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

Saturday, December 23, 2017

week ending Dec 23

 QE Works But Not Forever, BIS Study Tells Central Banks - The benefits of central banks pumping money into the economy by buying securities diminish over time, according to a BIS paper. That’s the conclusion of a Bank for International Settlements Working Paper by Henning Hesse, Boris Hofmann and James Weber, who compared the effects of the asset purchases in the U.S. and the U.K. conducted between 2008 and mid-2011 with those thereafter. While the earlier actions significantly helped the economy, they said, the subsequent ones had little or no impact. The issue is a topical one for central banks as they work out how to exit the emergency stimulus policies they imposed after the global financial crisis. The European Central Bank has slowed its bond purchases but not yet decided on a definite end-date, while the Federal Reserve is delicately shrinking its balance sheet. The decreasing impact of quantitative easing might be because investors increasingly priced in the bond purchases before they were actually announced, the paper suggests. While QE had “significant” positive effects on real gross domestic product and the consumer price index for the period until June 2011, thereafter the effects were “often not statistically significantly different from zero.” Following the collapse of Lehman Brothers in September 2008, central banks on both sides of the Atlantic started buying securities to contain the fallout. The Fed eventually spent roughly $3.6 trillion, while to date the Bank of England has spent 435 billion pounds ($580 billion) on gilts. Economists have raised concerns that the programs, designed to boost inflationary pressures, have had an outsized effect on equity valuations as yield-hungry investors flooded into the market – with potential risks for widening inequality. 

St. Louis Fed Promotes The Mathematically Impossible - It's bad enough when economic writers are clueless about how markets work. It's worse when Fed economists are clueless.  Check out this Tweet by @StLoiusFed.  @stlouisfed: Negative interest rates may seem ludicrous, but not if they succeed in pushing people to invest in something more stimulating to the economy than government bonds   Understanding the Math:

  • Negative interest rates cannot push people into more stimulating investments.
  • No matter how negative the rate, someone has to hold every treasury bond and someone has to hold every dollar in circulation.
  • In the equity markets, for every buyer of stocks, there is a seller, thus the sideline cash argument fails as well.

It's bad enough when analysts fail to understand basic economics, but even Fed economists are clueless about how markets work.  Negative rates cannot possibly do what the Fed suggests, but they can foster an artificial wealth effect when people borrow or spend more than they should. Any economic gain spurred on by reckless borrowing will all be taken back and then some, in the next recession.

PCE Price Index: November Headline & Core -  The BEA's Personal Income and Outlays report for November was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.23% month-over-month (MoM) and is up 1.76% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.08% MoM and 1.48% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made to figures for July through October.  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 with a decline in 2017. 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. The index data is shown to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted. For a long-term perspective, here are the same two metrics spanning five decades.

Chicago Fed: Moderate Growth in November - "Index points to a moderation in economic growth in November." This is the headline for today's release of the Chicago Fed's National Activity Index, and here is the opening paragraph from the report: Led by slower growth in production-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.15 in November from +0.76 in October. Two of the four broad categories of indicators that make up the index decreased from October, but three of the four categories made positive contributions to the index in November. The index’s three-month moving average, CFNAI-MA3, increased to +0.41 in November from +0.31 in October. [Link to News Release] The previous six months were revised. The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth. The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.

Q3 GDP Revised down to 3.2% Annual Rate - From the BEA: Gross Domestic Product: Third Quarter 2017 (Third Estimate) Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the third quarter of 2017, according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.3 percent. With this third estimate for the third quarter, personal consumption expenditures increased less than previously estimated, but the general picture of economic growth remains the same ...  Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 2.3% to 2.2%. Residential investment was revised up slightly from -5.1% to -4.7%. This was lower than the consensus forecast.

Q3 GDP Third Estimate: Real GDP at 3.2% - The Third Estimate for Q3 GDP, to one decimal, came in at 3.2% (3.16% to two decimal places), an increase over 3.1% for the Q2 Third Estimate. had a consensus of 3.3%.  Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the third quarter of 2017 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.3 percent. With this third estimate for the third quarter, personal consumption expenditures increased less than previously estimated, but the general picture of economic growth remains the same (see "Updates to GDP" on page 2). [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.43%.

Final Q3 GDP Revised To 3.2%, Highest Since Q1 2015 -- In the third and final estimate of Q3 GDP, the US economy eased back fractionally from last month's "hot" 3.3% print, and as a result of a modest decline in Personal Consumption from 1.60% to 1.49% (in the GDP calculation) as well as net trade, the final GDP print came in at 3.2%, down slightly from last month's and consensus estimate 3.3%, which however was still the highest GDP print since Q1 2015, when the economy grew at a 3.23% pace. The increase in real GDP reflected increases in consumer spending, inventory investment, business investment, and exports. Imports, which are a subtraction from GDP, decreased. The increase in consumer spending reflected increases in spending on both goods and services. The increase in goods was primarily attributable to motor vehicles. The increase in services primarily reflected increases in health care, financial services and insurance, and food services and accommodations. Putting numbers to the data, final Q3 Consumer Expenditures were revised modestly lower, from contributing 1.60% to the bottom line GDP, to 1.49%. This however was offset by an upward revision to Fixed Investment (from 0.39% to 0.40%) while Private Inventories was marginally lower (0.80% to 0.79%); net trade was also reduced fractionally (from 0.44% to 0.36%) and finally, government consumption, rose once again from 0.07% to 0.12%. Some other numbers:

  • Core PCE 1.3%, below the 1.4% estimate and below the 1.4% per the last revision.
  • PCE Prices rose 1.5% in Q3, below the 1.6% estimate, and unchanged from the second revision.
  • GDP Sales also declined from 2.5% in the previous estimate to 2.4%, missing the est. 2.5%.
  • GDP deflator came in at 2.1%, same as the last quarter estimate, if slightly below the 2.2% estimate.
  • Consumer spending final printed 2.2%, below the 2.3% last

Also notable in today's release was the Corporate Profits number, which surged at a 4.3% annual rate in Q3, after increasing 0.7 percent in the second quarter.

Q3 Real GDP Per Capita: 2.39% Versus the 3.16% Headline Real GDP - The Third Estimate for Q3 GDP came in at 3.2% (3.16% to two decimals), up from 3.1% in Q2. With a per-capita adjustment, the headline number is lower at 2.39% to two decimal points. Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.3% below the pre-recession trend.

GDP Forecast For 4Q17 Unchanged: 3.3% -- December 19, 2017 --GDP Now: Latest forecast: 3.3 percent — December 19, 2017The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 3.3 percent on December 19, unchanged from December 14. The forecast of fourth-quarter real GDP growth fell to 3.1 percent after Friday's industrial production and capacity utilization release from the Federal Reserve Board of Governors but rebounded back to 3.3 percent after this morning's new residential construction release from the U.S Census Bureau.  The forecast of fourth-quarter real residential investment growth increased from 4.8 percent to 8.2 percent after the construction release.

Why Monetary Policy Will Cancel Out Fiscal Policy - Good cheer has arrived at precisely the perfect moment. The cocktail of record stock prices, robust GDP growth, and reforms to the tax code has the sweet warmth of a glass of spiked eggnog.  Not long ago, if you recall, a Dow Jones Industrial Average above 25,000 was impossible.  Yet somehow, in the blink of an eye, it has moved to just a peppermint stick shy of this momentous milestone – and we’re all rich because of it. But despite closing out the year strong, 2017 won’t be the year when annual U.S. GDP growth finally eclipses 3 percent.   The Tax Foundation, an outfit out of Washington, offered the following assessment:“According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, and an additional 339,000 full-time equivalent jobs.  In 2018, our model predicts that GDP would be 2.45 percent, compared to baseline growth of 2.01 percent.”To be clear, we don’t know what assumptions went into the Tax Foundation’s Taxes and Growth Model.  Does it factor in the latent effects of quantitative tightening?  Does it assume a total of 3 Fed rate hikes in 2018?  What about the flattening yield curve?In short, will tightening credit markets offset any boost that tax cuts are expected to deliver to the economy? In other words, will monetary policy cancel out fiscal policy? Most likely it will.  Here’s why…  Plain and simple, the entire financial system and economy has become fully dependent on cheap and ever expanding credit.  Consumers, the federal government, and corporations have gone hog wild gorging on a decade of artificially suppressed, cheap credit.  What makes the growth of consumer, government, and corporate borrowing over this period so dangerous – in addition to its pure enormity – is that it was encouraged by the Fed’s artificially low interest rates.  The scale and magnitude of this cheap credit expansion is nothing short of a manic credit bubble. The point is, as mentioned last week, we appear to be entering a period where the price of credit – specifically, interest rates – rise and, thus, credit contracts.  Naturally, this is occurring at the worst possible time; after everything and everyone has become wholly dependent on cheap, expanding credit.

Paul Ryan Adds Disaster Aid, Child Health-Insurance To Spending Bill --House Republicans have decided to attach provisions reauthorizing a popular child health-insurance program and allocating an unprecedented $81 billion in disaster-aid spending to a continuing resolution that would keep the federal government funded until Jan. 19, Politico reported Tuesday, citing anonymous Congressional aids.House Speaker Paul Ryan disclosed the new strategy in a GOP conference meeting Wednesday morning.NEWS— Ryan tells House Republicans he will attach the $81 billion supplemental disaster spending bill to the stopgap bill to keep the government open.— Jake Sherman (@JakeSherman) December 19, 2017Funding for the federal government is set to run out on Friday at midnight, and Republican leaders have been preoccupied with tax reform and unable to focus on averting a shutdown and the myriad other legislative priorities that demand action before Congress enters recess.

 Abortion fight threatens Collins deal, risks shutdown | TheHill: A new fight over abortion has thrown a late obstacle into negotiations on the year-end stopgap spending deal days before a possible government shutdown. House Republicans say two ObamaCare measures that Senate GOP leaders are expected to attach to the stopgap as part of a deal with Sen. Susan Collins (R-Maine) must include Hyde Amendment language prohibiting the use of federal funds for abortion. It would be a “stone cold nonstarter” for many House Republicans to vote for a stopgap that includes the ObamaCare measures without the abortion restrictions, said one House GOP appropriations aide. “It won’t pass the House if you don’t have Hyde protections,” said House Energy and Commerce Committee Chairman Greg Walden (R-Ore.). But Democrats oppose including the language, which they see as an expansion of the existing Hyde Amendment. They argue including the language could discourage private insurers from covering abortions and insist they won’t back the stopgap if it is added. Senate Democratic Leader Charles Schumer (N.Y.) said Tuesday that adding Hyde language would “kill it altogether.” Senate Republicans need at least eight Democrats or independents to back the stopgap to overcome a filibuster. The government will shut down on Saturday unless a new funding measure is approved. The two ObamaCare measures are part of a deal between Senate GOP leaders and Collins that won her support for the tax-cut bill. 

Republican Squabbling Could Force A Government Shutdown This Weekend - Now that Republicans have finished patting themselves on the back for passing the first comprehensive tax reform bill in 31 years, and which hopes to stimulate the economy my rewarding those least likely to spend.... members of Congress are shaking off their hangovers and confronting the reality that that the leadership is still nowhere near a consensus on the continuing resolution package that must be passed by midnight Friday (or early morning Saturday at the latest) to avert a holiday shutdown.Initially, Republicans were planning to include a separate authorization that would keep the Pentagon funded through September, but that idea was scrapped after the leadership discovered the bill would be dead-on-arrival in the Senate, where Republicans must win at least eight Democratic votes to circumvent a filibuster.House Speaker Paul Ryan said earlier this week that Republicans would attach an $81 billion disaster-relief aid package to the CR, thereby combining two legislative priorities into one. But that plan has also been abandoned. Now, the leadership is scrambling to whip up enough votes to push the CR through the Senate. According to the Hill, Speaker Paul Ryan met with Mark Meadows, the leader of the Freedom Caucus, several members of his faction last night, and managed to flip several ‘no’ votes to ‘yes’ after promising to reauthorize a controversial surveillance program that was due to expire. Still, some conservative Republicans are digging in their heels and insisting that the defense spending measures must be included in the final bill - or else. Following the meeting with Meadows, Republicans hammered out a draft of the bill during a conference late Wednesday. In its present form, the CR would delay cuts to defense and nondefense spending, reauthorize the controversial surveillance program, and include funding for a popular children’s health-insurance program, per Bloomberg.

House votes to keep government open, sends funding bill to Senate - The House approved Thursday evening a short-term spending bill that keeps federal agencies operating through January 19, a major step toward avoiding a government shutdown.The legislation passed 231-188 and heads to the Senate where it is expected to be approved ahead of a Friday deadline. The proposal also included an extension of funding for the Children's Health Insurance Program through March, and a three-week extension of the FISA surveillance program.Immediately after the vote, the House also has passed an $81 billion disaster aid bill in the wake of this year's devastating hurricanes and wildfires. The bill includes additional money for hurricane recovery in Texas, Florida, Puerto Rico and the US Virgin Islands, and along with fires that impacted California. It passed the House 251-169, but it's not expected to be taken up in the Senate until after the new year. Republican leaders had appeared at an impasse over the spending bill just hours before the House voted, though signs of progress toward a resolution began to emerge throughout the day. House Armed Services Chairman Mac Thornberry, a Texas Republican who demanded for weeks that the Pentagon needed a full year spending bill with added resources, told reporters Thursday that he would now vote for a stopgap bill to extend current levels until mid-January and he believes it will pass.  Republicans are trying to avoid a shutdown just days ahead of the holidays, but passing a funding bill will require the party to go it alone in the House or risk overshadowing their biggest legislative accomplishment of the year.

Democrats Fold on a DACA Fix - When 18 Senate Democrats joined Republicans to pass a short-term spending bill on Thursday, it marked yet another day of disappointment for Dreamers and their allies in Congress. Earlier on Thursday afternoon, a dozen members of the Congressional Hispanic Caucus had marched across the Capitol to Sen. Chuck Schumer’s office, asked his receptionist for a meeting, and soon found themselves in a room with the minority leader. The topic was finding a fix for DACA recipients before adjourning for the year—a pledge Democrats made to the so-called Dreamers in September, after President Trump announced plans to end the program that shields children of undocumented immigrants from deportation. “We were clear,” Illinois Rep. Luis Gutiérrez, perhaps the most outspoken advocate for Dreamers in Congress, said after the meeting. “You cannot put [Dreamers], Mr. Schumer, on a pedestal, take them to the Democratic convention, and then not give them the same kind of legislative importance moving forward.” The Hispanic Caucus, Dreamers, activists, and progressives are furious that another must-pass spending bill will move through Congress without a DACA fix attached.There was no fix in the September short-term spending bill, there wasn’t one in the two-week spending bill that passed on Dec. 8, and there isn’t one in the four-week spending bill that the House introduced Thursday before government funding was set to expire on Friday night. Democratic leaders say they used “end of the year” as shorthand for when the full, long-term appropriations bill would pass and did not anticipate that there would be another short-term bill kicking the process into January. But they now have to live by their miscalculation. A DACA fix will not come out of Congress by the end of the year. House Minority Leader Nancy Pelosi has stood her ground, whipping her conference to vote against the bill if the DREAM Act and other priorities weren’t included in the bill. In the Senate, though, Schumer has not whipped his conference to block a spending bill that doesn’t contain a DACA fix. Though a DACA fix is popular, forcing a shutdown on the issue would be risky for Democrats. “Most people want DACA replaced,” as FiveThirtyEight wrote recently. “But for a lot of people, it’s not enough of a priority to shut down the government.”

US Military Rushes To Study Blockchain As 'Hybrid Wars' Loom -- President Trump signed into law the 2018 National Defense Authorization Act on Tuesday, a $700 billion defense policy bill that mandates for a “briefing on cyber applications of blockchain technology.” Language within the bill is part of a much wider effort to modernize the United States military, before decades of hybrid wars breakout (see: US Army Is Preparing For Decades Of Hybrid Wars.)The blockchain study, according to the bill text (Sec.1646), will create “an assessment of efforts by foreign powers, extremist organizations, and criminal networks to utilize such technologies;…[and] an assessment of the use or planned use of such technologies by the Federal Government and critical infrastructure networks.” Further, the study is to be delivered to Congress “not later than 180 days after the date of the enactment of this act.” Coin Desk adds while the study is set to be prepared by the Department of Defense, the final report could include input from other federal agencies and departments. Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the heads of such other departments and agencies of the Federal Government as the Secretary considers appropriate, shall provide to the appropriate committees of Congress a briefing on the cyber applications of blockchain technology. So you ask, what is blockchain? And why would the Department of Defense be interested in this technology? (infographic)

America Preparing "Bloody Nose" Military Attack On North Korea: Telegraph -- While North Korea managed to once again drop off the list of immediate geopolitical concerns having kept relative quiet in recent weeks, without any notable provocations or ICBM launches, this may be changing soon, because according to the Telegraph, America is drawing up plans for a “bloody nose” military attack on North Korea to stop its nuclear weapons program. The UK newspaper's sources claim that the White House has “dramatically” stepped up preparation for a military solution in recent months amid fears diplomacy is not working. As a result, one option currently under consideration is destroying a launch site before it is used by the regime for a new missile test. Stockpiles of weapons could also be targeted.The explanation for what would be an act of war, is amusing: "The hope is that military force would show Kim Jong-un that America is “serious” about stopping further nuclear development and trigger negotiations." Well, yes: launching an offensive war does tend to confirm that one is indeed serious. The question is what will China, Russia and the rest of the all too serious world do in response. “The Pentagon is trying to find options that would allow them to punch the North Koreans in the nose, get their attention and show that we’re serious", said one former US security official briefed on policy.

 Storm clouds gathering over Korean peninsula, Mattis tells US troops - Storm clouds are gathering over the Korean Peninsula, Defence Secretary James Mattis has told soldiers and airmen of the elite 82nd Airborne Division at Fort Bragg, North Carolina. "My fine young soldiers, the only way our diplomats can speak with authority and be believed is if you're ready to go," Mr Mattis told several dozen soldiers and airmen during a two-day tour of US bases, the military journal Stars And Stripes reported on Friday (Dec 22). During his visit to another US base, the Guantanamo Bay Naval Station, he told the troops "you all have to be ready to go" if diplomacy fails. The US could not assume that North Korean leader Kim Jong Un does not seek nuclear war, he said. The Associated Press quoted him saying: "If we have to do it (militarily), we expect to make it the worst day in North Korea's life." If war comes, "every submarine he's got is to be sunk, and every ship he's got is to be sunk", said the retired general. At Fort Bragg, Mr Mattis told the troops they should read the book This Kind Of War: A Study In Unpreparedness published in 1963, a decade after the Korean war ended in 1953. "You know what I'm driving at here," Mr Mattis said as the soldiers listened in silence, the Stars And Stripes reported. "So you gotta be ready," he added. The book, a classic history of the Korean War, saw the conflict as a test of wills. The communists, author T.R. Fehrenbach contended, doubted that the United States had the will to react quickly and practically, and without panic. 

Can The US Survive An EMP Attack? -- While there’s no question that a nuclear strike on the Continental US would be utterly devastating, it’s not the only way a rogue state like North Korea could kill millions of American civilians in one fell swoop. Another possibility that is being studied by lawmakers and Pentagon officials is – like North Korea itself – a vestige of the Cold War. We’re of course referring to an electromagnetic pulse. By detonating a hydrogen bomb in just the right spot miles above the Earth’s surface, the North could permanently damage the US power grid – maybe even take it offline completely. By robbing entire swaths of the US of electricity, the North could precipitate thousands – if not millions – of deaths. The North first threatened an EMP attack over the summer, and North Korean media and its people have mentioned it several times since. Last month, federal agencies and utility executives held GridEx IV, a biennial event where officials responsible for hundreds of local utilities game out scenarios in which North America’s power grid could fail. Unsurprisingly, with the North Korean threat looming, these discussions took on a whole new level of urgency, as Bloomberg explains. This year, the event took on an added urgency given growing concern with a weapon straight out of the Cold War: an electromagnetic pulse, or EMP, emanating from a nuclear blast - specifically, one delivered by a North Korean missile or satellite detonated miles above the Earth. Though GridEx IV didn’t pose this exact scenario, industry experts concede there’s no clear plan to deal with it. An EMP could damage electronic circuits over large areas, depending on the configuration of the weapon and how high it was detonated, though there’s disagreement over how effective such a tactic would be. Scientists also emphasize that a nuclear bomb that hits a ground target is much more worrisome. Nevertheless, with North Korea’s increasingly successful missile and warhead tests in mind, Congress moved to renew funding for the Commission to Assess the Threat to the US from Electromagnetic Pulse Attack as part of the National Defense Authorization Act.

Trump administration approves lethal arms sales to Ukraine -- The Trump administration has approved the largest U.S. commercial sale of lethal defensive weapons to Ukraine since 2014. The move was heavily supported by top Trump national security Cabinet officials and Congress but may complicate President Trump’s stated ambition to work with Russian President Vladimir Putin. Administration officials confirmed that the State Department this month approved a commercial license authorizing the export of Model M107A1 Sniper Systems, ammunition, and associated parts and accessories to Ukraine, a sale valued at $41.5 million. These weapons address a specific vulnerability of Ukrainian forces fighting a Russian-backed separatist movement in two eastern provinces. There has been no approval to export the heavier weapons the Ukrainian government is asking for, such as Javelin antitank missiles. Congress authorized such sales in 2014 in the Ukraine Freedom Support Act, but the Obama administration never authorized large commercial or government sales, a move widely seen as a de facto decision not to provide lethal weapons to the Ukraine military. Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.), who co-sponsored the law, praised the Trump administration’s move. “I’m pleased the administration approved the sale of defensive lethal arms to Ukraine,” Corker told me. “This decision was supported by Congress in legislation that became law three years ago and reflects our country’s longstanding commitment to Ukraine in the face of ongoing Russian aggression.” 

Trump’s Naming of Jerusalem Capital Brings Anger and Despair: An Interview With Richard Falk -- President Trump made history in naming Jerusalem the capital of Israel, as much of the world watched on with anger and despair. The moment comes as a crucial step backwards for the region's "peace process." In the background seemingly, Trump needs to sustain his base of support among Evangelicals and rich Jewish donors, but as for the effects, it seems that as usual, he couldn't care less. Liberal US Jews, such as the advocacy group J-Street, are condemning the decision and they're right, of course, to condemn it. Theirs is a major task to bring about some respect for human rights in the US, at least at the leadership level. The move poses other challenges and questions. Will Trump move the Embassy? Does Trump have any thinking on the matter beyond his own ego? Or is this a further step toward organizing the reactionary bloc of Arab dictatorships as well as hyper-nationalist Israel? Is an alliance against Iran part of the strategy? In this exclusive Truthout interview, former UN Special Rapporteur for Palestinian Human Rights Richard Falk helps to elaborate on these points and more. Falk argues that "what is already evident on the basis of the decision itself is the severe damage done to the global and regional leadership reputation of the United States. As well, the authority of the United Nations has been shown to be no match for geopolitical resolve, and international law and world public opinion have been pushed aside." Falk goes on to state that, "prospects for a diplomacy based on the equality of rights of Palestinians and Israelis have been reduced to zero, and thus no just end of the Palestinian ordeal can be foreseen."

US vetoes resolution on Trump's Jerusalem decision -- As expected, the US has vetoed a UN Security Council draft resolution rejecting President Donald Trump's recent recognition of Jerusalem as Israel's capital, and his plans to move the American embassy in Israel to the city. However, the measure was backed on Monday by the 14 other Security Council members, including many US allies, highlighting Washington's increasing isolation over an issue that has triggered mass rallies in support of the Palestinians in major international cities."What is troublesome to some people […] is that the United States had the courage and honesty to recognise a fundamental reality," Nikki Haley, the US ambassador to the UN, said.  "Jerusalem has been the political, cultural, and spiritual homeland of the Jewish people for thousands of years - they have had no other capital city," she continued. Along with the UK, France, Russia, and China, the US is a permanent member of the UN Security Council, with the power to block any resolution from passing with the use of a veto.   Riyad Mansour, the Palestinian ambassador to the UN, said: "It is paradoxical that while we were waiting for a peace plan from the US, the administration instead decided to further obstruct peace and delay its realisation. "The US decision encourages Israel to persist in its crimes against the Palestinian people and to continue its occupation of our territory. No rhetoric will hide this complacency in prolonging the occupation," he added.

 US outnumbered 14 to 1 as it vetoes UN vote on status of Jerusalem -- A UN security council resolution calling for the withdrawal of Donald Trump’s recognition of Jerusalem as Israel’s capital has been backed by every council member except the US, which used its veto. The unanimity of the rest of the council was a stark rebuke to the Trump administration over its unilateral move earlier this month, which upended decades of international consensus. The Egyptian-drafted resolution did not specifically mention the US or Trump but expressed “deep regret at recent decisions concerning the status of Jerusalem”. A spokesman for the Palestinian president, Mahmoud Abbas, responded to the veto by saying it was “unacceptable and threatens the stability of the international community because it disrespects it”. The UK and France had indicated in advance that they would would back the text, which demanded that all countries comply with pre-existing UN security council resolutions on Jerusalem, dating back to 1967, including requirements that the city’s final status be decided in direct negotiations between Israel and the Palestinians. The resolution was denounced in furious language by the US ambassador to the UN, Nikki Haley, who described it as “an insult” that would not be forgotten. “The United States will not be told by any country where we can put our embassy,” she said. “It’s scandalous to say we are putting back peace efforts,” she added. “The fact that this veto is being done in defence of American sovereignty and in defence of America’s role in the Middle East peace process is not a source of embarrassment for us; it should be an embarrassment to the remainder of the security council.” 

Trump Threatens To Cut Foreign Financial Aid Over Upcoming UN Jerusalem Vote --As the United Nations general assembly is set to hold a rare emergency session on Thursday to consider a resolution condemning President Trump's recent controversial move to recognize Jerusalem as the Israeli capital, American Ambassador to the UN Nikki Haley is lashing out, telling member countries that "the US will be taking names". She posted the warning in a Tuesday tweet after Monday's UN vote, which pitted the United States against all other members of the UN Security Council in a 14 to 1 decision with the US as the lone veto blocking the resolution. Haley was visibly furious over the resolution, calling it an "insult" while saying the US won’t be told where it can put its embassy. Though blocked at the security council, the Palestinians moved to put the resolution before the UN's General Assembly, where the US is not able to block it - a vote scheduled for Thursday. And on Tuesday President Trump followed up on Haley's threat while talking to reporters at the White House, saying that American foreign aid to countries voting in favor of the resolution to condemn Trump's decision could be pulled. According to a Reuters report: U.S. President Donald Trump on Wednesday threatened to cut off financial aid to countries that vote in favor of a draft United Nations resolution against his decision to recognize Jerusalem as Israel’s capital.“They take hundreds of millions of dollars and even billions of dollars, and then they vote against us. Well, we’re watching those votes. Let them vote against us. We’ll save a lot. We don’t care,” Trump told reporters at the White House.

"A Stunning Rebuke": 128 Nations Support UN Call For Trump To Withdraw Jerusalem Decision -- One day after Trump escalated his war of words with the UN, threatening to cut off foreign financial aid over today's UN vote on the president's decision to recognize Jerusalem the capital of Israel, the United Nations on Thursday delivered what has been dubbed a "stunning rebuke" of the US President's Jerusalem decision, casting an overwhelming vote condemning the move and calling on the U.S. to withdraw the decision. The final vote was a landslide against Israel, with some 128 nations voting in favor of the resolution. Nine countries opposed the resolution while 35 abstained, including Canada. While the resolution – a formal statement of a U.N. opinion – is not legally binding, it is represents a symbolic and diplomatic condemnation of Trump's decision and exerts political pressure on him to reverse the move... which Trump of course won't do.  As reported yesterday, in the run-up to the General Assembly vote, Trump and US Ambassador to the UN, Nikki Haley, warned countries against opposing the Trump administration's Jerusalem decision. Haley went so far as sending a letter to members of the international body this week, warning that Trump had instructed her to take names, i.e., list the countries that voted in favor of the resolution. The president followed up on that warning on Wednesday, suggesting at a Cabinet meeting that the U.S. could cut off foreign aid for countries that opposed the U.S. in the vote. The threat did little to stop the countries from voting to blast Trump's decision.

“Russsiagate” and the Collapse of Obama’s War Against Syria - Black Agenda Report -- “Russia-gate” is the scream of a wounded U.S. empire – a military colossus that can destroy the planet many times over but was defeated in its war of regime change in Syria, despite killing half a million people and displacing a third of its population. Barack Obama was packaged as a “peace” candidate, but his real objective was to reverse the humiliation of his predecessor’s forced withdrawal from Iraq and thus maintain the image and substance of U.S. “primacy” in the world. U.S. public opinion, however, would not tolerate another massive mobilization of American ground forces in the region. Instead, Obama and his secretary of state and would-be successor, Hillary Clinton, partnered with the monarchies of the Persian Gulf, the most backward regimes on the planet, to transform the various flavors of al Qaida into a pro-western foreign legion: foot solders of imperialism. The nature of the obscene alliance -- although impossible to fully conceal, and rooted in U.S. policy since Jimmy Carter’s presidency -- could not be spoken. Americans are conditioned to hate and fear all things Arab and Muslim (and, indeed, all people’s not sufficiently “white”). How could a U.S. administration align itself with the same forces that were blamed for 9/11? The same people that the CIA claimed had been harbored by Saddam Hussein? The same madmen that, we are told, want to kill Americans because they hate “our freedoms”? That’s way too much boggling for most American minds. The very insanity of the idea helped to cloak the truth. The corporate media eagerly provided a full-blown counter-reality to suit imperial purposes. When the U.S. and its NATO and royal Arab allies became the air force for regime change in Libya, in 2011, the western press extolled the democratic virtues of the “rebels” on the ground -- even as these heavily jihadist militias lynched and massacred Black Libyans and immigrant African workers by the thousands.

Trump unveils national security plan, touts economy - CNN - President Donald Trump on Monday framed his foreign policy as an extension of his populist economic message, lambasting past presidents and trumpeting his own achievements during a speech meant to outline the guiding principles of his national security strategy.In a speech that closely resembled a campaign address, Trump offered a laundry list of accomplishments and a reiteration of his view that Americans have been left behind as a result of decisions made by past administrations, including on immigration, the Iran nuclear deal, and trade pacts. And while Trump repeated some core aspects of the foreign policy strategy document that his aides have spent the past eleven months preparing, he reserved much of his address for touting domestic economic growth and lambasting his predecessors for damaging American security. "For many years, our citizens watched as Washington politicians presided over one disappointment after another; too many of our leaders -- so many -- who forgot whose voices they were to respect, and whose interest they were supposed to defend," Trump said in a speech to collection of uniformed military personnel and members of his cabinet assembled at an auditorium in downtown Washington."On top of everything else, our leaders drifted from American principles, they lost sight of America's destiny, and they lost their belief in American greatness," Trump said. "As a result, our citizens lost something as well. The people lost confidence in their government and eventually even lost confidence in their future." Trump said his election last year was an indication that Americans yearned for another direction.

Trump strategy document says Russia meddles in domestic affairs worldwide (Reuters) - U.S. President Donald Trump’s administration said on Monday that Russia interferes in the domestic political affairs of countries globally, but stopped short of accusing Moscow of meddling in the 2016 U.S. election. The criticism of Russia, laid out in a new national security strategy based on Trump’s “America First” vision, reflects a view long held by U.S. diplomats that Russia actively undermines American interests at home and abroad, despite Trump’s own bid for warmer ties with President Vladimir Putin. “Through modernized forms of subversive tactics, Russia interferes in the domestic political affairs of countries around the world,” said the document. It avoided directly citing what U.S. intelligence agencies say was Russian meddling in last year’s U.S. presidential election. “Russia uses information operations as part of its offensive cyber efforts to influence public opinion across the globe. Its influence campaigns blend covert intelligence operations and false online personas with state-funded media, third-party intermediaries, and paid social media users or ‘trolls,'” the document said. Trump has frequently spoken of wanting to improve relations with Putin, even though Russia has frustrated U.S. policy in Syria and Ukraine and done little to help Washington in its standoff with North Korea. In a speech laying out his strategy, Trump noted that he received a call from Putin on Sunday to thank him for providing U.S. intelligence that helped thwart a bomb attack in the Russian city of St. Petersburg. Trump said the collaboration was “the way it’s supposed to work.” “But while we seek such opportunities of cooperation, we will stand up for ourselves and we will stand up for our country like we have never stood up before,” he said 

Trump's national security strategy shines spotlight on China -- President Donald Trump, in a major policy speech today on his national security strategy, will emphasize the need for the United States to protect its economic might and technological lead against “revisionist powers,” such as China and Russia, which want to reshape the world to their advantage.  “The strategy affirms … the belief that America’s economic security is national security,” a senior administration official told reporters. Defense Secretary Jim Mattis “was recently quoted as saying the strongest weapon he has is our GDP [Gross Domestic Product], and again you’ll really see a major focus on that,” the official added. Administration officials said U.S. Trade Representative Robert Lighthizer played a major role in shaping the document, as did Mattis, Secretary of State Rex Tillerson, Treasury Secretary Steven Mnuchin and other members of the National Security Council. “We welcome all economic relationships rooted in fairness, reciprocity, and faithful adherence to the rules,” the strategy says, according to advance excerpts. “Those who join this pursuit will be our closest economic partners. But the United States will no longer turn a blind eye to violations, cheating, or economic aggression.” China is seen as a strategic competitor because China competes effectively across the political, economic, military and informational domain in ways probably not duplicated by our other competitors,” a senior administration official added. But at the same time, “we’re working with China. We do not rule out cooperation in anyway. It talks throughout the document about areas of mutual cooperation.”  One particular focus of the strategy, which will be released this morning ahead of the speech, is protecting the U.S. “national security innovation base.” That’s a term coined by the Trump administration to capture a broad list of activities it believes the United States needs to protect and promote to make sure the nation can continue to innovate and maintain its technological lead.

 Donald Trump’s security strategy fuels era of more fractious Sino-US relations: analysts | South China Morning Post: US President Donald Trump’s first comprehensive national security assessment pushed Washington further into a new, more fractious era of relations with China by alleging that Beijing is seeking to undermine American interests, policy experts said. The report’s claim that China and Russia are “attempting to erode American security and prosperity” is a “somewhat radical claim” and a departure from assumptions that China only moves to counter the US when the country stands in the way of Beijing’s initiatives, Robert Daly, director of the Kissinger Institute on China at the Washington-based Wilson Centre, said in an interview with the South China Morning Post. The 55-page report, a requirement mandated by Congress, also called out China’s activity in the South China Sea, Beijing’s repression of its people and cast suspicion on mainland Chinese nationals working in US hi-tech companies and those enrolled in US universities. “This constitutes Trump’s first major attack on China’s human rights record and employs that as part of the American tool kit in combating competition from China, which had taken solace in the fact that Trump didn’t care” about human rights, said Daly, who served as a Beijing-based US diplomat in the late 1980s and early 1990s. “The notion that we’re entering into a new era in which it is recognised that the relationship, which should still be cooperative whenever possible, is fundamentally competitive and maybe tracking more adversarial is probably correct,” Daly said.  Since taking office in January, Trump has ordered numerous investigations into China’s investment and trade practices while lawmakers have moved ahead with measures that may tighten scrutiny on investments by Chinese companies in the US, moves that analysts have said signal a shift away from a nearly three-decade run of increasing economic engagement.

Trump’s new global vision lacks coherent global strategy - President Trump’s new National Security Strategy (NSS), which he introduced in an address in Washington on Monday, amounts to a clear break with the way his post-Cold War predecessors saw the international system and envisaged the US role in it. In a way, as the Trump administration sees it, its duty is not to secure the foundations of an amorphous New World Order, or to promote its democratic values, or to advance free trade and investment. Instead, its obligation is first and foremost to protect US strategic and economic interests around the world by using its power and not necessarily through multilateral institutions. The interests of the American people override those of the Global Community.  President Trump’s vision is grounded in an old-fashioned realpolitik world view that dominated US foreign policy for most of the Cold War, which was centered on managing the global competition between great powers. That vision of the international system is grounded in the assumption that global stability is achieved not through accommodation of competitors or by making concessions to rivals or by relying on international institutions and the application of international law. Only the threat of the use of military and economic power creates incentives for other players to reach diplomatic and trade deals with the United States. That is the most effective way to avert costly conflicts in the long run.And now that “the great-power competition has returned,” as the NSS document puts it, President Trump has pledged to use US power to contain and deter the two leading “revisionist powers” that “want to shape a world antithetical to US values and interests” – China and Russia. The US would therefore embrace a combative stance that would challenge Beijing’s unfair economic practices and its attempts to exert control over islands and waterways in the South China Sea. And “the United States will no longer turn a blind eye to violations, cheating or economic aggression.”

The New National Security Strategy Paves A Path To Isolation - Yesterday the White House published a new National Security Strategy (pdf). The publication was, unusually, announced by the president in a stump speech. The new NSS is unusually long: Reagan National Security Strategy was 41 pages, Bush 2002 was 31, Obama 2015 was 29. Trump's is 55 pages: Buffet of priorities without much prioritization. The first "fundamental responsibility" the NSS sets out is:  to protect the American people, the homeland, and the American way of life .. Micah Zenko points out that does not really do that:  [A]lmost nothing in the .. document deals with the actual domestic threats, risks, and systemic harms that Americans experience every day... The Trump NSS .. mentions terrorists 58 times, and pledges to “defeat jihadist terrorists,” just as all previous NSS documents have done since 9/11. Over the past 16-plus years, jihadis have killed 103 Americans within the United States, while right-wing terrorists have killed 68. During that same time period, drug-induced deaths have more than tripled, with over 59,000 Americans dying in 2016, while America’s suicide rate has risen by 25 percent, resulting in 43,000 deaths annually. ..The Trump administration’s NSS fails to do what it claims — protect Americans — largely because it does not address the real threats and risks faced by Americans. While it touches lots of foreign policy issues, the emphasis of the new NSS is more realist than the - on paper - more idealistic version of Obama's imperial strategy. There is less schmoozing about "values" and a new emphasis on "rivals", most importantly China and Russia. Labeling those two countries as rivals implies that they are again seen on a similar level than the U.S. itself. It thus marks the end of the "unilateral moment" moment that the U.S. felt entitled to after the end of the Soviet Union. Sure, the U.S. is still trying to set itself apart from others. It just ridiculously vetoed a UN Security Council resolution that reaffirmed the occupied status of Jerusalem. But voting against all other members of the UNSC, including close allies like Britain, is not a sign of global leadership but of a pariah state.

Trump Plan Sees National Security As a Zero-Sum Game -  On Monday, President Donald Trump laid out a national security strategy for a world in which all Republican shibboleths are true: The U.S. economy is fueled by tax cuts for the wealthy, drilling in the Arctic will solve our energy problems forever, and building a 2,000-mile wall is a cost-effective and worthwhile solution to the problem of “bad people” entering the country. If you believe all this, you likely thought Monday’s speech was pretty good.  Indeed, much of this strategy is merely a rehash of Trump’s core campaign promises: Get tough on immigration, crack down on Islamism, close the border. In Trump’s rhetoric, the failure of past administrations to do these supposedly simple things is the cause of most of our present ills, whereas Trump’s having the courage to finally do them will make us safe and prosperous — great again, as it were. And the only reason everything isn’t perfect yet is that his predecessors were so catastrophically wrong about everything that it’s taking a little time. That was the essence of Monday’s message. Perhaps that’s why, like so many of Trump’s appearances, this felt at times more like a campaign speech than a policy address. There was more about the vision than there was about how we’re going to get there. The biggest national security challenges of the day — North Korea, Iran, Russia, China — merited only brief mentions. His invocation of “unfair trade practices and intellectual property theft” sounded like an oblique reference to China, but it was not clear what his actual policy response to those practices would be. Resurrecting the Reaganesque motto “peace through strength,” Trump proposed a “total modernization” of the armed forces, and “massively building up our military, which has the fundamental side benefit of creating millions and millions of jobs,” while also “streamlining acquisition” and “eliminating bloated bureaucracy,” as though eliminating red tape could generate the trillions of dollars needed to achieve a “massive” buildup of the already massive U.S. military. Meanwhile, Trump seems to be calling for a kind of military expansion-as-stimulus/make-work program, the wisdom and effectiveness of which are debatable at best, especially compared to other forms of economic stimulus. The strategy document itself, of course, gets into more detail, painting what foreign policy analyst Daniel DePetris describes at the American Conservative as “almost Hobbesian … a picture of a world in black-and-white, a sometimes harsh and unforgiving place where nations compete with one another for a bigger piece of the global pie.” Yet again, Trump and his administration belie a strikingly zero-sum worldview, in which all deals have winners and losers, and everyone is looking out to screw over the other guy.

 The text of the GOP tax complication legislation -  Linda Beale - The Republicans, after holding one sham “public hearing” on their conference bill (without any text released) have on late Friday released the text of their (Republicans only) agreed-upon final bill that will be put to a House and Senate vote as early as Tuesday, December 19, even though there is no score from the Congressional Budget Office or analysis from the Joint Committee on Taxation. Here’s the link to the 1097 pages of the tax bill:   Here’s the link to the 570 pages of the Joint Conference explanation:  (Hat tip to Ellen Aprill for sharing the links with tax professors as soon as they became available.) As a Vox article announcing the release notes, “the bill is a far cry from the simplified tax code that Republicans have long been promising, but it is a substantial reshaping of the nation’s tax base.”   Tara Golshan, Full Text: Republicans unveil their final tax bill (Dec. 15, 2017 6:05 pm EST).

The GOP Tax Bill Disses the Working Class -  Linda Beale - Here’s something about the GOP House and the GOP Senate:  they each passed tax bills (supposed to come out in a “conference” agreement sometime today) that diss the United States’ working class taxpayers.  White or black, Christian or Jew or other, citizen by birth or naturalized citizen–workers are treated as an inferior “taker” class and owners are treated as a superior “maker” class–the same old GOP class warfare that has been evidenced in Republican-driven tax legislation for decades.  That shows in the provisions that have been discussed quite a bit already, even though there is no official distributional analysis and even though the Treasury Department put out a one-pager claiming to provide an analysis showing huge economic growth would eliminate any deficits (based on both the tax “reform” legislation and promised cost-cutting “reforms” to Medicare and Social Security):

  • the  significant reduction in impact of the estate tax,
  • the huge reduction in the statutory corporate tax rate of most benefit to officers/shareholders (it was 35%, it will be 21% under the conference agreement, apparently, even though the “effective” corporate tax rate ranged from negative to around 24-25%–essentially more favorable than many of our fellow advanced economies’ corporate tax rates);
  • the territoriality of the corporate tax (generally, zero tax on foreign earnings of U.S. companies);
  • immediate expensing of company investments (a five year provision that allows companies huge tax benefits for those five years);
  • the elimination of the corporate alternative minimum tax (AMT), at a cost of about $250 billion in revenues.
  • the reduction in the top rate for wealthy individuals (from 39.6% to 37%),
  • the substantial reduction in the  State and Local Tax Deduction for workers (thus changing entirely the economics of paying for a house already purchased, while allowing sole proprietors, partnerships and other “owners” of equity in businesses the ability to deduct such State and Local Taxes in full);
  • a larger standard deduction but the elimination of personal exemptions;
  • a larger child tax credit that only becomes refundable over time (limiting how much it helps the poor) but is available to wealthy households (starting to phase out at half-a-million of income!);
  • the only slight reduction in the ability of wealthy individuals to take advantage of the mortgage interest deduction (reducing the debt limit to $750,000 instead of $1,100,000)
  • the elimination of the corporate AMT (which cuts taxes for wealthy shareholders/owners/managers) but the retention of the individual AMT (which primarily affects the upper middle class and not the wealthiest taxpayers under the current rate bracket system);
  • the elimination of the Affordable Care Act mandate and penalty (which reduces the amount of Medicaid and insurance subsidy funds for poor and middle-income taxpayers, as well as guaranteeing the deconstruction of the health care system for 13 million or more Americans by 2027 and  increasing insurance premiums for upper-middle-class taxpayers); and
  • the opening of the Arctic National Wildlife Refuge to rape by fossil fuel oligarchies (a piddling amount of revenue, but sufficient to buy off the principle-less Sen. Lisa Murkowski from Alaska );
  • making the corporate tax changes permanent (and effective without any transition period) while making the individual tax cuts other than benefits for the wealthy like the estate tax changes temporary.
  • (just to name a few).

Here’s what’s in the Republican tax deal - Republicans’ tax overhaul appears to be heading for approval in Congress next week, after GOP senators who were previously holdouts on the bill said they’d vote for the sweeping measure that would cut corporate and individual rates. Released late Friday afternoon, the bill would retain seven individual tax brackets; lower the corporate rate to 21% from 35%; and double the child tax credit to $2,000. The refundable portion of the child credit would be $1,400 — up from $1,100 in the Senate-passed bill. That expansion persuaded Sen. Marco Rubio, a Florida Republican, to back the new bill, buoying chances for passage. See text of the bill. The bill also takes an axe to Obamacare, repealing its mandate for individuals to have health insurance or pay a fine. It doubles the exemption for the estate tax, commonly called the death tax by critics.House and Senate Republicans are planning to vote on the package next week. President Donald Trump told reporters Friday morning: “I think that we are going to be in a position to pass something as early as next week, which will be monumental.” Republicans control the Senate 52-48 and can only afford to lose two votes on the bill and still pass it. Under Senate rules, the bill can add no more than $1.5 trillion to deficits over 10 years. In another positive sign for GOP leaders, Sen. Bob Corker, a Tennessee Republican who voted against the Senate version of the bill, announced he will vote “yes” on the final product. The bill’s price tag is unlikely to differ much from previous versions, and estimates of the House- and Senate-passed bills found they wouldn’t generate enough growth to pay for the cuts.Democrats have criticized Republicans’ tax plans as a giveaway to the wealthy and corporations.“It is just the opposite of what America needs, and Republicans will rue the day they pass this,” said Senate Minority Leader Charles Schumer, a New York Democrat.The bill unveiled Friday would cut the top individual tax rate to 37% from 39.6%. Here are the individual tax rates. (list) The new corporate rate would go into effect next year. Earlier this week, Trump said he’d be “thrilled” with a 21% rate after earlier seeking a rate of 20%. The corporate alternative minimum tax is repealed in the bill, which also sets up a so-called territorial system for multinational corporations..Individuals  would be able to deduct up to $10,000 in state and local taxes, split between property taxes and income/sales taxes.The new individual rates would expire after 2025. Republicans are confident future Congresses will extend the cuts, but there is no guarantee of that.

File Your Taxes on a Postcard? A G.O.P. Promise Marked Undeliverable - NYT — The Republican tax bill does not pass the postcard test. It leaves nearly every large tax break in place. It creates as many new preferences for special interests as it gets rid of. It will keep corporate accountants busy for years to come. And no taxpayer will ever see the postcard-size tax return that President Trump laid a kiss on in November as Republican leaders launched their tax overhaul effort.This was not the grand simplification of the code that Republicans promised when they set out to eliminate tax breaks and cut the number of tax brackets as they lowered rates.As their bill tore through Congress, their ambitions fell to the powerful forces of lobbying and the status quo. Killed tax breaks returned to life. New ones sprung up beside them. A plan for three individual tax brackets became five, and finally eight.Trade groups, such as the one for real estate agents, were able to preserve many benefits targeted for elimination. The groups whose breaks were actually killed formed an eclectic, if less powerful, bunch: bicycle commuters, gamblers, workers whose companies give them free food. What emerged on Friday, in the final product agreed to by Republican members of a House-Senate conference committee, was a bill that layers new tax complexities upon businesses large and small, and which delivers a larger share of benefits to corporations and the rich than to the middle class. It sets all tax relief for individuals to expire in eight years, while making deep and permanent cuts to the corporate tax rate. It limits one key benefit for taxpayers in high-tax states, such as New York, but otherwise does little to back up Mr. Trump’s promise last month that “we’re also going to eliminate tax breaks and complex loopholes taken advantage by the wealthy.”The final legislation, which appears on track to be approved by Congress next week, offers little redress to workers who have grown to believe that the country’s tax law thicket advantages those with power, political connections and lawyers on retainer. Its evolution undermines a central selling point for a bill that is already seen by most Americans as unlikely to benefit them, according to polls. Budget experts had hoped for a tax overhaul that stoked additional economic growth by eliminating targeted tax breaks, which would allow for lower tax rates, a trade that economists generally believe increases efficiency in the economy. “The whole purpose of tax reform is to eliminate tax breaks to simplify the tax code and reduce rates,”  . “But from what I can see, they only repeal one significant tax break, and very few if any tiny ones.”

The Darkest Hours -  Kunstler - The Tax “Reform” bill working its way painfully out the digestive system of congress like a sigmoid fistula, ought be re-named the US Asset-stripping Assistance Act of 2017, because that’s what is about to splatter the faces of the waiting public, most of whom won’t have a personal lobbyist / tax lawyer by their sides holding a protective tarpulin during the climactic colonic burst of legislation. Sssshhhh…. The media has not groked this, but the economy is actually collapsing, and the nova-like expansion of the stock markets is exactly the sort of action you might expect in a system getting ready to blow. Meanwhile, the more visible rise of the laughable scam known as crypto-currency, is like the plume of smoke coming out of Vesuvius around 79 AD — an amusing curiosity to the citizens of Pompeii below, going about their normal activities, eating pizza, buying slaves, making love — before it rained hellfire down on them.  Whatever the corporate tax rate might be, it won’t be enough to rescue the Ponzi scheme that governing has become, with its implacable costs of empire. So the real aim here is to keep up appearances at all costs just a little while longer while the table scraps of a four-hundred-year-long New World banquet get tossed to the hogs of Wall Street and their accomplices. The catch is that even hogs busy fattening up don’t have a clue about their imminent slaughter. The centerpiece of the swindle, as usual, is control fraud on the grand scale. Control fraud is the mis-use of authority in applying Three-Card-Monte principles to financial accounting practice, so that a credulous, trustful public will be too bamboozled to see the money drain from their bank accounts and the ground shift under their feet until the moment of freefall. Control fraud is at work in the corporate C-suites, of course, because that is its natural habitat — remember that silver-haired CEO swine from Wells Fargo who got off scot-free with a life-time supply of acorns after scamming his account-holders — but their errand boys and girls in congress have been superbly groomed, pampered, fed, and trained to break trail and cover for them.

McCain To Miss Critical Tax Vote, Returning To Arizona After Chemo Treatment -- The mystery whether John McCain will be present during next week's historic tax bill vote is over: according to CBS, the Arizona Senator will not be on hand for the final vote on the Republican tax bill, expected early this week, and instead is returning to Arizona after spending several days in a Maryland hospital recovering from side effects from chemotherapy treatment for brain cancer. As CBS furter notes, McCain left Washington Sunday and is heading back to his home state to spend the holidays with his family. It is unclear when McCain might return to Washington, especially amid rumors that the senator's health has taken a turn for the worse.Will McCain's absence be a dealbreaker to the GOP tax vote? Probably not: despite a razor-thin margin needed to pass the measure, McCain's presence will not likely be the determining factor in the vote. The reason is that two critical senators - Bob Corker of Tennessee and Marco Rubio of Florida - announced their support for the bill last week after initially saying they would oppose earlier versions. Unless, of course, one or both of them changes their opinion in the last minute, somethign which could happen following an IBT report this morning that according to John Cornyn, a tax cut potentially benefiting Bob Corker was part of the effort to secure votes for passage. As note yesterday, Republican leaders aim to hold floor votes this week, with the House expected to take up the measure first on Tuesday.

Why Bob Corker Flipped To A 'Yes' On Tax Reform In One Simple Chart --Senator Bob Corker, the lone Republican voting against the tax bill suddenly changed his mind. Why? On December 1 Senator Corker made this statement:"But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations."Today Corker Tweets:See my statement on my support for tax reform legislation:— Senator Bob Corker (@SenBobCorker) December 15, 2017.  Senator Corker denies allegations of the "Corker Kickback".Corker initially told IBT that the new provision “sounds totally unnecessary and borderline ridiculous” but later admitted he doesn’t “really know what the provision does to be honest. I would need an accountant to explain it.” Last year, Corker made up to $7 million from real estate pass through companies he owns.His story, however, hit a snag when Sen. John Cornyn (R-TX), the Senate Majority Whip, told ABC News that the provision that benefits real estate investors was added as part of an effort to “cobble together the votes we needed to get this bill passed.” When asked if the provision was added specifically to secure Corker’s vote, Cornyn dodged the question.

Corker asks how real estate provision ended up in tax bill | TheHill: Sen. Bob Corker (R-Tenn.) sent a letter on Sunday to Sen. Orrin Hatch (R-Utah) asking how a provision that would potentially benefit real estate owners, including Corker, made it into the final version of the Republican tax-reform bill. “Because this issue has raised concerns, I would ask that you provide an explanation of the evolution of this provision and how it made it into the final conference report,” Corker wrote. The International Business Times reported Saturday that a provision added during the reconciliation process allows owners of income-producing real estate to take advantage of a 20 percent deduction for "pass-through" entities. The Senate version of the tax bill included rules that allowed the deduction to be claimed only by businesses that pay their employees significant wages. The provision would potentially benefit Corker and President Trump, among others.Corker said Sunday he did not have a role in writing the legislation and asked Hatch, the chairman of the Senate Finance Committee, to explain how the provision made it into the final bill. He suggested it was in the House’s version of the tax bill and remained in the final version after a conference committee sought to reconcile the House and Senate tax bills. Corker announced late last week he would support the final Republican tax-reform legislation, saying he believes the country is better off with it than without it. He voted against the Senate version of the tax bill, citing concerns that it would add to the national debt. 

Tax Bill: John Cornyn Says Tax Cut Potentially Benefiting Bob Corker Was Part Of Effort To Secure Votes For Passage -- Sen. John Cornyn of Texas, the majority whip, on Sunday said a tax provision, which could personally enrich key Republican lawmakers, was added to the final tax bill as part of an effort to “cobble together the votes we needed to get this bill passed.” Cornyn was pressed about the provision on ABC’s "This Week," after an International Business Times investigation showed that Sen. Bob Corker of Tennessee suddenly switched his vote to “yes” after GOP leaders added the provision, which could boost Corker’s real estate income. A top Democratic senator, Chris Van Hollen of Maryland, responded to Cornyn’s explanation by saying the language put into the bill also “would be a windfall to Donald Trump.” As IBT first reported, the provision potentially enriching Corker, Trump and a handful of other top Republican lawmakers, was not part of the House- or Senate-passed bill, but was added by GOP lawmakers to the final bill, which was publicly released on Friday afternoon. Corker, who is not seeking re-election and is considered a crucial swing vote due to his criticism of President Trump, suddenly said he would support the final bill. He initially voted against the original bill in the Senate, which did not have the provision. Corker subsequently asserted to IBT that he did not know about the provision being added to the final bill, and he also declared he has not even read the tax bill he announced he is voting for. The provision at issue would provide a special tax deduction on income made from so-called “pass through” entities, like real estate LLCs. The specific language would provide the lucrative tax deduction for such entities, even when they employ few or no employees -- a structure that tax experts say is designed to give a tax break to real estate moguls.

Tax Bill: Bob Corker Demands Answers From Chairman Orrin Hatch About Last-Minute Tax Provision  - Facing a firestorm of criticism, Republican Sen. Bob Corker (TN) sent a letter Sunday night to Senate Finance Committee Chair Orrin Hatch, R-Utah, asking how the final tax bill ended up including a special tax cut provision experts say would particularly benefit investors in real-estate related LLCs. The letter follows an International Business Times investigative series showing that Corker, President Donald Trump, House Speaker Paul Ryan and a handful of key GOP lawmakers overseeing the tax bill have multimillion-dollar ownership stakes in such LLCs, meaning they could be personally enriched by the provision, which was added to the final tax legislation released on Friday.   Corker this week could decide the fate of the entire $1.5 trillion tax bill in the closely divided U.S. Senate. He cast the lone Republican vote against the original Senate bill, which did not include the provision, but on Friday he announced he would support the final version of the legislation after GOP leaders added the provision to the final bill. Economist Dean Baker estimated that based on his financial holdings, “Corker could be saving as much as $1.1 million from this late addition to the tax bill.”  Under fire for switching his position after a personally lucrative provision was added to the legislation, Corker demanded to know how the language got into the final bill. “Because this issue has raised concerns, I would ask that you provide an explanation of the evolution of this provision and how it made it into the final conference report,” he wrote to Hatch, who is the chairman of the Senate panel that wrote the tax bill. “I think that because of many sensitivities, clarity on this issue is very important and hope that you will respond in an expeditious manner.” Corker is not a member of the Senate Finance Committee that wrote the bill, and he was not one of the Senate conferees who negotiated the final bill with House counterparts. In his letter, Corker said Republican aides insisted to him that the provision was not new -- an assertion that drew a swift rebuke from experts who have been tracking the legislation.

The Final Version of the G.O.P. Tax Bill Is a Corrupt, Cruel, Budget-Busting Hairball -- Grant the Republican Party leaders one thing: their tactics in passing their hugely unpopular tax bill have been consistent—consistently evasive. A few weeks ago, the Senate version of the bill was passed in the middle of the night. This weekend, the final iteration of the legislation was made public on Friday evening—a traditional dumping ground for bad news. The Republicans intend to hold votes on the bill early next week in both houses of Congress, and it seems certain to pass. It is hardly surprising that Republicans don’t want to give anyone too much time to look closely at their latest handiwork. The final tax bill is the product of a conference committee that was tasked with reconciling the different bills passed in the House and the Senate. Almost eleven hundred pages long, the final bill is just as regressive and fiscally irresponsible as either of the two earlier bills, and it is arguably more so. At its center is a huge tax cut for corporations and unincorporated business partnerships—such as the ones that Donald Trump owns—while arrayed around the edges are all sorts of carve-outs and giveaways to favored industries and interest groups. For individual households, the bill contains some tax cuts and expanded family credits. But these provisions are temporary, and they are also partially offset by changes to the rules about deductions. Because the deduction for state and local taxes will be limited to ten thousand dollars a year, for instance, some upper-middle-class households in states like California and New York could end up paying more to the federal government. Nowhere to be found in the bill are three elements that House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and their colleagues originally promised to deliver when they urged the American public to embrace tax reform: revenue neutrality, simplicity, and fairness. The final bill is a corrupt, budget-busting hairball. 

The Major Tax Changes in the Republican Bill - Members of Congress are rushing to fulfill one of the Republican Party’s biggest and most long-awaited goals: an overhaul of the tax code. Their bill—which awaits final votes in both chambers this week—cuts corporate taxes permanently and provides temporary cuts for individuals. (current law vs revisions table)

Read the Republican tax plan - CNN - Republicans in Congress released the final version of their tax plan on Friday. Read the bill: (embedded document)

Republicans Are Growing the Deficit to Cut Welfare Programs - President Trump’s corporate tax cuts will likely generate enormous deficits, even if the administration’s rosiest economic forecasts come true, setting Republicans up to claim that it is time to cut Social Security, Medicare, and welfare, to reduce the expected $1 trillion deficit over the next 10 years created by those very tax cuts. Speaker of the House Paul Ryan has already announced that the GOP plans to cut federal health care and anti-poverty programs because of a deficit that his party is about to balloon. “We’re going to have to get back next year at entitlement reform,” he said on a talk-radio show, “which is how you tackle the debt and the deficit.”   This is exactly how what President Ronald Reagan’s Budget Director David Stockman called “starving the beast” works. By creating a fiscal straightjacket through lower taxes, conservatives leave Washington with less money and conservatives raise the specter of deficits damaging the economy as a rationale to take away the benefits that millions of Americans depend on. If they are not fiscally conservative right now, they can be when it comes time to talk about spending on the poor and disadvantaged. While the right usually encounters a fierce backlash whenever they try to retrench specific federal benefits, as the GOP recently discovered with their failed attempt to repeal and replace the Affordable Care Act, cutting budgets in the name of deficit reduction has traditionally offered a less toxic mechanism for achieving the same goal. Yet the unintended consequence of tax cuts of this scale and scope might be to create a political space for Democrats to push for higher taxes in the future. When the government fails to balance the books, it creates the conditions that give Democrats leeway to take the unpopular step of asking Americans to pay more to finance their obligations. Raising taxes has never been easy in American politics, even in the so-called heyday of New Deal and Great Society liberalism, but large deficits have repeatedly bolstered Democratic efforts like almost nothing else, much more than the appeal of political ideology or mass movement pressure.

Republican Senators Will Save Millions With Special Real-Estate Tax Break - When the U.S. Senate takes up the final tax bill this week, more than a quarter of all GOP senators will be voting on a bill that includes a special provision that could give them a new tax cut through their real estate shell companies, according to federal records reviewed by International Business Times.The provision was not in the original bill passed by the Senate on Dec. 1. It was embedded in the final bill by Sen. Orrin Hatch of Utah, who is among the lawmakers that stand to personally benefit from the provision. In response to Democratic lawmakers who have slammed the provision as a lobbyist-sculpted giveaway to the rich, Republican Majority Whip John Cornyn promoted on Twitter a column by Ryan Ellis, a registered bank lobbyist who has been working to influence the tax legislation and who has defended the provision. In all, 14 Republican senators (see list below) hold financial interests in 26 income-generating real-estate partnerships — worth as much as $105 million in total. Those holdings together produced between $2.4 million and $14.1 million in rent and interest income in 2016, according to federal records.  IBT first reported on the tax carve-out, which allows investors in “pass-through” entities, including real-estate partnerships such as LLCs and LPs, with few employees to deduct part of their income that passes through those partnerships. In response to IBT’s reporting, Republican Sen. Bob Corker, who owns up to $35 million in “pass-through” real-estate interests, claimed he did not know of the carve-out when he announced his support for the legislation on Friday, after previously casting the only Republican vote against the bill in the Senate, which did not then include the provision.  In the face of a Twitter-trending hashtag #CorkerKickback, Corker has been vociferously defended by Liam Donovan, a registered lobbyist for the construction and real estate industry who is lobbying Congress on tax reform and specifically on “pass-through rates,” according to federal records. While Republicans have argued the House version of the bill contained the controversial provision, experts have told IBT the provision appeared in the legislation only after the bill was finalized during House-Senate Conference Committee deliberations.

The Full List Of Every GOP Senator Who Stands To Be Personally Enriched By The Tax Bill - When the U.S. Senate takes up the final tax bill this week, more than a quarter of all GOP senators will be voting on a bill that includes a special provision that could give them a new tax cut through their real estate shell companies, according to federal records reviewed by International Business Times. The provision was not in the original bill passed by the Senate on Dec. 1. It was embedded in the final bill by Sen. Orrin Hatch of Utah, who is among the lawmakers that stand to personally benefit from the provision.  In response to Democratic lawmakers who have slammed the provision as a lobbyist-sculpted giveaway to the rich, Republican Majority Whip John Cornyn promoted on Twitter acolumn by Ryan Ellis, a registered bank lobbyist who has been working to influence the tax legislation and who has defended the provision. In all, 14 Republican senators (see list below) hold financial interests in 26 income-generating real-estate partnerships — worth as much as $105 million in total. Those holdings together produced between $2.4 million and $14.1 million in rent and interest income in 2016, according to federal records. IBT first reported on the tax carve-out, which allows investors in “pass-through” entities, including real-estate partnerships such as LLCs and LPs, with few employees to deduct part of their income that passes through those partnerships. In response to IBT’s reporting, Republican Sen. Bob Corker, who owns up to $35 million in “pass-through” real-estate interests, claimed he did not know of the carve-out when he announced his support for the legislation on Friday, after previously casting the only Republican vote against the bill in the Senate, which did not then include the provision. In the face of a Twitter-trending hashtag #CorkerKickback, Corker has been vociferously defended by Liam Donovan, a registered lobbyist for the construction and real estate industry who is lobbying Congress on tax reform and specifically on “pass-through rates,” according to federal records. While Republicans have argued the House version of the bill contained the controversial provision, experts have told IBT the provision appeared in the legislation only after the bill was finalized during House-Senate Conference Committee deliberations.

Defining the Tax Reform Battleground -naked capitalism - Yves here. Although J.D. Alt is correct to criticize Republicans for passing a tax “reform” bill that shamelessly enriches the already wealthy, it’s disingenuous for him to depict the balanced budget/deficit hawk obsession as a Republican scheme foisted on Democrats. The Clinton Administration was in thrall to the bond gods, and fetishized not only balancing the Federal budget but  even saw paying down the Federal debt as desirable, when Modern Monetary Theory stresses that what should drive the decision as to how much deficit spending a currency issuer should engage in depends on how far the economy is from full employment and how much other resource slack it has. As a reminder, Randy Wray discussed how Federal deficits are misunderstood: While we hear all the time the statement that “if I ran my household budget the way that the Federal Government runs its budget, I’d go broke”, followed by the claim “therefore, we need to get the government deficit under control”, MMT argues this is a false analogy. A sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency. Indeed, if government spends currency into existence, it clearly does not need tax revenue before it can spend. Further, if taxpayers pay their taxes using currency, then government must first spend before taxes can be paid. Again, all of this was obvious two hundred years ago when kings literally stamped coins in order to spend, and then received their own coins in tax payment. Another shocking truth is that a sovereign government does not need to “borrow” its own currency in order to spend. Indeed, it cannot borrow currency that it has not already spent! This is why MMT sees the sale of government bonds as something quite different from borrowing. When government sells bonds, banks buy them by offering reserves they hold at the central bank. The central bank debits the buying bank’s reserve deposits and credits the bank’s account with treasury securities. Rather than seeing this as borrowing by treasury, it is more akin to shifting deposits out of a checking account and into a saving account in order to earn more interest. And, indeed, treasury securities really are nothing more than a saving account at the Fed that pay more interest than do reserve deposits (bank “checking accounts”) at the Fed.

House passes GOP tax plan as Congress prepares to deliver Trump’s top legislative priority - LA Times: The House passed the sweeping GOP tax plan on a near-party-line vote Tuesday, with the Senate expected to quickly follow, as congressional Republicans move to give President Trump his most significant legislative victory of the year — one that has come at a steep political cost. Polling shows the $1.5-trillion package remains broadly unpopular, contributing to a political environment in which even surveys by Republican groups show the party in serious danger of losing control of Congress in next year’s midterm elections.Those political problems may be especially acute in parts of California, where the bill, sold as a tax-cut measure, is expected to lead to tax increases for a significant number of individuals and families. That’s largely because it curtails the current deduction for state and local income and property taxes. Many of those voters live in affluent suburban areas, such as Orange County, that in the past have backed Republicans. Democrats already have gained in suburbs nationwide this year and believe the tax bill’s unpopularity will give them an opening to sway more such voters to their side. Concern over the state and local tax deduction led two Orange County Republicans, Reps. Darrell Issa of Vista and Dana Rohrabacher of Huntington Beach, to join nine Republicans from New York and New Jersey, which are similarly affected, in voting against the bill in the 227-203 roll call. One other Republican, from North Carolina, opposed it. No Democrats voted for it. The Senate was expected to vote on the measure Tuesday evening, with passage expected there, also with only Republican support. 

House Must Vote Again On Tax-Reform Plan After Procedural Snag  -- In an embarrassing reversal of what House Republicans had celebrated as a done deal, the House will need to vote again on the final version of the tax reform plan passed earlier this afternoon. The second vote is the result of a technicality in one of the bill's provisions. According to Bloomberg, the Senate parliamentarian found three provisions in the final bill that violate the Byrd Rule, and the Senate will have to strip them from the bill before passing it, according to Bernie Sanders, the top Democrat on the Senate Budget Committee.“It is our intention to raise a point of order to remove these provisions from the conference report and require the House to vote on this bill again," Sanders said. House now expects to take another vote on the tax bill tomorrow morning, according to email from majority leader’s office; that vote would clear the bill for Trump’s signature, assuming the Senate passes the bill with the required changes later this evening.The second vote will likely take place on Wednesday, and is expected to pass, according to CNBC. Earlier, the House approved the tax plan in a 227-203 vote with 12 Republicans joining all the Democrats in opposition.

We’re witnessing the wholesale looting of America - Over the course of 2017, both in Congress and in the executive branch, we have watched the task of government devolve into the full-scale looting of America.  Politicians are making decisions to enrich their donors — and at times themselves personally — with a reckless disregard for any kind of objective policy analysis or consideration of public opinion.  A businessman president who promised — repeatedly — that he would not personally benefit from his own tax proposals is poised to sign into law a bill that’s full of provisions that benefit him and his family. Congressional Republicans who spent years insisting that “dynamic scoring” would capture the deficit-reducing power of tax cuts are now plowing ahead with a bill so fast that they don’t have time to get one done, because it turns out they can’t be bothered to meet their own targets.  Meanwhile, in the background an incredible flurry of regulatory activity is happening out of public view — much of it contrary to free market principles but all of it lucrative for big business and Trump cronies.  The tax bill pending in Congress this week is, naturally, front of mind and unquestionably represents the linchpin of the 2017 looting agenda. But in some ways, the clearest example of the difference between a regime of corporate looting and one of free market ideology came on the lower-profile topic of financial regulatory policy, where the Trump administration quietly signaled a major shift last month.  The Trump administration has taken up the deregulatory baton with gusto, appointing Wall Street lawyers to run key agencies and turning what was intended to be an interagency working group on identifying financial risk into a forum for advancing deregulation.  But the free market fix for financial crisis has gone missing in action. In late November, the Trump Treasury Department quietly announced that it wants to keep the Dodd-Frank Orderly Liquidation Authority fund around after all. That’s an obscure little corner of the government, but it’s conceptually crucial — that’s the thing Republicans used to call a “permanent bailout fund.” They used to argue that eliminating it was the key to establishing a sound financial regulatory framework in which no bailouts would happen, and bankers would be disciplined by markets rather than bureaucrats.

Tax bill is nothing short of wholesale looting - The tax bill approved by the House and headed to the Senate today represents nothing short of wholesale looting by the Republican Party, on behalf of the wealthiest Americans and large corporations. Despite claims that it will trickle down to working people, there is no evidence that corporations will do anything with the money they save in taxes other than reward shareholders with more dividends and executives with higher salaries—a fact that many high-profile CEOs have admitted to. When fully-phased in, the bill will give 83 percent of its benefits to the top 1 percent. Incredibly, it raises taxes on half of working families. To add further injury, the bill kneecaps the Affordable Care Act by eliminating the individual mandate—destabilizing health insurance markets, raising health insurance premiums, and leaving 13 million people without health insurance. While it won’t spur wage growth or boost corporate investment, provide meaningful benefits to working families, simplify the tax code, or make it easier for people to file their taxes, what this bill will do is increase the deficit by as much as $2.2 trillion simply to finance more money in the pockets of the richest American households and corporations. Congressional Republicans have already signaled that in 2018 they will go after Medicare, Medicaid, and Social Security as well, likely exploiting fears about the deficits they just worsened. We owe it to the most vulnerable among us to fight those coming attacks tooth and nail. From the way it was conceived and sold to the public, to the rushed, haphazard manner in which it made its way through Congress, this bill has never been anything more than a scam. Any Senator who cares about making sure that working people and the middle class can get ahead should vote no.

Tax Bill That Will Further Enrich the Wealthy Is Close to Becoming Law -- The House has passed the final version of the GOP tax plan – a bill that will deliver 83 percent of its benefits to the top 1 percent in 2027. "Today," said House Speaker Paul Ryan, "we are giving the people of this country their money back." Ryan's words ring true if you believe in the old Mitt Romney maxim that "corporations are people, my friends." The Republican bill slashes the corporate tax rate by 40 percent. It offers corporations that have funnelled trillions offshore as much as a 77 percent break on their tax bill for those profits – while creating new incentives to offshore future profits. Business owners who pocket "pass-through" income receive a 20 percent break on their taxes. As a gift to oil companies, the bill also opens up the Arctic National Wildlife Refuge to drilling. The bill makes a liar of the president. In November, Donald Trump insisted tax reform "is going to cost me a fortune ... believe me." In fact, the GOP's give-away to the wealthiest directly benefits Trump and his heirs – including by creating a deduction for real estate investors and by doubling to $22 million the amount that can be passed down at death without paying any estate tax. The GOP bill also includes special tax breaks for the owners of private jets. House minority leader Nancy Pelosi condemned the bill as "one of the most scandalous, obscene acts of plutocracy ever."The legislation will hurt millions of middle-class families, both upfront and over time. It effectively eliminates the individual mandate to buy health insurance – which the Congressional Budget Office projects will cause 13 million Americans to leave the insurance rolls – driving premium spikes for Americans who remain in the marketplace. While the GOP's cuts to corporate taxes are permanent, new tax benefits for the middle class largely expire after a few years. The tax bill creates an across-the-board tax increase for Americans earning less than $75,000 by 2027, according to a distributional analysis by the Joint Committee on Taxation. These tax hikes will reportedly hit 86 million middle-class households.

U.N. Special Rapporteur Says Tax Bill Will Make the U.S. “World Champion of Extreme Inequality” Democracy Now!  (video & transcript) - As Congress prepares to vote on the controversial tax bill, the United Nations has issued a scathing report on poverty in the United States that found the Trump administration and Republicans are turning the U.S. into the “world champion of extreme inequality.” Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, announced his findings after conducting a two-week fact-finding mission across the country, including visits to California, Alabama, Washington, D.C., and Puerto Rico. Alston also warned that the Republican tax bill will transfer vast amounts of wealth to the richest earners while making life harder for the 41 million Americans living in poverty. Among other startling findings in Alston’s report, the U.S. ranks 36th in the world in terms of access to water and sanitation. We speak with Philip Alston, who is also a professor at NYU Law School.

Senate passes sweeping GOP tax bill, but House has to vote again — The Senate voted along party lines after midnight Tuesday to pass a sweeping $1.5 trillion tax bill that slashes tax rates for corporations, provides new breaks for private businesses and reorganizes the individual tax code. The House approved the bill earlier Tuesday but will have to vote again on Wednesday. Democrats in the Senate persuaded the chamber's parliamentarian that several minor provisions in the House bill violated Senate rules, forcing the House into an embarrassing second vote. One of those provisions would allow 529 savings accounts, which are now used for college tuition, to help finance home schooling. Another would exempt a small tuition-free college in Kentucky from a new tax on endowments.  The Republican bill was initially approved on a 227-203 vote in the House earlier Tuesday, with no Democrats supporting it. Twelve Republicans also voted against the measure.  With Vice President Mike Pence presiding over the chamber and Treasury Secretary Steve Mnuchin on hand, the Senate then voted 51-48 in favor of the bill. The Senate's bill will go back to the House for a final vote, after which President Donald Trump could sign the package, dubbed the Tax Cuts And Jobs Act, into law before week's end. It would be his first significant legislative accomplishment and the biggest tax overhaul in a generation.

A primal scream on taxes. And why the plan will likely send more, not less, jobs/investment abroad - Jared Bernstein --First, I give a primal scream over at WaPo re the tax plan that may well be law by the time you read this. Next, there’s been a lot of writing, including my own, on the question of whether the plan further incentivizes or discourages offshoring of investment and jobs. I’ve thought so, for a number of reasons, and I’m increasingly convinced that’s the case. However, the writing on this is often quite technical and dense. So I was glad to see this WaPo piece break it down quite simply. Here are some of the main factors that I expect to juice the incentive of to offshore production, with my bold added.First, a corporation would pay that global minimum tax only on profit above a “routine” rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn. The legislation thus offers corporations “a perverse incentive” to shift assembly lines abroad, said Steve Rosenthal of the Tax Policy Center.Second, the bill sets the “routine” return at 10 percent — far more generous than would typically be the case. Such allowances are normally fixed a couple of percentage points above risk-free Treasury yields, which are currently around 2.4 percent.As a result, a U.S. corporation that builds a $100 million plant in another country and makes a foreign profit of $20 million would pay roughly $1 million in tax versus $4 million on the same profit if earned in the United States, said Rosenthal, who has been a tax lawyer for 25 years and drafted tax legislation as a staffer for the Joint Committee on Taxation.Finally, the minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profit from U.S. locations to tax havens such as the Cayman Islands. Simply put, the more factories you build abroad, the more you can cut your tax bill. They set the non-taxable foreign profits high enough that even with the lower rate at home, there’s still a big incentive to produce abroad. And as long as you book some of your profits in non-tax-haven countries, you can send the rest of them to bask on the beach in the Caymen’s.  For a deeper dive, see Gene Sperling, Brad Setser, Kim Clausing.

Republican-led Congress passes sweeping tax bill — Congress approved a sweeping $1.5 trillion tax bill on Wednesday that slashes rates for corporations, provides new breaks for private businesses and reorganizes the individual tax code.  The Senate passed the GOP bill early Wednesday morning and the House then voted on it for a second time to fix technical problems with the legislation, the final step before it's sent to President Donald Trump for his signature. No Democrats in either the House or Senate backed the measure. It is the president's first significant legislative accomplishment and the biggest tax overhaul in a generation.  Trump, who praised the Republican bill as a "historic victory for the American people" at a Cabinet meeting Wednesday, is holding an event at the White House in the afternoon with GOP members of the House and Senate to celebrate passage, White House Press Secretary Sarah Huckabee Sanders said. The president is expected to sign the bill at a later date.  Trump tweeted Wednesday that the tax cuts are "so large and so meaningful," adding: "This is a case where the results will speak for themselves, starting very soon. Jobs, Jobs, Jobs!"

AT&T Warms To Trump, Will Give $1,000 Bonus To 200,000 Workers, Boost CapEx After Tax Cut Becomes Law - With the relationship between AT&T (and Time Warner) and the Trump administration on the rocks, as the DOJ is now suing to break up the merger which just happens to include Trump's media nemesis CNN, it appears that AT&T is offering an olive branch to the president, as well as a little backdoor bribe to improve sentiment, and moments ago announced that once tax reform - i.e., Trump's signature act to date - is signed into law, AT&T will not only invest an additional $1 billion in CapEx in the US in 2018, but also pay a "special bonus" of $1,000 to its more than 200,000 U.S. employees, "all union-represented, non-management and front-line managers." And, to push Trump to sign the bill into law in the next hours instead of waiting for January, AT&T said that "if the President signs the bill before Christmas, employees will receive the bonus over the holidays."In a surprisingly polite address to the president, AT&T CEO Randall Stephenson said that “Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,”and added that “this tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.” AT&T was also quick to note that "since 2012, AT&T has invested more in the United States than any other public company. Every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers, research shows."The timing of the announcement is not surprising for another reason: earlier this week we reported that AT&T and Time Warner failed to settle acquisition talks with the DOJ. As a result, AT&T will be forced to challenge the DOJ verdict in court, a step it would much rather avoid since a court ruling is unlikely to come before May 2018. Notably, both the companies have resettled the closing date for the deal at Apr 20, 2018. A trial to decide the matter is set to begin on Mar 19, 2018 and run for about 15 days, according to the filing. AT&T's growth in 2018 will largely depend on the court ruling on the Time Warner merger deal.

Corporate PR Stunts Won’t Save the Working Class - Congress gave corporate America a multi-trillion-dollar Christmas present on Wednesday — and several companies proceeded to dole out stocking stuffers to their employees. AT&T announced $1,000 bonuses for each of its 200,000 U.S. workers; Boeing pledged to commit $300 million to new investments, including $100 million for employee training and education; Comcast loudly celebrated the Trump tax cuts with bonuses for its employees (and quietly celebrated the end of net neutrality with higher prices for its consumers); Wells Fargo bumped its minimum wage to $15 an hour; and Fifth Third Bancorp, a bank based in Cincinnati, boosted its minimum wage and distributed $1,000 bonuses. President Trump was pleased, and proudly cited AT&T’s announcement at a press conference. Evangelists for (“Trumped up”) trickle-down economics celebrated the long-awaited fulfillment of their prophecy. And blue America’s bitter scrooges impatiently explained why this outpouring of corporate largesse was actually bad. Specifically, liberals noted the curious coincidence that most of the companies validating Trumponomics have an enormous financial interest in maintaining warm relations with the executive branch. The Justice Department has sued to block AT&T’s desired merger with Time Warner; if the telecom giant cannot reach a settlement with the DOJ that allows that merger to go forward, it stands to lose hundreds of millions of dollars. Comcast and Wells Fargo have much to gain and lose from federal regulatory policy, as the fights over net neutrality and the Consumer Financial Protection Bureau have well-illustrated. Boeing’s bread and butter are government contracts.Given this context, one might suspect that these announcements were more of a political publicity stunt than the inevitable economic consequence of a cut in the corporate tax rate. And there are a few other causes for such suspicion:

Inside Wall Street’s Towers, Traders Grouse Over Trump Tax Plan - Wall Street traders who rake in hundreds of thousands of dollars a year or more eagerly awaited a Republican overhaul of the U.S. tax code. Now, many are huddling with accountants and concluding the real gains will go to billionaires and other captains of the industry. Those in trenches -- the merely wealthy -- are grousing.Atop their list of worries: New limits on deductions for mortgage interest and state and local taxes -- relatively high throughout New York, New Jersey and Connecticut -- will cost them thousands of dollars annually while depressing the value of their homes. That would chop local tax revenues and erode the quality of schools and other amenities traders expect for their families. As Christmas approaches and business slows, many on Wall Street are distracted by the tax bill, calculating how it may help or hurt, and looking for ways to maximize gains or minimize losses. Most spoke on the condition they not be named. Many were self-aware enough to realize they won’t garner sympathy. One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill. A pair of hedge fund managers said they’ll stop donating to Republicans they’ve long supported. One of them said he spent weeks berating a politician who’s taken his money, arguing the tax bill is too tilted toward corporations, rather than individuals who should get more relief.

Why A Scathing Wall Street Is Furious At The Trump Tax Plan - Back in October 2016, the "millionaire, billionaire, private jet owners" of America's elitist, liberal mega-cities (A.K.A. New York and San Francisco) celebrated the tax hikes that a Hillary Clinton presidency would have undoubtedly jammed down their throats proclaiming them to be a 'patriotic duty'.  Unfortunately, now that Trump has given them exactly what they apparently amazing opportunity to 'spread their wealth around"...they're suddenly feeling a lot less patriotic.  Of course, as we've noted numerous times, while most people across the country and across the income spectrum will benefit from the Republican tax reform package, the folks who stand to lose are those living in high-tax states with expensive real estate as their SALT, mortgage interest and property tax deductions will suddenly be capped.  And, as Bloomberg points out today, that has a lot of Wall Street Traders in New York drowning their sorrows in expensive vodka and considering a move to Florida.One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill.A pair of hedge fund managers said the tax bill is too tilted toward corporations, rather than individuals who should get more relief.“My clients are hard-working young professionals on Wall Street. I don’t have a lot of good news for them,” said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. “I don’t think anyone is going to be surprised by the economic reality.” “This provides a clear incentive for financial advisers to go independent,” said Louis Diamond of Diamond Consultants. “We’re hearing from a lot of clients on this; it’s just another reason why it makes a ton of sense, economically, to become self-employed.”

Trump May Delay Signing Tax Bill Until Early Next Year --As the House prepares to hold its second vote on the final version of the Republican tax plan, Fox Business and Dow Jones Newswires are reporting that President Donald Trump might wait until early next year to sign the bill once it reaches his desk. His reason? By delaying the signing, Trump would effectively push certain spending cuts to programs like Medicare until 2019. At issue are so-called "pay as you go," or "pay-go," budget rules that could be triggered by deficits in the tax bill. Congressional Republicans are preparing a separate fix to waive the rules after they finish the tax bill. But - given their already jam-packed legislative schedule - if Congress fails to pass the waiver before its year-end recess, one way to delay the cuts would be to wait until January to sign the bill. If successful, the waiver would likely be attached to Congress's 'continuing resolution' bill that would keep the government funded through Jan. 19.After the House finishes the Senate-approved version of the tax bill on Wednesday, Congress has to complete work on a bill known as a "continuing resolution," or "CR," to fund the government when current spending provisions expire Friday. "If we can get 'pay-go' waived in the CR, we will sign the tax bill this year," said Gary Cohn, director of the White House National Economic Council, at an event Wednesday morning hosted by media company Axios. "The president would like to sign the tax bill." Mr. Cohn described the budget rule complication as "a technical issue."

The G.O.P. Tax Bill Is Unworkable - With the House of Representatives set to pass the final version of the Republican tax bill on Tuesday, and a vote in the Senate expected later in the week, here is a prediction: no matter which party controls Congress after next year’s midterms, lawmakers will eventually be forced to revise this tax bill substantially. This legislation simply isn’t workable in the long run. Unless it is fixed, it could end up crippling the tax system. At this stage, the unfairness and ideological bent of the proposal are widely recognized, as is its corrupt nature. Giveaways to the wealthy and large corporations have been at the heart of the bill all along, while last-minute changes made to the final bill, unveiled on Friday, included goodies for a number of groups, including architects, engineers, and the owners of a particular sort of commercial real-estate entity—the kind that Donald Trump, Senator Bob Corker, and certain other members of Congress just so happen to own. (On Monday afternoon, Senator Orrin Hatch, the chairman of the Senate Finance Committee, admitted that he was responsible for inserting the offending provision. The real-estate industry has long been a big donor to his campaigns.) What isn’t yet fully appreciated is how porous and potentially unstable the rest of the tax code will be after the bill is passed. With a corporate rate of just twenty per cent, and a big new break for proprietors of unincorporated businesses and certain types of partnerships, the new code will contain enormous incentives for tax-driven restructurings, creative accounting, and outright fraud. Every tax adviser and scammer in the country will be looking for ways to reclassify regular salary income as favored types of business income. For tax accountants, the first step will be to see how many of their well-to-do clients could feasibly convert themselves into corporations. “Taxpayers will be able to shield their labor income from tax by simply setting up a corporation and having their income accrue in the form of corporate profits. . . . Income that would have been taxed at the high individual rates is instead taxed at the low corporate rate,” an updated report from a group of tax experts at New York University, the University of Chicago, and other places noted on Monday. Investment income is also taxed at the lower rate. “There is really no downside to this game,” the report said. 

Disaster victims to suffer additional losses from Republican tax bill --  From catastrophic hurricanes to an endless wildfire season, Americans endured huge personal and financial losses from natural disasters in 2017. Now, people who live in disaster-prone areas should be preparing for more turbulence, this time in the form of tax legislation that will make their ability to recover from future disaster even more difficult.As they prepare to vote on the final tax bill, Senate Republicans are expected to follow their House colleagues who on Tuesday passed a sweeping tax bill containing a provision that will harm the ability of residents to put their lives back together after a disaster.Disaster victims currently can deduct losses that are not insured and that amount to more than 10 percent of their incomes. Under the new tax plan, deductions for personal loss from natural disasters such as hurricanes and wildfires would be eliminated unless the event is a federally-declared disaster. The House of Representatives voted 227 to 203 to pass the final version of the GOP Tax Cut and Jobs Act, which contained the provision removing the deduction. The Senate is expected to vote on the final bill Tuesday evening. Republicans contend the provision and others are necessary to generate more revenue to offset cuts elsewhere. Most economists anticipate the overall cuts, even with the elimination of certain deductions, will increase the national deficit by at least $1 trillion over the next 10 years.

The Tax Bill And The Individual Mandate: What Happened, And What Does It Mean? - Senators Alexander and Collins announced on December 20, 2017, that they will not push for enactment of either the Alexander/Murray bipartisan cost-sharing reduction funding bill or the Collins/Nelson reinsurance bill yet in 2017.  They will try to move this or similar legislation early in 2018 when the short-term funding bill expected by December 22 expires and all of the “must-pass” legislation that Congress must yet address comes up for a vote.  As has been widely reported, both houses of Congress have now voted to repeal the Affordable Care Act’s (ACA) individual shared responsibility penalty, effective for 2019, as part of the 2017 tax reconciliation act. This post discusses first what the repeal does and does not do. Second it discusses the repeal’s possible effects.

Do GOP House and Senate reps even know what they voted for? -- Linda Beale - The House passed the awful “tax complication bill of 2017” on Tuesday.  The Senate had to make a few changes because it didn’t comply with the Byrd rules, and then will presumably pass it today. It’ll go back to the House where the HOuse will then take the final vote on the Senate changes and send it to Mr. Trump for signature. The GOP will claim that they have singlehandedly put together a marvelous tax cut package for the middle class.  That is a pack of lies. The tax cut package redistributes upwards–it is a marvelous cut for the wealthy (the estate tax reductions costing about $200 billion over ten years, the corporate tax reductions (including increased incentives for offshoring while lowering the top corporate tax statutory rate (higher than most corporations ever paid) to 21% from 35%, the lowering of the top individual rate from 39.6% to 37%, and a 20% “deduction” from taxable income for “qualified business income” for owners of businesses (whereas workers with the same earned income don’t get that nice little subsidy, based, it appears, on Mitt Romney’s keen disregard for the large group of American workers and working poor that he labelled “takers” compared to the regard he had for the wealthy capitalists, who he labelled “makers”, etc.).  It is a piddling cut for most non-wealthy individual Americans, especially those who live in “blue” states and already contribute more tax money to the federal government that is transferred to “red” states.  And the corporate tax cuts are permanent while the individual tax cuts go away at various times over the next decade. What’s more, it is rather doubtful that most of those voting for this bill in the House and Senate even know what is in it or how it will impact different types of families and workers.  The Huffington Post reported that several GOP congressmen couldn’t say what the bill’s new tax brackets were hours before they voted to pass it. See Matt Fuller, Twitter Account (asked Kevin Brady to name them, said he could, but either wouldn’t or couldn’t, and 11 others couldn’t).  And mostly they disregarded the overwhelming majority of Americans who are against more tax breaks for the wealthy and big corporations.

The Daily 202: The tax bill is likely to become more popular after passage. Here’s how Republicans plan to sell it. WaPo -- The best thing going for Republicans right now is low expectations.   Just before 1 a.m., the Senate passed on a party-line vote the most significant overhaul of the tax code in three decades. The House, which advanced the bill yesterday, needs to vote on it again to deal with a few technical issues raised by the Senate’s parliamentarian, but that’s a mere formality. Donald Trump plans to hold a news conference later today and sign the first major legislative achievement of his presidency as soon as possible.  As the measure gets across the finish line, a flurry of fresh polling shows the bill is historically unpopular and becoming more so:

  • In an NBC-Wall Street Journal survey, 24 percent of Americans think the tax bill is a good idea versus 41 percent who believe it’s a bad idea. (That’s up from 35 percent in October.) A plurality — 37 percent — say the middle class will pay more.
  • Opposition to the bill has popped 10 points in CNN’s polling since last month, with 55 percent now against the bill. Only 21 percent say they’ll be better off if the bill becomes law, and 37 percent say that their family will be worse off.
  • A Monmouth University poll found that exactly half the country predicts that the federal taxes they pay will go up under the new law. Just 14 percent say their taxes will go down, and another 25 percent believe they’ll pay the same amount.

But here’s the truth: 8 in 10 Americans will pay lower taxes next year, according to the nonpartisan Tax Policy Center’s analysis of the final bill. Only 5 percent of people will pay more next year. Mostly, those are folks who earn six figures and own expensive houses in places with high local taxes, such as New York and California.

GOP Congress: my (wealthy) donors made me do it -- Linda Beale - The GOP's tax-complicating, deficit-increasing, wealthy-subsidizing, Arctic destroying, Health Care damaging, $1.5 trillion tax "reform" package is unpopular with most Americans, destructive to the government's ability to fund needed programs from disease prevention to FEMA to basic research to needed infrastructure improvements, and wildly popular with the wealthy GOP donors like the (oil-rich) Koch Brothers, the Mercers, the Wal-Mart heirs, etc. So why did GOP representatives and senators vote for this bill that most of them hadn't read and didn't understand?  Back in early November, one Republican in the House was surprisingly honest about his reason: his wealthy GOP donors told him to get the tax bill (that favors the wealthy) passed or don't ask for campaign assistance.  See Bob Bryan, Top GOP Congressman: my donors told me to get the tax bill passed or 'don't ever call me again', Business Insider (Nov. 7, 2017).

Why Would Anybody Invest When Capacity Utilization is This Low? - A central selling point of the tax bill is that it will encourage investment.  But that assumes that high tax rates were the primary reason why business wasn't investing.  Instead, the data says business investment is weak because the U.S. has a ton of spare capacity.  First, let's look total capacity utilization: It has peaked at lower levels in each of the last three expansions. Let's break the data down into durable and non-durable CU: Both categories of production have ample spare capacity, with non-durable production having greater capacity. Finally, let's look at crude, intermediate and final stages of production: All three have plenty of spare capacity to bring online if needed. So, will we see a huge wave of investment as a result of the changed tax bill? The data says no.

Trump Signs $1.5 Trillion Tax Cut in First Major Legislative Win -- President Donald Trump signed the Republican tax-overhaul bill to little fanfare on Friday, delivering a major tax cut to U.S. corporations along with a package of temporary cuts for other businesses and most individuals. “I consider this very much a bill for the middle class and a bill for jobs,” Trump told reporters in the Oval Office before signing the legislation. “Corporations are literally going wild over this. I think even beyond my expectations.” Trump’s signature caps a seven-week sprint that began when the House unveiled its tax bill last month, and it gives the GOP its first major legislative victory since January. The private setting was unusual given the significance of the legislation, but the process had been delayed until Congress passed a stopgap spending bill late Thursday. The legislation hasn’t scored well in national polls, in part because of concerns about its benefits for corporations and top earners. But Trump and other Republicans say average Americans will embrace it. The bill slashes the corporate tax rate to 21 percent from 35 percent and cuts individual tax rates across the board -- though analyses have shown that most of the benefit would go to those at the top of the income scale. It also imposes new limits on deductions used heavily in high-tax states with high home values, meaning some people in those areas will see higher tax bills. Trump highlighted corporate responses to the new law. AT&T said Wednesday that it would give a special $1,000 bonus to 200,000 U.S. workers to celebrate the tax cut. Boeing Co. separately pledged $300 million for employee training, improved workplace infrastructure and corporate giving, crediting the new tax law. “This is having an even bigger impact faster than I thought,” Trump said Friday. Trump said the bill will prompt abandoned factories to come back to life. He said Bob Kraft, owner of the New England Patriots, called him last night to say he’s buying a new paper plant in North Carolina because of the tax law. He said companies will bring at least $4 trillion in cash into the U.S. from overseas as a result of the law. 

JCT: New tax law won't pay for itself | TheHill: Congress's tax scorekeeper said Friday that the tax-cut package President Trump signed earlier in the day won't fully pay for itself through economic growth. After accounting for macroeconomic effects, the bill would reduce federal revenue by $1.07 trillion over 10 years, according to the Joint Committee on Taxation (JCT). While that's less than the $1.46 trillion price tag the JCT put on the bill before accounting for economic growth, the committee says the bill still isn't close to being deficit-neutral.The JCT's report was released hours after Trump signed the tax package into law at the White House. The president said that the tax cuts will be "fantastic for the economy." The Treasury Department had said that an earlier version of the tax package, along with regulatory reform, infrastructure development and welfare reform, would produce enough economic growth to pay for the tax cuts. That analysis was widely criticized by tax experts as well as by Democratic lawmakers. But congressional Republicans are optimistic that the tax cuts will pay for themselves, and they view the JCT's estimates as conservative. The right-leaning Tax Foundation estimated earlier this week that the law would cost $448 billion over 10 years after accounting for economic growth — a projected revenue loss significantly lower than the JCT's but that still suggests the tax cuts won't pay for themselves. 

What is the GOP goal? A return to the "gilded age" (or worse) - Linda Beale - When right-wing Roy Moore said that the time when America was great was during slavery, he revealed something key to the current GOP members of Congress and state legislatures--their primary goal is to return to a time when owners of property held all the keys to the kingdom and workers were just serfs expected to do as told and whose lives didn't really matter much to the boss capitalists. Historian Nancy MacLean suggests that this is the reason for the tax bill's largesse to corporatists and the wealthy, the reason the GOP wants to undo Medicaid, Medicare, Social Security and essentially all the progressive programs introduced in the twentieth century to form the basis for a thriving middle class and surging democratic union.  See Cahuncey DeVega, Historian Nancy MacLean on the right's ultimate goal: rolling back the 20th century, (Dec. 13, 2017). Here are some key points from the article.

  • 1) "[T]he Democratic Party is terrible at translating complex questions of public policy into simple narratives that evoke emotion and, in turn, action from the American people." Id.
  • 2) The GOP tax "reform" bill is intended to create a deficit that will justify "huge automatic cuts to Medicare, Social Security and Medicaid", to be followed by a "push for a constitutional convention, at which the No. 1 agenda item will be a balanced budget amendment" with the goal ultimately of privatizing Social Security.
  • 3)The GOP emphasis on voter fraud (and consequent efforts across the country to make it harder for people to register to vote or to actually vote) allows the oligarch-led anti-democratic movement to disregard the will of the people because they have "gamed the system to maintain power."

Here’s what Trump’s tax plan means for blue collar workers, from cooks to mechanics - US President Donald Trump has marketed himself as a champion of working people. And Congressional Republicans are touting their new finalized tax bill as a wage-boosting, job-creating boon to the middle class, as well as a means of simplifying the tax system.But the tax reform efforts have earned harsh criticisms from the public and experts. The conservative Tax Foundation found Republicans also overpromised on how much the bill would boost the economy, according to Business Insider.Business Insider's Lauren Lyons Cole reported that while take-home pay is set to rise under the tax reform plan, most Americans won't see a ton of extra cash in their pockets. But how much you save also depends on how much you currently earn.Career site Zippia's David Luther provided us with data breaking down how different occupations fare under the finalized tax plan. Business Insider decided to look into how the new plan will affect blue collar workers — people in jobs that center around non-agricultural physical labor — in particular. The estimated federal tax savings below are for a single, childless taxpayer who owns a house valued at three times their salary. Zippia's calculations factored in whether a given taxpayer would benefit most from taking the standard deduction or itemizing deductions. Following is a look at how blue collar workers in a number of occupations, from food preparation workers to power plant operators, could see their taxes change next year if the tax plan becomes law.

Republicans plan mega marketing push to sell unpopular tax plan - Conservative groups are planning a multimillion-dollar effort to sell the GOP’s tax cut law, hoping the American electorate can learn to love the party’s signature — but massively unpopular — legislative achievement. "We have a public that distrusts anything coming out of Washington, especially anything from the majority party," said Tim Phillips, president of Americans for Prosperity, the grass-roots organizing arm of the powerful Koch brothers network of conservative groups. "We have a job that's not that hard. We have to make sure people understand the benefits they're going to receive from this legislation." The Koch network will launch a multimillion-dollar push next year to sell the bill, with paid advertising and town halls to educate voters. A major GOP super PAC is planning to spend $10 million to protect House members. And another group, the Committee to Unleash Prosperity, plans to spend the majority of its $1 million annual budget selling the tax plan next year, according to one of the group’s founders, Stephen Moore, a distinguished visiting fellow at The Heritage Foundation and an informal economic adviser to the president. Arguing that “the bill sells itself,” Moore said the committee intends to focus its efforts on selling the advantages of the tax bill to average Americans. “Right now, Americans think it is a tax increase instead of a tax cut, but when they start to see what happens to their paychecks and how the economy responds, they will change their minds,” he predicted.

Repeal and Replace the Trump Tax Plan: A Call to Action for 2018 - Without doubt, opponents of the Trump tax plan have real reason to feel defeated: The tax plan favors corporations and billionaires and will even raise taxes on the bottom 60 percent of earners in 2027; it lowers the corporate tax rate from 35 percent to 21 percent without closing major loopholes, as Trump had promised to do on the campaign trail; and it opens a $2 trillion hole in the national debt that conservatives will use to spur cuts to government benefits like Medicare and Medicaid. But the tax plan is just one part of the Trump agenda, with more to come. Cutting government benefits under programs like Medicare, Social Security and Medicaid is another. Having accomplished one of their main goals, Republican leaders are now openly proclaiming that cuts to Medicare, Medicaid and Social Security are their next priority. Protecting Medicare, Medicaid, Social Security, and a range of other programs, including food assistance and traditional welfare for low-incomes families, will become a major priority for progressives in 2018. The tax plan, as passed, will result in an automatic $25 billion in cuts to Medicare unless Congress takes action. These programs benefit millions of Americans, and most Americans will rely on one or more of these programs at some point in their lives. Medicare and Social Security are also the only government programs that Americans routinely pay into through payroll taxes before they are eligible for benefits.This will be no easy political feat. If the Trump tax plan was unpopular (and it was), cuts to Medicare and Social Security are even less popular -- especially if those cuts are seen as helping to pay for tax cuts for the rich. A majority of voters -- Democrats, Republicans and Independents -- oppose cutting Medicare, Medicaid or Social Security to pay for tax cuts.The very first legislative battle on this front is defending Medicare: Due to a preexisting law, the tax plan as passed will result in an automatic $25 billion in cuts to Medicare unless Congress takes action. Making sure Congress takes this action is a short-term priority. There are signs that Rep. Paul Ryan, at least, is treading carefully here: He has promised these cuts won't be allowed to happen. Looking ahead to 2018, priorities must include the defense of Medicaid, welfare and programs that help the lowest-income Americans -- a particular target of both Paul Ryan and President Trump.

U.S. taxpayers rush to claim deductions under threat from tax bill  (Reuters) - Financial advisers and accountants are working overtime as many U.S. taxpayers scramble to pay the rest of their 2017 taxes before Jan. 1 when the proposed Republican tax overhaul would sharply cut the amount they can deduct on federal tax bills. The tax legislation, which top U.S. Republicans said on Sunday they expected Congress to pass this week, caps the amount of state, local and property taxes individuals can deduct from their federal tax bills at $10,000. The average American who itemized his or her tax bill in 2015 claimed more than $27,000 in deductions. While taxpayers have until Jan. 15 to pay the final installment of their 2017 taxes, Tom Holly of the accounting firm PwC said he received dozens of calls over the weekend from concerned clients eager to pay sooner. “It’s going to be a very busy holiday season for advisers,” said Holly, who heads the firm’s wealth and asset management division. Lisa Featherngill, managing director of wealth planning at Wells Fargo’s Abbot Downing, said wealthy clients and their accountants were not just trying to figure out if it makes sense to estimate and pay the rest of their 2017 itemized taxes this year, but also working to see if they should itemize at all. Some taxpayers, particularly those in high-tax states who have income above $100,000, may end up paying the alternative minimum tax, which limits the deductions a person can take against his or her federal income tax. “People really have to run the numbers because ... if they are subject to alternative minimum tax, some of those taxes wouldn’t be deductible anyway,” said Featherngill. 

 U.S. lawmakers are redistributing income from the poor to the rich, according to massive new study -  Back in 1980, the bottom 50 percent of wage-earners in the United States earned about 21 percent of all income in the country — nearly twice as much as the share of income (11 percent) earned by the top 1 percent of Americans. But today, according to a massive new study on global inequality, those numbers have nearly reversed: The bottom 50 percent take in only 13 percent of the income pie, while the top 1 percent grab over 20 percent of the country's income.Since 1980, in other words, the U.S. economy has transferred eight points of national income from the bottom 50 percent to the top 1 percent. That trend is even more remarkable when you set it against comparable numbers for wealthy nations in Western Europe. There, the bottom 50 percent earn nearly 22 percent of the income in those economies, while the top 1 percent take in just over 12 percent of the money.The income situation in Western Europe today, in other words, is similar to how things were in the United States nearly 40 years ago. The 2018 World Inequality Report, written by a team of leading international economists including Thomas Piketty of “Capital in the Twenty-First Century” fame, finds that the rise of income inequality in the United States is “largely due to massive educational inequalities, combined with a tax system that grew less progressive despite a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s.”

 The three richest people in the US own as much wealth as the bottom half of the US population - The three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people.  Analysis of the wealth of America’s richest people found that Gates, Bezos and Buffett were sitting on a combined $248.5bn (£190bn) fortune. The Institute for Policy Studies said the growing gap between rich and poor had created a “moral crisis”. In a report, the Billionaire Bonanza, the thinktank said Donald Trump’s tax change proposals would “exacerbate existing wealth disparities” as 80% of tax benefits would end up going to the wealthiest 1% of households.  “Wealth inequality is on the rise,” said Chuck Collins, an economist and co-author of the report. “Now is the time for actions that reduce inequality, not tax cuts for the very wealthy.”  The study found that the billionaires included in Forbes magazine’s list of the 400 richest people in the US were worth a combined $2.68tn – more than the gross domestic product (GDP) of the UK. “Our wealthiest 400 now have more wealth combined than the bottom 64% of the US population, an estimated 80m households or 204 million people,” the report says. “That’s more people than the population of Canada and Mexico combined.” The rise at the wealthiest end of society comes as one in five US households live in what the report’s authors call the “underwater nation”, with either zero or negative wealth. Inequality is even more stark among minorities. Three in 10 black households and 27% of Latino ones have zero or negative wealth, compared with 14% of white families.

Why Stopping Tax “Reform” Won’t Stop Inequality - Over the past four decades, American household incomes have become strikingly more unequal, along an unsustainable path. But as of late 2017, prospects for attacking inequality are bleak, whether or not the Republican-controlled U.S. Congress manages to pass a tax cut favoring businesses and high-income households. Fundamental changes in income and wealth distribution will require equally fundamental changes in the way the economy generates and distributes pre-tax incomes.  This paper looks at several key topics that relate to our country’s growing inequality and the ways in which it can be remedied. First, it’s worth examining the likely macroeconomic effects of the tax package. They will be visible but small. Republican efforts will push up the federal deficit as a means to transfer funds to business and rich households. Growth dynamics sketched below suggest that the deficit and incomes of the rich cannot rise indefinitely. This analysis also shows how, over time, rising income inequality creates greater concentration of wealth, which is almost certainly on the cards.1 For rich households, wealth accumulation is driven by high saving rates from high incomes, capital gains on existing assets, and receipts from initial public offerings which are highly visible but quantitatively not so important. Over the past few decades, capital gains have been a main driver for wealth concentration. Crucially, this analysis looks to answer why inequality has grown so steadily since around 1980. The principal cause is that wealthy “capitalist” households have benefitted from rising business profits while wage-earning “worker” households have fallen behind. Are higher profits the consequence of greater power of firms to raise prices against wages, or else their ability to hold down wages against prices? Analysis of producing sectors suggests the latter based upon the creation and extension of a vast low wage labor market.

Fallout from allegations of tea party targeting hamper IRS oversight of nonprofits - WaPo -- Years of conservative attacks on the Internal Revenue Service have greatly diminished the ability of agency regulators to oversee political activity by charities and other nonprofits, documents and interviews show. The fall in oversight, a byproduct of repeated cuts to the IRS budget, comes at a time when the number of charities is reaching a historic high and they are becoming more partisan and financially complex. It represents a success for conservatives who have long sought to scale back the IRS and shrink the federal government. They capitalized on revelations in 2013 that IRS officials focused inappropriately on tea party and other conservative groups based on their names and policy positions, rather than on their political activity, in assessing their applications for tax-exempt status. Among conservatives, the episode has come to be known as the “IRS targeting scandal.” Under the federal tax code, charities may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues. Other nonprofits known as social welfare groups may be involved in politics, but only as long as it is not their primary purpose. The main part of government tasked with policing those lines, the IRS’s Exempt Organizations division, has seen its budget decline from a peak of $102 million in 2011 to $82 million last year. At the same time, division employees have fallen from 889 to 642. The division now lacks expertise, resources and the will needed to effectively oversee more than 1.2 million charities and tens of thousands of social welfare groups, according to interviews with two dozen nonprofit specialists and current and former IRS officials. “This completely neutered them,” “The will is totally gone.”

Goodbye internet: How regional divides upended the world wide web Politico — So, there you have it: 2017 was the year that finally broke the internet.From Europe’s aggressive (some would say fanatical) expansion of digital privacy and hate speech rules to the rollback on December 14 of the United States’ net neutrality provisions, this year marks the end of an era.Gone is the internet where people from Philadelphia to Paris pretty much had access to the same digital services. That basic tenet (the “world’ in the “world wide web”) is what made the internet the lifeblood coursing through our daily lives. It’s what was making countries’ borders increasingly meaningless and connecting people (for good and bad) in ways that seemed like science fiction just a few years ago.The common global internet is now dead. In its place is something all together different: a Balkanized “splinternet,” where your experience online is determined by local regulation.In 2018, the forces dividing the internet along regional or national borders are only likely to gain momentum, as governments worldwide reassert their control over digital forces that threatened to turn policymakers and politicians into bit players in a tech-centric world run by the likes of Google, Amazon and Facebook.  That Balkanization should worry anyone who (like me) believes that when harnessed correctly, the global digital revolution — like previous epochal shifts such as the Industrial Revolution — offers both new economic opportunities and a chance for people to become more engaged in public life.

The Fight for Net Neutrality Isn’t Over -- This Real News Network interview with Craig Aaron, president of Free Press, discusses this week’s Federal Communications Commission decision to unwind net neutrality, and what comes next. Aaron suggests the fight for a free and open internet isn’t over– despite this week’s huge setback.

In Protests of Net Neutrality Repeal, Teenage Voices Stood Out - Millions of Americans have been caught up in a bitter debate over the repeal of net neutrality rules that prevented broadband providers from blocking websites or demanding fees to reach consumers. But the most vocal and committed activity may have come from generation internet, the digitally savvy teenagers in middle and high school who grew up with an open internet. The repeal of net neutrality has gotten many of these teens politically engaged for the first time, with fears that the dismantling of rules could open the door for broadband providers like AT&T and Comcast to distort the experience of accessing anything online with equal ease. For them, a dry issue that has often been hard to understand outside of policy circles in Washington has become a cause to rally around. Net neutrality’s repeal will not take effect for several weeks. Internet service providers including AT&T and Comcast have promised they won’t block or throttle sites or create fast lanes for certain content. And several efforts are underway to scale back the rollback, including the introduction of a congressional bill and potential lawsuits. The opposition by many teenagers is rooted in how they are among the most avid users of the internet and smartphones. Virtually all youth between ages 13 and 17 own or have access to a smartphone and 94 percent use social media, according to an April 2017 study by The Associated Press-NORC Center for Public Affairs Research. Many are gaining access to devices at younger ages, with 98 percent of children from newborn to 8 years old accessing a mobile device at home, compared with 52 percent in 2011. Many became digital users when net neutrality was in effect. Net neutrality has existed in various forms since about 2006, when the F.C.C. first created open internet guidelines for broadband providers known as the “Four Internet Freedoms.” In 2015, the F.C.C. declared that broadband had become utility-like and deserved extra government oversight. Since 2006, more and more children began using Netflix, Snapchat, Instagram, YouTube and all manner of other apps and online services.

Where Were Netflix and Google in the Net-Neutrality Fight? -  The most recent chapter in the debate over net neutrality has been, like previous chapters, cacophonous. One notable difference this time around, though, was the relative quiet of many large tech companies. In previous years, these firms had been outspoken about the issue. What changed? Netflix’s net-neutrality journey is an illuminating example. In 2014, Reed Hastings, the company’s CEO, issued a strongly worded warning about oppressive “internet tolls” that could threaten the web’s status as a “platform for progress.” In the time between then and last week—when the FCC voted to undo its 2015 regulations—something, apparently, had changed. “We think net neutrality is incredibly important,” Hastings said at a tech conference in late May, but went on to say that it’s “not narrowly important to us because we’re big enough to get the deals we want.” The “deals” he was referring to are the ones theoretically opened up by the repeal of net neutrality—they’re the fees that internet-service providers (like Comcast) could ask for from, well, just about anyone (like Netflix), in exchange for speeding their data along. Netflix did submit two filings to the FCC in the run-up to last week’s vote, but the commission didn’t have any record of lobbying visits on the company’s behalf during that time, according to Bloomberg. What about that platform for progress? The reality is that Netflix and other large tech companies, such as Facebook and Google, have grown so dominant that net neutrality has become a nonissue for them. They’re aware that their extensive, loyal user bases can protect them from any unfavorable deals that internet-service providers (ISPs) might devise—there’s leverage to be gained from becoming a platform that broadband customers expect ready access to. And unlike smaller businesses, which lack that leverage, big tech companies have the political clout to fight policies they don’t want—should they choose to.

There’s another angle to the FCC’s “Restoring Internet Freedom” -- Internet users have been justly outraged by the FCC’s decision to ignore the public and repeal net neutrality rules. But few media outlets or internet users seem to understand that the net neutrality repeal is just one small part of a massive, larger plan to eliminate nearly all meaningful federal and state oversight of some of the least-liked and least-competitive companies in America. To be clear: the net neutrality repeal itself is awful policy that ignores both the will of the public and the people who built the damn internet. It eliminates a wide variety of consumer protections that prevent incumbent ISPs from abusing a lack of competition in the broadband market. Without these rules, ISPs will be able to engage in all manner of bad behavior, frompaid prioritization deals that disadvantage smaller competitors, to imposing unnecessary usage caps that their content is allowed to bypass (aka zero rating). Should the FCC’s repeal survive a 2018 court challenge, the only thing standing between you and Comcast’s bad behavior is going to be empty promises from an industry with a long history of ripping you off. But it’s actually much worse than all that. There’s another angle to the FCC’s “Restoring Internet Freedom” proceeding that should be even more worrying. A big part of the FCC’s plan involves rolling back the FCC’s tailor-made authority over broadband providers, then shoveling all remaining government oversight to an FTC ill-equipped to handle it.  Why is that a problem? The FTC has no rule-making ability, and can only move to protect consumers after a violation has occurred. And that action can only occur if it’s painfully clear that an ISP engaged in “unfair and deceptive” behavior, something that’s easy for an ISP to dodge in the net neutrality era, where anti-competitive behavior is often buried under faux-technical jargon and claims that it was done only for the health and safety of the network. But experts in the field warn that this claim is complete nonsense. Telecom lawyer and consumer advocate Harold Feld, for example, recently noted that under this new FTC-dominant enforcement system, most of the net neutrality violations we’ve frequently cited wouldn’t fall within FTC authority, leaving the agency powerless to stop offenses we’ve already seen, much less any new, creative ISP efforts to abuse a lack of competition. As we reported earlier this year, the FTC is poorly placed to protect net neutrality.

Koch Brothers Are Cities’ New Obstacle to Building Broadband - THE THREE REPUBLICAN commissioners now in power at the FCC voted this week to erase the agency's legal authority over high-speed Internet providers. They claim that competition will protect consumers, that the commission shouldn't interfere in the "dynamic internet ecosystem," and that they are "protecting internet freedom." Now that the vote is done, the agency has little to do but mess around with spectrum allocations. The mega-utility of the 21st century officially has no regulator. In the meantime, fed up with federal apathy and sick of being held back by lousy internet access controlled by local cable monopolies, scrappy cities around the US are working hard to find ways to get cheap, world-class fiber-optic connectivity. It’s always been an uphill climb, as the “incumbents”—giant carriers like Comcast, Verizon, and AT&T—are constantly working behind the scenes to block competition. (Recently, Comcast spent nearly $1 million opposing a municipal-fiber vote in Fort Collins, Colorado. The company did not prevail, I’m happy to report.) But now there’s an additional obstacle: Powerful right-wing billionaires have joined the fight against municipal fiber efforts, using their deep pockets to fund efforts to block even the most commonsense of plans. Bad news for internet access—the Koch brothers are fighting low-cost open fiber nets. Look what happened in Louisville, Kentucky. It's a city of about 750,000, the largest in the state. Earlier this year, the city noticed that the state of Kentucky was funding a "middle mile" fiber network designed to connect the state’s 120 counties and provide cheaper connectivity for municipal buildings—KentuckyWired.  As part of the project, Louisville—also known as Jefferson County—would be able to run 100 miles of fiber alongside the state network for just the cost of materials.   It seemed to be a no-brainer. “I can't think of a more sensible plan," Simrall says. "I just didn't think that we were going to face opposition on this. We thought surely people would understand that this was a way for us to leapfrog where we were for a fraction of the cost."But when Simrall and her colleagues went to talk to members of the Louisville Metro Council in May, they found that interest groups, including the cable trade association in Kentucky and something called the Taxpayers Protection Alliance, had been there already. Suddenly, the city's eminently sensible plan was in trouble. "The cable trade association in Kentucky was very vocal about how they thought that this was a waste of taxpayer money and had just spoken to numerous council members on the record about that," Simrall says.

New Net Neutrality Bill Has Glaring Loopholes - Hopes that Congress would take up the net neutrality cause took a hit Tuesday, when Rep. Marsha Blackburn (R-TN) introduced a bill that promises consumers some internet access protections. But the bill also includes several loopholes favoring internet service providers (ISPs). Blackburn’s Open Internet Preservation Act would prohibit ISPs from blocking or slowing internet traffic—an apparent attempt to blunt the U.S. Federal Communications Commission’s (FCC) revocation last week of the 2015 Open Internet Order. However, the bill would likewise limit the authority of the FCC and state governments to prevent ISPs from manipulating Web traffic in other ways.One of the biggest concerns to emerge from the years-long debate over government regulation of the internet has been that loosely regulated ISPs would set up tiered internet service. This would potentially let deep-pocketed companies pay to have their content load faster than content produced by startups with more modest means. Blackburn’s bill, which seeks to amend Title 1 of the Communications Act of 1934, would not prevent that from happening. The proposed act would also make permanent the distinction that broadband internet access is a Title 1 information service—rather than a more tightly regulated Title 2 utility service, as the FCC had decided in 2015.Blackburn’s bill is a “step in the right direction,” but is unclear and problematic in some important areas, says Jim Speta, a law professor and associate dean for international initiatives at Northwestern University’s Pritzker School of Law. Speta agrees that “Congress has too long been absent from the scene” when it comes to internet regulation, and that it is important for federal legislators to “engage in a serious debate over the scope of the internet and the FCC's authority over it.” It is also unclear how—or even if—the bill would regulate other major points of contention between ISPs and large content providers such as Google and Netflix: Should ISPs be allowed to offer faster service to content providers if they are willing to pay more? And should ISPs be permitted to give their own content and services priority over those offered by competitors?

U.S. lawmakers seek temporary extension to internet spying program (Reuters) - Republican leaders in the U.S. House of Representatives are working to build support to temporarily extend the National Security Agency’s expiring internet surveillance program by tucking it into a stop-gap funding measure, lawmakers said. The month-long extension of the surveillance law, known as Section 702 of the Foreign Intelligence Surveillance Act, would punt a contentious national security issue into the new year in an attempt to buy lawmakers more time to hash out differences over various proposed privacy reforms. Lawmakers leaving a Republican conference meeting on Wednesday evening said it was not clear whether the stop-gap bill had enough support to avert a partial government shutdown on Saturday, or whether the possible addition of the Section 702 extension would impact its chances for passage. It remained possible lawmakers would vote on the short-term extension separate from the spending bill. Absent congressional action the law, which allows the NSA to collect vast amounts of digital communications from foreign suspects living outside the United States, will expire on Dec. 31. Earlier in the day, House Republicans retreated from a plan to vote on a stand-alone measure to renew Section 702 until 2021 amid sizable opposition from both parties that stemmed from concerns the bill would violate U.S. privacy rights. Some U.S. officials have recently said that deadline may not ultimately matter and that the program can lawfully continue through April due to the way it is annually certified. But lawmakers and the White House still view the law’s end-year expiration as significant.  

The Misguided GOP Attack on Government Bureaucrats - Joe Davidson wrote in the Washington Post over the weekend about a key figure in the ongoing Republican effort to decimate the federal workforce: Trump’s labor adviser James Sherk. Before his White House role, Sherk went to the conservative Hillsdale College and spent three years in the economics program at the University of Rochester, but came away with only a master’s degree. Then he spent more than a decade at the conservative Heritage Foundation, where he authored a series of papers arguing that federal employees are overpaid. (Other frequent topics included the beauty of right-to-work laws and the dangers of raising the minimum wage.) Josh Marshall summarized Sherk’s resume less charitably: The essence is that this guy went to Wingnut college, washed out of grad school and then spent his entire 11 years of employment at The Heritage Foundation. Now Trumps put him in charge of cutting the pay of every federal worker. — Josh Marshall (@joshtpm) December 18, 2017You can get a good sense of what the Trump administration has in mind by reading a paper Sherk co-authored for Heritage in 2016, titled “Why It Is Time to Reform Compensation for Federal Employees.” The paper proposes a variety of ways to cut civil servants’ pay and benefits. It builds off of Sherk’s earlier research purporting to show that federal employees are wildly overpaid compared to similar private-sector workers—including benefits, he claims, they make between 30 and 40 percent more. That number is almost certainly exaggerated, but it does seem true that federal workers get a compensation premium relative to the private sector—16 percent, according to the nonpartisan Congressional Budget Office. But is that so bad? We want government to attract top talent. And the typical American worker has seen almost zero annual wage growth since 1973. Maybe the problem is that private sector employees are underpaid. If federal employees make more than workers in the private sector, why should we put a stop to it?

House unveils massive $81 billion disaster aid package - The House on Monday night disclosed the details of a staggering $81 billion disaster aid package, the largest single funding request for natural calamities in U.S. history. If approved, Congress will have spent more than $130 billion on a spate of deadly hurricanes and wildfires this fall, outpacing the total amount of aid after both Hurricanes Katrina and Sandy. The funding bill is split among Texas, Florida, Puerto Rico and the U.S. Virgin Islands, as well as states ravaged by wildfires. The bill contains tens of billions of dollars each for FEMA and Community Development Block Grant programs, and $12 billion for reconstruction projects by the Army Corps of Engineers. It also contains several billion for education programs, highway rebuilding, small business loans and military construction projects. Appropriations Chairman Rodney Frelinghuysen (R-N.J.) said the funding is a crucial part of the government’s response to “some of the largest major hurricanes, wildfires, and agriculture losses this country has ever seen.” 

Three Trump judicial nominees stumble — with Republicans | TheHill: Controversy is swirling over the quality of candidates that President Trump is nominating to lifetime appointments on the federal courts. In the last week, the GOP chairman of the Senate Judiciary Committee has pressed the White House to not proceed with two controversial candidates — including one who had never tried a case in court. A third nominee on Thursday struggled to answer relatively easy questions about basic principles of law during a cringeworthy appearance before the Senate Judiciary Committee. Worse from the White House’s point of view, the questions came not from a Democrat but from a conservative Republican — Sen. John Kennedy (La.). And the video has gone viral, with a clip of the exchange tweeted out by Sen. Sheldon Whitehouse (D-R.I.) gaining over 4.5 million views as of Friday afternoon. After learning from his questioning that Matthew Petersen, a nominee for the District Court for the District of Columbia, had not handled a jury trial and had probably taken five or fewer depositions, Kennedy bore down on him, asking Petersen about the last times he’d read either the Federal Rules of Civil Procedure or the Federal Rules of Evidence. Petersen said that as a Federal Election Commission member, he didn’t need to read those federal standards on a “day-to-day basis.” “As a trial judge, you’re obviously going to have witnesses. Can you tell me what the ‘Daubert standard’ is?” Kennedy then asked. “I don’t have that readily at my disposal,” Petersen said of a rule regarding expert testimony in federal court. “Do you know what a 'motion in limine' is?” Kennedy asked a moment later, referring to a request to exclude certain evidence in a trial. Petersen said he hadn’t had time to “do a deep dive,” before later saying that he would “probably not be able to give you a good definition right here at the table.” 

Trump Judicial Nominee Who Bungled Basic Legal Questions, Withdraws After Humiliating Hearing -- President Trump's nominee to fill a vacant D.C. District Court Judge seat has withdrawn his name from consideration after an embarrassing video went viral of him bungling basic legal questions at his confirmation hearing on December 13.  Matthew Petersen, a member of the Federal Election Commission and former Obama-appointed Chairman of the regulatory agency, struggled to answer a series of questions by Sen. John Kennedy (R-LA) that any attorney should be able to answer. After Petersen admitted he's never tried a case as an attorney, Kennedy reminded him that as a trial judge he'd have to deal with witnesses, and asked the nominee what the "Daubert standard" is - a rule of evidence regarding the admissibility of an expert witness testimony.  Petersen replied "I don't have that readily at my disposal."  When asked next what a "motion in limine" is, referring to a request to exclude certain evidence in a trial, Petersen said he hadn't had the time to "do a deep dive," adding that he would "probably not be able to give you a good definition right here at the table." Petersen's embarrassing performance can be seen below: MUST WATCH: Republican @SenJohnKennedy asks one of @realDonaldTrump’s US District Judge nominees basic questions of law & he can’t answer a single one. Hoo-boy.— Sheldon Whitehouse (@SenWhitehouse) December 15, 2017Sen. Kennedy said in a Monday morning interview on WWL-TV that “Just because you’ve seen My Cousin Vinny doesn’t qualify you to be a federal judge,” adding “And he has no litigation experience. And my job on the judiciary committee is to catch him. I would strongly suggest he not give up his day job.” Kennedy also said President Trump called him after the video went viral, stating “The president and I get along fine, and he has told me, ‘Kennedy, when some of my guys send somebody over who’s not qualified, you do your job,” he said.

The Taking: How the federal government abused its power to seize property for a border fence - The land agents started working the border between Texas and Mexico in the spring of 2007. Sometimes they were representatives from the U.S. Army Corps of Engineers. Other times they were officers from the U.S. Border Patrol, uniformed in green, guns tucked into side holsters. They visited tumbledown mobile homes and suburban houses with golf course views. They surveyed farms fecund with sugar cane, cotton and sorghum growing by the mud-brown Rio Grande. They delivered their blunt news to ranchers and farmers, sheet metal workers and university professors, auto mechanics and wealthy developers. The federal government was going to build a fence to keep out drug smugglers and immigrants crossing into the United States illegally, they told property owners. The structure was going to cut straight across their land. The government would make a fair offer to buy property, the agents explained. That was the law. But if the owners didn’t want to sell, the next step was federal court. U.S. attorneys would file a lawsuit to seize it. One way or the other, the government would get the land. That, too, was the law. The visits launched the most aggressive seizure of private land by the federal government in decades. In less than a year, the U.S. Department of Homeland Security filed more than 360 eminent domain lawsuits against property owners, involving thousands of acres of land in the border states of Texas, New Mexico, Arizona and California. Most of the seized land ran along the Rio Grande, which forms the border between Texas and Mexico. All told, the agency paid $18.2 million to accumulate a ribbon of land occupying almost half the length of the 120 miles of the Rio Grande Valley in southernmost Texas. Years before President Donald Trump promised to build his wall, Homeland Security erected an 18-foot-high fence here in a botched land grab that serves as a warning for the future. An investigation by ProPublica and The Texas Tribune shows that Homeland Security cut unfair real estate deals, secretly waived legal safeguards for property owners, and ultimately abused the government’s extraordinary power to take land from private citizens.

Jeff Sessions Isn’t Giving up on Weed. He’s Doubling Down -- A year ago, when president-elect Donald Trump announced Senator Jeff Sessions would be his attorney general, advocates for marijuana law reform were suddenly seized with panic. The longtime Alabama senator, they knew, had once joked that he considered the Klan to be OK guys until he found out they smoked pot. Only they weren’t quite sure he was kidding.  Sessions’ appearance at his confirmation hearing in early January did little to allay those fears. During testimony best remembered for the attorney general’s commitment to recuse himself from any investigation related to the 2016 election, the nominee was asked about medical marijuana by Vermont Senator Pat Leahy: “Would you use our federal resources to investigate and prosecute sick people who are using marijuana in accordance with their state laws, even though it might violate federal laws?” “I won’t commit to never enforcing federal law, Senator Leahy,” Sessions replied, suppressing a slight smirk. That double negative tightened the knot in every drug policy reformer’s gut. Exactly how vulnerable were the nascent marijuana industries in the 29 states where it was now legal? Would SWAT teams arrest wheelchair-bound medical marijuana patients, raid marijuana dispensaries and shut down the high-tech growhouses that supplied them? The dreaded crackdown never materialized. Sessions, perhaps preoccupied with other priorities like keeping his volatile boss from firing him, remained largely inactive on the subject. But things are suddenly looking rosier for Sessions. Thanks to Congress’ fumbling over the spending bill, the AG’s yearning to battle legal marijuana may get a major boost without him having to lift a finger. That’s because Rohrabacher-Farr, a little-known and even less discussed amendment that protects state-legal medical marijuana programs from federal interference, is close to expiring. If the government shuts down at the expiration of the current continuous resolution on December 22, or if negotiations in an upcoming appropriations conference committee fail to insert it in the final draft of the spending bill—entirely possible given House Republicans’ hostility to marijuana—Sessions would be free to unleash federal drug agents on a drug, which according to federal drug law, is considered the equal of heroin and LSD.

The Trump administration’s Orwellian plan to gut Roe v. Wade - Two women, known by the pseudonyms “Jane Roe” and “Jane Poe,” are being held at federal facilities for undocumented minors who enter the country without an adult guardian. They are pregnant and want abortions. Yet they cannot obtain one because the Trump administration will not let them leave the facility to obtain the medical care they seek.If this scenario sounds familiar, it should. Last October, the Trump administration made a similar attempt to hold a woman prisoner to prevent her from terminating her pregnancy. The woman eventually received her abortion, but only after she obtained a federal court order.But that court order may have only taken effect because of a tactical error by Trump administration lawyers, who delayed seeking review in the Supreme Court until after the woman already obtained her abortion. These lawyers are unlikely to repeat this error now that Roe and Poe seek a similar court order. That means that, as soon as this week, the Supreme Court is likely to weigh in on whether the federal government can physically detain a woman to prevent her from obtaining an abortion.

Trump replaces ‘E Pluribus Unum’ with ‘Make America Great Again’ on presidential coin - President Donald Trump has made several alterations to what is known as the presidential "challenge coin," including replacing the US motto, "E Pluribus Unum," with "Make America Great Again," The Washington Post reported Friday. The Latin phrase, which appears on US currency, means "Out of many, one." Now the challenge coin features the Trump campaign slogan on both sides. Presidents have for about two decades given the coins as mementos.  Other changes to the coin include removing the 13 arrows representing the original 13 colonies and making it much thicker than its predecessors. Trump's name also appears three times on it.  One White House aide told The Post the coin was "very gold," adding that Trump "wanted to weigh in on" its design.   Another aide told The Post that the coins would be "used in ways they haven't been in the past," possibly being distributed at rallies and to donors.

Trump Attorney Quashes Rumors Of Impending Mueller Firing -- An Attorney for President Trump has vehemently denied rumors that special counsel Robert Mueller will be fired over revelations of politically motivated malfeasance by the FBI towards Hillary Clinton and against Donald Trump, including disturbing text messages which were sent between top FBI investigators implying the Trump-Russia investigation may have been launched as an "insurance" policy in the event Trump won the 2016 election. Furthermore, GOP lawmakers have asserted that FBI top brass relied on a salacious and unverified "dossier" to launch the Trump-Russia investigation. Also noted by critics is the fact that Robert Mueller's "right hand man," Aaron Zebley represented Clinton IT staffer Justin Cooper - a Bill Clinton aide who "jerry-rigged" Hillary Clinton's "private, illegal" server in her Chappaqua home.  Despite all of that, Trump attorney Ty Cobb told Politico, "As the White House has repeatedly and emphatically said for months, there is no consideration at the White House of terminating the special counsel.”

Trump transition lawyer accuses Mueller of unlawfully obtaining emails - A lawyer for President Donald Trump’s transition team is accusing special counsel Robert Mueller of unlawfully obtaining tens of thousands of private emails during its investigation into Russian meddling in last year’s presidential election. Kory Langhofer, an Arizona-based attorney representing Trump for America, spelled out the complaint in a seven-page letter sent Saturday to the main House and Senate oversight committees where he raises potential violations of attorney-client privilege and the Fourth Amendment, which protects against unlawful search and seizure. Mueller’s office got the records earlier this summer from the General Services Administration, the government agency charged with holding all transition materials, even while it was “aware that the GSA did not own or control the records in question,” Langhofer wrote. The Trump attorney also argued that Mueller’s office has “extensively used the materials in question” during its investigation, even though its prosecutors were aware some of the materials were subject to claims of attorney-client privilege and other protections. Mueller spokesman Peter Carr defended the special counsel’s work in a statement issued just past midnight on Sunday, several hours after this story first posted. “When we have obtained emails in the course of our ongoing criminal investigation, we have secured either the account owner’s consent or appropriate criminal process,” he said.

Republicans accused of concocting email scandal against Mueller- Republicans have been accused of trying to discredit special counsel Robert Mueller by claiming his inquiry into Russian election meddling inappropriately gained access to emails from Donald Trump’s transition team. The complaint from the Trump for America group comes a day after a warning from Adam Schiff, a senior Democrat, that top Republicans are maneuvering to shut down the House intelligence committee’s Trump–Russia inquiry and weaken Mueller. Some reports suggest Trump is considering firing Mueller, who was appointed as special counsel to oversee the FBI and justice department investigation of contacts between the Russian government and Trump’s election campaign. On Saturday it emerged that Mueller’s investigation has gained access to thousands of emails sent and received by officials on Donald Trump’s transition team, which operated between his election and swearing-in. Kory Langhofer, general counsel for the transition group, has written to the Republican chairs of the House oversight committee and the Senate homeland security committee about what the transition contends was an “unauthorized” disclosure of its emails by the General Services Administration (GSA). The GSA is a government agency that has supported presidential transitions in recent years and typically houses electronic transition records in its computer system. The transition team says the GSA did not get its permission to hand over the emails. But Eric Swalwell, a Democrat on the House intelligence committee, said: “This is another attempt to discredit Mueller as his Trump–Russia probe tightens. “‘Private documents’ on a US government, public email system? What are they afraid was found? Baloney.”

Trump-Russia inquiry: Why attacks on Robert Mueller are mounting - BBC News: In recent weeks, conservative commentators and politicians have begun arguing, with growing intensity, that Robert Mueller's investigation into possible ties between the Trump campaign and Russia is the result of an intentional effort by biased investigators to undermine the Trump presidency. There are a number of components to the case they are presenting, from doubts about the impartiality of Mr Mueller and his team to questions about the integrity of the FBI and the Obama-era Justice Department. All of it could be setting the ground for new investigations into the FBI or Democrat Hillary Clinton's actions while secretary of state - something Mr Trump himself has suggested - or perhaps even for the president to order the end of Mr Mueller's probe. Such an action would provoke a major political crisis and could have unpredictable consequences. For Mr Trump's defenders, it may be enough simply to mire Mr Mueller's investigation in a partisan morass. Here are some are some of the ways they're trying to do that.Peter Strzok, a senior counter-intelligence agent in the FBI and until this summer a top member of Mr Mueller's special counsel team, has become Exhibit A of anti-Trump bias in the Russia investigation. A Justice Department inspector general review of the FBI's handling of its 2016 election investigations unearthed text messages between Mr Strzok and Lisa Page, an FBI lawyer who also temporarily worked on the Mueller investigation and with whom Mr Strzok was having an extramarital affair. Some of the messages, which were provided to reporters, showed the two had a hostility toward then-candidate Trump in 2016. Ms Page called Mr Trump a "loathsome human" in March, as the candidate was cementing his lead in the Republican primary field. Three months later - after Mr Trump had secured the nomination - Mr Strzok wrote that he was an "idiot" who said "bigoted nonsense". 

Trump Transition Team Emails: Here’s Why Washington Insiders Are Freaking Out – Pam Martens - On Saturday, the news broke that Kory Langhofer, counsel to Donald Trump’s transition team known as Trump for America, Inc. (TFA), had sent a 7-page letter to House and Senate Committees stating that Special Counsel Robert Mueller’s office had improperly received “tens of thousands of emails” from the General Services Administration (GSA), a Federal agency, that had been sent or received by members of Trump’s transition team. Both the GSA and Mueller’s spokesmen denied that there had been anything improper about the turnover of the emails. Peter Carr, a spokesman for Mueller, said that “When we have obtained emails in the course of our ongoing criminal investigation, we have secured either the account owner’s consent or appropriate criminal process.” Lenny Loewentritt, a veteran lawyer for the GSA told Buzzfeed that transition team members were told by the GSA that materials “would not be held back in any law enforcement” actions and were also informed that there were a series of agreements between the GSA and the transition team that there would be “no expectation of privacy” because there could be monitoring and auditing of communication devices provided by the government. Looking at how the sausage is made during the Presidential transition – the period from election day to inauguration day – is something that should have been criminally investigated long before now. There is certainly a prima facie case that can be made that this is the period when the will of the elected President is replaced by the will of a cartel of lawyers representing multi-national corporations.

Trump team’s meeting with Mueller’s office poised to ratchet up tensions -- White House lawyers are expected to meet with special counsel Robert S. Mueller III’s office late this week seeking good news: that his sprawling investigation’s focus on President Trump will soon end and their client will be cleared. But people familiar with the probe say that such assurances are unlikely and that the meeting could trigger a new, more contentious phase between the special counsel and a frustrated president, according to administration officials and advisers close to Trump. People with knowledge of the investigation said it could last at least another year — pointing to ongoing cooperation from witnesses such as former Trump campaign adviser George Papadopoulos and former national security adviser Michael Flynn, as well as a possible trial of two former Trump campaign officials. The special counsel’s office has continued to request new documents related to the campaign, and members of Mueller’s team have told others they expect to be working through much of 2018, at a minimum.  The dynamic threatens to intensify the already inflamed political atmosphere enveloping the investigation into Russia’s meddling in the 2016 election. Even as White House lawyers have pledged to cooperate with Mueller, Trump and his allies have accused the Justice Department and FBI of bias and overreach. The latest salvo came this past weekend, when a lawyer for the presidential transition accused Mueller of wrongfully obtaining thousands of emails sent and received by Trump officials before the start of his administration. The special counsel’s office said all the material was legally obtained.

Top FBI official linked to reporter who broke Trump dossier story -House Republicans are investigating contact between the FBI's top lawyer and a Mother Jones reporter in the weeks before the left-leaning outlet broke the first news story about the existence of a disputed dossier alleging ties between President Donald Trump and the Kremlin, according to two congressional GOP sources who described documents linking the two men. The GOP sources said the documents — made available recently to lawmakers by the Department of Justice — revealed that James Baker, the FBI's general counsel, communicated with Mother Jones reporter David Corn in the weeks leading up to the November 2016 election. Corn was the first to report the existence of the dossier on Oct. 31 and that it was compiled by a former high-level western spy.  The Washington Post reported Thursday that Baker had been reassigned within the FBI, though the reason for the move was unclear.Corn denied that Baker was a source for his story on the dossier. "I'm not going to discuss my sources. But in order to prevent the dissemination of inaccurate information, I will say that James Baker was not my source for this story," he said in a statement to POLITICO.The congressional sources said there's no conclusive evidence that Baker aided Corn's reporting or acted as a source. But Republicans are pointing to the connection to cast suspicion about whether FBI officials had a hand in directing the details of the dossier to reporters, and the two sources said they expect it to be a focus of GOP investigators' upcoming lines of inquiry. Baker's connection to Corn comes as Republicans in Congress have been raising questions about the FBI's handling of the now-famous Steele dossier, named for Christoper Steele, the British former intelligence agent subsequently identified as the author of the document.

Kushner's Records At Deutsche Bank Subpoenaed As Mueller Avoids Trump -- As it turns out, President Trump’s legal team was telling the truth when it said that Special Counsel Robert Mueller hadn’t subpoenaed financial records related to the president’s business activities from German lender Deutsche Bank, contrary to Bloomberg reporting. On Friday, the New York Times reported that Deutsche Bank had received a subpoena for records on accounts linked to the Kushner Companies, the family real-estate empire of Trump son-in-law and senior adviser Jared Kushner. This contradicts reports by both German and US media organizations dating back to July which insinuated that Mueller had been digging into Trump’s multi-decade career in real estate. Even after his infamous bankruptcies in the 1990s, Trump managed to maintain a functioning lending relationship with Deutsche, which has lent him and his businesses hundreds of millions of dollars over the years.  Unsurprisingly, these stories also got a few other key details wrong. The subpoena in question was sent by the Eastern District of New York, not special counsel Robert Mueller and his team. However, it’s notable that three prosecutors from Mueller’s team once worked for the Eastern District – which could’ve been one reason for the mix up.

Trey Gowdy Demands FBI Counsel Lisa Page Appear Before Oversight Following "Insurance Policy" Text --Last week, the world was shocked by the disclosure of text messages exchanged between FBI agent Peter Strzok and FBI counsel Lisa Page suggesting that the FBI may have crafted and "insurance policy" to prevent a Trump presidency (we wrote about it here: FBI Texts Reveal "Insurance Policy" To Prevent Trump Presidency). Text-from Peter Strzok to Lisa Page (Andy is Andrew McCabe): "I want to believe the path u threw out 4 consideration in Andy's office-that there's no way he gets elected-but I'm afraid we can't take that risk.It's like an insurance policy in unlikely event u die be4 you're 40" — Bret Baier (@BretBaier) December 13, 2017  Now, for the first time since these new revelations came to light, Trey Gowdy, chairman of the House Oversight Committee, and Bob Goodlatte, chairman of the Judiciary Committee,are demanding that Page appear before Congress to answer for what appear to be very troubling messages.  In a letter sent to Attorney General Jeff Sessions and his deputy, Rod Rosenstein, Goodlatte and Gowdy said they continue to investigate the FBI's handling of the Clinton email investigation as well as the 'Russian collusion' investigation and demanded the appearance of FBI Deputy Director Andrew McCabe, FBI Chief of Staff Jim Rybicki, and FBI counsel Lisa Page for transcribed interviews starting tomorrow. "In order to further the Committees' oversight of this important matter, we request that you make the following officials available for transcribed interviews starting this Thursday, December 21, 2017: FBI Deputy Director Andrew McCabe, FBI Chief of Staff Jim Rybicki, and FBI counsel Lisa Page."

McCabe Testimony Contained "Numerous Conflicts" With Previous Witnesses; Subpoenas Planned -- After Eight Hours Of Testimony And More Scheduled For Thursday, Congressional investigators tell Fox News that Deputy FBI Director Andrew McCabe dodged questions on the "Trump-Russia" dossier, and his testimony "contained numerous conflicts with the testimony of previous witnesses" so much that the House Intelligence Committee is planning to issue new subpoenas next week to Justice Department and FBI Personnel. While HPSCI staff would not confirm who will be summoned for testimony, all indications point to demoted DOJ official Bruce G. Ohr and FBI General Counsel James A. Baker, who accompanied McCabe, along with other lawyers, to Tuesday’s HPSCI session. -Fox News “It’s hard to know who’s telling us the truth,” said one House investigator after McCabe’s questioning - which was reportedly spearheaded by Rep. Trey Gowdy (R-SC).  Individuals thought to be on the new subpoena list include demoted DOJ official Bruce Orr and FBI General Counsel James A. Baker. Notably absent, however, is Peter Strzok - the veteran counterintelligence agent in charge of both the Hillary Clinton email "matter" and the early Trump-Russia investigation who sent anti-Trump text messages to his mistress.  McCabe was described as a "friendly witness" to Democrats in the room, who tried to enlist McCabe in building a case against President Trump for obstruction of justice. "If he could have, he would have" said one witness in the closed door session.

House Republicans Secretly Gathering Evidence To Launch Case Against DOJ and FBI: Report -- According to Politico, a group of frustrated Republicans on the House Intelligence Committee led by Devin Nunes (R-CA) have been gathering in secret for several weeks to build a case against senior leaders of the Justice Department and the FBI for what they say is "improper" and perhaps criminal mishandling of the salacious and unproven 34-page Trump-Russia dossier, according to four sources familiar with their plans.  A subset of the Republican members of the House intelligence committee, led by Chairman Devin Nunes of California, has been quietly working parallel to the committee’s high-profile inquiry into Russian meddling in the 2016 presidential election. […]The people familiar with Nunes’ plans said the goal is to highlight what some committee Republicans see as corruption and conspiracy in the upper ranks of federal law enforcement. The group hopes to release a report early next year detailing their concerns about the DOJ and FBI, and they might seek congressional votes to declassify elements of their evidence. -PoliticoWhen pressed for details, Reps Mike Conway (R-TX) and Peter King (R-NY) were mum, with Conway telling POLITICO, "I don't want talk about what we do behind closed doors." Nunes' has gone on record several times to discuss his feelings over the government law enforcement, telling Fox News "I hate to use the word corrupt, but they've become at least so dirty that who's watching the watchmen? Who's investigating these people?" adding "There is no one." House and Senate Republicans have joined countless voices, including President Trump's outside counsel, Jay Sekulow, to launch a second Special Counsel to investigate the FBI and Justice Department to find out what role the salacious dossier played in the Trump-Russia investigation, as well as a trove of anti-Trump text messages sent between lead FBI investigator Peter Strzok to his FBI attorney mistress Lisa Page while the two of them were working together on both the Clinton email investigation and the Trump-Russia investigation.

Jill Stein In Crosshairs Of Senate Intel Committee For "Collusion With The Russians" -- Step aside Tovarish Trump, it's time for Comrade Stein. Seemingly unable to deliver the finishing blow in the Trump Russian collusion probe, the Senate Intelligence Committee investigating Russian interference in the 2016 election is now seeking documents from Green Party candidate Jill Stein over what Committee Chairman Richard Burr (R-NC) characterized as "collusion with the Russians," reports Buzzfeed.Dennis Trainor Jr., who worked for the Stein campaign from January to August of 2015, says Stein contacted him on Friday saying the Senate Intelligence Committee had requested that the campaign comply with a document search.Trainor, who served as the campaign’s communications director and acting manager during that time, told BuzzFeed News that he was informed of the committee’s request because during his time on the campaign, his personal cell phone was “a primary point of contact” for those looking to reach Stein or the campaign. That included producers from RT News, the Russian state-funded media company, who booked Stein for several appearances, Trainor said.Trainor says Stein told him to wait for further instructions, adding that the Stein campaign would be in contact over the next week after receiving instructions, presumably from the Senate Intelligence Committee. The former campaign aide said he believes Stein plans to fully cooperate with the investigation, and will post the documents to her website "in an effort to show complete transparency and kind of wage her own war against [...] what I imagine she thinks is an overblown investigation into collusion."  Senator Burr said that the committee is "just starting" on the task of investigating two campaigns, but did not elaborate.

Hillary In The Crosshairs As DOJ Prosecutors Begin Asking FBI Agents About Uranium One -- Attorney General Jeff Sessions has instructed DOJ prosecutors to begin asking FBI agents for explanations regarding evidence pertaining to a dormant criminal investigation into the controversial Uranium One deal linked to Bill and Hillary Clinton, according to NBC.  The order comes as part of a promise made last month by Sessions to examine whether or not a special counsel was warranted in the deal which saw 20% of American Uranium sold to a Russian state-owned energy company in a 2010 transaction allowed by the Obama administration. Prior to the deal, individual connected with Uranium One deal had donated over $140 million to the Clinton Foundation. Moreover, Bill Clinton gave a $500,000 speech to a Russian bank which issued a favorable rating on Uranium One stock. Clinton and Putin met the same day of the speech at the Russian leader's private homestead. A report by the New York Times and the book Clinton Cash by investigative journalist Peter Schweizer in 2015 are said to have convinced the FBI in large part to launch their investigation into the Clinton Foundation over several claims of pay-for-play before and during Hillary Clinton's role as Secretary of State, including the Uranium One deal and several international arms sales.  As reported in International Business TimesThe Clinton-led State Department also authorized $151 billion of separate Pentagon-brokered deals for 16 of the countries that donated to the Clinton Foundation, resulting in a 143 percent increase in completed sales to those nations over the same time frame during the Bush administration.

Exclusive: Prominent lawyer sought donor cash for two Trump accusers --Prominent lawyer sought donor cash for two Trump accusers --A well-known women's rights lawyer sought to arrange compensation from donors and tabloid media outlets for women who made or considered making sexual misconduct allegations against Donald Trump during the final months of the 2016 presidential race, according to documents and interviews. California lawyer Lisa Bloom's efforts included offering to sell alleged victims' stories to TV outlets in return for a commission for herself, arranging a donor to pay off one Trump accuser's mortgage and attempting to secure a six-figure payment for another woman who ultimately declined to come forward after being offered as much as 750,000, the clients told The Hill. The women's accounts were chronicled in contemporaneous contractual documents, emails and text messages reviewed by The Hill, including an exchange of texts between one woman and Bloom that suggested political action committees supporting Hillary Clinton were contacted during the effort.

Meet the new risks, same as the old risks: Trump's FSOC shares many Obama-era fears -  — In its first annual report to Congress since the Trump administration took office, the Financial Stability Oversight Council identified many of the same sources of risk identified in previous reports, while adding a new emphasis on economic growth and regulatory tailoring. The report, which the FSOC voted to approve Thursday afternoon, includes extensive examinations of risks to the financial system such as cybersecurity, central counterparty risk, short-term wholesale funding, reference rates and resolution planning. But the primary change from previous reports is its references to the importance of streamlining regulations and ensuring that they foster economic growth, a senior Treasury official said.  Treasury Secretary Steven Mnuchin said the report is “the culmination of a productive process among all of FSOC’s members” and said the council has “received valuable input from the other agencies, and I look forward to implementing the recommendations.” The general areas of risk hew to recommendations that FSOC made in its 2016 report, which was issued nearly 18 months ago in June 2016. The report is different in some of its particulars, however.  In the area of cybersecurity, the 2017 report calls on Congress to pass legislation that grants the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Housing Finance Agency and National Credit Union Administration the power to issue enforcement actions against third-party service providers.  The report also calls for the creation of a “private sector council of senior executives” that would meet with “principal-level government counterparts” to discuss cybersecurity issues and threats.  The 2017 report retains much of the language dealing with the potential risks posed by the asset management industry. It noted that since the last FSOC update on asset management in April 2016, the SEC has “finalized a number of rules” to address many of those issues, including liquidity and redemption risk. The report called for principal agencies to review their data collections to assess whether further action is necessary to counter leverage risks posed by hedge funds. But the report dropped references made in the 2016 report to operational risk, securities lending risk and resolvability and resolution planning for asset managers.

Scrapping $50B threshold will let 30 big banks off the hook - The House of Representatives is slated to vote on a bipartisan bill this week that would effectively deregulate 30 of the 38 largest banks in the country. The bill, the Systemic Risk Designation Improvement Act, targets Section 165 of the Dodd-Frank Act, which requires regulators to subject bank holding companies with over $50 billion in assets to enhanced prudential regulations. Yet it was clear in the aftermath of the financial crisis that the banking sector suffered from weak regulatory oversight and regulation. Subjecting the largest roughly 40 banks — out of 6,000 banks in the U.S. — to stronger loss-absorbing capital requirements, leverage limits, liquidity requirements, stress testing, living wills, and more, was a sensible policy response to the crisis.  The House bill repeals the $50 billion threshold and requires that regulators only apply the enhanced prudential regulations to the eight most systemically important banks in the U.S. that qualify as globally systemically important banks. The bill would provide cumbersome mechanisms for regulators to reapply these enhanced regulations to the 30 deregulated banks. It is hard to imagine, however, that the Trump-appointed regulators keen on financial deregulation would exercise this authority aggressively. And even if regulators did utilize those mechanisms to reapply the regulations, banks could challenge those decisions in court — potentially resulting in drawn-out legal battles.  The 30 banks deregulated by this bill hold a combined $5.3 trillion in assets, or roughly 25% of the total assets in the banking sector. Collectively they received $65 billion in TARP bailout funds and hundreds of billions more in additional forms of government support. This universe of banks deregulated by the bill also includes the U.S. holding companies of systemically important foreign banks like Credit Suisse, Deutsche Bank and HSBC. These scandal-plagued foreign banks should be some of the last banks policymakers consider deregulating.

Regulators approve big banks’ living wills — with a warning - — Federal regulators approved the resolution plans of the eight largest U.S. banks on Tuesday, but faulted half of them for areas that need improvement. The Dodd-Frank Act required banks with more than $50 billion of assets to provide a detailed plan, known as a living will, of how they could be dismantled without government help if they began to fail. The plans must be signed off on by regulators. In its latest evaluation, the regulators said the plans of the eight biggest institutions passed muster, but cited areas of improvement for Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo. All four must revise their resolution plans when they make their next submission in 2019.“Reflecting the significant progress made in recent years, the [Federal Deposit Insurance Corp.] and the Federal Reserve Board on Tuesday announced that the resolution plans of the eight largest and most complex domestic banking organizations did not have ‘deficiencies,’ which are weaknesses severe enough to trigger a resubmission process that could result in more stringent requirements,” the agencies said in a joint release. The firms that passed without objections were Citigroup, JPMorgan Chase, Bank of New York-Mellon and State Street. In the case of Wells Fargo, the agencies said that the bank’s living will “did not include sufficient documentation and analysis relating to impediment identification and mitigation,” which they said “raises questions regarding the degree to which identified divestiture options are actionable.”The agencies instructed Wells to “provide a comprehensive analysis of p otential significant impediments to execution for each divestiture option and clear mitigating strategies that could be taken, if needed, to address those impediments.”

Fed’s Quarles recuses himself from Wells-related actions — The Federal Reserve Board on Friday announced that Vice Chairman for Supervision Randal Quarles will recuse himself from supervisory matters related to Wells Fargo to avoid “even the potential appearance of a conflict of interest.” Quarles, who held stock in Wells Fargo that he divested upon his confirmation to the Fed board, is recusing himself voluntarily, according to the Fed statement. The recusal is not required by law, but “in light of his extended family's prior sale of their interest in a bank to Wells Fargo, he has chosen to recuse himself from matters specifically involving the firm.”   Quarles' wife is a member of the Eccles family, who were owners of First Republic Bank, which was headquartered in Utah. The bank, which held $23 billion in assets and had more than 200 branches, was acquired via an all-stock deal worth an estimated $2.6 billion in 2000. At the time, it was Wells’ largest acquisition.  While Quarles’ recusal would render him unable to vote on any enforcement of supervisory matters relating to Wells directly, it would not require Quarles to recuse himself on matters that affect banks more generally, even if Wells is among the banks affected.  Still, the impact of the recusal could be significant considering the regulatory scandals that have dogged Wells Fargo of late. Last year, the Consumer Financial Protection Bureau fined the bank $140 million related to a cross-selling scandal where employees signed up customers for accounts they did not authorize. Fed Chair Janet Yellen has said in congressional testimony that the central bank is weighing its own actions against the bank.

Three looming worries for bankers in final tax reform plan - The centerpiece of the final reform bill, which was unveiled Friday and which Congress is expected to pass later this week, is a reduction of the corporate tax rate from 35% to 21%. The lower rate will provide a sudden boost to banks' bottom line. “All things considered, banks are decidedly and unambiguously one of the clearest beneficiaries of the GOP tax reform package,” Isaac Boltansky, an analyst at Compass Point Research & Trading, wrote in a note to clients.  The final bill, unveiled by the conference committee chaired by Rep. Kevin Brady, R-Texas, also addressed concerns that some lenders had about how earlier drafts dealt with the tax treatment of mortgage servicing rights. But the House and Senate conference report left some lingering concerns about the bill's effects on the housing mortgage industry, deposit insurance premiums and the value of certain assets banks hold that accrue when they incur tax losses. Here are three potential causes for concern from the tax plan.

  • Deferred tax assets.  While banks will benefit from the lower corporate tax rate, many will also have to write down the value of deferred tax assets, which could mean a temporary hit to their capital reserves.
  • Deposit insurance deduction. Some industry watchers were concerned that tax legislation authors might try to create some sort of bank tax or financial transaction tax in order to pay for tax cuts. Even though the final plan lacked such a measure, it did ultimately remove larger banks' tax deduction for Federal Deposit Insurance Corp. premiums. The deal Congress unveiled on Friday would get rid of that deduction for banks with more than $50 billion in assets, and limits the deduction for banks with assets of $10 billion to $50 billion. Banks with assets of less than $10 billion will still be able to write off their deposit insurance premiums.
  • A blow to the housing industry?  The original House tax plan would have limited the mortgage interest deduction to loans of no more than $500,000. The Senate plan capped the deduction at $1 million, and the two chambers ended up compromising at $750,000.  Housing groups have opposed the cap from the very beginning, saying it waters down an incentive for homeownership. The effect of the cap is exacerbated, they say, by the doubling of the individual standard deduction from $12,000 and $24,000, which means taxpayers are less likely to want to take itemized deductions such as that for mortgage interest.

Will Treasury target data agency's independence? - The Consumer Financial Protection Bureau isn’t the only Dodd-Frank Act agency poised for change in the new year. With the abrupt departure of its director last month, the Office of Financial Research may also be facing a shift in direction.  Since its inception, the office has largely remained out of the public eye. But it’s tasked with an important role: collecting and standardizing complex market data and conducting research to help the Financial Stability Oversight Council root out the next financial crisis.  Now the office’s functioning — and independence — may be under threat.  Treasury has previously recommended that OFR become "a functional part" of the department.  Treasury has promised to slash its budget and staff significantly in the coming year. And the Trump administration has named Ken Phelan, who has served as Treasury’s chief risk officer since 2014, as the office’s acting director. That’s notable because Treasury has also called for bringing the office more completely into its fold. The department recommended in June that the office should become “a functional part of Treasury” — with its director appointed by the secretary and removable at will. The office’s budget, which is currently paid for by bank assessments, would also be determined by Treasury.  If the president selects a director whose views about the office mirrors his own, that will be a marked contrast with the intentions of those who originally conceived of the OFR. In the wake of the mortgage meltdown, a group of academics called for the creation of a fully independent office — much like the CFPB — that would, among other things, alert regulators and the public early to the possibility of future crises.

How Basel rule changes could trump tax reform as driver of US bank payouts - The tax reform bill passing through US congress will likely prove a payday for bank shareholders. A reduction in corporation tax rates to 20% applied to 2016 earnings would result in $12.6 billion additional post-tax income for the six biggest banks.Yet a far bigger payout – also for US bank shareholders – is looming as a consequence of changes to bank capital requirements agreed in Basel last week, as well as new leadership at the Federal Reserve. A Risky Finance analysis shows how it could work. The main takeaway from the Basel change was the abolition of internal models for a slew of capital requirements, including those for operational risk, which covers losses from things like failed systems, inadequate controls or unexpected events. According to the Basel Committee, internal models failed to predict the biggest op risk losses after the financial crisis, which resulted from conduct failings such as market rigging or mis-selling. [see chart] In the new Basel standardised model, the op risk charge will be proportionate to the size of a bank’s businesses (split into three types), multiplied by a factor dependent on the bank’s historical operational risk losses over the previous ten years. However, this internal loss multiplier (ILM) can be set to one at the discretion of national regulators – in other words, they can choose to ignore history if they want to. According to a quantitative impact study published by Basel at the same time as the rule changes, the move to a standardised op risk charge will reduce capital requirements for this risk for large (G-SIFI) banks by around a third.    As a percentage of their common equity tier 1 capital, the top four US banks have the highest op risk charges in the world, according to the Risky Finance database [see chart]. Reducing the charge to the average of large non-US banks would add almost two percentage points to US bank CET1 ratios, Risky Finance analysis shows.

Bitcoin: The Most Impressive Speculative Bubble In Modern History -- In August of 2008, a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” was released on an academic listserve by somebody called “Satoshi Nakamoto.”  The paper described an electronic, public system for transferring “value” from one participant to another without a bank or other type of intermediary. The security for clearing these public transactions came from industrial strength cryptography, which effectively makes each bitcoin trade more costly to validate than the last.  After getting the bitcoin party started with a few initial trades, the enigmatic Satoshi disappeared, leaving his creation to expand pretty much on its own. And it has. Without consultants or conferences or government sponsorship, the world of bitcoin has grown exponentially, attracting a growing number of participants and equally vast and growing amounts of computer resources and, in particular, electricity needed to validate each transaction.  The bitcoin adherents are loyal to the cause—“true believers,” to borrow from the famous title of Eric Hoffer’s classic 1951 book. They are attracted by the numerous “benefits” of bitcoin, including the lack of a central authority and the use of a proof of work known as a “block” to add each new transaction to the existing “chain” of previous transactions.   But more than anything else, the bitcoin enthusiasts are attracted by the fact that the value of these tokens, measured in real currencies, has been rising steadily, up for than 1,600 percent in 2018 alone. According to CNBC, one bitcoin was worth about $1,000 in 2013. As of Friday, one bitcoin was worth $17,599. Historically, Edward Balleisen notes in his 2011 book Fraud, “the most powerful means of getting people to view a fraudulent scheme as legitimate is the manufacture upward price movements.”

The Bitcoin Bubble - naked capitalism - Yves here. This post focuses on why bitcoin has gone from being a mere speculative mania to a potential risk to the economy. Futures contracts make is possible to engaged in levered speculation. The booms and busts that have had destructive real economy effects have involved borrowed funds, because the collapse blows back to lenders, who almost without exception have intertwined relationships with other lenders and/or the payments system.  Note that the exchanges have set pretty high margin requirements for bitcoin. From the CME’s website: the Maintenance Margin for the BTC future is 43%, where the Initial Margin for Hedger is 100% of the maintenance margin and the initial Margin for Speculator is 110% of that number.. Margin offsets with other CME products will not be offered initially. Additionally, FCMs may require a margin level beyond CME Clearing’s minimum requirement. However, some speculators are already working with borrowed funds, albeit not with the short fuses of margin accounts. Any leverage with an “investment” this volatile is playing with fire.  In a longer-form treatment, banking expert (and diehard libertarian) Chris Whalen decries bitcoin as a financial fraud in the American Conservative:Stripped down to its basic elements, bitcoin is a classical fraud, a form of high-tech gaming that has captured the imagination of millions of greedy and gullible people around the globe. Participants exchange a legal tender dollar or some other real asset, for example, for a share of the limited supply of bitcoins at whatever the current price may be at the time. The participants exchange something for nothing – namely bitcoin, which have no intrinsic value or yield, but which trade over the world of ethernet, outside of the regulated world of banks and financial payments…the remarkable thing is that much of the effusive praise for bitcoin that is heard from participants is self-generated flimflam… Sad to say, there is little likelihood of bitcoin displacing any of the existing fiat currencies sponsored by governments. First and foremost, the cost of solving the ever-lengthening blocks of cryptographic transactions is prohibitive. The total electricity consumed today by the bitcoin “miners” who validate the transactions (and thereby earn a 25 bitcoin reward) already exceeds the total power consumption of small nations.

Bitcoin plummets, reveals Ponzi scheme traits - The Hill - Several readers of my most recent op-ed on cyber currencies, “Bitcoin is a Ponzi scheme, and it will collapse like one,” criticized my characterization of cyber currencies, and specifically bitcoin, as Ponzi schemes. I will explain why cyber currencies in fact are akin to a Ponzi scheme even if they are not criminal frauds.Friday's unprecedented collapse of cyber currency prices reinforces my Ponzi scheme characterization of cyber currencies. Bitcoin, the dominate cyber currency, hit an all-time peak, slightly above $20,000 last Sunday morning before beginning a moderate price slide that accelerated in the early hours of Friday morning Eastern time. By late Friday morning, Bitcoin's price had dropped to $11,833, a 41-percent decline from Sunday's peak. Every other cyber currency reported on the website showed similar, if not greater price declines. The decline in the market value of all cyber currencies exceeds $100 billion; bitcoin alone has lost almost $40 billion of market value.The collapse of cyber currency prices over the last 24 hours powerfully reinforces my assertion that at their core, cyber currencies are Ponzi schemes, or certainly close Ponzi cousins. This price collapse also destroys any belief that cyber currencies represent a reliable store of value — anything but!Ponzi schemes, such as the one Bernie Madoff operated for years, are fraudulent because they promise returns to investors that are totally illusory. Ponzi operators such as Madoff use cash received from recent investors to repay earlier investors, returning not only their original investment, but also a “profit” presumably earned by the operator while holding that “investment.” Ponzi operators also pocket a portion of what they collect from investors.Since Ponzi schemes rarely invest in anything with a real or intrinsic value, such as stocks, bonds, property, businesses, etc., which generate real income, Ponzi schemes do not generate any real profits. The same is true for all cyber currencies — there is nothing real about them.

SEC Suspends Trading In Crypto Company Which Soared To $11 Billion Amid Bitcoin Mania --Following last night's chaotic appearance of LongFin CEO on CNBC's FastMoney, it appears The SEC has finally had enough of the unusually explosive price gains of previously tranquil publicly-traded companies adding the word 'blockchain' to their names (or mission statements). In what we suspect will be the first of many, The SEC has suspended trading of shares in "The Crypto Company" - a name we're familiar with - due to "potentially manipulative transactions in the company’s stock."The Securities and Exchange Commission cites concerns regarding the accuracy and adequacy of information about compensation paid for promotion of the company, and statements in Commission filings about the plans of the company’s insiders to sell their shares of The Crypto Company’s common stock.  As Bloomberg reports, through Monday, Crypto’s market value had surged to more $11.9 billion. The company invests in digital assets, and is developing source code for managing them, according to its regulatory filings.  James Gilbert, the company’s president, held a stake valued at nearly $4.2 billion based on Monday’s closing price.The SEC said its concerns include the compensation paid for promotion of Crypto and statements made in regulatory filings about plans for insiders to sell their shares.Full SEC Statement:

Litecoin Founder Cashes Out, Sells Entire Stake After 9,300% Rally - Charlie Lee, the creator of the world’s fifth-biggest cryptocurrency, Litecoin, announced shortly after midnight that he was cashing in his profits after a torrid, 9,300% rally in the past 12 months. In a post on reddit, the San Francisco-based software engineer who founded litecoin in 2013, said that he sold and donated all of his holdings over the past few days. "Litecoin has been very good for me financially, so I am well off enough that I no longer need to tie my financial success to Litecoin’s success. For the first time in 6+ years, I no longer own a single LTC that’s not stored in a physical Litecoin" Lee said in the post. Lee explained that his liquidation was aimed at preventing a “conflict of interest” when the creator of what is known as "Bitcoin Silver" makes comments on twitter about the digital currency - something he tends to do with chronic zeal - that could influence its price, he said. That said, Lee declined to comment in the post on how many coins he sold or at what price, and asked readers to please "don’t ask me how many coins I sold or at what price. I can tell you that the amount of coins was a small percentage of GDAX’s daily volume and it did not crash the market." Litecoin, which was trading at $3.67 on December 20, 2016, and $4.40 at the start of the year, has climbed 9,300% in the past 12 month. It tumbled on Wednesday, following most digital currencies lower after a flash crash in bitcoin after Coinbase announced it would finally transact in Bitcoin Cash which led to a brief avalanche of selling as traders repositioned.

Goldman Sachs will trade cryptocurrencies by June 2018 - JPMorgan Chase CEO Jamie Dimon is on record as having said earlier this year that bitcoin is a "fraud" and that he would fire any employee he caught trading it. Goldman Sachs, the famed investment bank led by Lloyd Blankfein, is now preparing to set up its own cryptocurrency trading desk.Goldman plans to begin buying and selling cryptocurrencies such as bitcoin as early as June, though the bank is still figuring out how it will store the digital assets and keep them secure, according to a Bloomberg report published on Thursday afternoon. The move keeps Goldman at the forefront of Wall Street banks amid this year's cryptocurrency explosion.Blankfein tweeted this fall about his interest in bitcoin, and when CBOE Global Markets and CME Group began listing the world's first bitcoin futures in December, Goldman stepped up to clear those transactions. Other large banks, such as Citigroup and Bank of America, have stayed out of it.Goldman's trading desk will be set up in New York, according to Bloomberg, though it isn't yet clear in which division it will be housed. One possibility is the fixed-income, currencies and commodities unit.It remains to be seen whether other Wall Street players will follow Goldman's lead. This year has already seen a tsunami of interest in digital currencies from hedge funds, venture capitalists and the general public, as new coins launched and the total value of the market shot up from less than $18 billion to some $600 billion on Dec. 21. But the Goldman news may be a sign that the real tidal wave is still inbound.

The Market for Stolen Account Credentials - Brian Krebs -- Past stories here have explored the myriad criminal uses of a hacked computer, the various ways that your inbox can be spliced and diced to help cybercrooks ply their trade, and the value of a hacked company. Today’s post looks at the price of stolen credentials for just about any e-commerce, bank site or popular online service, and provides a glimpse into the fortunes that an enterprising credential thief can earn selling these accounts on consignment. Not long ago in Internet time, your typical cybercriminal looking for access to a specific password-protected Web site would most likely visit an underground forum and ping one of several miscreants who routinely leased access to their “bot logs.” These bot log sellers were essentially criminals who ran large botnets (collections of hacked PCs) powered by malware that can snarf any passwords stored in the victim’s Web browser or credentials submitted into a Web-based login form. For a few dollars in virtual currency, a ne’er-do-well could buy access to these logs, or else he and the botmaster would agree in advance upon a price for any specific account credentials sought by the buyer. Back then, most of the stolen credentials that a botmaster might have in his possession typically went unused or unsold (aside from the occasional bank login that led to a juicy high-value account). Indeed, these plentiful commodities held by the botmaster for the most part were simply not a super profitable line of business and so went largely wasted, like bits of digital detritus left on the cutting room floor. But oh, how times have changed! With dozens of sites in the underground now competing to purchase and resell credentials for a variety of online locations, it has never been easier for a botmaster to earn a handsome living based solely on the sale of stolen usernames and passwords alone. If the old adage about a picture being worth a thousand words is true, the one directly below is priceless because it illustrates just how profitable the credential resale business has become.

Banks offer raises, bonuses after Congress passes tax reform bill -- Now that the tax bill has passed Congress and will soon be signed by the president, some banks are beginning to outline what they will do with the extra money they will have once a reduction in the corporate tax rate takes effect.   Fifth Third Bancorp said Wednesday that it plans to give many employees a raise and bonus check. The Cincinnati-based company said it will hike its minimum hourly wage to $15 and pay a one-time bonus of $1,000 to more than 13,500 employees. That would cover roughly three-quarters of the bank's employees, the $142 billion-asset company said. Wells Fargo made a similar move, announcing it would also raise its minimum hourly wage to $15 once the president signs the tax bill into law.The increase is Wells’ second minimum wage hike this year. The San Francisco company in January increased wages for entry-level workers to $13.50 from $12. Other big banks — including JPMorgan Chase and Bank of America — increased hourly wages to $15 last year.Additionally, Wells said in its announcement that it plans to donate $400 million to nonprofit organizations next year. Beginning in 2019, it will set a target of donating 2% of its after-tax profits to corporate philanthropy. A portion of those donations will go towards programs that help support small businesses and homeownership, according to the company. Other businesses also announced plans to offer raises and bonsues. AT&T, which is trying to persuade the government to approve its agreement to buy Time Warner, said on Wednesday it will pay a $1,000 bonus to about 200,000 workers.  When the tax legislation was still being debated, bankers mused how they would use the extra money flowing into their coffers. Some bankers said they would pay higher dividends to shareholders, or accelerate share-buyback programs. Others said they might hire extra workers or reinvest the money back into the bank.

This is just the start of companies handing out bonuses, raising wages and increasing spending - Expect a stampede of companies handing out bonuses, raising pay, spending on capital projects and giving to charities, with the windfall from the massive corporate tax cuts passed Wednesday. In the hours after Congress approved the GOP tax cut plan, a handful of companies jumped to announce plans to share some of the proceeds on their employees and spend on infrastructure. Boeing was first out of the gate, followed by AT&T, which said it would give more than 200,000 unionized employees a special bonus of $1,000 once the tax bill is signed. The company also said it would increase its capital expenditures by $1 billion. Both Fifth Third Bancorp and Wells Fargo followed, saying they would raise their minimum wage to $15 an hour. Fifth Third said it would also give workers a bonus, and Wells Fargo said it would give $400 million to community and nonprofit organizations next year. Comcast, which owns CNBC parent NBCUniversal, said it would pay 100,000 frontline and non-executive employees special $1,000 bonuses. The company also said it is making the move because of the FCC's recent change in broadband rules and tax reform. It also said it plans to spend well in excess of $50 billion over the next five years on infrastructure improvements. "This is exciting stuff. This is good. This is not just a whole bunch of guys saying I can buy back a lot of stock here and jazz up my numbers through financial engineering. This is a bunch of business leaders saying we can use this tax benefit to grow our company, keep our loyal employees and assist the community," said Dick Bove, banking analyst at Vertical Group. The corporate tax rate is being cut to 21 percent from 35 percent. Bove said banks pay an average 31 percent tax rate. Bove said he now expects the other banks to follow with similar announcements. 

Here’s what tax reform bill will cost banks - The tax reform legislation approved by Congress on Wednesday and expected to be signed by President Trump soon is mostly good news for banks, but many will have to take big charges in the fourth quarter as a result.  The blows are temporary — the lower corporate tax rate in the legislation will sharply lower the value of tax-deferred assets, forcing write-downs — but significant.  Citigroup is estimated to take a $16 billion to $17 billion hit, but even for regional banks, the charges could be sizable. Capital One Financial, for example, may record a charge of about $976 million, according to an estimate by FIG Partners. Among large banks, only Citi has indicated the size of its charge. However, FIG Partners estimated that U.S. Bancorp’s charge could total $514 million; the $19 billion-asset First National Bank of Omaha may record a $50 million charge; the $30 billion-asset Associated Banc-Corp may take a $36 million charge; and the $27 billion-asset Hancock Holding in Gulfport, Miss., could record a $29 million charge. “Banks are going to have to shrink the size of an asset on their balance sheets,” said Bill Reilly, an accountant at Grant Thornton who advises banks. “Their future tax deductions will be worth less.” To be sure, banks will ultimately gain under the bill, which lowers the corporate income tax to 21% from 35%. Banks are expected to reap significant benefits next year as a result.   But the impact is expected to be widespread. Nearly all banks are expected to be affected since a tax-deferred asset is generated through loan-loss reserves, though the amount will vary considerably based on the level of reserves and other factors.

Taxphoria Sparks Stock-Buying Panic - Dow Does Something It Has Never Ever Done Before -- The Dow closed at its 70th record high of the year... it has never done that before in its 100-year-plus history. Additionally, S&P is most overbought (weekly RSI) since 1958... There have been no down months since Trump elected and 2017 is shaping up to be a 'Perfect Year' This would be the first time ever that stocks had 12 monthly gains in a row in a calendar year... On the day, everything in stock-land was awesome... Trannies and Small Caps outperformed, Dow and S&P gained but lagged on the day... Most-Shorted stocks soared 3.5% in the last 2 days as another squeeze surged markets higher... 'High Tax' companies actually outperformed... Retailers (black) continued their rip higher (Utes underperformed)... And it would be rude to end today without mentioned LongFin... which was halted 18 times today!!! 

Dow rises 5,000 points in a year for the first time ever --This is the biggest annual-points gain for the Dow in its history. | 18 Dec 2017 | The Dow Jones industrial average just did something it has never done in its 121-year history. The 30-stock average is now up more than 5,000 points in a year, marking its biggest annual-points gain ever. This following a 200-point rally Monday which sent it to an all-time high. The Dow was also on track Monday to post 70 record closes in a year for the first time. To put that into perspective, about one of every four trading sessions this year has been a record close for the index. The Dow, along with the S&P 500 and the Nasdaq composite, has had a banner year, rising 25.6 percent. The S&P 500 and Nasdaq are up 20.3 percent and 28.6 percent, respectively. 

The Coming Fiscal Derailment - Why FY 2019 Will Sink The Casino -- David Stockman Since last November 8th the Russell 2000 has risen by 30% and the net Federal debt has expanded by an astounding $1.0 trillion dollars.  In a rational world operating with honest financial markets those two results would not be found in even remotely the same zip code; and especially not in month #102 of a tired economic expansion and at the inception of an epochal pivot by the Fed to QT (quantitative tightening) on a scale never before imagined.And we do mean exactly those words. By next April the Fed will be shrinking its balance sheet at $360 billion annual rate and by $600 billion per year as of next October.Altogether, the Fed's balance is scheduled to contract by upwards $2 trillion by the end of 2020. And it's apparently on a path that is so locked-in----barring a recession---that Janet Yellen affirmed in her swan song that the Fed's giant bond dumping program (euphemistically called "portfolio runoff") would no longer even be mentioned in its post-meeting statements.So the net of it is this: The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995! That prospect alone might give a rational stock market at least some cause to pause. After all, the Fed's $2 trillion bond selling campaign (likely to be joined by the ECB in 2019 when a German replaces wild-man Draghi) is on automatic pilot unless there is a recession.So stock prices are either going to be battered by slumping profits if the business cycle hasn't actually been abolished; or, in the alternative, rising bond yields will sharply inflate the carry cost of $12.5 trillion of US non-financial business debt (e.g. a 200 basis point increase in rates would lower pre-tax business profits by $250 billion or 15%) even as PE multiples shrink and stock buybacks are sharply curtailed.And that's not all, as the late night TV man says. There is literally a fiscal red ink eruption heading straight at the Fed's balance sheet shrinkage campaign that will rattle the rafters in the casino.

Can CFPB’s Mulvaney bring politicos to independent agency? Absolutely -  When Mick Mulvaney announced plans to hire political appointees to work at the Consumer Financial Protection Bureau, many viewed that as antithetical to the workings of an independent regulator. Political appointees don't work at the banking agencies, they said. And that is true. The regulators are traditionally staffed with non-political career employees. But legal experts say that distinction may be just tradition more than anything else. Technically speaking, there is nothing stopping Mulvaney, the CFPB's acting director, from hiring as many political appointees as he wants. "The director has the authority to hire anybody he wants as long as they meet minimal criteria such as citizenship," said Richard Horn, of Richard Horn Legal, who is a former CFPB senior counsel and special adviser.  Mulvaney, the White House budget director who was named by President Trump to head the CFPB last month, has said he plans to bring political staffers on board to pair them with career officials who run CFPB divisions. Although Mulvaney had called for a 30-day hiring freeze his first day on the job, he said he plans to embed political appointees at the agency early next year. Observers said Mulvaney's experience running the White House Office of Management and Budget gives him the expertise on how to utilize political staffers at the CFPB. "You can salt away a small army at an agency using different mechanisms because the coin of the realm is the paycheck and the power, and [Mulvaney] can get them," said Paul C. Light, a professor of public service at New York University's Robert F. Wagner Graduate School of Public Service. "There are a lot of ways to get people into government at the top and while it's not an infinite number, [Mulvaney] will get a dozen, maybe two dozen, political appointees and he knows how to do it, so the question will be, who does he pick?" At a press conference last week, Mulvaney said he would "try to marry [each CFPB branch's] senior staffer… up with a political position." Jeff Hauser, the executive director of the Revolving Door Project at the left-leaning Center for Economic Policy and Research, said Mulvaney's call to hire more political staffers was unusual among financial regulators. "It means [Mulvaney] is going to create patronage jobs for ideologically reliable people," Hauser said. "This is unusual because an independent agency is not designed to allow this kind of patronage hiring process. This has not happened at the Federal Reserve."

 Chamber backs CFPB's Mulvaney, cites 'constitutional concerns -- The U.S. Chamber of Commerce said Monday that an attempt to oust Mick Mulvaney as acting director of the Consumer Financial Protection Bureau would raise "grave questions" about the constitutionality of the consumer agency. The Chamber wrote in an amicus brief that CFPB Deputy Director Leandra English's legal effort to have Mulvaney removed from his job running the bureau would represent "an unprecedented limitation" on the president's constitutional authority to appoint and remove the heads of federal agencies."An interpretation of the Dodd-Frank Act that would prevent the president from designating the acting director of the bureau after a director’s resignation would accordingly raise serious constitutional concerns," Andrew Pincus, the Chamber's lawyer and a partner at Mayer Brown, wrote in a 38-page brief filed with the U.S. District Court for the District of Columbia.  Mulvaney was named acting director of the CFPB by President Trump on Nov. 24, just hours after former CFPB Director Richard Cordray had tapped English to lead the agency on an interim basis. English has claimed she is the rightful head of the CFPB in the absence of a Senate-confirmed director. English sued Trump and Mulvaney on Nov. 29, but a district court judge refused to issue an immediate temporary restraining order to Mulvaney, thereby validating his position. But a final ruling in the case is still pending; a hearing is set for Friday. President Trump's appointment and removal powers are central elements to the case, Pincus wrote.  Under Dodd-Frank, which created the CFPB, the law says the job of director falls to the deputy director in the "absence or unavailability" of the director. Democrats interpret that to mean English is the lawful head until Trump nominates a successor who is confirmed by the Senate.

Three things to watch as CFPB leadership case goes to court - The Trump administration and acting Consumer Financial Protection Bureau chief Mick Mulvaney won round one in a legal battle challenging Mulvaney's leadership. His critics will have a tall order trying to win round two.  The lawyer for CFPB Deputy Director Leandra English, who claims she is the rightful acting director, will face off against the Justice Department in a court hearing where key questions about the CFPB's independence and the president's authority to appoint an interim director are sure to be raised.  English, who is represented by a former CFPB attorney, is still a long shot to unseat Mulvaney — as evidenced by the judge's denial last month of English's request to have Mulvaney immediately removed. But the oral arguments could delve into questions over Mulvaney's early moves as CFPB director, including a freeze on new regulations and his decision to bring more political appointees into the agency, which critics say threaten the CFPB's independence. English was named deputy director last month by former CFPB Director Richard Cordray, right before he abruptly resigned, which her supporters say catapulted her to the top job. But that prompted President Trump to immediately name Mulvaney as acting director.  English then filed a lawsuit against both Trump and Mulvaney in a bizarre showdown in which two people were claiming to be the lawful head of the CFPB.  Here are three things to watch for in Friday's hearing:

  • Does English actually have a case?  Many lawyers think English has little chance of succeeding given that U.S. District Court Judge Timothy J. Kelly declined to grant her request for a temporary restraining order against Mulvaney, which would have forced him to leave his position while the case played out.
  • The case may really be about CFPB's independence.  While the lawsuit is principally about who serves as acting director when there is a vacancy at the CFPB, the hearing Friday could further the debate over whether the agency operates independently from the White House.
  • English could be eyeing an appeals court showdown. Some legal experts think the case is really about Democrats trying to keep the issue of the CFPB's independence alive with the goal of appealing any decision to the D.C. Circuit, but that type of strategy might spark its own backlash.

 Judge casts doubt on CFPB deputy's claim to head agency - A federal judge appeared to be leaning toward siding with President Trump during oral arguments Friday in a case in which Consumer Financial Protection Bureau Deputy Director Leandra English is challenging the president's ability to appoint Mick Mulvaney as acting director.  The case, English v. Trump, et al., arose after former CFPB Director Richard Cordray resigned abruptly over Thanksgiving weekend, appointing English as acting director pursuant to a clause in the Dodd-Frank Act that says that the deputy director should serve as interim head in the director's absence. President Trump instead invoked the 1998 Federal Vacancies Reform Act to appoint Mulvaney, who is also the head of the Office of Management and Budget. Much of the legal questions in the case surround not only what statute should dictate succession at the bureau, but also the criteria the judge should use when considering which law applies.  Deepak Gupta, the lead attorney for English, insisted that just because Mulvaney is currently running the CFPB, that shouldn't count against English's case. “The reason for that is a simple matter of equity,” Gupta said. If Judge Timothy Kelly were to treat Mulvaney’s directorship as the status quo, he “would reward someone for taking matters into their own hands.”  Kelly, who was appointed by President Trump, said that the two statutes bring into question the relative importance of general versus specific directives in statutes. In order for a judge to decide which applies, there has to be a conflict between the two statutes that directs one to do the opposite of the other. He wasn’t sure that was the case here.  “To get to that canon … the statutes have to be irreconcilable,” Kelly said. “Is that really the case here? There are any number of cases where ‘shall’ is made the default rule and qualified by a ‘may.’ ” 

CFPB's Mulvaney scraps survey for debt collection plan - The Consumer Financial Protection Bureau on Tuesday withdrew a plan to conduct a web survey for its debt collection proposal while acting Director Mick Mulvaney reviews the rulemaking.The CFPB filed a notice with the Office or Regulatory Affairs to withdraw a plan to conduct a survey of 8,000 individuals as part of research into debt collection disclosures. "Bureau's leadership would like to reconsider the information collection in connection with its review of ongoing related rulemaking," the CFPB stated in the filing.  The CFPB had sought approval in November from the Office of Budget and Management to "explore consumer comprehension and decision making in response to debt collection disclosure forms," according to a notice filed in the Federal Register. Mulvaney heads the OMB and was named to be the acting director of the CFPB last month by President Trump. The debt collection industry applauded the withdrawal of the data collection, saying it was flawed and undermined the Paperwork Reduction Act.  The Association of Credit and Collection Professionals, a trade group for debt collectors, objected in a comment letter to the data plan by arguing that the survey questions were biased. One of the CFPB's proposed question stated, “Debt collectors generally don’t care whether the people they are trying to collect debts from actually owe the debt.” Still, it is unclear if Mulvaney will try to scrap the entire debt collection proposal that was promulgated under former CFPB Director Richard Cordray.

CFPB halts implementation of prepaid rule to consider changes -- Consumer Financial Protection Bureau said Thursday that it will delay implementation of its prepaid rule and will consider new changes to the regulation before it goes into effect. Moments after the CFPB had said it would reopen its mortgage disclosure rule earlier in the day, the CFPB released a statement announcing that the effective date for the prepaid rule — set for April 1, 2018 — would similarly be scrapped. The agency said it would announce changes after January 1 to amend the prepaid rule.  The announcement was a further sign that acting CFPB Director Mick Mulvaney will seek to overhaul rules that had been issued under former CFPB Director Richard Cordray. The prepaid rule had been finalized in 2016, but implementation had already been delayed twice under Cordray.   “The bureau expects to issue a final rule amending certain aspects of its 2016 rule governing prepaid accounts soon after the new year," the CFPB said in a statement. "As part of that process, the bureau expects, based on its review of the comments received, to further extend the effective date of the 2016 rule to allow additional time for implementation of the final rule." Republicans have tried to kill the prepaid rule but have been unable to muster enough support. The prepaid rule requires that companies disclose fees on prepaid cards and cooperate with consumers who discover unauthorized charges or errors. Financial institutions have raised concerns about the rule and whether they would be on the hook for fraud losses on unregistered cards.

CFPB to reopen mortgage disclosure rule, will not penalize data errors -- The Consumer Financial Protection Bureau said Thursday that it plans to reopen its rulemaking for the Home Mortgage Disclosure Act and will not assess penalties against mortgage lenders for any errors in data collected next year. The announcement marked a big win for the mortgage industry, which has repeatedly asked for a so-called safe harbor from HMDA reporting errors and wanted a delay in the rule, which goes into effect on Jan. 1. "The bureau does not intend to assess penalties with respect to errors in data collected in 2018 and reported in 2019," the CFPB said in a press release. "Collection and submission of the 2018 HMDA data will provide financial institutions an opportunity to identify any gaps in their implementation of amended Regulation C and make improvements in their HMDA compliance management systems for future years. Any examinations of 2018 HMDA data will be diagnostic to help institutions identify compliance weaknesses and will credit good faith compliance efforts." The change is part of acting Director Mick Mulvaney's plan to reduce the burden of regulations on companies and to reconsider rules promulgated by former CFPB Director Richard Cordray.  Mortgage lenders have complained about the CFPB's sweeping changes made in 2015 to Regulation C, which implements HMDA. Some of the data is mandated by the Dodd Frank Act, but under Cordray the bureau added 25 new data points and modified 14 others, in addition to the existing 9 that were part of required reporting for years.  The mortgage industry now has cause to rejoice as Mulvaney considers scrapping what is not required by statute, such as loan underwriting and pricing information.

FDIC budget has fallen by nearly half since 2010 — The Federal Deposit Insurance Corp. board of directors approved a $2.09 billion operating budget for 2018, down 3.0% from 2017, despite a large investment in investment technology. The FDIC board, which for the first time included acting Consumer Financial Protection Bureau chief Mick Mulvaney, signed off on a budget for next year that is 48% lower than the peak of the agency's crisis-era spending in 2010.“I note that next year’s budget and staffing will be lower than the prior year for the eighth consecutive year,” said FDIC Chairman Martin Gruenberg, in likely his final budget meeting as chairman. “This reflects the continued steady improvement in the health of the U.S. banking industry over this period as well as the FDIC’s efforts to carefully manage resources.”  The agency's receivership funding will fall to $225 million, down from $300 million in 2017. But the agency will increase spending in some areas. The component of the budget for ongoing operations will increase 0.3% to $1.83 billion in 2018. Spending for the Office of the Inspector General will increase 9.1% to $40 million. The 2018 budget included a reduction of 266 nonpermanent positions and 21 permanent positions. The overall staffing level for 2018 will be 6,076 full-time equivalent positions.The budget was approved by Gruenberg, FDIC Vice Chairman Thomas Hoenig and Mulvaney, who holds an FDIC board seat as a result of his becoming acting director of the CFPB last month. A well-known budget hawk who is also the director of the Office of Management and Budget, Mulvaney commended the FDIC's spending control, but warned that the agency will lose flexibility as the agency shifts away from relying on temporary staff and toward more full-time hires. The agency had hired large numbers of temporary staff following the financial crisis to handle the wave of bank failures. However, while the agency plans to shrink staff, it also plans to spend $44 million or 5.3% more on information technology, compared to 2017. IT spending is up 23.2% from 2016.

Bankers chafe as another credit union draws record secondary capital investment - A second credit union has announced plans to take on a record amount of secondary capital, a trend that is alarming bankers.Notre Dame Federal Credit Union in Notre Dame, Ind., said late last week that it raised $12 million from a new fund created to provide secondary capital to credit unions. That followed a move by Jefferson Financial Federal Credit Union last month, which disclosed plans to bring on an identical amount as part of a transaction credit union officials called the largest secondary capital raise in the industry’s history. The $530.2 million-asset Notre Dame, which has been growing loans significantly faster than banks and other credit unions, plans to use the new capital to drive further growth.  “This injection of secondary capital … provides us the potential for immediate growth that otherwise would have taken years to achieve,” Notre Dame CEO Thomas Gryp said in a press release.  Gryp labeled secondary capital a potential “game-changer.” Dennis Dollar, a former chairman of the National Credit Union Administration who now works as a prominent industry consultant, said that “there is no question there is a growing demand for capital” among credit unions seeking to expand their branch networks, upgrade technology or venture into new lines of business.  “It’s a trend we’ve been watching,” Brittany Kleinpaste, director of economic policy and research at American Bankers Association, said in an interview.

Broken bonds: The role Wall Street played in wiping out Puerto Ricans' savings - When residents of Puerto Rico funneled their life savings into funds that were largely made up of the island's bonds, they were told their money would be safe. They were told that they would receive interest payments that were higher than many comparable opportunities. They were told income would be tax exempt. And when those investments began to evaporate four years ago, they were told not to sell, that the market would rebound, and they would recoup their losses — eventually. This year, eventually became never after Puerto Rico triggered bankruptcy-like proceedings, and the island began restructuring its debt to seek protection from creditors — pushing the already depreciated bond prices within the funds lower. Then came Hurricane Maria, and those prices plummeted even further. While the storm that decimated the island's infrastructure was unavoidable, the one that tore through the savings of its residents was entirely man-made. "To have this type of carnage being born on this small of a population in this small of a geographic territory is something that we'll likely never see again," said attorney Jeffrey Erez, who has filed hundreds of securities cases on behalf of Puerto Rican investors. "You have the complete investing class on a very small island having lost 50 percent, 60 percent, 70 percent, 80 percent of their retirement savings within a few years." A CNBC investigation found that UBS was not forthcoming about the extent of the risks of those bond funds from both its clients and brokers, even as the values of the funds plummeted. By the end of 2012, more than $10 billion in assets were invested in UBS' bond funds. That represented about 10 percent of the island's gross domestic product at the time. Today, those investments have been nearly wiped out.  About 2,000 pages of confidential documents obtained by CNBC reveal the inner workings and dialogue between executives at UBS Puerto Rico and those in Weehawken, New Jersey, show UBS executives sought to withhold stress-test results from their brokers and did not translate research reports and other fund documents to Spanish. They show that even though some of the most powerful brokers expressed multiple concerns about the bond funds early on, UBS management encouraged them to sell the funds anyway.

The Next Crisis for Puerto Rico: A Crush of Foreclosures - Puerto Rico has had an awful decade — and it’s about to get worse. First came a brutal 10-year recession and financial crisis that drove businesses from this island and left 44 percent of the population impoverished. Then, in September, Hurricane Maria, a powerful Category 4 storm, shredded buildings, wrecked the electrical power grid and possibly led to more than 1,000 deaths. Now Puerto Rico is bracing for another blow: a housing meltdown that could far surpass the worst of the foreclosure crisis that devastated Phoenix, Las Vegas, Southern California and South Florida in the past decade. If the current numbers hold, Puerto Rico is headed for a foreclosure epidemic that could rival what happened in Detroit, where abandoned homes became almost as plentiful as occupied ones. About one-third of the island’s 425,000 homeowners are behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages. Tens of thousands have not made payments for months. Some 90,000 borrowers became delinquent as a consequence of Hurricane Maria, according to Black Knight Inc., a data firm formerly known as Black Knight Financial Services. Puerto Rico’s 35 percent foreclosure and delinquency rate is more than double the 14.4 percent national rate during the depths of the housing implosion in January 2010. And there is no prospect of the problem’s solving itself or quickly.  “Thousands have lost their jobs, thousands of small business have closed, and thousands more have left the country.” At the moment, dealing with a mortgage lender about a missed payment may be a distant concern for many of the 3.4 million people in Puerto Rico. They are literally still picking up the pieces, struggling to live without electricity or trying to get insurance companies to pay claims to repair their homes. More than 100,000 people are believed to have left to go live with friends and family on the mainland.Residents won a reprieve when the federal government imposed a temporary moratorium on foreclosures, which stops banks and investors that bought mortgages at cut-rate prices from evicting delinquent borrowers or starting new foreclosures. Many lenders also have agreed to waive missed payments during the moratorium. But that moratorium is scheduled to expire in early 2018, and lawyers and housing counselors expect that to trigger a surge in foreclosures.

FHFA seeks input on Fannie and Freddie's credit score models - The Federal Housing Finance Agency is seeking input on whether Fannie Mae and Freddie Mac should upgrade their credit score models.  The two government-sponsored enterprises have relied on the “classic” FICO credit scoring model for the past 12 years. But the FHFA is weighing whether the GSEs should upgrade to more recent alternatives, such as FICO’s newer scoring model known as FICO 9, or the VantageScore 3.0 credit scoring model, or both.

Senate confirms HUD nominees, but not Montgomery for FHA - — The Senate approved three Department of Housing and Urban Development nominees by vote voice on Thursday, but left for the holiday break without confirming Brian Montgomery as head of the Federal Housing Administration. Sen. Elizabeth Warren, D-Mass., and four other Democrats on the Senate Banking Committee are insisting on a recorded vote by the full Senate. Despite the delay, industry sources expect the Senate will confirm Montgomery in January. Montgomery previously served as FHA commissioner from 2005 to 2009 and received high marks for his leadership of the agency following the housing crash. But Warren is concerned that Montgomery is too close to mortgage industry due to his consulting work with private mortgage lenders and insurers after he left HUD. On Thursday, the Senate confirmed: Susan Israel Tufts to be HUD assistant secretary for administration, Leonard Wolfson to be HUD assistant secretary for congressional and intergovernmental relations and Irving Dennis to be HUD's chief financial officer. Dennis recently retired as a global client service partner with Ernst & Young. Wolfson previously served as HUD's congressional liaison during the Bush administration. And Tufts is a consultant and attorney with expertise in the field of inner-city social programming in the areas of microenterprise, education and women’s issues. She has also been responsible for programs at housing authorities in New York, according to HUD. 

Treasury, FHFA strike deal to let GSEs retain 'limited' capital  - — Fannie Mae and Freddie Mac will be allowed to build capital buffers to protect against losses under an agreement between the Treasury Department and the Federal Housing Finance Agency announced on Thursday. “Under the modifications announced today, Fannie Mae and Freddie Mac will be allowed to maintain a capital buffer of $3 billion each,” said a Treasury statement.  Fannie and Freddie had been delivering a quarterly dividend to the Treasury as part of an arrangement that was designed to gradually deplete their capital to zero.  The agreement announced Thursday will change the terms of the deal with Treasury.“The dividend payment owed to Treasury will be calculated each quarter using the $3 billion capital buffer as a baseline,” said the Treasury statement. “To compensate taxpayers for the dividends they would have received absent these letter agreements, Treasury’s liquidation preference for the Preferred Stock held in Fannie Mae and Freddie Mac will increase by $3 billion as of December 31, 2017.” FHFA Director Mel Watt had been agitating to allow Fannie and Freddie to keep capital, which he argued was prudent risk management. However, Treasury Secretary Steven Mnuchin had said he expected Watt to continue to deliver the dividends, which went to taxpayer coffers. According to the Treasury statement, "any failure by Fannie Mae or Freddie Mac to declare and pay a full quarterly dividend will result in the automatic, immediate termination of its capital buffer."

Four takeaways from deal to prop up GSEs — The announcement Thursday that Treasury Secretary Steven Mnuchin and Federal Housing Finance Agency Director Mel Watt agreed to let Fannie Mae and Freddie Mac each build a $3 billion capital buffer avoided a potential crisis.Without this deal, Fannie and Freddie would have faced a scenario where they were going to have zero capital starting next year, and a draw on the Treasury by the cash-hungry government-sponsored enterprises would have been severe. Their funding needs were exacerbated by the tax reform legislation, which will significantly reduce the value of their deferred tax assets. A draw is still possible, and Fannie and Freddie are not out of the woods yet. But the agreement to let them keep at least a portion of their capital will mitigate their funding needs and the effects of tax reform. Perhaps more importantly, an improvement in the GSEs' financial situation puts the mortgage giants on better footing before they can be restructured through housing finance reform. Without the deal announced Thursday, Fannie Mae and Freddie Mac would have faced a scenario where they were going to have zero capital starting next year.  Here are some key takeaways from the deal announced between Mnuchin and Watt.

  • Fannie and Freddie's financial problems are too dire to ignore. Watt said as early as last February that Fannie and Freddie should be able to hold some capital in order to protect against a quarterly loss. The rhetoric picked up in recent months as Watt told Congress that he would consider suspending dividend payments to Treasury to address the GSEs' capital needs.
  • The agreement helps momentum for a bill. Estimates vary on how significant the deferred tax asset write-down will be, but it is likely to be somewhere between $10 billion to $20 billion for the two mortgage companies combined. It is unclear whether Fannie and Freddie’s profits combined with the new additional buffer will be enough to prevent a draw. Some had worried that the true impact of Fannie and Freddie needing a huge draw would be that their critics would use another bailout to stoke calls to eliminate the companies for good.
  • Small lenders are happy. Ron Haynie, senior vice president of mortgage finance policy for the Independent Community Bankers of America, said that, while a number of policymakers see a draw by Fannie and Freddie on the Treasury line of credit as a nonevent, that is not how small banks see the situation. Improving the financial standing of the GSEs removes some of the uncertainty around how they can still serve the mortgage market.
  • Critics of the GSEs hate the deal. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has called for putting an end to Fannie and Freddie, and is one of the harshest critics of using taxpayer funds to back the GSEs. He swiftly opposed the new agreement.

Serious delinquencies mount in hurricanes' wake - Hurricanes Harvey and Irma contributed to a surge in seriously delinquent mortgages in November. Of the 77,000 loans that were by 90 days or more late during the month, over 85% or 66,000 were delinquent on their payments because of the two late summer storms that struck Texas and Florida, Black Knight said in its November first look report. More than 85, are 90 days or more late on their payments because of Harvey and Irma, according to current estimates. Black Knight's report includes a subset of these loans.The 13% increase in the seriously delinquent mortgage inventory was the largest monthly increase since 2008. Florida had the second highest percentage of seriously delinquent mortgages in November at 3.04%, up 85% from November 2016. Texas was fourth at 2.23%, up 52%. Mississippi was first at 3.21%, but that was a 7% improvement from last year. Louisiana ranked third at 2.68%, which was a 17% improvement. Delinquency rates normally rise in November from October. The total delinquency rate (loans that are late by 30 days or more but not yet in foreclosure) was 4.55%, up 11 basis points from 4.44% one month prior. That was a typical seasonal increase, Black Knight said.  There are now 2.3 million mortgages that are at least 30 days behind on their payments, up 62,000 from October, because of the storms. The year-over-year increase was 61,000. Foreclosure inventory represented 0.66% of all loans, down 3.15% from October and 32.67% from November 2016. There were 47,800 foreclosure starts during the month, down 4.75% from October and 20.86% from one year ago.

Black Knight: National Mortgage Delinquency Rate increased in November due to Hurricanes - From Black Knight: Black Knight’s First Look at November 2017 Mortgage Data: Continued Hurricane-Driven Effects Lead to Largest 90-Day Delinquency Increase in Nine Years

• 90-day delinquent mortgage inventory spiked 13 percent in November, the largest monthly increase since 2008 as the financial crisis began to unfold
• While 90-day delinquency increases are common in November, the volumes seen this year are noteworthy
• Over 85 percent -- approximately 66,000 -- of the month’s 77,000 new severely delinquent loans can be attributed to hurricanes Harvey and Irma
• As a result, the current estimate of 90-day delinquencies resulting from Harvey and Irma totals over 85,000
According to Black Knight's First Look report for November, the percent of loans delinquent increased 2.5% in November compared to October, and increased 2.0% year-over-year.  The percent of loans in the foreclosure process declined 3.2% in November and were down 33% over the last year.  Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.55% in November, up from 4.44% in October. The percent of loans in the foreclosure process declined in November to 0.66%.   The number of delinquent properties, but not in foreclosure, is up 61,000 properties year-over-year, and the number of properties in the foreclosure process is down 161,000 properties year-over-year.

Mortgage lenders fear ‘train wreck’ logjam due to IRS issue - — Mortgage lenders are bracing for big delays in the processing of mortgage applications, citing a problem at the Internal Revenue Service.   The agency made changes to its authentication system, which verifies tax returns provided by mortgage applicants, on Dec. 8. The system, known as the Income Verification Express System or IVES, is designed to ensure the tax returns are not fraudulent.  But mortgage groups claim that problems with the system surfaced on Dec. 13, less than a week after the IRS made changes to it.  "The bottom line is that mortgage closings are going to be delayed by many, many months," said Anne Canfield, executive director of the Consumer Mortgage Coalition. The "ripple effect of having closings delayed significantly will be extremely harmful to consumers, the industry and the economy.” "One possible solution would be to roll back the recent implementation and allocate sufficient time for the IRS and affected parties to evaluate and test proposed changes," said Anne Canfield, executive director of the Consumer Mortgage Coalition. The IRS has not confirmed the issues and did not return efforts to contact it for comment. Industry groups, including the American Bankers Association, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions and National Association of Home Builders, are also urging the IRS to act quickly to resolve the situation.  "Without an immediate resolution, we believe that the IRS change will begin affecting consumers’ ability to borrow funds to purchase homes," the groups wrote in a joint industry letter sent to IRS on Friday.

 IRS to address tax transcript processing to fix mortgage applications   — Top officials at the Internal Revenue Service met with mortgage industry groups this week to discuss possible fixes to the agency’s verification system, which lenders rely on to process mortgage loans. During a conference call late Monday, IRS officials told anxious industry group executives that they were working to address the problem, which many fear will significantly delay mortgage closings. “We are hearing that time frames have increased by two to four days longer than the time frames prior” to a recent change to the system by IRS, said Ron Haynie, senior vice president for mortgage finance policy at the Independent Community Bankers of America. The “IRS seemed very open to addressing the issues quickly.” At issue is the Income Verification Express System, an IRS service that mortgage lenders and other financial institutions use to request copies of tax returns to verify loan applicants' income and assets. The IRS made an update to the system on Dec. 8 and “processing delays began almost immediately,” according to the Mortgage Bankers Association, which detailed the issue in an alert to members. “One of the largest vendors reports that they may have to revert to manual downloads, which means production levels dropping from tens of thousands of transcripts per day to perhaps hundreds," the alert said. It’s a “slow clogged drain” currently, said one industry source, and it's unclear how quickly the issue can be resolved.

 Property tax delinquencies highest in Northeast, South - Residential and commercial property tax delinquencies are slightly higher in the Northeast and South than in the Midwest and West, but improving economic conditions are keeping the national delinquency rate in check, according to a report by Lereta.The percentage of land lots with property tax delinquencies in the Northeast and South are approaching 9% in both cases, whereas in the West the delinquent property tax rate is almost 7% and in the Midwest it's just shy of 6.5%.A delinquency rate of 10% or above would be considered high, so these rates are in line with expectations. A stronger U.S. economy and stabilized unemployment rates may be a factor in the tax collection success, said Terry Cason, Lereta's data modeling analyst.In the Northeast, 804,867 out of 6,373,394 or 8.9% of the parcels Lereta reviewed in 1,543 jurisdictions are delinquent. In the South, 3,378,129 out of 38,483,343 or 8.8% of the parcels in 454 jurisdictions have unpaid property taxes.In contrast, 300,373 of 4,381,645 or just 6.9% of the parcels Lereta reviewed in the West are delinquent. In the Midwest, 408,868 of the 6,363,394 or 6.4% of the parcels have property taxes that went unpaid.In the U.S. as a whole, 4,892,237 out of 58,256,536 or 8.4% of the parcels Lereta reviewed are delinquent. The review is based on data collected between Oct. 1, 2016 and Oct. 1, 2017.Property taxes are becoming an increasing concern for homeowners and the mortgage industry, as Congress considers changes to the tax code that would eliminate state and local tax deductions. The tax burden could be so great in some areas that borrowers would consider moving to avoid it.

Fewer borrowers get HARP refinances in October -- The Home Affordable Refinance Program recorded a 45% drop in volume in October from the previous year as it continunes to wind down, according to the Federal Housing Finance Agency.  Earlier this year, when the FHFA extended HARP through the end of 2018, it said 143,000 conforming borrowers could benefit from the program. Total mortgage refinance volume increased in October as the previous month's rates in were below levels seen at the start of the year. In October, the total number of refis grew to 142,687 from 128,738 the previous month, but was still down from 243,537 from the same period last year. The average interest rate on a 30-year fixed rate mortgage increased to 3.9% from 3.8% in the previous month.   Borrowers completed 2,184 refinances through HARP, compared to 3,986 from the previous year, bringing the total refinances since its inception to 3,479,901. HARP volume accounted for 2% of all refinance loans in October.  Notably, borrowers who refinanced through HARP had a lower delinquency rate than those who did not refinance through the program.  Approximately 26% of HARP refinances for underwater borrowers from January to October were for shorter term 15- and 20-year mortgages, which build equity more quickly than the traditional 30-year mortgages, according to the FHFA. Year-to-date through October, 32,229 refinances were completed through HARP, while 67,115 were completed throughout all of 2016.  About 7% of loans refinanced through HARP had a loan-to-value ratio greater than 125%.

Tax bill may cause mortgage rates to temporarily spike --Mortgage rates rise and fall in line with the yield on 10-year Treasury notes, which has hovered around 2.5% since congressional Republicans passed the tax reform bill, an increase of about 15 basis points from a week ago, when the yield was 2.35%. The 30-year fixed rate mortgage averaged 3.94% for the week ending Dec. 21, an increase of one basis point from the previous week, according to Freddie Mac.  However, "the majority of our survey was completed prior to the surge in long-term interest rates that followed the passage of the tax bill," Deputy Chief Economist Len Kiefer said in a press release. "If those rate increases stick, we'll likely see higher mortgage rates in next week's survey." Zillow, which has its own rate tracker, said the average for the 30-year FRM increased 6 basis points from the previous week, with the upward movement taking place after Congress approved tax reform."After holding steady in a narrow range for much of last week — even after the Federal Reserve increased its benchmark short-term interest rate — mortgage rates increased sharply on Tuesday to their highest level since late October," Zillow senior economist Aaron Terrazas said in a press release. "While the increase coincided with the passage of tax reform legislation in Congress, the effects of the reform were already largely priced into markets."

MBA: Mortgage Applications Decrease in Latest Weekly Survey -- From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 4.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 15, 2017... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 9 percent compared with the previous week and was 1 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.16 percent from 4.20 percent, with points decreasing to 0.35 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The first graph shows the refinance index since 1990. Refinance activity will not pick up significantly unless mortgage rates fall well below 4%. The second graph shows the MBA mortgage purchase index.  According to the MBA, purchase activity is up 1% year-over-year.

Refi application share reaches one-year high - Mortgage application volume decreased 4.9% from one week earlier, according to the Mortgage Bankers Association.The MBA's Weekly Mortgage Applications Survey for the week ending Dec. 15 found that the refinance index decreased 3% from the previous week.The refinance share application increased to 53.9%, its highest level since December 2016, from 52.4% the previous week. The seasonally adjusted purchase index decreased 6% from one week earlier. The unadjusted purchase index decreased 9% compared with the previous week and was 1% higher than the same week one year ago.

FHFA House Price Index: Index Up 0.5% in October - The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for October. Here is the opening of the report:  U.S. house prices rose in October, up 0.5 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported 0.3 percent increase in September was revised upward to 0.5 percent.The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From October 2016 to October 2017, house prices were up 6.6 percent. [Link to report] The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

NAR: "Existing-Home Sales Soar 5.6 Percent in November" -- From the NAR: Existing-Home Sales Soar 5.6 Percent in November to Strongest Pace in Over a Decade - Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, according to the National Association of Realtors®. All major regions except for the West saw a significant hike in sales activity last month. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million). Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago. This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in November (5.81 million SAAR) were 5.6% higher than last month, and were 3.8% above the November 2016 rate. The second graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 1.67 million in November from 1.80 million in October. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Existing-Home Sales Surged in November - This morning's release of the November Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.81 million units. The consensus was for 5.54 million. The latest number represents a 5.6% increase from the previous month and a 3.8% increase year-over-year. Here is an excerpt from today's report from the National Association of Realtors. Lawrence Yun, NAR chief economist, says home sales in most of the country expanded at a tremendous clip in November. “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” he said. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.” [Full Report] For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2014. It can be found here.

Existing Home Sales Surge To 11-Year Highs (As Mortgage Applications Tumble) --Following strong starts/permits data but weak mortage apps (biggest drop in 3 mo), existing home sales broke the tie with a yuuge beat, surging 5.6% MoM (against expectations of a 0.9% jump)... the strongest pace of sales since December 2006.  The median existing-home price for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains. Inventory of available properties fell 9.7% y/y to 1.67m, the second-lowest in records to 1999, the NAR said.“Home prices continue to march higher at a very solid pace,” Lawrence Yun, NAR’s chief economist, said at a press briefing accompanying the report.“Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” he said.“As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with con siderable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”The data are “showing exceptionally tight inventory conditions.” The overall impact from the tax reform plan “could be mildly negative,”however that could be cushioned by good market conditions including strong demand, a solid job market and the short-term fiscal stimulus from the legislation, he said. The net impact could be slower price gains of up to 3 percent in 2018, he said.

A Few Comments on November Existing Home Sales --A few key points:
1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus.  See: Lawler: Early Read on Existing Home Sales in November. The consensus was for sales of 5.52 million SAAR in November.  Lawler estimated 5.77 million, and the NAR reported 5.81 million. ""Based on what I've seen so far, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.77 million in November."
2) There might have been some bounce back in November from the hurricanes.
3) Inventory is still very low and falling year-over-year (down 9.7% year-over-year in November). More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases.    This was the 30th consecutive month with a year-over-year decline in inventory.
The following graph shows existing home sales Not Seasonally Adjusted (NSA). Sales NSA in November (427,000, red column) were above sales in November 2016 (418,000, NSA) and at the highest level for November since 2006 (472,000).  Sales NSA are now slowing seasonally, and sales NSA will be lower through February.

New Home Sales increase to 733,000 Annual Rate in November --- The Census Bureau reports New Home Sales in November were at a seasonally adjusted annual rate (SAAR) of 733 thousand.  The previous three months combined were revised down significantly (October was revised down from 685 thousand to 624 thousand)."Sales of new single-family houses in November 2017 were at a seasonally adjusted annual rate of 733,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 17.5 percent above the revised October rate of 624,000 and is 26.6 percent above the November 2016 estimate of 579,000. "The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply. The months of supply decreased in November to 4.6 months from 4.9 months in October. The all time record was 12.1 months of supply in January 2009.This is in the normal range (less than 6 months supply is normal). "The seasonally-adjusted estimate of new houses for sale at the end of November was 283,000. This represents a supply of 4.6 months at the current sales rate." Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed.The third graph shows the three categories of inventory starting in 1973.The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

November New Home Sales Skyrockets 17.5%, Surprises Forecasts - This morning's release of the November New Home Sales from the Census Bureau came in at 733K, up 17.5% month-over-month from a revised 624K in October. Seasonally adjusted estimates back to August were also revised. The forecast was for 654K. Here is the opening from the report: Sales of new single-family houses in November 2017 were at a seasonally adjusted annual rate of 733,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 17.5 percent (±10.4 percent) above the revised October rate of 624,000 and is 26.6 percent (±16.6 percent) above the November 2016 estimate of 579,000. The median sales price of new houses sold in November 2017 was $318,700. The average sales price was $377,100. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales Explode Higher: Biggest Monthly Jump In 25 Years  -- Earlier we discussed that US personal savings tumbled to the lowest since 2007, and now we can also conclude that one of the things Americans splurged on last month was New Homes, because according to the Census on Friday morning, new home sales in November soared by a near record 109K to 733,000 from a downward revised 624,000 in October (from 685,000 previously).  On a year over year basis, new home sales soared by a whopping 26.6%: This was not only a 9-sigma beat to consensus expectations of 655K... ... but it was the biggest monthly increase since January 1992 (that said, the previous 3 months were revised lower by 77,000.)  Broken down geographically, every single region saw an increase, although the biggest surge by far was in the West, where new home sales jumped by a whopping 31% M/M:  Some other observations:

  • Median new home price rose 1.2% y/y to $318,700; average selling price at $377,100
  • 15% of new homes sold in Nov. cost more than $500,000, down from 16% last month
  • New home sales on pace for 613k this year compared to a 2016 total of 561k
  • Houses for sale in Nov. unchanged at 283,000
  • Months’ supply at 4.6 in Nov. compared to 5.4 last month

Still, as the chart below shows, new home sales have a way to go before they catch up to where median new home prices suggest sales should be.

A few Comments on November New Home Sales -- New home sales for November were reported at 733,000 on a seasonally adjusted annual rate basis (SAAR). This was well above the consensus forecast, and the highest sales rate since July 2007. However the three previous months were revised down significantly (especially sales for October). Looking at the regional data, the South saw a 32.5% year-over-year increase that might be related to the hurricanes (some sales might have been delayed). Sales overall were up 26.6% year-over-year in November. This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate).  For the first eleven months of 2017, new home sales are up 9.1% compared to the same period in 2016. This was a solid year-over-year increase through November. And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years. The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through November 2017. This graph starts in 1994, but the relationship had been fairly steady back to the '60s. Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.   The gap has persisted even though distressed sales are down significantly, since new home builders focused on more expensive homes. I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

 Housing Starts increased to 1.297 Million Annual Rate in November -- From the Census Bureau: Permits, Starts and Completions: Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,297,000. This is 3.3 percent above the revised October estimate of 1,256,000 and is 12.9 percent above the November 2016 rate of 1,149,000. Single-family housing starts in November were at a rate of 930,000; this is 5.3 percent above the revised October figure of 883,000. The November rate for units in buildings with five units or more was 359,000.  Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,298,000. This is 1.4 percent below the revised October rate of 1,316,000, but is 3.4 percent above the November 2016 rate of 1,255,000. Single-family authorizations in November were at a rate of 862,000; this is 1.4 percent above the revised October figure of 850,000. Authorizations of units in buildings with five units or more were at a rate of 395,000 in November. The first graph shows single and multi-family housing starts for the last several years. Multi-family starts (red, 2+ units) decreased slightly in November compared to October. However Multi-family starts were up year-over-year. Multi-family is volatile month-to-month, but has been mostly moving sideways to down recently. Single-family starts (blue) increased in November, and are up solidly year-over-year. The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low), Total housing starts in November were above expectations. Starts for September and October were revised down, combined.

Single-family housing starts rise to highest level in a decade - Groundbreaking on single-family homes proceeded in November at the strongest pace in a decade, driving housing starts to a faster-than-estimated rate, government figures showed Tuesday. Residential starts rose 3.3% to a 1.3 million annualized rate (the estimate was 1.25 million) after a 1.26 million pace in the prior month (revised from 1.29 million). Single-family starts jumped 5.3% to 930,000, the highest since September 2007. The South and West regions also were at 10-year highs. Permits, a proxy for future construction of all types of homes, fell 1.4% to a 1.3 million rate (the estimate was 1.27 million) from a 1.32 million pace; single-family permits in the U.S. and South were both at their highest level since August 2007. The latest results make it more likely that residential construction spending — which subtracted from economic growth in the second and third quarters — will add to the pace of U.S. expansion in the October-December period, which is already shaping up as a solid quarter. The November gains are encouraging because they're driven by single-family homebuilding, which tends to spur economic activity and jobs in a bigger way than apartment construction. Single-family permits have increased for three straight months, also indicating a sustained pipeline of work for developers.The figures reflect a boost from rebuilding and recovery efforts following Hurricanes Harvey and Irma, as areas in the South had faced the brunt of the damage from flooding and winds. A separate report on Monday showed homebuilders' confidence jumped in December to the highest level since July 1999. Groundbreaking on multifamily homes, such as apartment buildings and condominiums, fell 1.6% to an annual rate of 367,000; data on these projects can be volatile. Housing starts plunged 40% in the Northeast to 87,000, the biggest drop in a year and were down 13% in the Midwest. The report shows a wide margin of error, with a 90% chance that the November figure on housing starts was between a 5.8% drop and a 12.4% gain. Housing units authorized but not yet started reached 155,000, the most since June 2008; and homes under construction increased to 1.11 million, the most since August 2007. The report was released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.

Is Renter Nation Dead? Single-Family Housing Starts, Permits Highest Since 2007 - October's 13.7% MoM spike in housing starts was revised dramatically lower to just +8.4% which makes November's 3.3% rise (vs expectations for a 3.1% decline) somewhat less impressive. Building Permits dipped from recent highs.  Northeast starts tumbled -39.6% and down -12.9% in Midwest, but jumped in South +11.1% and West +19.0%. While both cohorts rose, single-family starts are now at their highest since 2007...  Additionally Single-family permits are the highest since 2007... Is renter nation dead?

New Residential Building Permits: Down 1.4% in November - The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for November new residential building permits. The latest reading of 1.298M was a decrease from a revised 1.316M in October and above the forecast of 1.273M. Here is the opening of this morning's monthly report: Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,298,000. This is 1.4 percent (±1.7 percent)* below the revised October rate of 1,316,000, but is 3.4 percent (±2.3 percent) above the November 2016 rate of 1,255,000. Single-family authorizations in November were at a rate of 862,000; this is 1.4 percent (±1.6 percent)* above the revised October figure of 850,000. Authorizations of units in buildings with five units or more were at a rate of 395,000 in November. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Comments on November Housing Starts -  Mcbride - The housing starts report released this morning showed starts were up 3.3% in November compared to October, and starts were up 12.9% year-over-year compared to November 2016.  Single family starts, at 930 thousand SAAR, were at the highest level since September 2007 (over 10 years ago).This first graph shows the month to month comparison between 2016 (blue) and 2017 (red). Starts were up 12.9% in November 2017 compared to November 2016 (a fairly easy comparison), and starts are up only 3.1% year-to-date. Note that single family starts are up 8.7% year-to-date, and the weakness (as expected) has been in multi-family starts. My guess was starts would increase around 3% to 7% in 2017.   It looks like starts will be at the low end of that range. Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions.  The blue line is for multifamily starts and the red line is for multifamily completions.  The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has turned down recently.  Completions (red line) have lagged behind - and completions have caught up to starts (more deliveries).  Completions lag starts by about 12 months, so completions will probably turn down in about a year. As I've been noting for a couple of years, the growth in multi-family starts is behind us - multi-family starts peaked in June 2015 (at 510 thousand SAAR).  The third graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.Note the low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect a few more years of increasing single family starts and completions.

A long, long time ago, rents used to be cheap — and common - Renting in America used to be the norm — and a family didn’t have to spend very much to put a roof over their heads. But you might not remember those days, because it was before World War II. Now the country may be headed back to a time when more people rent rather than own, according to recent trends analyzed by the digital platform Apartment List. A new study by the real estate rental website found that it’s gotten much tougher for the new generation of renters, who spend a higher percentage of their incomes on housing while watching rental prices rocket past salary gains. But with soaring housing prices, the rental population has inched up after years of growing rates of home ownership. “You’re seeing rents increase very steadily, and not wages,” said Chris Salviati, housing economist with Apartment List and author of the study. As late as the 1940s, more households rented — about 56 percent — than owned homes, according to the study. Today, about 37 percent of the country rents. “The home ownership rate is focused on a lot in the last 50 years,” said Salviati. “If you go back another 50 years, it was a renter society.” The percentage of income spent on rent has increased steadily through the generations. In the 1960s, a typical family would spend 15 percent of their income on rent. Today, a renter will pay about 25 percent of his or her paycheck for housing. 

AIA: Architecture Billings Index Increases in November -- Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.  From the AIA: Architecture billings upturn shows broad strength  Even with the uncertainty related to pending tax reform legislation that likely will have a mixed effect on the construction industry, design services at architecture firms remains in high demand. The American Institute of Architects (AIA) reported the November ABI score was 55.0, up from a score of 51.7 in the previous month. This score reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.1, up from a reading of 60.2 the previous month, while the new design contracts index rose slightly from 52.8 to 53.2. “Not only are design billings overall seeing their strongest growth of the year, the strength is reflected in all major regions and construction sectors,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The construction industry continues to show surprising momentum heading into 2018.”
• Regional averages: West (54.8), Northeast (52.8), South (52.8), Midwest (50.4)
• Sector index breakdown: multi-family residential (53.9), mixed practice (53.6), commercial / industrial (53.3), institutional (52.4)

How tax bill will change consumers' financial behavior - Whether to rent or buy a home, how to pay for college and where to stash retirement savings are all questions that hinge in large part on the tax code. Earlier this fall, it appeared that the tax bill winding its way through Congress might dramatically reshape consumers’ incentives.But lobbyists fought hard to preserve a slew of existing tax breaks related to consumer borrowing and saving, and the changes that made it into the final version of the legislation are relatively small.“I would say probably the biggest news here is what didn’t happen,” For example, the bill retains the existing tax deduction for student loan interest, which would have been axed under an earlier version passed by the House. It also keeps the current limits for pretax contributions to retirement accounts, rather than reducing them, as was being contemplated earlier this year. As has been widely reported, the tax bill reduces the cap on mortgage interest that can be deducted from $1 million to $750,000. That change is smaller than the House had proposed. Still, it is expected to hurt some homebuyers in states that have high housing costs, such as New York and California.In a less publicized change, the tax bill also eliminates the deductibility of interest on home equity loans and home equity lines of credit.Such loans are frequently used by consumers who are in a financial pinch and want consolidate other debts. Many of those borrowers lack access to other forms of attractively priced credit, so they are unlikely to be dissuaded from tapping into their home equity. If they itemize their tax deductions, they will end up paying more.The bill that Congress passed this week will allow for withdrawals of up to $10,000 annually for each beneficiary to pay for tuition at elementary and secondary schools. That change will help many wealthier families that can afford the cost of private and parochial schools. It could also change the calculus for some households that are on the fence about whether to send their kids to public or private schools.The bill does not reduce the contribution limits for 401(k) plans, as GOP lawmakers contemplated earlier this year. Nor does it eliminate the ability of workers to make pretax contributions to their employer-linked retirement plans, another idea that had been floated.

Personal Income increased 0.3% in November, Spending increased 0.6% -- The BEA released the Personal Income and Outlays report for November: Personal income increased $54.0 billion (0.3 percent) in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $50.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $87.1 billion (0.6 percent).Real DPI increased 0.1 percent in November and Real PCE increased 0.4 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent. The November PCE price index increased 1.8 percent year-over-year and the November PCE price index (up from 1.6 percent YoY in October), excluding food and energy, increased 1.5 percent year-over-year (up from 1.4 percent YoY in October). The following graph shows real Personal Consumption Expenditures (PCE) through November 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 slightly below expectations,  and the increase in PCE was slightly above expectations. Using the two-month method to estimate Q4 PCE growth, PCE was increasing at a 3.2% annual rate in Q4 2017. (using the mid-month method, PCE was increasing 4.2%). This suggests solid PCE growth in Q4.

Real Disposable Income Per Capita Gains in November - With the release of this morning's report on November 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 0.06% when we adjust for inflation. The year-over-year metrics are 3.04% nominal and 1.25% 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 74.5% since then. But the real purchasing power of those dollars is up only 26.4%. Let's take one more look at real DPI per capita, this time focusing on the year-over-year percent change since the beginning of this monthly series in 1959. The chart below highlights the value for the months when recessions start to help us evaluate the recession risk for the current level.The current YoY of 1.25% is below the 1.66% average YoY at the start of the eight recessions since 1959. Check out the conspicuous tax planning blips as well as Microsoft's big dividend payout in 2004

US Consumers Tap Out: Personal Savings Rate Plunges To 10 Year Low While Americans Splurge -- The latest confirmation that the US consumer is now effectively tapped out came moments ago when the Dept of Commerce reported that in November, Personal Income rose by a lower than expected 0.3% (exp. 0.4%), while US consumers continued to splurge at an accelerated rate, with personal spending rising 0.6%, above the 0.5% expected, as Americans decided to splurge on holiday products and services. A way of visualizing the historical change in income, spending - and savings - is the next chart below: However, and speaking of savings, therein lay the rub, because as Americans splurged in November - and much of 2017 - the personal savings rate continued to decline, and in the latest month it tumbled from 3.2% to 2.9%, the lowest since November 2007, which as a reminder is one month before the recession started. This incidentally explains the surge in credit card usages we noted last night. As a reminder, the 13-week annualized credit card balances in the U.S. have gone completely vertical in the last few months of 2017, a troubling sign and yet another confirmation that US household savings are almost gone, forcing Americans to resort to savings. What is somewhat strange is that this collapse in savings took place even as US wage growth actually surprised to the upside, with wage growth rising at 4.5% Y/Y (private rose 4.8%, government 3.0%), more than core consumer spending (4.3%) for the first time since December 2015. And yet, despite this favorable wage background, Americans were not only unable to save but saw collective savings decline by $41 billion in November to $426 billion. At this rate the Fed will have to step in and bailout the plunge in bitcoin or else risk a complete collapse in holiday spending.

Credit Card Debt Suddenly Surges 18% As U.S. Consumers "Pre-Spend" Tax Relief Savings -- With Republicans in Washington D.C. on the verge of passing their first major piece of legislation in the form of comprehensive tax cuts that will allow Americans across the income spectrum to keep a little more of their hard earned cash in 2018, it appears as though eager U.S. consumers may have already "pre-spent" their savings on their credit cards.  As the folks at Gluskin Sheff point out, 13-week annualized credit card balances in the U.S. have gone completely vertical in the last few months of 2017 which should make for some great Christmas gifts for little Johnny and that will undoubtedly find themselves tucked away in a dark closet, never to be seen again, by mid January.Of course, as we pointed out earlier this month, the latest Fed data revealed that total consumer credit rose by 6.5% Y/Y, rising to $3.802 trillion as of Oct 31. That number is more than double the rate of increase of US GDP or wage growth, making it clear just where America's "purchasing power" comes from.  Finally, this was also the single biggest monthly increase in consumer credit since November 2016.

Is U.S. Gasoline Consumption Set To Collapse? -U.S. individual vehicle miles traveled (VMT) growth has been flat since June 2017,and the potential end of the VMT growth that started in early 2014 may be an indicator of slowing oil consumption, according to government data compiled by Labyrinth Consulting Services, Inc.Gasoline is the most consumed petroleum product in the U.S. Last year, motor gasoline consumption averaged about 9.3 million bpd, or 391 million gallons per day - the largest amount recorded and equal to about 47 percent of total U.S. petroleum consumption, data by the EIA shows.Some 29 percent of all U.S. energy consumption in 2016 was for transporting people and goods from one place to another, the EIA says. Petroleum products provided around 92 percent of the total energy the U.S. transportation sector used last year.The latest available data by the U.S. Department of Transportation shows that the seasonally adjusted vehicle miles traveled for October 2017 stood at 268 billion miles, a 0.8-percent increase over October 2016, and 0.2-percent growth as compared to September 2017. The cumulative estimate for this year is 2,685 billion vehicle miles of travel.In its latest Short-Term Energy Outlook (STEO), the EIA said that in November, U.S. regular gasoline retail prices averaged $2.56/gallon, an increase of nearly 6 cents/gal from the average in October, primarily reflecting rising crude oil prices. EIA forecasts the U.S. regular gasoline retail price will average $2.59/gal this month, 34 cents/gal higher than at the same time in 2016. For 2018, EIA expects U.S. regular gasoline retail prices to average $2.51/gal.Gasoline prices and increases in fuel efficiency are important factors in U.S. gasoline sales that are also highly seasonal, but according to Jill Mislinski at Advisor Perspectives, there are also some significant demographic and cultural dynamics affecting the U.S. gasoline consumption trends. In a post from November 2017, Advisor Perspectives said that apart from fuel efficiency improvements, declines in gasoline consumption can be attributable in large part to factors such as an aging population leaving the workforce; growing trend toward working from home; social media providing alternatives to face-to-face interaction requiring transportation; a general trend in young adults to drive less; and accelerating urban population growth, which reduces the per-capita dependence on gasoline. 

Headline Durable Goods Orders Up 1.3% in November - The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders: New orders for manufactured durable goods in November increased $3.1 billion or 1.3 percent to $241.4 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 0.4 percent October decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders increased 1.0 percent. Transportation equipment, also up three of the last four months, drove the increase, $3.3 billion or 4.2 percent to $80.9 billion. Download full PDF.  The latest new orders number at 1.3% month-over-month (MoM) was worse than the consensus of 2.0%. The series is up 8.2% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at -0.1% MoM, which was slightly worse than the consensus of 0.5%. The core measure is up 7.0% YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 0.7% MoM and up 10.1% YoY. Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.1% MoM and up 8.1% YoY.  For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Durable Goods New Orders Improve in November 2017: The headlines say the durable goods new orders and backlog improved. The unadjusted three month rolling average improved. Our analysis is more positive than the headlines as the rolling averages significantly improved. Civilian and defence aircraft were the main drivers this month.This series has wide swings monthly so our primary metric is the unadjusted three month rolling average. Econintersect Analysis:

  • unadjusted new orders growth accelerated 8.8 % (after decelerating 3.4 % the previous month) month-over-month , and is up 11.6 % year-over-year.
  • the three month rolling average for unadjusted new orders accelerated 2.0 % month-over-month, and up 6.7 % year-over-year.
  • Inflation adjusted but otherwise unadjusted new orders are up 0.8 % year-over-year.
  • Backlog (unfilled orders) accelerated 0.02 % month-over-month, and is up 10.1 % year-over-year.
  • The Federal Reserve's Durable Goods Industrial Production Index (seasonally adjusted) growth up 0.4% month-over-month, up 2.9 % year-over-year [note that this is a series with moderate backward revision - and it uses production as a pulse point (not new orders or shipments)] - three month trend is accelerating

Vehicle Forecast: Sales Expected to Exceed 17 million SAAR Again in December --The automakers will report December vehicle sales on Wednesday, Jan 3rd. Note: There are 26 selling days in December 2017, there were 27 selling days in December 2016.From WardsAuto: December U.S. Forecast: Market Will Hit 17.5 Million SAAR The WardsAuto monthly forecast is calling for 1.57 million light vehicles to be delivered over 26 selling days in December.... The forecast 17.53 million-unit seasonally adjusted annual rate is above November’s 17.40 million, but below December 2016’s 18.05 million.  Sales had been below 17 million SAAR (Seasonally Adjusted Annual Rate) for six consecutive months, until September (18.5 million SAAR), October (18.0 million SAAR), and November (17.4 million SAAR) when sales spiked due to buying following Hurricane Harvey. Even with the pickup in sales over the last few months, sales were down 1.5% in 2017 through November compared to the same period in 2016.

Kansas City Fed: Regional Manufacturing Activity "Growth Continued at a Solid Pace" in December --From the Kansas City Fed: Tenth District Manufacturing Growth Continued at a Solid PaceThe Federal Reserve Bank of Kansas City released the December Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity continued at a solid pace, and optimism remained high. “Factories in our region remain upbeat about hiring and capital spending as we head into 2018, following strong growth in recent months,” said Wilkerson.  The month-over-month composite index was 14 in December, lower than 16 in November and 23 in October. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in factory activity moderated slightly at both durable and non-durable goods plants, particularly for chemicals and plastics products. Month-over-month indexes were mixed but remained generally solid. The shipments, new orders, and order backlog indexes all decreased somewhat. However, the production index edged up from 15 to 21, and the employment and new orders for exports indexes also rose. The finished goods inventory index dropped from 2 to -11, and the raw materials inventory index also decreased.  So far, all of the regional Fed surveys have been solid in December.

Earlier: Philly Fed Manufacturing Survey showed "Solid Growth" in December -- Earlier from the Philly Fed: December 2017 Manufacturing Business Outlook SurveyResults from the December Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve. Indexes for general activity, new orders, and shipments were all positive this month and increased from their readings last month. The firms also reported continued expansion of employment. Most indicators reflecting expectations for the next six months suggest continued optimism... The diffusion index for current general activity increased from a reading of 22.7 in November to 26.2 this month ... The firms continued to report increases in employment. The current employment index fell 5 points but remained in positive territory, where it has been for 13 consecutive months. More than 29 percent of the responding firms reported increases in employment, while 11 percent of the firms reported decreases this month. The average workweek index declined 3 points after being in positive territory for 14 consecutive months. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Weekly Initial Unemployment Claims increase to 245,000 - The DOL reported:In the week ending December 16, the advance figure for seasonally adjusted initial claims was 245,000, an increase of 20,000 from the previous week's unrevised level of 225,000. The 4-week moving average was 236,000, an increase of 1,250 from the previous week's unrevised average of 234,750.  Claims taking procedures continue to be disrupted in the Virgin Islands. The claims taking process in Puerto Rico has still not returned to normal.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Unemployment Rates Lower in 8 states in November; Alabama, California, Hawaii, Mississippi and Texas at New Series Lows -  From the BLS: Regional and State Employment and Unemployment SummaryUnemployment rates were lower in November in 8 states, higher in 2 states, and stable in 40 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twenty-three states had jobless rate decreases from a year earlier, 2 states had increases, and 25 states and the District had little or no change. The national unemployment rate was unchanged from October at 4.1 percent but was 0.5 percentage point lower than in November 2016....  Hawaii had the lowest unemployment rate in November, 2.0 percent. The rates in Alabama (3.5 percent), California (4.6 percent), Hawaii (2.0 percent), Mississippi (4.8 percent), and Texas (3.8 percent) set new series lows. ... Alaska had the highest jobless rate, 7.2 percent.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.Fourteen states have reached new all time lows since the end of the 2007 recession.  These fourteen states are: Alabama, Arkansas, California, Colorado, Hawaii, Idaho, Maine, Mississippi, North Dakota, Oregon, Tennessee, Texas, Washington, and Wisconsin. The states are ranked by the highest current unemployment rate. Alaska, at 7.2%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).

Employers would pocket $5.8 billion of workers’ tips under Trump administration’s proposed ‘tip stealing’ rule -- On December 5, the Trump administration took its first major step toward allowing employers to legally pocket the tips earned by the workers they employ. The Department of Labor (DOL) released a proposed rule that would allow restaurants to take the tips that servers earn and share them with untipped employees such as cooks and dishwashers.1 But, crucially, the rule doesn’t actually require that employers distribute “pooled” tips to workers. Under the administration’s proposed rule, as long as tipped workers earn minimum wage, employers could legally pocket those tips. Evidence shows that even now, when employers are prohibited from pocketing tips, many still do. Research on workers in three large U.S. cities (Chicago, Los Angeles, and New York) finds that 12 percent of tipped workers had tips stolen by their employer or supervisor.2 Further, recent research shows that workers in restaurants and bars are much more likely to suffer minimum wage violations—meaning that they receive less than the applicable minimum wage—than workers in other industries. For tipped workers, some of these minimum wage violations occur when an employer confiscates tips.3With that much illegal tip theft currently taking place, it’s clear that when employers can legally pocket the tips e arned by their employees, many will. And although the bulk of tipped workers are in restaurants, tipped workers outside the restaurant industry—such as nail salon workers, casino dealers, barbers, and hairstylists—could also see their bosses start taking a cut from their tips. We estimate that under this rule, employers would pocket $5.8 billion in tips earned by tipped workers each year. This is 16.1 percent of the estimated $36.4 billion in tips earned by tipped workers annually. A detailed methodology describing how we arrived at that estimate is provided as an appendix, including a discussion of the uncertainty around the estimate. We believe employers will pocket between $523 million and $13.2 billion in workers’ tips annually, with $5.8 billion being our best estimate.

 Americans say they are worse off today than 50 years ago -- Are you doing better than the previous generation? The Pew Research Center, a nonprofit think tank in Washington, D.C., asked nearly 43,000 people in 38 countries around the globe that question this past spring. Residents in 20 countries said people like them were better off than they were 50 years ago. In Vietnam, 88% felt better off, followed by India (69%), South Korea (68%), Japan (65%), Germany (65%), Turkey (65%), the Netherlands (64%), Sweden (64%), Poland (62%) and Spain (60%). Overall, 43% of people in those countries said they were better off.All told, a majority of respondents in these 20 countries said they were better off. However, the U.S. wasn’t one of them. The U.S. was among the other 18 countries in which people said they were actually worse off than half a century ago. In Senegal, 45% felt this way, followed by Nigeria (54%), Kenya (53%), the U.S. (41%), Ghana (47%), Brazil (49%), France (46%), Hungary (39%), Lebanon (54%) and Peru (46%). Venezuela, which has suffered from political unrest and economic turbulence in recent years, was last on the list. Some 72% people there said they felt worse off than 50 years ago (only after Mexico, Jordan and Argentina).

 New York City Moves to Create Accountability for Algorithms -  The algorithms that play increasingly central roles in our lives often emanate from Silicon Valley, but the effort to hold them accountable may have another epicenter: New York City. Last week, the New York City Council unanimously passed a bill to tackle algorithmic discrimination — the first measure of its kind in the country.The algorithmic accountability bill, waiting to be signed into law by Mayor Bill de Blasio, establishes a task force that will study how city agencies use algorithms to make decisions that affect New Yorkers’ lives, and whether any of the systems appear to discriminate against people based on age, race, religion, gender, sexual orientation or citizenship status. The task force’s report will also explore how to make these decision-making processes understandable to the public.The bill’s sponsor, Council Member James Vacca, said he was inspired by ProPublica’s investigation into racially biased algorithms used to assess the criminal risk of defendants.“My ambition here is transparency, as well as accountability,” Vacca said. A previous, more sweeping version of the bill had mandated that city agencies publish the source code of all algorithms being used for “targeting services” or “imposing penalties upon persons or policing” and to make them available for “self-testing” by the public. At a hearing at City Hall in October, representatives from the mayor’s office expressed concerns that this mandate would threaten New Yorkers’ privacy and the government’s cybersecurity.

A journey through a land of extreme poverty: welcome to America - Guardian - The UN’s Philip Alston is an expert on deprivation – and he wants to know why 41m Americans are living in poverty. The Guardian joined him on a special two-week mission into the dark heart of the world’s richest nation We are in Los Angeles, in the heart of one of America’s wealthiest cities, and General Dogon, dressed in black, is our tour guide. Alongside him strolls another tall man, grey-haired and sprucely decked out in jeans and suit jacket. Professor Philip Alston is an Australian academic with a formal title: UN special rapporteur on extreme poverty and human rights. General Dogon, himself a veteran of these Skid Row streets, strides along, stepping over a dead rat without comment and skirting round a body wrapped in a worn orange blanket lying on the sidewalk. The two men carry on for block after block after block of tatty tents and improvised tarpaulin shelters. Men and women are gathered outside the structures, squatting or sleeping, some in groups, most alone like extras in a low-budget dystopian movie. We come to an intersection, which is when General Dogon stops and presents his guest with the choice. He points straight ahead to the end of the street, where the glistening skyscrapers of downtown LA rise up in a promise of divine riches. Heaven. Then he turns to the right, revealing the “black power” tattoo on his neck, and leads our gaze back into Skid Row bang in the center of LA’s downtown. That way lies 50 blocks of concentrated human humiliation. A nightmare in plain view, in the city of dreams. “You got a choice to make, man. You could go straight on to heaven. Or you could turn right, into that.”  Alston turns right.

Why are black incarceration rates falling? - So it may come as a surprise to learn that for the last 15 years, racial disparities in the American prison system have actually been on the decline, according to a Marshall Project analysis of yearly reports by the federal Bureau of Justice Statistics and the FBI’s Uniform Crime Reporting system.This story was published in collaboration with Washington Post’s Wonkblog Between 2000 and 2015, the imprisonment rate of black men dropped by more than 24 percent. At the same time, the white male rate increased slightly, the BJS numbers indicate. Among women, the trend is even more dramatic. From 2000 to 2015, the black female imprisonment rate dropped by nearly 50 percent; during the same period, the white female rate shot upward by 53 percent. As the nonprofit Sentencing Project has pointed out, the racial disparity between black and white women’s incarceration was once 6 to 1. Now it’s 2 to 1. As for potential answers:

  • 1) Crime, arrests and incarceration are declining overall.
  • Those decreases benefit the most incarcerated group: African Americans. Crime rates have been on the decline since just after 1990, as have arrests. Given that both measures disproportionately affect the black community, one theory goes, the overall drop should shrink the racial gap in incarceration, too…
  • 2) The war on drugs has shifted its focus from crack and marijuana to meth and opioids…
  • 3) White people have also faced declining socioeconomic prospects, leading to more criminal justice involvement…
  • 4) Criminal justice reform has been happening in cities, where more black people live, but not in rural areas.

Here is the full piece by Eli Hager, via Anecdotal.

The Racist Subtext Of Philly's Ban On Bulletproof Glass In Convenience Stores -- Shopkeepers in Philadelphia's neighborhood convenience stores that serve food and beverages, locally referred to as "beer delis," face a legal prohibition on the thick glass barriers around cashiers that protect them from stickup artists wielding guns, knives, and other weapons.  Because the shopkeepers predominately are Asian, and the customers (and robbers) are mostly black, this imbroglio looks a lot like a racist quest for vengeance against a commercially successful minority group. Julie Shaw of the Philadelphia Inquirer provides the details:Despite strong opposition from Asian American beer deli owners and their supporters, Philadelphia City Council voted, 14-3, Thursday to approve a bill that most members said would enhance neighborhoods, but that the merchants fear could jeopardize their safety and livelihood.Mayor Kenney's office said he would sign the bill.City Councilwoman Cindy Bass introduced the bill Nov. 2 as part of an effort to rid the city of what she has called illegal stop-and-go outlets. Although much of the bill involves categorizing food establishments by size for city licensing purposes, one paragraph generated huge protests and polarized communities, exposing fissures involving race, class, and perceptions of immigrants. That paragraph called for banning bullet-resistant windows in large food establishments. Beer deli owners were affected because state law requires them to have at least 30 seats. Many of the owners, who are largely Asian American, decried the bill, saying removing the safety windows would expose them to being robbed, injured, or killed. But Bass called such windows, which separate food servers from customers, "an indignity."

Amish Anarchy & Uncle Sam -- There’s a kerfuffle in Wisconsin over threatened application of The Law to the Amish. Up to now, they’ve successfully dodged Uncle Sam – been exempted on religious grounds from a great many busybody-isms, including laws requiring the presence and use of seat belts and child safety seats in all motor vehicles. Their horse-drawn buggies lack motors, of course – as well as seatbelts and child seats. They don’t have air bags or back-up cameras or tire pressure monitors, either. The Amish don’t believe such things are necessary and therefore do without.  They also believe it’s their decision, their business – and just want to go about their business, leave others alone and be left alone in turn. After all, they’re not harming anyone else. And if they harm themselves, the Amish take care of themselves.It seems reasonable enough.That doesn’t wash for the rest of us, though.Why should it work for the Amish?Such is the entirely logical argument of a busybody with a gun – i.e., a government worker – by the name of Bill Winch. He is a member of the Wisconsin Rapids Board of Supervisors and doesn’t think the Amish ought to be exempted from anything – including other laws requiring driver’s licenses and mandatory insurance.He has proposed a new law precisely to that effect. Amen.Winch goes further. The buggies of the Amish should also be fitted with automotive safety glass, windshield and side glass – no matter what it costs the Amish and how impractical it is to install such things in a horse-drawn buggy. For their saaaaaaaaaaaaafety, of course. Their horse-drawn buggies should also be required to have headlights and turn signals – just like everyone else’s car. If this requires expense, so be it. And new buggies manufactured after a certain date surely ought to be required to have at least driver and front seat passenger air bags and comply with some sort of government crash test regime.

Millennials Are Screwed -  Like everyone in my generation, I am finding it increasingly difficult not to be scared about the future and angry about the past. I am 35 years old—the oldest millennial, the first millennial—and for a decade now, I’ve been waiting for adulthood to kick in. My rent consumes nearly half my income, I haven’t had a steady job since Pluto was a planet and my savings are dwindling faster than the ice caps the baby boomers melted. We’ve all heard the statistics. More millennials live with their parents than with roommates. We are delaying partner-marrying and house-buying and kid-having for longer than any previous generation. And, according to The Olds, our problems are all our fault: We got the wrong degree. We spend money we don’t have on things we don’t need. We still haven’t learned to code. We killed cereal and department stores and golf and napkins and lunch. Mention “millennial” to anyone over 40 and the word “entitlement” will come back at you within seconds, our own intergenerational game of Marco Polo.This is what it feels like to be young now. Not only are we screwed, but we have to listen to lectures about our laziness and our participation trophies from the people who screwed us. But generalizations about millennials, like those about any other arbitrarily defined group of 75 million people, fall apart under the slightest scrutiny. Contrary to the cliché, the vast majority of millennials did not go to college, do not work as baristas and cannot lean on their parents for help. Every stereotype of our generation applies only to the tiniest, richest, whitest sliver of young people. And the circumstances we live in are more dire than most people realize. You can even see this in the statistics, a divot from 2008 to 2012 where millions of jobs and billions in earnings should be. In 2007, more than 50 percent of college graduates had a job offer lined up. For the class of 2009, fewer than 20 percent of them did. According to a 2010 study, every 1 percent uptick in the unemployment rate the year you graduate college means a 6 to 8 percent drop in your starting salary—a disadvantage that can linger for decades. The same study found that workers who graduated during the 1981 recession were still making less than their counterparts who graduated 10 years later. “Every recession,” Spriggs says, “creates these cohorts that never recover.”

College completion rates are still disappointing - Plenty of American students are attending college. But how many are graduating? Fortunately, the National Student Clearinghouse (NSC) released its annual report on college completion rates last week to answer precisely that question. The report tracks degree-seeking students who first entered college in fall 2011 and determines how many had attained a degree or certificate within six years. Unlike many other measures of completion, which only look at graduation rates at the first institution a student attends and ignore the fortunes of those who transfer, the NSC report tracks students’ outcomes no matter where they obtain their degrees.Just under half (45%) of students obtain a degree or certificate at the first institution they attend within six years of starting college. Another 12% transfer and complete at a different institution, for a total completion rate of 57%. Six years after first enrolling, 12% of students have not completed college but are still enrolled. Nearly one in three (31%) drop out entirely. Four-year public and private nonprofit schools have the best completion rates, with 65% and 76% of students starting at these institutions attaining a credential, respectively. That’s good news, given that these schools enroll a majority of the students covered by the NSC analysis.But completion rates are still abysmal at other categories of institutions. At four-year for-profit colleges, the typical completion rate is 35%. The situation is little better at public (two-year) community colleges, where the completion rate is just 38%.

Berea College feeling effects of changes to tax reform bill - Tax reform has made it past Congress. The House first passed the measure on Tuesday, but the Senate Parliamentarian ruled three provisions violated Senate rules and must be removed. The removal of the provisions means the House had to approve the bill again on Wednesday. The Senate passed it Wednesday also.  One of the provisions removed from the bill would have prevented Berea College from having to pay a new 1.4% tax on private university endowments. Berea College typically enrolls low-income students and does not charge tuition. On Wednesday, Berea College said it is disappointed in the development. The college issued a statement saying, "Berea College uses its entire endowment to educate students who could not otherwise afford to attend college, serving them on a no-tuition basis. We agree that there need to be incentives for schools to make higher education accessible to all students, but it seems so unfortunate that the political strife over tax reform in our country will result in greater difficulty for colleges seeking to serve low-income students."

Corporatizatizing The All-Administrative University -- One of the few good things that appears to have happened in the conference committee on the generally awful impending GOP tax bill is that the hits students were going to take have been eliminated.  However, even without that additional burden, college students face costs that are far higher than any other nation and have been rising above inflation rates for decades.  While students in Denmark actually get paid, costs are closing on $70,000 per year at the most expensive US institutions, with public schools having costs rising more rapidly than in the privates over the last decade, as states have cut public support in the wake of the revenue shortfalls that came with the Great Recession.  This is not likely to be reversed in many states as favorable views of universities among Republicans have fallen from nearly 60% to about 30% (with little change among Dems, still between 55 and 60%). I would like to focus on a long-running trend that has been known for some time but somehow keeps disappearing from view.  This trend was best presented in the ever more relevant 2011 book by Johns Hopkins poli sci prof, Benjamin Ginsberg, The Fall of the Faculty: The Rise of the All-Administrative University and Why it Matters.  This rise of an all-powerful professional administration is tied to a corporatization of American academia.  From 1975 to 2005 while student populations rose 56%, faculty increased by 51%, administrators rose 85%, and their professional staffs rose 240%.  Around 2005 the total numbers of admins and staff surpassed that of faculty, with that trend simply continuing.  Admin salaries have risen faster than the other categories. On top of that, even as faculty numbers and salaries have not kept pace, there has also  been the weakening of status and pay arising  from the ongoing steady shift from tenure track faculty to temporary adjuncts who have risen   from 22% of faculty in 1970 to about 50% in 2017.Ginsberg argues that this rise of administrative bloat has become administrative blight.  While admins claim that corporatization brings efficiencies and flexibility, the evidence looks just the opposite with the ridiculous rise of tuition and fees showing the lie to this claim.  Some argue that the explosion of admins is a response to expanding government mandates, this can explain only a portion of this.  Indeed, Ginsberg documents that admins have increased more at private than at public unis, which looks to be the opposite of what we expect if it were public mandates lying behind this trend.

Cleaver, Jayapal urge student loan servicers to improve - Two Democratic lawmakers are asking the nation’s largest student loan servicers to improve their practices. Reps. Emanuel Cleaver II of Missouri and Pramila Jayapal of Washington sent letters Monday to the CEOs of Navient, Nelnet, Great Lakes and FedLoan Servicing urging them to address consumer complaints about inadequate servicing, poor record-keeping and steering borrowers into costly repayment plans. “We write to you with deep concern over the rising rate of student loan defaults and continuous claims of fraudulent practices in lending, servicing, and collecting,” the letter states. The lawmakers noted that there is some $1.3 trillion in student loan debt outstanding, nearly all of it federally guaranteed student loans, according to the most recent data from the U.S. Department of Education. Some 4 .6 million of borrowers are severely behind on payments at the end of the third quarter — nearly double the number four years earlier. “This is an issue that needs immediate remediation,” Cleaver said in a press release Monday. “There are too many people in the U.S. who are struggling and if we can lessen the burden with these student loans, we can help people breathe a little easier.” The letter asks the servicing companies for information about four areas that the Consumer Financial Protection Bureau, 24 attorneys general and numerous consumer advocacy groups have cited as the most prevalent complaints: staffing and training, default and collections, forgiveness, and payment processing.  Persis Yu, an attorney and the Director of National Consumer Law Center’s Student Loan Borrower Assistance Project, noted that the CFPB, under former director Richard Cordray, sued Navient for allegedly systematic failures in processing loan payments and failing to enroll borrowers in less expensive repayment plans.  The letter comes as House Republicans are working on legislation that would eliminate some of the Education Department’s most generous repayment programs. The Education Department has also been meeting with major finance and tech companies to get ideas to improve how it manages the program and services loans.

U.S. states sue Trump administration for not granting student-loan relief (Reuters) - President Donald Trump’s administration is breaking the law in not granting loan relief to students defrauded by Corinthian Colleges and other defunct for-profit schools, according to four U.S. state attorneys general who sued the Education Department and Secretary Betsy DeVos on Thursday. In a complaint filed in the U.S. District Court of the District of Columbia, the top law-enforcement officers of New York, Illinois and Massachusetts also said the administration has unlawfully declared that some of the loans are still valid, which has led to involuntary collections from students’ paychecks. Separately, California Attorney General Xavier Becerra filed a parallel complaint in the U.S. District Court in Northern California. According to Becerra, 13,000 former Corinthian students in his state are waiting for the federal government to forgive their loans. Amid federal and state investigations into how many students found work after graduating from its schools, for-profit Corinthian filed for bankruptcy and abruptly closed its 28 schools in 2015. The lawsuits come after months of pressure from states, borrower advocates and Democratic lawmakers, who say students cannot repay the often-large debts because the schools did not give them adequate work training or diplomas. By law, anyone the government determines was a victim of education fraud is not required to pay student-loan debt. In the final days of his administration, President Barack Obama approved rules speeding up the debt cancellations. DeVos has delayed implementing those rules, saying they would create significant costs for taxpayers. Tens of thousands of defaulted borrowers with pending applications for relief are seeing interest charged for the loans mount and their credit scores drop, and are often unable to get additional financial aid to return to school, said New York Attorney General Eric Schneiderman. 

Student-Loan Borrowers Await Debt Relief - When Corinthian Colleges and ITT Technical Institutes collapsed in 2015 and 2016, respectively, after allegations of fraud and misleading marketing, it seemed like a moment of reckoning for the for-profit college industry. Tens of thousands of students were left with no degrees or those not worth the paper they were printed on, plus millions of dollars in student-loan debt. President Obama’s Education Department passed regulations aimed at streamlining the process to forgive loans taken out by defrauded students. Relief has yet to arrive. Nearly 100,000 student-loan borrowers with billions in total debt from an array of mostly for-profit schools are still waiting for their accounts to be cleared, and the process put in place to help them–known as “borrower defense to repayment”–has ground to a halt. The Education Department has the authority to discharge defrauded students’ federal loans, but 11 months into the Trump Administration, not a single claim has been approved, and just two have been denied. Secretary of Education Betsy DeVos announced in June that her department would rewrite the Obama-era rules, saying they were unfair to students and schools, and left taxpayers with a hefty bill. After another delay, the new regulations will now likely go into effect in July 2019. “Fraud, especially fraud committed by a school, is simply unacceptable,” DeVos said in June. “Unfortunately, last year’s rulemaking effort missed an opportunity to get it right.” Advocates for student borrowers disagree. “There is a general sentiment of frustration with the fact that we’re doing this again,” says Will Hubbard, a member of both last year’s and this year’s rulemaking committees who represents the interests of student veterans. Reports have circulated this fall that the Education Department is considering offering partial rather than full debt relief for some applicants based on how much harm they suffered.

U.S. cancels student loan debts for 12,900 college fraud victims (Reuters) - The U.S. Education Department on Wednesday canceled the student-loan debts of 12,900 people defrauded by defunct Corinthian Colleges, but its announcement that it will give varying amounts of debt relief in the future set off fierce criticism. For-profit higher education provider Corinthian collapsed in 2015 amid government investigations into how many of its graduates found gainful employment. An internal review released this month showed the Education Department had stopped discharging loans of former attendees of Corinthian and other failed for-profit schools once President Donald Trump took office. The department added it also had denied 8,600 requests for relief from Corinthian loans. It gave no reason for the denials and no value for the canceled debt. Future loan discharges will follow a tiered system based on income, the department also said on Wednesday. Borrowers earning less than 50 percent of their peers will receive full relief, and those earning more will receive partial relief. Borrowers will also receive credit for interest that accrues on their loans if the time to decide whether they qualify for forgiveness takes longer than a year. “There is nothing fair about denying students the full relief they are entitled to when they are cheated,” said Senator Patty Murray, a senior Democrat lawmaker on the Education Committee, adding that thousands of borrowers would be “stuck paying back loans on worthless or non-existent degrees.” The department said in the announcement that a tiered system would help victims more than “an ‘all or nothing’ approach.” By law, borrowers defrauded by for-profit schools can have their loans erased, but since Trump’s Jan. 20 inauguration the department had not approved any of the 25,991 requests for relief it had received, its inspector general said in a report released this month. Last week, four states sued the department and Education Secretary Betsy DeVos, saying they were breaking the law and demanding speedy relief for borrowers. California Attorney General Xavier Becerra said his state would press on with its lawsuit despite Wednesday’s announcement, taking issue with the different levels of relief. “Under federal law, Secretary DeVos is required to provide full – not partial – relief to Corinthian students,” he said in a statement. 

 Retiring Early Just Might Kill You, Says New Research - We already know you’re better off financially the later you begin claiming Social Security. Now it seems there’s another reason to hold off on collecting those checks: If you retire early you’re more likely to die early as well.A new study from Maria Fitzpatrick at Cornell University and Timothy Moore at the University of Melbourne shows a striking correlation between Social Security claims for early takers and a jump in mortality. This week’s economic research roundup also features a contrarian take on what drives unhealthy nutrition habits among poorer Americans and whether labor-market concentration is holding down wages in the U.S. Check this column each Tuesday for a survey of fresh studies from academia, agencies, think tanks and Wall Street.  The Mortality Effects of Retirement: Evidence From Social Security Eligibility at Age 62 Available on the National Bureau of Economic Research websiteAbout a third of all Americans retire and start claiming Social Security benefits in their first month of eligibility when they turn 62. Fitzpatrick and Moore find this “may have an immediate, negative impact” on health. The effect is biggest on men in this scenario, who see an increase in mortality risk of about 20 percent.The authors found no rise in mortality among those for whom 62 was not the eligibility threshold for collecting Social Security. Moreover, demographic groups with the highest rate of retirement at 6 2 had the highest mortality rate increases at that age. The paper notes that the phenomenon may be linked partly to existing health problems that force some to stop working early.

From Employer Coverage to Single Payer Health Insurance -- This holiday season I’ve heard several tales of woe from working class acquaintances, mostly self-employed, about Obamacare: how they are just above the subsidy cutoff and would rather pay the fine than buy expensive individual policies, or how they are just below and can’t afford to put in more hours per week. I can understand why there is a lot of disappointment with the Democrats. So what about single payer? Along with free public higher ed, it’s supposed to be the leitmotif of the resurgence of the left, with even moderate politicians signing on, or claiming to, to save their skins. And I’m all for it too. But a big political obstacle is widespread employer-based health coverage, a benefit that would disappear under a universal system. As a public employee, I have coverage of this sort myself, and it’s a big part of my overall compensation. How do we fold the millions with adequate-to-good health plans into a new system financed through taxes? I have an idea. As single payer goes into effect, require every employer to publicly report how much it pays in the form of contributions to employee health insurance, documented by its payment record over the past twelve months. The health care law would then mandate that this sum be returned as added wage payments to employees for some transitional period (such as six months) or the term of the employment contract, whichever is greater. Ideally the law would specify a reasonably progressive apportionment of this payment across the workforce, such as equal lump sums. At the end of the transition, wages increases and decreases would fall under the same employment law rules, such as they are, as before. From the worker’s point of view, there would be no loss under the switch to single-payer, even if existing coverage were gold-plated; it would generate that much more wage income. To the extent that the new system can reduce America’s bloated medical costs, workers could even come out ahead over time. From the employer’s perspective it should be revenue-neutral, and changes in the composition of the compensation package should have little effect on HR. In principle, then, it ought to address most of the political concern over how we can get from here—a fragmented, employment based health care system with both bright spots and gaping holes—to there.

Words banned at CDC were also banned at other HHS agencies: report | TheHill: Multiple agencies in the Department of Health and Human Services (HHS) have reportedly been told by the Trump administration that they cannot use certain phrases in official documents. Officials from two HHS agencies, who asked that their names and agencies remain anonymous, told The Washington Post that they had been given a list of "forbidden" words similar to the one given to the Centers for Disease Control and Prevention (CDC). A second HHS agency was told not to use the phrases “entitlement,” “diversity” and “vulnerable," in documents. It was also told to use "ObamaCare" as opposed to the "Affordable Care Act" and to refer to "marketplaces," where people purchase health insurance, as "exchanges." The Post's new report builds on its Friday report that the CDC had been told it could no longer use the phrases "evidence-based” and “science-based" in documents being prepared for the 2019 budget. The list of “forbidden” words and phrases given to policy analysts at the CDC also included “vulnerable,” “entitlement,” “diversity,” “transgender” and “fetus.”

Life expectancy in US down for second year in a row as opioid crisis deepens - Life expectancy in the US has declined for the second year in a row as the opioid crisis continues to ravage the nation. It is the first time in half a century that there have been two consecutive years of declining life expectancy. Drug overdoses killed 63,600 Americans in 2016, an increase of 21% over the previous year, researchers at the National Center for Health Statistics found. Almost 100 people are dying every day across America from opioid overdoses – more than car crashes and shootings combined. The majority of these fatalities reveal widespread addiction to powerful prescription painkillers. The crisis unfolded in the mid-90s when the US pharmaceutical industry began marketing legal narcotics, particularly OxyContin, to treat everyday pain. This slow-release opioid was vigorously promoted to doctors and, amid lax regulation and slick sales tactics, people were assured it was safe. But the drug was akin to luxury morphine, doled out like super aspirin, and highly addictive.  Americans can now expect to live 78.6 years, a decrease of 0.1 years. The US last experienced two years’ decline in a row in 1963, during the height of the tobacco epidemic and amid a wave of flu. “We do occasionally see a one-year dip, even that doesn’t happen that often, but two years in a row is quite striking,” said Robert Anderson, chief of the mortality statistics branch with the National Center for Health Statistics. “And the key driver of that is the increase in drug overdose mortality.” Especially disconcerting, said Anderson, was preliminary data researchers received about overdoses in 2017: “It doesn’t look any better.” Together, the drug overdose epidemic and a plateau in improved mortality rates from cardiovascular disease are “affecting the entire national picture”. “We haven’t seen more than two years in a row in declining life expectancy since the Spanish flu – 100 years ago,” said Anderson. “We would be entering that sort of territory, which is extremely concerning.”

Opioid crisis trims U.S. life expectancy, boosts hepatitis C: CDC (Reuters) - The opioid crisis is rippling through the U.S. healthcare system, causing a spike in rates of hepatitis C related to increased opioid injections and reducing overall life expectancy among Americans, which has fallen for the second year in a row, U.S. health officials said on Thursday. The news comes through a series of reports from the Centers for Disease Control and Prevention, which showed that a total of 63,000 people died from drug overdoses in 2016, up 21 percent from 2015. Opioid-related overdoses surged 28 percent, killing 42,249 people, mostly in the 25-to-54 age group. “The escalating growth of opioid deaths is downright frightening – and it’s getting worse,” John Auerbach, chief executive officer of the public health advocacy group Trust for America’s Health, said in a statement. The increase largely stemmed from the continued escalation of deaths from fentanyl and other synthetic opioids, which jumped to 19,410 in 2016 from 9,580 in 2015 and 5,540 in 2014, according to a TFAH analysis of the report. Heroin, an illegal opioid that is typically injected, accounted for around 15,500 deaths, and prescription painkillers were involved in about 14,500, TFAH reported. “These are not simply numbers - these are actual lives,” said Benjamin F. Miller, chief policy officer of Well Being Trust, a non-profit foundation focused on mental health issues. “Seeing the loss of life at this dramatic rate calls for more immediate action.” Overdose rates rose in 40 states and in Washington, D.C., between 2015 and 2016, with 17 states seeing increases of 25 percent or more, according to the TFAH analysis. “Every community has been impacted by this crisis,” Auerbach said, adding that the government was not making the investments needed to “turn the tide.” The surge in overdose deaths has depressed recent gains in U.S. life expectancy, which fell to an average age of 78.6, down 0.1 year from 2015 and marking the first two-year drop since 1962-1963. In a separate report, the CDC linked the recent steep increases in hepatitis C infections to increases in opioid injection.

These maps show how Americans are dying younger. It’s not just the opioid epidemic -- For the second year in a row, the Centers for Disease Control and Prevention reported that Americans are dying earlier — and mortality rates have increased for a number of causes of death, including opioid overdoses. But we’ve seen very little explanation on precisely where in the country this public health crisis is most acute. Thankfully, the Institute for Health Metrics and Evaluation published studies in JAMA in December 2016 and May that map out mortality trends by county and cause. And they're very revealing. Understanding what mortality in America looks like today now means zooming in on what’s happening in different regions. Because what’s killing more people in the South, the Great Plains, Appalachia, and other regions is remarkably different. There is a 20-year gap between counties with the lowest and highest life expectancies.  First, the big picture: Across the country, there were massive disparities in overall mortality from 1980 to 2014. Counties in South Dakota and North Dakota — particularly those with native populations — had the lowest life expectancy, along with eastern Kentucky and southwestern West Virginia. Conversely, counties in central Colorado had the highest life expectancies. These geographic disparities in life expectancy, the Institute for Health Metrics and Evaluation researchers found, "are large and increasing." In this map of mortality rates in the US, comparing 1980 and 2014, you can see that there is some good news: Fewer people are dying in the US today compared with 36 years ago.  The new data from the CDC shows progress on mortality rates and life expectancy is stalling; between 2015 and 2016, life expectancy in the US dropped for the second time since 1993. (In 2016, life expectancy was 78.6 years, a decrease of 0.1 year from 2015.) And despite an overall lower national mortality rate, there are pockets of the country where a person is far more likely to die — and the new IHME data suggests this problem is getting worse. An IHME study published in May found that many pockets of the US do not actually enjoy a significantly lower mortality rate (as you saw in the first map). In fact, in some southern counties in states like Oklahoma and West Virginia, there was little, if any, improvement in life expectancy despite overall national progress.

Pharma Impunity and the Opioids Crisis -  Jerri-lynn Scofield - It’s not just the banksters who got a get out of jail free card, who are too big to prosecute. Following two years of inquiry,  involving nine US attorneys, Drug Enforcement Agency (DEA) officials were foiled in their attempts to hold McKesson, the largest US drugs distributor, appropriately accountable for its role in the opioids crisis.  60 Minutes and the Washington Post and yesterday reported on the results of their joint bombshell investigation into these efforts.  Please take 10 minutes of your time to read the full 60 Minutes transcript here (or if you prefer, watch the video that’s embedded within that link). Alternatively, read the Washington Post account, ‘We feel like our system was hijacked’: DEA agents say a huge opioid case ended in a whimper. This reporting validates criticisms been made about how the Department of Justice (DoJ) became a paper tiger on corporate crime first under Attorney General Eric Holder and then under his successor Loretta Lynch, as I discussed in November 2016 in The Obamamometer’s Toxic Legacy: The Rule of Lawlessness. The findings of this joint investigation will of course come as no surprise to Naked Capitalism readers, although I’ll I admit I was shocked by some of its revelations. And the cynic in me wonders why, since much of the activity documented in this reporting occurred in 2014 and 2015 (and before), it’s only now that 60 Minutes and the Washington Post are bringing this to the public’s attention. But that’s a quibble, that’s delaying getting to the meat of this post. The core of the 60 Minutes report is an interview 60 Minutes correspondent Bill Whitaker conducted with David Schiller, a thirty-year DEA veteran who headed the team investigating McKesson, the 5th largest US corporation and a major opioids distributor.  McKesson has 76,000 employees, annual revenues of almost $200 billion a year– roughly the equivalent of  Exxon Mobil– and since the 1990s, earned billions from distributing addictive opioids, according to 60 Minutes.

Trump Vows to Kill 50 Years of Federal Health and Safety Protections - President Trump wants to set the regulatory clock back to 1960, and last week he acted it out for the cameras. Wielding a pair of golden scissors at a White House photo op, he cut red tape strung around two stacks of paper. One was a small pile of some 20,000 pages representing the amount of regulations in 1960; the other a mound of more than 185,000 pages representing those of today.  "We're getting back below the 1960 level," Trump declared , "and we'll be there fairly quickly."  There's only one problem. That mountain of paper Trump used as a prop symbolizes hard-won measures that protect us. To refresh the president's memory, back in the 1960s, smog in major U.S. cities was so thick it blocked the sun. Rivers ran brown with raw sewage and toxic chemicals. Cleveland's Cuyahoga River and at least two other urban waterways were so polluted they caught on fire. Lead-laced paint and gasoline poisoned children, damaging their brains and nervous systems. Cars without seatbelts, air bags or safety glass were unsafe at any speed. And hazardous working conditions killed an average of 14,000 workers annually, nearly three times the number today.  In response, Congress enacted the Clean Air Act, Clean Water Act, Safe Drinking Water Act and other landmark pieces of legislation to protect public health and safety. Some of those laws also created the Consumer Product Safety Commission, U.S. Environmental Protection Agency (EPA), National Highway Traffic Safety Commission, Occupational Safety and Health Administration, and other federal agencies to write and enforce safeguards.  None of those laws, or the regulations they spawned, existed in 1960.

NIH Lifts Ban On Research That Could Make Deadly Viruses Even Worse - Scientists could soon resume controversial experiments on germs with the potential to cause pandemics, as government officials have decided to finally lift an unusual three-year moratorium on federal funding for the work.The research involves three viruses — influenza, SARS, and MERS — that could kill millions if they mutated in a way that let the germs spread quickly among people.The bird flu virus H7N9, for example, is known to have infected more than 1,500 people, and 40 percent of them died. But unlike common flu strains, this one does not spread easily among humans.Biologists say they may need to alter these viruses in the lab to understand what genetic changes matter in starting pandemics, so they can understand the risks and get ready. But some of their past efforts to tinker with viruses have made other scientists uneasy. On Tuesday, the Department of Health and Human Services released a new framework for making decisions about funding research that has the potential to create a new pandemic strain

U.S. Government Lifts Ban on Making Viruses More Deadly and Transmissible -- Some horror movie tropes just come off as unbelievable, they're so ridiculous and overused. Like this one: " Science laboratory creates horrible disease that will inevitably escape and kill all of humanity," which might be the most unbelievable, since it defies both logic and actual laws. Or rather, it did until Tuesday, when the U.S. government announced it was lifting a three-year ban on federal funding for experiments that alter viruses to make them even deadlier.   "Gain-of-function" research, in which scientists make pathogens more powerful or easily transmissible, is aimed at preventing disease outbreaks by better understanding how they might occur. The studies allow scientists, working in a highly controlled environment, to learn how a flu virus might mutate into a superbug capable of killing millions—a sort of game of wits played to gain insight into nature's unpredictability. The ultimate goal is to proactively create vaccines, medications and other solutions to stop contagion in its tracks.  The new National Institutes of Health policy reverses a 2014 Obama administration funding ban on gain-of-function research projects specifically involving all forms of the influenza virus, Middle East respiratory syndrome (MERS) and severe acute respiratory syndrome (SARS). The new rules would extend beyond those viruses, " apply[ing] to any pathogen that could potentially cause a pandemic ," according to the New York Times. "For example, they would apply to a request to create an Ebola virus transmissible through the air."

Hold the Plum Pudding: U.S. Food Sampling Shows Troubling Pesticide Residues -  As many gather this holiday season for shared family meals, it is likely that they'll be serving up small doses of pesticides with each plate passed, including a prevalent type shown to be harmful to children and reproductive health .  New data released recently by the U.S. Food and Drug Administration (FDA) shows a rise in the occurrence of pesticide residues detected in thousands of samples of commonly consumed foods. Documents obtained from the agency through Freedom of Information Act (FOIA) requests also show the government is bracing for more, with the use of at least one controversial weed killing chemical–the herbicide known as 2,4-D–expected to triple in the next year.  And buried deep within the FDA's latest annual pesticide residue report is data showing that a controversial insecticide called chlorpyrifos, which is marketed by Dow Chemical and is banned from household use due to known dangers, was the fourth-most prevalent pesticide found in foods out of 207 pesticides detected.  Overall, about 50 percent of domestic food and 43 percent of imported foods sampled showed pesticide residues in the FDA's testing for fiscal year 2015, which is the period covered in the new report. That is up from about 37 percent of domestic and 28 percent of imported foods found with residues in 2010, and up from 38.5 percent and 39 percent, respectively, found by FDA a decade earlier in 2005.  FDA sampling has been shrinking over the years, dropping about 25 percent from a decade ago from more than 7,900 samples to 5,989 samples tested in its latest report. The U.S. Department of Agriculture (USDA) also does annual pesticide residue testing, but looks at more than 10,000 samples. The latest USDA residue report , which also was for the 2015 time period, found about 85 percent of samples contained pesticide residues.

EPA Says Glyphosate Does Not Cause Cancer, Contradicting IARC - The U.S. Environmental Protection Agency ( EPA ) released on Monday a human health and ecological draft risk assessment for glyphosate , concluding that the widely used—and highly controversial— pesticide is “not likely to be carcinogenic to humans."  According to the EPA's announcement , the assessment “found no other meaningful risks to human health when the product is used according to the pesticide label." However, the announcement noted, "the ecological risk assessment indicates that there is potential for effects on birds, mammals, and terrestrial and aquatic plants."  Last month, the ingredient won a new five-year lease in the Europe Union, following a bitter fight . Similarly, Monday's draft assessment is a foundational document in the EPA's potential extension of the product's registration for use in 2019, the Los Angeles Times reported. The EPA's latest findings contradicts the March 2015 conclusion of the World Health Organization's International Agency for Research on Cancer (IARC), which labeled glyphosate a “ probable carcinogen ." The France-based panel's ruling sparked debate around the world , prompted hundreds of lawsuits over allegations that glyphosate causes cancer, and resulted in the state of California adding glyphosate to its list of cancer-causing chemicals.  Glyphosate is the active ingredient many herbicides, most notably in Monsanto's star product, Roundup . The product is the world's best-selling weedkiller, applied to more than 150 food and non-food crops and used on lawns, gardens and parks. In fact , researchers from the University of California San Diego School of Medicine found that human exposure to glyphosate has increased approximately 500 percent since 1994, the year Monsanto introduced its genetically modified Roundup Ready crops in the U.S. Today, the chemical can be detected in household foods such as cookies, crackers, ice cream and even our urine .

Some Bigelow Tea Not 'Natural' Because It Contains Glyphosate, Lawsuit Says - The Organic Consumers Association (OCA) has filed a lawsuit against R.C. Bigelow, Inc. alleging that glyphosate —the world's most widely used weedkiller—can be detected in some of the company's popular tea products.  But the consumer interest group is not suing Bigelow due to the presence of the controversial chemical in its tea products (an estimated 0.38 ppm in Bigelow Green Tea, according to the lawsuit). Rather, the complaint alleges that Bigelow deceptively labeled, marketed and sold tea products with the representation of " All Natural " and "Natural," making the products appear environmentally friendly.  The lawsuit was filed Dec. 15 in Superior Court in Washington.  "Like other companies that market their products as 'natural' and 'environmentally friendly,' Bigelow is using these terms to profit from growing consumer demand for healthier, more sustainably produced products, even though the company knows those claims are false," said Ronnie Cummins, international director of the OCA.   While the lab results cited by OCA's lawsuit showed glyphosate levels far lower than the government's threshold of 1 ppm for dried leaves, the group believes there is no safe level of glyphosate exposure for a person.

EPA: Neonicotinoid Pesticides Pose Serious Risks to Birds, Aquatic Life -  The U.S. Environmental Protection Agency (EPA) released multiple scientific assessments last week that found commonly used neonicotinoid pesticides can kill and harm birds of all sizes.  Separate analyses also found the pesticides pose significant danger to aquatic invertebrates, which play a crucial role in supporting larger ecosystems.  The troubling assessments come on the heels of earlier EPA analyses and thousands of scientific studies that have identified substantial risks to pollinators and aquatic invertebrates from this class of pesticides .  "The EPA's assessments confirm neonicotinoid pesticides are extremely harmful to birds and aquatic life at the very center of our ecosystems," said Lori Ann Burd, director of the Center for Biological Diversity's environmental health program. "With bird, aquatic invertebrate and bee populations in decline, the only way to prevent further catastrophic damage is to follow Europe's lead and ban these dangerous pesticides."  In last week's assessment the EPA found that risks posed to certain birds from eating neonic-treated seeds exceeded the agency's level of concern—the level at which harm is known to occur—by as much as 200-fold. In addition to killing birds, a recent scientific study also found, neonic pesticides significantly impair the migratory ability of seed-eating songbirds.  The analysis found that if neonic-treated seeds make up just 1 percent to 6 percent of a bird's diet, serious harms could result.  Europe has instituted a temporary ban on neonicotinoids based on their harms to pollinators. Canada's pesticide regulatory agency has recommended banning the most widely used neonicotinoid based on harms to aquatic ecosystems.

EPA Considers Allowing Bee-Killing Pesticide to Be Sprayed on 165 Million Acres of U.S. Farmland - The U.S. Environmental Protection Agency (EPA) will consider allowing the bee-killing pesticide thiamethoxam to be sprayed on the most widely grown crops in the U.S. The application , if approved, would allow the highly toxic pesticide to be sprayed directly on 165 million acres of wheat, barley, corn, sorghum, alfalfa, rice and potato. The proposal by the agrochemical giant Syngenta to dramatically escalate use of the harmful neonicotinoid pesticide came last Friday, on the same day the EPA released new assessments of the extensive dangers posed by neonicotinoids , including thiamethoxam. "If the EPA grants Syngenta's wish, it will spur catastrophic declines of aquatic invertebrates and pollinator populations that are already in serious trouble," said Lori Ann Burd, director of the Center for Biological Diversity's environmental health program. "You know the pesticide-approval process is broken when the EPA announces it will consider expanding the use of this dangerous pesticide on the same day its own scientists reveal that the chemical kills birds and aquatic invertebrates." Neonicotinoids have long been known to pose serious harm to bee populations. But the new EPA assessments found the commonly used pesticides can kill and harm birds of all sizes and pose significant dangers to aquatic invertebrates. Thiamethoxam is currently widely used as a seed coating for these crops. This application would allow it to be sprayed directly on the crops, greatly increasing the amount of pesticide that could be used.  The just-released aquatic and non-pollinator risk assessment found that the majority of uses of the neonicotinoid on currently registered crops resulted in risks to freshwater invertebrates that exceeded levels of concern—the threshold at which harm is known to occur.

Pesticide Suicide - Pesticide suicide refers to toxic chemicals mucking up the health of animals, plants and insects. This worldwide causatum may be totally out of control or maybe not; nobody knows for sure. Therein lies the scary part.  However, what is known is not encouraging: “Industrial toxins are now routinely found in new-born babies, in mother’s milk, in the food chain, in domestic drinking water worldwide… Humans emit more than 250 billion tonnes of chemical substances a year, in a toxic avalanche that is harming people and life everywhere on the planet.”  For obvious reasons, it is not at all comforting to hear Earth referred to as a “toxic planet.” Indeed, it would be insulting, if not true.In that regard, there may be connecting dots around “toxic planet.” A huge increase in the incidence and prevalence of chronic diseases has been reported in the United States over the last 20 years during the same time frame as pesticide/chemical usage has become ubiquitous.   At the beginning of the 20th century infectious diseases like tuberculosis, pneumonia, and diarrheal disease were the leading causes of death. By the 21st century mortality by infectious diseases was replaced by chronic illnesses like heart disease, stroke, and cancer.  A Rand Corporation study states that 60% of Americans have one and 40% have multiple chronic conditions.  Sixty percent (60%) of Americans with a chronic condition is almost impossible to grasp because it’s a mind-boggling statistic. How is this possible? And, why so many? Whether pesticide suicide (inclusive of all chemicals) is reality is not known 100% certain.  Of course, given enough time, truth is revealed via ecosystem breakdowns (already starting) and/or advancing cases of autism, gastrointestinal issues such as inflammatory bowel disease, chronic diarrhea, colitis, Crohn’s disease, obesity, cardiovascular disease, depression, cancer, cachexia, Alzheimer’s disease, Parkinson’s disease, multiple sclerosis, and ALS, or none of above, which would, in part, be indicative of no ecosystem toxicity.

The Dicamba Crisis (Part 1) - Decades of experience prove the model of agriculture based on pesticides doesn’t work and is unsustainable.   That’s how we know support for GMOs, and continued support for pesticides, has zero to do with reason and science. Nowhere is this more obvious than in the case of the resurrection of such herbicides as 2,4-D and dicamba which the GMO paradigm previously declared obsolete. Nowhere is the big lie more obvious than in the case of how dicamba’s new GMO-based escalation immediately precipitated the most acute American agricultural crisis since the Southern corn leaf blight epidemic of 1970. In the 1990s Monsanto rolled out its glyphosate-tolerant Roundup Ready product line of GM crops. One of the big selling points was that glyphosate allegedly was less harmful to human health, the environment, and other crops than dicamba and 2,4-D. Monsanto and the USDA promised Roundup Ready would permanently supersede these bad old poisons. Monsanto and the USDA also promised weeds never would become resistant to glyphosate. Monsanto was lying when it claimed Roundup Ready was the final word on weed control. Within a few years Roundup-resistant weeds began to proliferate. Monsanto’s new flagship product, designed to rescue the company from its Roundup dependency and lift it to new heights of dominion and profitability, is the Xtend system of dicamba herbicide and dicamba-tolerant GM cotton and soybeans. . Pesticide drift has always been a problem, and this problem is especially acute with dicamba. Prior to the advent of the Xtend system dicamba was used only early in the season before crops had sprouted and under weather conditions which didn’t maximize its drift potential. As early as 2011 farmers, scientists, and industry figures warned that any large-scale spraying of dicamba under the warm, humid conditions of late spring onward was likely to maximize drift and the damage to other crops and plants this drift would cause. Dicamba kills all broad-leaf plants. Soybeans are especially sensitive to it, but it easily damages and kills most crops, ornamentals, and trees.

The Dicamba Crisis Part 2: GMO/Pesticides Vs. Evolution - Contrary to modernist religion evolution does not “progress”, but barring extreme events it tends in a linear way toward greater diversity. It doesn’t make great leaps outside of its own limits and laws. This is why scientifically sound agriculture is based on soil-building, biodiversity, attracting beneficial insects and other organisms, and putting natural stress on pests. These are the basis of agroecology.  Poison-based agriculture comprises, in theory and practice, the radical repudiation of science and wisdom. Rejecting biodiversity in every way and exalting monculture, it is anti-evolutionary and counter-evolutionary. It seeks to break out of evolution and nature completely and replace these with a technological desert. We see this most clearly with the GMO campaign.  One of the core cult faiths of genetic engineering cultism is that the engineers can lift themselves and their product out of the framework of natural evolution, leap over all its processes and safeguards, and superimpose their own anti-evolved, non-contexted product over the entire globe in minimal time. The GMO ideology is based on a technological leaping-out of natural evolution, in the same way technocracy as an order of social engineering wants to leap out of human politics, indeed out of human nature as such. As we see with the unfolding dicamba crisis, the results are likely to be disastrous.

California’s legal weed is going to have a huge pesticide problem - State rules could leave California’s first batch of recreational marijuana riddled with unknown amounts of pesticides, threatening the launch of the state’s projected $5 billion legal pot market on January 1.State officials are racing to craft new legal weed policies, covering everything from licensing to banking to delivery drones, which don’t even exist yet. But pesticides are getting a pass, the Associated Press reports — at least for the first six months.Under the state’s rules, growers and sellers, including the more than 1,300 legal medical dispensaries already operating in the state, have six months to sell their existing inventories before they have to start testing their stock for pesticides. It will be a year before stricter standards kick in, but any pot harvested after Jan. 1 still has to be tested.That has some experts advising caution about the first wave of sales, which usually attract droves of first-time consumers.  Donald Land, a chemistry professor at the University of California, Davis, warned that consumers shouldn’t expect their weed on the shelves to be safe just because it’s now legal. All untested weed will be labeled as such, according to the California Bureau of Cannabis Control. In the meantime, according to Land, under California’s more lax medical regulations, less than five percent of the state’s medical inventory has been tested for pesticides and other contaminants, which can include powerful fungicides and rodent-killers that haven’t been tested for their health effects when smoked and inhaled.

Mass starvation is humanity’s fate if we keep flogging the land to death, by George Monbiot - By the middle of this century there will be two or three billion more people on Earth. Any one of the issues I am about to list could help precipitate mass starvation. And this is before you consider how they might interact. The trouble begins where everything begins: with soil. The UN’s famous projection that, at current rates of soil loss, the world has 60 years of harvests left, appears to be supported by a new set of figures. Partly as a result of soil degradation, yields are already declining on 20% of the world’s croplands. Now consider water loss. In places such as the North China Plain, the central United States, California and north-western India – among the world’s critical growing regions – levels of the groundwater used to irrigate crops are already reaching crisis point. Water in the Upper Ganges aquifer, for example, is being withdrawn at 50 times its recharge rate. But, to keep pace with food demand, farmers in south Asia expect to use between 80 and 200% more water by the year 2050. Where will it come from? The next constraint is temperature. One study suggests that, all else being equal, with each degree celsius of warming the global yield of rice drops by 3%, wheat by 6% and maize by 7%. These predictions could be optimistic. Research published in the journal Agricultural & Environmental Letters finds that 4C of warming in the US corn belt could reduce maize yields by between 84 and 100%. The reason is that high temperatures at night disrupt the pollination process. But this describes just one component of the likely pollination crisis. Insectageddon, caused by the global deployment of scarcely tested pesticides, will account for the rest. Already, in some parts of the world, workers are now pollinating plants by hand. But that’s viable only for the most expensive crops.   In the poorer regions of the world, people with fewer than five hectares own 30% of the farmland but produce 70% of the food. Since 2000, an area of fertile ground roughly twice the size of the UK has been seized by land grabbers and consolidated into large farms, generally growing crops for export rather than the food needed by the poor.

 WTO and Food Security: Biting the Hand that Feeds the Poor --- Since 2013, controversy has swirled around India’s National Food Security Act (NFSA), the most ambitious food security initiative in the world, with its plans to buy food grains from small-scale farmers to distribute to some 840 million poor Indians, two-thirds of the country’s people. The controversy came at the World Trade Organization (WTO), where the U.S. government accused India of unfairly subsidizing its farmers by paying a support price above market prices.At the WTO biannual ministerial conference in Bali, India stood firm, questioning the subsidy calculation as an artifact of old WTO rulemaking and asserting that, in any case, such programs that are used for legitimate food security purposes should be exempt from such restrictions. The conflict nearly torpedoed the WTO’s modest negotiated agreements in Bali, but a “Peace Clause” granted India and other developing countries with such programs a grace period while negotiators tried to reach a permanent solution. (See my coverage of the controversy here.) That grace period is up now, as trade ministers from across the globe board planes for the December 10 opening of the WTO’s 11th Ministerial Conference in Buenos Aires, Argentina. With no progress on the matter at the 2015 conference in Nairobi, Kenya, India and other developing countries have called for a simple exemption of such programs from WTO restrictions. U.S. negotiators, themselves under fire for “dumping” agricultural surpluses on global markets at prices below the costs of production, are demanding more restrictive measures and further concessions from developing countries. As the controversy dragged on toward the Nairobi WTO meeting in late 2015, I traveled to India to see the reality of the National Food Security Act. What I found were moderate subsidies, which helped stabilize rural markets while putting urgently needed food rations into hands of poor women so they could feed their families. What I saw, in fact, was a far more ambitious version of the U.S. farm programs enacted as part of the New Deal for much the same reasons.

Is a belief in the eternal purity of the Ganga aiding its destruction? A writer has some answers -- I arrived in India about five years ago. I’m pretty interested in rivers, and I was immediately fascinated by the Yamuna River, a big tributary of the Ganges that runs through the middle of Delhi. By the time it leaves Delhi, it’s extremely polluted, yet if you look at Indian art and literature the Yamuna, like the Ganges, is considered this extraordinarily beautiful and pure river. A goddess, in fact. Both these rivers, which eventually join up and become one, are celebrated in Indian mythology and history as these fantastically pure rivers with turtles and deer, and Krishna playing on the banks with his gopis. It’s tragic to see the rivers now so heavily polluted in places. In the case of the Yamuna, it’s completely dead because it’s so full of raw untreated sewage and toxic waste as it heads down towards the Taj Mahal at Agra. It’s ironic because you’d think that, because the river is worshiped as a goddess, people would automatically do everything possible to keep the river clean. Unfortunately, it’s not quite that simple. I think a lot of Indians, particularly those who do not have much education, would tend to think that “nothing we do will make the Ganges dirty, because the Ganges is the river that purifies you, purifies people.” When you die, you want your body to be burned along the banks of the river, and the ashes scattered over it, so you can achieve moksha, transcendence and freedom from the cycle of death and rebirth. I’ve seen people throwing garbage in a plastic bag into the river from a temple to the goddess. The belief that the river is so pure that we can do no harm to it is a problem.

Asiatic cheetahs on the brink of extinction with only 50 left alive - Conservationists have warned that the Asiatic cheetah is on the threshold of extinction following a UN decision to pull funding from conservation efforts to protect it. Fewer than 50 of the critically endangered carnivores are thought to be left in the wild – all of them in Iran – and scientists fear that without urgent intervention there is little chance of saving one of the planet’s most distinctive and graceful hunters. “Lack of funding means extinction for the Asiatic cheetah, I’m afraid,” the Iranian conservationist Jamshid Parchizadeh said. “Iran has already suffered from the loss of the Asiatic lion and the Caspian tiger. Now we are about to see the Asiatic cheetah go extinct as well.”  Cheetahs – both African and Asian – are the fastest land animals on Earth, using their speed to bring down antelope, gazelle and other moderately large prey. Asiatic cheetahs were once widespread across the continent but were eradicated in India, where they were hunted for sport. The spread of farming also greatly reduced numbers in the 19th and 20th centuries. Eventually the animal was wiped out in all the nations of Asia to which it was once native – with the exception of a few areas of Iran. Conservationists have battled to keep numbers stable in these areas. They have faced severe problems, however. “There have been all sorts of threats to the Asiatic cheetah,” said the conservation biologist Sam Williams of the University of Venda, in South Africa, who is an expert on large carnivores. “For example, they are hunted and killed by local herders – of sheep and goats – because cheetahs will occasionally kill and eat one of their animals.”

New study: Snake fungal disease may now be a global threat - A potentially fatal fungus infection found in more than two dozen snake species in Europe and the United States could be lethal to serpents across the globe, a new study finds.  The report, published in the online journal Science Advances on Wednesday, December 20, suggests that given the scope of the snake fungal disease caused by Ophidiomyces ophiodiicola, future surveys should operate under the assumption that all species harbor the pathogen.  The fungal disease in snakes was first identified in 2009 and put in the genus, Chrysosporium. However, in 2013, after DNA sequencing revealed the fungus to be a separate species, the genus Ophidiomyces was created to accommodate the new fungus. A study reported on in early June this year showed zero occurrences of the fungus from 1880 all the way through to 1999, based on examinations of specimens in museums.  Matt Allender at the University of Illinois in Urbana said he and his team of researchers found that in the year 2000, they began to see the fungal disease reappearing, with the BBC reporting this suggests some sort of event occurred at the turn of the century that led to a relatively innocuous soil fungus turning into a deadly pathogen.  Some 30 snake species in 15 U.S. states and in Canada have been hit by the fungal infection, although rattlesnakes seem to have been hit hardest. The disease manifests itself as a minor skin irritation at first and as the snake's immune system kicks in, within a few days the skin at the infection site begins to thicken and die-off.  This die-off creates a thick yellow crust that often breaks off, exposing raw flesh that allows the fungus to spread. When the infection reaches the head of the snake, it can interfere with the snake's eyes or sense of smell, leaving the animal unable to hunt and prone to death by starvation. The mortality rate is 90 percent.

 Plastic Pollution Is ‘Low Priority’ for Shoppers, Soft Drink Execs Tell Policy Officials –-- Soft drinks executives told government officials most shoppers don't care much about the environmental impact of the plastic drinks bottles they buy, according to documents seen by Unearthed . Coca-Cola, Lucozade Ribena, Danone and Nestle were among those invited to a soft drinks roundtable to discuss the problem of plastic bottle waste and recycling at Defra's headquarters in October. They told officials: "The environmental impact of packaging was low on consumers' priorities when buying a soft drink," according to a note of the meeting obtained by Unearthed using Freedom of Information rules. Plastic pollution, particularly single-use packaging such as drinks bottles, has come under increasing scrutiny in the past year after global concern at the amount of plastic entering the oceans: An estimated 15 million plastic drinks bottles are thrown away rather than recycled every day in the UK. The screening of Blue Planet 2 this autumn, which included footage of turtles trapped in plastic debris and albatrosses feeding their young on plastics , has only increased the public concern around the issue.  This week environment secretary Michael Gove told reporters he had been inspired by Blue Planet 2 to tackle the issue and wanted to boost recycling rates, cut the amount of plastic in circulation and to make recycling easier by reducing the number of different types of plastic in common use.

Trump EPA Delays Deadly Chemical Bans Indefinitely - The Trump administration last week proposed to indefinitely delay proposed bans of high-risk uses of three toxic chemicals: Methylene chloride and N-Methylpyrrolidone, or NMP, in paint strippers and trichloroethylene, or TCE, in degreasing. The proposed chemical bans and restrictions were stripped from the administration's " Unified Agenda "—and are among hundreds of deregulatory actions that put the health and safety of Americans at risk by weakening protections. Methylene chloride, an acutely toxic likely carcinogen that is also toxic to the brain and liver, has been linked to more than 50 deaths. CBS recently featured the tragic story of Kevin Hartley, a 21-year-old who died while using it to strip a bathtub. "This latest action is one more move by this EPA to undermine implementation of the bipartisan reforms to TSCA enacted last year," said Dr. Richard Denison , lead senior scientist at Environmental Defense Fund . "Among those reforms, Congress specifically authorized EPA to take action on these chemicals to address high-risk uses. Instead, EPA is once again kowtowing to the chemical industry." "EPA's callous decision to continue to allow the use of methylene chloride in paint strippers will lead to more needless deaths of Americans who are simply refinishing a door or renovating a bathroom," said Scott Faber, senior vice president at Environmental Working Group . "Once again, this administration would rather pander to chemical industry lobbyists than save American lives."  EPA has found that TCE is "carcinogenic to humans by all routes of exposure" and causes developmental and reproductive harms. NMP is also a reproductive toxicant.

AP finds climate change risk for 327 toxic Superfund sites -- Over 300 Superfund sites scattered across the United States are vulnerable to sea level rise and flooding due to climate change, endangering nearly 2 million Americans, an AP investigation has found. The AP's analysis of census data, flood zone information and EPA Superfund site locations show that hundreds of thousands of Americans--many of whom are minorities living in low-income communities--live within one mile of 327 toxic sites that are particularly at risk. The AP also reported this week that an EPA task force set up by Administrator Scott Pruitt in May to set priorities on Superfund site cleanup kept no written records of meetings, used no reference materials, held no public meetings and set no standards for selection for employees serving on the committee. The task force issued a lengthy report in June with dozens of recommendations with regard to Siuperfund site cleanup--recommendations, the AP reported, that Pruitt "immediately" adopted. (Climate risk & Superfund sites: see photos)

Residents flee as flames approach wealthy California enclave (AP) — Residents piled into cars and fled on Saturday, turning downtown Santa Barbara into "a ghost town" as surging winds drove one of the biggest fires in California's history toward the city and the nearby wealthy enclave of Montecito. The mandatory evacuations around Montecito and neighboring Summerland came as winds that had eased a day earlier roared back at around 30 mph (48 kph), with gusts to about 60 mph (97 kph). Firefighters sprayed water onto hot spots sparked by wind-blown embers. Firefighters also drove to the historic San Ysidro Ranch in yellow fire trucks as heavy smoke rose from the coastal hills, blotting out the blue skies.A portion of Santa Barbara was under mandatory evacuation. At the city's zoo, workers began putting some animals into crates and kennels, to ready them for possible evacuation.In downtown Santa Barbara, Restaurants and small stores on normally bustling State Street were shuttered.  "It's a ghost town. Everything is shut down," Schoop-Rutten said. "It's very, very eerie."The northbound lanes of U.S. Highway 101, coming up the coast from Los Angeles, were closed for a few hours south of Santa Barbara, with cars stopped on the freeway.The 404-square-mile (1,046-sq. kilometer) Thomas Fire was moving rapidly westward and crested Montecito Peak, just north of Montecito. Known for its star power, the enclave boasts the mansions of Oprah Winfrey, Ellen DeGeneres and many other celebrities. Winfrey expressed her dismay on her Twitter account. "Still praying for our little town. Winds picked up this morning creating a perfect storm of bad for firefighters," Winfrey tweeted.  "The worst was the smoke," Henry said. "You couldn't breathe at all and it became worse when the wind started. All the ashes and the dust on the street were in the air. It was very, very frightening."

Large Swaths of Southern California Are in Ruins Thanks to the Catastrophic Thomas Fire -- Wildfires in California have continued to ravage large portions of the state, with the Thomas fire in southern California now entering its 13th day and claiming over 267,500 acres of land, CNN reported. The wildfire is now the third-largest in California history and is just 40 percent contained, with over 8,400 firefighters and $110 million in resources deployed to fight it. Now-familiar scenes posted by the Santa Barbara County Fire Department and others this weekend showed Ventura and Santa Barbara counties descending into a nightmarish state, just as with a prior spate of wildfires elsewhere in California earlier this year. Ventura resident Patricia Rye told KEYT she had woken up in the middle of the night after her son-in-law arrived and did not have time to grab anything before the fire approached her building. “I didn’t have time to take anything,” Rye said. “My wallet, or any of my personal things. I literally left with the clothes on my back.” Elsewhere, CNN reported, thousands of people were evacuated and animals at the Santa Barbara Zoo were loaded into cages in anticipation of a possible emergency. The Thomas fire could be on track to become the largest fire in recorded California history, the L.A. Times reported, potentially surpassing both the 2003 Cedar fire (273,000 acres) and the 1889 Santiago Canyon fire (300,000 acres). UCLA and U.S. Geological Survey research ecologist Jon Keeley told the paper that half of the largest wildfires in the state since 1861 have occurred in the last 15 years, with humans primarily to blame—both as a result of arson or accidental fires being started by them or due to persistent regional drought, which is linked to climate change. “We think that this fire, the Thomas fire, is likely very large in part not just because the Santa Ana wind event is long, but there was this very extreme drought between 2012 and 2014,” Keeley said.

Thomas fire continues to grow as strong, shifting winds bring new dangers - LA Times: The massive Thomas fire continued to grow Sunday even after an epic battle to protect homes along the Santa Barbara County coast Saturday proved successful despite intense winds. The third-largest wildfire in modern California history was burning a massive swath from Santa Barbara to Ventura, fueled by intense Santa Ana winds. On Sunday morning, the San Fernando Valley was being hit by wind gusts topping 70 mph in some mountain areas. The National Weather Service issued a wind advisory for canyon and mountain areas.As of Sunday morning, the fire was at 269,000 acres and 40% contained. The California Department of Forestry and Fire Protection said 18,000 structures were threatened. Fire crews were expected to shift their focus from Santa Barbara to Ventura County, where the northern edge of the fire was moving east and red flag conditions are expected to remain in place until Sunday night, officials said. Winds could gust up to 55 mph. In Ventura County, firefighters were concentrating their forces in the hills above Fillmore where the wildfire continues to burn. Their efforts were hampered by dry conditions combined with low humidity and strong winds. Red flag conditions were forecast in the mountains and valleys of Los Angeles County through Sunday evening as well as parts of Ventura, Orange, Riverside and San Bernardino counties. On Sunday morning, wind gusts topped 70 mph in mountain areas in the fire zone and 50 mph on the coast in Ventura County, said Kathy Hoxsie, meteorologist with the National Weather Service in Oxnard. Winds are expected to calm down Monday and Tuesday to 10 to 20 mph, which will “look tranquil” compared with the weekend gusts, Hoxsie said. 

California's 3rd-largest wildfire in state history has been burning for 13 days, and it's still only 40% contained  (Reuters) - Strong winds that have powered the third-largest wildfire in California's history were expected on Sunday to further fuel a blaze that has burned 267,500 acres.  Nearly 8,500 firefighters are battling the so-called Thomas Fire in Southern California, which began Dec. 4 and has destroyed more than 1,000 structures and threatened 18,000 more, including homes in the wealthy town of Montecito just outside the coastal city of Santa Barbara.  While the winds were expected to ease on Sunday near Santa Barbara, northeast wind gusts up to 55 mph were forecast through Sunday for parts of Ventura and Los Angeles counties, National Weather Service forecasters said.  The blaze, centered less than 100 miles northwest of downtown Los Angeles, has forced evacuations that turned neighborhoods into ghost towns and filled the air with smoke.  The fire is now 40%  contained despite hot Santa Ana winds that have powered its expansion, at times sending embers far ahead of its main flank.  Firefighters were employing more than 970 fire engines and 34 helicopters to battle the blaze. "It is a beast," Santa Barbara County Fire Department Division Chief Martin Johnson told a news conference on Saturday. "But we will kill it." Five of 20 most destructive fires in recorded history ravaged the state in 2017, according to Cal Fire. The Thomas fire, the seventh-most destructive in state history, forced many schools to close for days, shut roads and drove hundreds of thousands from their homes.  It was also responsible for poor air quality throughout Southern California.

California Wildfires: Thomas Fire Could Become Largest in State History - More than 8,400 firefighters are battling the Thomas Fire raging in Southern California's Pacific coast. The massive blaze, which charred 270,000 acres, destroyed 1,024 structures and took the life of 32-year-old Cal Fire engineer Cory Iverson, is officially the third largest wildfire in state history.  Notably, the Thomas Fire—now 45 percent contained—could potentially take the dubious title of California's largest-ever wildfire since record-keeping began in 1932. The state's largest is the 2003 Cedar Fire which burned 273,246 acres and killed 15 people.  Environmentalist and founder Bill McKibben tweeted about the stunning distinction:  The multiple fires that erupted across Southern California over the past two weeks have been fueled by an unusual set of forces , including stronger-than-normal Santa Ana winds, experts says.  The fast-moving Thomas fire, which began on Dec. 4, is now approaching Santa Barbara, threatening more than 18,000 structures, forcing thousands of additional Californians to evacuate from their homes, and has cost $123.8 million so far to fight. One person has also been killed in a vehicle accident blamed on the Thomas Fire.  But hope appears to be on the horizon. According to CalFire , weak northeast winds are expected to cool temperatures and increase humidity, allowing for favorable firefighting efforts.  As Reuters reported, the calmer winds helped make Sunday one the most productive days battling the fires.  “We're just hoping to make it home for Christmas," Bakersfield Fire Department Captain Tim Ortiz told the news service.  The Golden State has been experiencing a higher frequency of intense wildfires in recent years. According to Cal Fire, five of the 20 most destructive fires in recorded history have ravaged the state in 2017.  The current outbreak comes not long after October's string of devastating wildfires in Northern California that killed 44 people—the deadliest in state history.

With more than 8,500 firefighters doing battle, this is California’s largest wildfire response - LA Times -- As the Thomas fire entered its third week, the scope of the inferno continues to inspire awe and generate horror. The wildfire had grown to 270,000 acres and spurred 104,607 people to flee their homes, authorities said. More than 8,500 firefighters have battled the blaze, the largest mobilization of fire crews to fight any wildfire in California history. The firefight has cost $130 million. It’s now the third-largest fire in California history but is likely to become the second within the next day or two. Officials don’t expect to have it contained until January, and some experts say it’s possible the fire could end up as California’s largest. And the battle is far from over. Winds are expected to calm down Monday and Tuesday to 10 to 20 mph, which will “look tranquil” compared with the weekend gusts, said Kathy Hoxsie, meteorologist with the National Weather Service. Increased humidity levels and low winds are expected to aid firefighters. But it will be a short respite, as strong winds and low humidity are expected to return Wednesday in Santa Barbara County and Thursday in Ventura County, Hoxsie said.Many firefighters say they’ve never encountered a situation like this in their careers. Many are on three-week shifts, so because containment isn’t expected until January they know they’ll be working on Christmas. 

California wildfire fight aided by better weather (Reuters) - Thousands of weary firefighters, battling a deadly 2-week-old California wildfire that ranks as the third largest in state history, welcomed a second straight day of favorable weather on Monday that allowed a more aggressive attack on the flames. The so-called Thomas fire has scorched 271,000 acres (110,000 hectares) of drought-parched chaparral and brush in the coastal mountains, foothills and canyons of Ventura and Santa Barbara counties northwest of Los Angeles.  The burned zone encompasses an area about a third of the size of the state of Rhode Island. More than 1,000 homes and other buildings have gone up in flames and some 18,000 other structures remained threatened from a late-season firestorm that kept firefighters on the defensive for the better part of two weeks. One firefighter lost his life, succumbing to smoke inhalation and burns last Thursday near the town of Fillmore in Ventura County. A mix of lighter winds, rising humidity and cooler air temperatures prevailed for a second day on Monday, affording crews the greatest weather break they had seen yet, said Lynne Tolmachoff, a spokeswoman for the California Department of Forestry and Fire Protection (CalFire).  “Everybody is breathing a sigh of relief that this will give those firefighters a chance to get in there and do some good work, and not just be constantly chasing things,” she told Reuters by telephone.

'Monster' Thomas fire in Southern California now 50 percent contained - ABC News: The monster Thomas fire north of Los Angeles is coming under control. Interested in California Wildfires?Add California Wildfires as an interest to stay up to date on the latest California Wildfires news, video, and analysis from ABC News. California Wildfires Add Interest For the past 14 days, the fire that has been turning mountainsides to ash has been growing to become California’s third largest wildfire on record. The fire only needs to consume a couple thousand more acres to dethrone the 2003 Cedar fire that maintains top spot on the list. The Ventura County Fire Department said Monday evening that the fire is now 50 percent contained after having so far burned 271,000 acres. So far, the overpowering Thomas fire has claimed two lives, caused more than 104,000 people to flee their homes and destroyed 1,313 structures. More than 8,526 firefighters have put their lives on their line to stop it, running up a cost of roughly $124 million.Over the weekend, tens of thousands of residents in the wealthy enclaves of Montecito and Santa Barbara were notified they should be ready to evacuate. Many adhered to the warnings. On Monday, the Santa Barbara Office of Emergency Management airlifted some of them out. In the meantime, actor Rob Lowe converted his palatial seaside kitchen into a heartwarming mess hall.

Inferno-fanning winds set to return as Thomas Fire close to becoming largest ever in California - Calm winds have helped California firefighters make progress battling a massive blaze in Ventura and Santa Barbara counties, but the fire is expected to eclipse the largest wildfire in recorded state history, officials said.   The so-called Thomas fire has burned burned around 272,000 acres since it broke out on the evening of Dec. 4.  A respite from powerful winds allowed firefighters to reach 50 percent containment on the fire, and crews were taking advantage of calm conditions Tuesday by performing a controlled burn to remove swaths of dry brush along the fire's northern edge.  "We're going to take a lot of that fuel out of there," said Capt. Rick Crawford, a spokesman for Cal Fire. "That way when the winds come back there'll be nothing left to burn." The Thomas Fire has destroyed over 1,000 structures, including at least 765 homes, and been blamed for at least two deaths, including a woman killed in a crash while evacuating and a firefighter who died while fighting the blaze, officials said.  The largest fire in recorded state history is 2003's Cedar fire, which burned 273,246 acres in San Diego County, killed 15 people and destroyed over 2,800 structures. Brown said Monday that he expects the Thomas Fire to grow larger than that fire.  "Do we think it’s going to get bigger than the Cedar fire? With the planned containment lines for the firing operation that we have going on, yeah," said Brown.

As Winds Rise Once More, Firefighters Fear 'Flare-Up' In Massive Thomas Blaze - For the past few days, the weather in Southern California granted firefighters a rare reprieve. Winds dropped, humidity ticked up a tad — and for a brief span, at least, firefighters had a little natural help reining in the massive Thomas Fire northwest of Los Angeles, which they had 60 percent contained by Wednesday morning.But that lull didn't last long.The strong winds and low humidity that helped fan the blaze into California's second-largest wildfire on record are returning. In certain areas, winds are expected to reach 15 to 30 mph, with gusts up to 60 mph.And experts fear the fire's dangerously erratic behavior will return with them."There is potential for a flare-up," Joe Sirard, a meteorologist with the local weather service, tells The Los Angeles Times. That is far from good news for residents who have been facing down the angry orange glow of the blaze since it took hold Dec. 4. In the more than two weeks since then, the Thomas Fire has been blamed for two deaths, destroyed at least 750 homes and burned roughly 272,000 acres — or a span larger than all of New York City and Boston combined. Before the fire is finally contained, it is expected to pass the 2003 Cedar Fire as the largest since Cal Fire began keeping such records in 1932.

Thomas Fire holds at 272,000 acres, now 60 percent contained   -- The blaze held steady at 272,000 acres — the second-largest wildfire in California history — with a “significant wind event” expected to hit Wednesday night and carry into Thursday morning. Cal Fire reported the total cost since the Thomas Fire began on Dec. 4 is more than $161 million. More than 1,000 structures have been destroyed and 18,000 remain threatened.  Santa Barbara County Fire Department battalion chief Chris Childers said Wednesday during a community meeting at San Marcos High School that crews “have secured the Santa Barbara side of this fire.”“I believe we’ve done it so well that we’re now getting the test,” Childers said. “The wind test that’s coming tonight will be the true test to see that we have done our job correctly.”There have been no changes in evacuation orders over the last 24 hours, Santa Barbara County Sheriff Bill Brown said.  About 16,000 Santa Barbara residents are still under mandatory evacuation orders, and 12,000 remain under evacuation warning. Brown said there are plans in place if more evacuations are ordered during the wind event.

Thomas Fire to become largest wildfire in California history as gusty winds, dry air persist -- Gusty winds will kick up and become troublesome for firefighting efforts in Southern California into Friday. The Thomas Fire is likely to become California's largest wildfire on record, when it tops 273,246 acres burned, from the Cedar Fire in October 2003. As of Thursday morning, Dec. 20, the Thomas Fire has charred 272,200 acres. Another Santa Ana wind event will unfold into early Friday, with canyons and passes from Santa Barbara through San Diego becoming subject to damaging winds. "Wind gusts of 40 to 50 mph will be possible in the canyons and passes but could reach up to 60 mph in the mountains through Thursday," AccuWeather Senior Meteorologist Kristina Pydynowski said. These winds have the potential to become damaging both in spreading any fires and in toppling trees and power lines. As a result, residents and tourists should prepare for the threat of closed roads and other travel disruptions as well as some property damage. “The uptick in the wind threatens to hamper containment efforts of the devastating Thomas Fire and reverse firefighter's progress earlier this week,” according to AccuWeather Meteorologist Kyle Elliott. 

Thomas fire worst-case scenario includes parts of Santa Barbara, Ventura - As of Thursday, the Thomas Fire had burned 272,000 acres and was 60 percent contained. More than 1,000 structures have been destroyed thus far. "We are now the second-largest fire in California history and we could very easily -- as we get our control lines together -- become the largest fire in California history," said Brandon Vaccaro, a spokesman for the California City Fire Department. The incident map (above) showing the path of the Thomas fire includes a yellow line that’s far beyond the fire’s forward-most advance. It’s called a contingency line, and it’s what fire officials have determined is the worst-case scenario. The contingency line cuts into the heart of the city of Ventura, and through much of downtown Santa Barbara down to the 101. Firefighters would use the freeway to stop the fire from burning the rest of the city down to the coast. Other than using freeways as last stand areas, officials look for ridgelines and areas where past fires have burned fuel already when placing the contingency line, said Vaccaro. "It’s easier for us to defend that than if it was 80-year-old dead vegetation," he said. Barring a severe pick up in wind or other setbacks, tactics like controlled burns and bulldozer lines should keep the fire from reaching Santa Barbara or other nearby cities, said Vaccaro.

Thomas Fire now 65 percent contained after crews withstand wind event -- Crews fighting the 272,600-acre Thomas Fire withstood a significant wind event overnight Wednesday, allowing 600 acres of growth and increasing containment to 65 percent by Thursday night, according to Cal Fire.  The winds did blow through the night, but by morning all the containment lines had held, and fire officials lifted all evacuation orders and warnings for the Santa Barbara County South Coast, allowing some 16,000 people to return home in time for the holidays.More than 4,700 fire personnel are currently assigned to the blaze, down from a peak of nearly 9,000.The fire is transitioning for unified command, which includes a variety of local, state and federal officials, to a federal Type 1 management team led by Mark Von Tillow of the U.S. Forest Service. The Thomas Fire is 646 acres away from catching the 2003 Cedar Fire in San Diego County, which blackened 273,246 acres and is the largest wildfire recorded in California history. The cause of the fire is still under investigation, according to Cal Fire.

273,400-acre Thomas Fire now the largest wildfire in California history The Thomas Fire burning in Santa Barbara and Ventura counties hit a milestone Friday: The largest recorded wildfire in modern California history. The blaze, which began Dec. 4, grew to 273,400 acres Friday and officially surpassed the Cedar Fire, which burned 273,246 acres across San Diego County in 2003. The Thomas Fire has destroyed more than 1,000 structures.Cal Fire reported Friday evening there are 2,841 fire personnel assigned to the Thomas Fire, well below the peak of 9,000 late last week. The Thomas Fire was 65 percent contained. Growth over the past three days has been incremental, despite a “significant wind event” Wednesday night and Thursday morning. “Winds gusting to 50 miles per hour produced no remarkable fire activity in the Montecito area, Camino Cielo or Fillmore” Cal Fire said.  A look at the largest wildfires in California, per Cal Fire:

  • ▪  Thomas Fire: Has burned 273,400 acres so far. Cause is under investigation.
  • ▪  Cedar Fire: Burned 273,246 acres. October 2003 in San Diego County. A lost hunter started the blaze to signal for help.
  • ▪  Rush Fire: Burned 271,911 acres in California and 43,666 in Nevada. August 2012 in Lassen County. Started by lightning.
  • ▪  Rim Fire: Burned 257,314 acres. August 2013 in Tuolumne County. Started by an illegal campfire.
  • ▪  Zaca Fire: Burned 240,207 acres. July 2007 in Santa Barbara County. Started by sparks from grinding equipment during a water-pipe repair.

Smoke from wildfires may be surprisingly deadly, scientists report - As firefighters continue to battle California’s devastating Thomas Fire — now the fourth-largest in state history — a group of scientists presented new results suggesting that air pollution from such massive blazes may be one of their deadliest consequences. Speaking at the annual American Geophysical Union meeting in New Orleans, the researchers, from Colorado State University and the University of Houston, suggested Thursday that wildfires may be responsible for thousands of U.S. deaths annually due to the tiny pollution particles they put into the atmosphere. Moreover, just as fires are expected to worsen under climate warming, so might these health impacts.  Just like smokestacks and tailpipes, wildfires fill the air with the byproducts of combustion, including very dangerous small particles known as PM2.5, which can get into the lungs and bloodstream. A growing body of research has demonstrated that these particles degrade health and contribute to thousands of deaths each year in the United States alone by causing respiratory, cardiovascular and other health problems. So just how deadly is the smoke from wildfires? While the numbers presented this week are definitely preliminary, they suggest the cost could be severe indeed. Pierce presented the highest numbers at the meeting. He estimates that between 5,000 and 25,000 people in the United States may die each year at present from PM2.5 that specifically comes from the smoke of wildfires burning in the United States and other nearby countries (such as Canada). But the number of wildfire-linked deaths could triple by the end of the century for high levels of global warming, he has found, based on one climate modeling scenario (which, Pierce emphasizes, is only a preliminary finding and should be replicated by other scientific groups). That would lead to a situation in which, as other sources of air pollution decline, wildfires become an increasingly dominant overall source of PM2.5.

U.S. Drought Risk Rising as a Second La Niña Winter Kicks In - Weather Underground - The odds of widespread U.S. drought are going up as we head into 2018, thanks in part to the presence of a second consecutive winter of La Niña conditions. New research suggests that the second year of a multi-year La Niña event might, on average, bring more widespread U.S. drought than the first.  La Niña, characterized by a cooling of sea surface temperatures (SSTs) in the central and eastern equatorial Pacific, is the rough counterpart to El Niño, which warms the same region. It’s long been known that La Niña favors drought across the southern United States. During La Niña, sinking air tends to predominate across the Sun Belt, blocking moisture-laden storm systems. This is the result of a large-scale atmospheric feature called a Rossby wave that propagates northward from La Niña’s center of action in the eastern tropical Pacific.  What hasn’t been examined much till now is how U.S. drought risk might evolve from one year of La Niña to the next. Many El Niño events unfold in a year or less—building in northern autumn, peaking in winter, and waning by spring. In contrast, La Niña conditions often recur for two northern winters in a row, and sometimes they come back for a third. That was the case in the three winters from 2009-10 to 2011-12, a period that culminated in major drought across the southern tier of states (especially Texas) in 2011, and over much of the U.S. in 2012.  Multiyear La Niña events get close scrutiny in a paper published in October in Geophysical Research Letters and led by Yuko Okumura (University of Texas at Austin). The authors examined 10 multiyear La Niña events, which they identify by standard deviations in SSTs since 1901 across the benchmarkNiño3.4 region, which is bounded by 5°N-5°S and 120°W-170°W. The 10 events they found start in the years 1908, 1916, 1949, 1954, 1970, 1973, 1983, 1998, 2007, and 2010. Each of the events since 1950 matches up with a multiyear La Niña event in the official database (1950-present) maintained by NOAA’s Climate Prediction Center. Two of the post-1950 events—the ones starting in 1973 and 1998—included three consecutive winters, while the others lasted two years each.Together, these 10 multiyear events are correlated with a weaker wintertime subtropical jet, shunted further north than usual across the U.S., as opposed to the intensified subtropical jet during El Niño that often hauls wet winter storms into California and across the Sun Belt.’

Puerto Rico governor orders recount of hurricane deaths -  The governor of Puerto Rico ordered all government agencies to reopen their books and initiate a recount and review of certified deaths that have occurred since Hurricane Maria, after weeks of reporting by various news outlets pointed to a possible severe undercount of storm fatalities. The territorial government has attributed 64 official deaths to the storm and its aftermath, but the New York Times and the Center for Investigative Journalism have used vital-statistics data to show that the number of deaths in the weeks after the storm far exceeded those of the same time period in previous years. The independent analyses put the death count at probably more than 1,000. Gov. Ricardo Rosselló told The Washington Post last week that there was “no intent to hide the number of deaths” relative to the hurricane and that “accountability broke down” in the wake of the storm. But he said his government is committed to reevaluating death certificates that attributed many of the casualties to natural causes. “We always expected that the number of hurricane-related deaths would increase as we received more factual information — not hearsay — and this review will ensure we are correctly counting everybody,” the governor said in a statement Monday. The government will reexamine medical records, interview family members and call doctors for more information to determine whether deaths identified as “natural” need to be reclassified. 

Louisiana, sinking fast, prepares to empty out its coastal plain -  Louisiana is finalizing a plan to move thousands of people from areas threatened by the rising Gulf of Mexico, effectively declaring uninhabitable a coastal area larger than Delaware. A draft of the plan, the most aggressive response to climate-linked flooding in the U.S., calls for prohibitions on building new homes in high-risk areas, buyouts of homeowners who live there now and hikes in taxes on those who won’t leave. Commercial development would still be allowed, but developers would need to put up bonds to pay for those buildings’ eventual demolition. “Not everybody is going to live where they are now and continue their way of life,” said Mathew Sanders, the state official in charge of the program, which has the backing of Governor John Bel Edwards. “And that is an emotional, and terrible, reality to face.” Months of community meetings on the program wrapped up this week. The draft plan, a portion of which was obtained by Bloomberg News, is part of a state initiative funded by the federal government to help Louisiana plan for the effects of coastal erosion. That erosion is happening faster in Louisiana than anywhere in the U.S., due to a mix of rising seas and sinking land caused in part by oil and gas extraction. State officials say they hope the program, called Louisiana Strategic Adaptations for Future Environments, or LA SAFE, becomes a model for coastal areas around the country and the world threatened by climate change. While the state hasn’t come up with a cost estimate, the buyouts and resettlement could add up to billions of dollars. The federal grant for the initial phase cost $40 million. The idea hasn’t gone over well with all the people it’s supposed to help, some of whom want the government to do more to protect their communities instead of abandoning them.

 Jakarta is sinking so fast, it could end up underwater - Rasdiono remembers when the sea was a good distance from his doorstep, down a hill. Year by year, the water crept closer. The hill gradually disappeared. Now the sea loomed high over the shop, just steps away, held back only by a leaky wall. With climate change, the Java Sea is rising and weather here is becoming more extreme. Earlier this month another freakish storm briefly turned Jakarta’s streets into rivers and brought this vast area of nearly 30 million residents to a virtual halt. One local climate researcher, Irvan Pulungan, an adviser to the city’s governor, fears that temperatures may rise several degrees Fahrenheit, and the sea level as much as three feet in the region, over the coming century. That, alone, spells potential disaster for this teeming metropolis. But global warming turned out not to be the only culprit behind the historic floods that overran Rasdiono’s bodega and much of the rest of Jakarta in 2007. The problem, it turned out, was that the city itself is sinking. In fact, Jakarta is sinking faster than any other big city on the planet, faster, even, than climate change is causing the sea to rise — so surreally fast that rivers sometimes flow upstream, ordinary rains regularly swamp neighborhoods and buildings slowly disappear underground, swallowed by the earth. The main cause: Jakartans are digging illegal wells, drip by drip draining the underground aquifers on which the city rests — like deflating a giant cushion underneath it. About 40 percent of Jakarta now lies below sea level.

Trump resort in Ireland gets approval for sea walls - An Irish county council on Thursday gave a golf resort owned by President Trump approval to build two sea walls, a reduced version of an earlier plan but one that still generated opposition from environmentalists. Trump International Golf Links, which owns the resort at Doonbeg, County Clare, intends to build a line of two low, concealed sea walls, 2,000 feet long and 840 feet long, on the landward side of a public beach to prevent storm waters from eroding three holes of the course.A previous application for a continuous 1.7-mile-long structure was withdrawn last year. Thursday’s decision by the Clare County Council can be appealed to the national planning authority.The resort’s new plan was supported by some local residents, who said they hoped that Mr. Trump would follow up on plans to invest millions in the property.Records show that Mr. Trump paid 8.7 million euros for the resort at an auction in 2014. It had originally opened in 2002, having cost €28 million to build.Environmentalists said the new coastal walls would damage a popular public beach and vulnerable dunes and heath. Some residents also objected, saying the walls would alter tidal flows and divert storm surges into their own properties.

Through global warming, we're now creating new types of extreme weather events, with dire results - The next time someone tells you that we can’t tie an individual weather event to climate change, you should tell them that’s partly to mostly bullshit. Not only can we say a whole lot about an event’s ties to climate change, but some events could not have occurred without global warming’s assistance.  Let this sink in for a second. Global warming is bringing us newly possible extremes, from the 2016 global average surface temperature milestone (it was number one, baby), to a stifling heat wave in Southeast Asia that set numerous all-time high temperature records.  The reason we know this tipping point in extreme weather and climate events has been passed is because of a growing sub-field within climate science, known as detection and attribution research. Scientists who work in this field are the climate equivalent of CSI investigators, probing for clues about what may have led to an extreme event soon after it occurs.  For the past six years, scientists have published the equivalent of a greatest hits album of extreme weather events and their possible ties to climate change. These reports, published in the Bulletin of the American Meteorological Society, or BAMS, analyze events that took place all over the globe during the past year. They employ different methodologies and are typically chock full of cautious statements about what phenomena can and cannot be attributed to climate change.  Scientists tend to shy away from bold pronouncements. But this year's report is different. The message of the 2016 attribution issue is that a sea change has occurred in our understanding of what we, by burning fossil fuels for energy, are doing to our weather. In short, we're now manufacturing our own extremes, scientists said.

Australia's greenhouse gas emissions highest on record -- Australia’s emissions over the past year were the highest on record, when relatively unreliable emissions from land use are excluded, according to estimates by the carbon consultancy NDEVR Environmental. Greenhouse gas emissions continued to rise in recent quarters, with the most recent the second highest for any quarter since 2011, despite electricity emissions being driven down by wind generation. The government’s official public release of data on emissions is now six months behind and NDEVR Environmental’s estimations attempt to mirror that methodology. Released in partnership with Guardian Australia, the results have proven very accurate when compared with data eventually released by the federal government. The ever-increasing emissions are taking Australia further from both its carbon-reduction commitments made in Paris and the much bigger reductions demanded by the science-based targets, recommended by the government’s Climate Change Authority. NDEVR found emissions in the most recent quarter soared to levels only seen once in the past six years. That came despite massive jumps in wind-generated electricity in Victoria and New South Wales, which more than doubled, pushing down emissions from the National Electricity Market. But emissions from transport were at record levels, with jumps in the use of diesel and aviation fuel. Emissions in all other sectors either remained stable or increased slightly. 

Arctic Report Card: Lowest Sea Ice on Record, 2nd Warmest Year -- The Arctic experienced its second-warmest year on record in 2017, behind only 2016, and not even a cooler summer and fall could help the sea ice rebound, according to the latest Arctic Report Card. "This year's observations confirm that the Arctic shows no signs of returning to the reliably frozen state that it was in just a decade ago," said Jeremy Mathis, director of the Arctic program at National Oceanic and Atmospheric Administration (NOAA), which publishes the annual scientific assessment. "These changes will mean living with more extreme weather events, paying higher food prices and dealing with the impacts of climate refugees." The sea ice in the Arctic has been declining this century at rates not seen in at least 1,500 years, and the region continued to warm this year at about twice the global average, according to the report. Temperatures were 1.6° Celsius above the historical average from 1981-2010 despite a lack of an El Nino, which brings warmer air to the Arctic, and despite summer and fall temperatures more in line with historical averages. Among the report's other findings:

  • When the sea ice hit its maximum extent on March 7, it was the lowest in the satellite record, which goes back to 1979. When sea ice hit its minimum extent in September, it was the eighth lowest on record, thanks in part to the cooler summer temperatures.
  • Thick, older sea ice continues to be replaced by thin, young ice. NOAA reported that multiyear ice accounts for just 21 percent of the ice cover, compared with 45 percent in 1985.
  • Sea surface temperatures in the Barents and Chukchi seas in August were up to 4°C warmer than the 1982-2010 average.
  • Permafrost temperatures in 2016 (the most recent set of complete observations) were among the highest on record.

Let it go: The Arctic will never be frozen again - Last week, at a New Orleans conference center that once doubled as a storm shelter for thousands during Hurricane Katrina, a group of polar scientists made a startling declaration: The Arctic as we once knew it is no more.The region is now definitively trending toward an ice-free state, the scientists said, with wide-ranging ramifications for ecosystems, national security, and the stability of the global climate system. It was a fitting venue for an eye-opening reminder that, on its current path, civilization is engaged in an existential gamble with the planet’s life-support system.In an accompanying annual report on the Arctic’s health — titled “Arctic shows no sign of returning to reliably frozen region of recent past decades” — the National Oceanic and Atmospheric Administration, which oversees all official U.S. research in the region, coined a term: “New Arctic.”Until roughly a decade or so ago, the region was holding up relatively well, despite warming at roughly twice the rate of the planet as a whole. But in recent years, it’s undergone an abrupt change, which now defines it. The Arctic is our glimpse of an Earth in flux, transforming into something that’s radically different from today. At a press conference announcing the new assessment, acting NOAA Administrator Timothy Gallaudet emphasizes the “huge impact” these changes were having on everything from tourism to fisheries to worldwide weather patterns.“What happens in the Arctic doesn’t stay in the Arctic — it affects the rest of the planet,” Gallaudet said. In an interview with NPR, marine scientist Jeremy Mathis, director of NOAA’s Arctic Program, went a step further. When it comes to the Arctic, Mathis said “there is no normal” anymore: “The environment is changing so quickly in such a short amount of time that we can’t quite get a handle on what this new state is going to look like.” Using 1,500 years of natural records compiled from lake sediments, ice cores, and tree rings as context, the NOAA report says the Arctic is changing at a rate far beyond what’s occurred in the region for millennia.

Antarctic Modeling Pushes Up Sea-Level Rise Projections - Antarctic ice sheet models double the sea-level rise expected this century if global emissions of heat-trapping pollution remain high, according to a new study led by Dr. Robert Kopp of Rutgers University and co-authored by scientists at Climate Central.Global average sea level is expected to rise by one foot between 2000 and 2050 and by several more feet by the end of the century under a high-pollution scenario because of the effects of climate change, according to the projections in the new peer-reviewed study. It shows 21st century sea-level rise could be kept to less than two feet if greenhouse gas emissions are aggressively and immediately reduced, reflecting a larger gap in sea-level consequences between high and low emissions scenarios than previous research has indicated. The study provides a median projection for sea-level rise of 146 cm (4’9”) during the 21st century under a high-pollution scenario known as RCP8.5 (see Table 1), when results from new modeling of Antarctic ice sheet behavior are included. The Intergovernmental Panel on Climate Change’s most recent report, published in 2014, which assumed the Antarctic ice sheet would remain stable, provided a median projection for the same scenario during a similar time period of 74 cm (2’5”). Previous efforts to project future sea levels have combined projections for future levels of greenhouse gas pollution with findings from research into the effects of that pollution in warming oceans and melting glaciers. Those efforts have either excluded the possibility of ice sheet break-ups on the margins of Greenland and Antarctica, left out the consequential new mechanism of marine ice-cliff instability, or relied on experts’ opinions regarding these potential impacts. Ice loss in Antarctica could do more to raise sea levels than all of the other factors combined, and recent ice sheet modeling developed by Robert DeConto of University of Massachusetts and David Pollard of Pennsylvania State University has indicated the continent’s ice reserves may be less stable than previously thought.

Unruly Antarctica could change sea-level outlook without much warning - Sea-level rise is one of the more challenging effects of climate change to project. It’s not that the direction of the change is unclear—sea level will rise as the planet warms—but it’s extraordinarily difficult to know when which sections of which glaciers will slide into the sea. Many factors are involved besides temperatures, including ocean currents and the topography of the bedrock below ice sheets. As a result, the projections of sea-level rise presented to entities like the Intergovernmental Panel on Climate Change (IPCC) have been heavily caveated and have changed significantly over time. The 2013 IPCC report, for example, projected considerably higher sea-level rise than the 2007 report, which explained that it was leaving out important ice-sheet processes that needed more research. And the recent 2017 US National Climate Assessment again increased projections of sea-level rise based on the current state of the science.A new study from a group of researchers led by Rutgers’ Bob Kopp has made for splashy headlines in recent days, some of which claimed the study showed that sea-level rise will be “worse than thought” or that the study confidently predicted how many people would be inundated by rising seas this century. Neither description is really true, as there is nothing new about the sea-level rise scenarios shown. In fact, Kopp also helped put together the sea-level chapter of the US National Climate Assessment, and the numbers in the new study obviously match those in the report. Partly because ice-sheet models have not reached the point where researchers feel they accurately represent everything we know, several past efforts have produced a hybrid sort of projection incorporating detailed surveys of experts in the field. This new study takes a hybrid projection like that from 2014 and replaces the Antarctic ice-loss estimates with the alarming model simulations to find out what the implications would be. The answers are more interesting (and wonky) than “sea-level rise goes higher.” But yes, the new study definitely does increase the estimated future sea-level rise.

New Study Evaluates Climate Models — Best Ones Also Show the Most Global Warming - Gaius Publius - This is a climate story with two pieces. The first piece is the by-now-obvious “Everything’s happening faster than anyone thought it would” observation, of which the immediate corollary is, “OMG we’re still screwed.”  It’s true that everything is happening faster than anyone thought it would (anyone who had a prominent public voice, that is). This part of the story is, as noted above, “by now obvious.” Changes are happening a lot faster — big storms are more frequent than anticipated, even by those who anticipated them; wildfires are burning hotter and later in the season (December?!) than even those who predicted more and hotter wildfires; and the cost to insurance companies of climate-caused damage is rising faster than insurance companies anticipated— and anticipating increasing costs is their whole business model. But those of us without power have already gotten that message. The real resistance to that message is among people who do have power, but also have money to protect from that message as well. The second piece of this story is much more interesting — it’s about how the message we all understand to be true is now supported. A group of climate scientists have published a paper (subscription required) that puts statistical data round the observation that things are happening faster than most models predict.  In other words, they’re analyzing the models statistically in order to see which models are making the best predictions. Instead of waiting for events to prove which climate models (projections) ended up being right because events proved them right, this study looks at models and figures out ahead of time which ones are most likely to “get it right” in advance of the observational data. In other other words, all models are not created equal, so taking the average of a large set of models tells us less that looking at the best models first. The study attempts to identify those models.How did the researchers test which models were best? They looked for models that made the most accurate statements in the past about the earth’s energy imbalance — models that most correctly anticipated the difference between energy-in (from the sun) and energy-out (radiation of that energy back into space). Our whole problem is that difference — too much energy-in relative to energy-out, and the planet heats. So models that made predictions about the energy imbalance that turned out to be right are likely to be right about the effects of that imbalance, such as the amount of increased global warming.

 Could geoengineering lessen the damage caused by climate change? - If the world is going to experience catastrophic sea-level rise—the kind of worst-case scenario spun out of climate models that would force humanity to flee from the world's coasts—there's a good chance it could all start with the collapse of Thwaites Glacier. If Thwaites goes, it could trigger a chain of events that destabilizes the West Antarctic ice sheet, with a recent Rolling Stone feature dubbing it the "doomsday glacier." The bad news is that Thwaites isn't particularly stable itself.  The glacier's grounding line—the place where it is attached to the Earth's bedrock—lies below sea level, making it vulnerable not just to melting from warming air, but, more importantly, from below. With the world still nowhere near the emissions reductions needed to stave off significant global warming, Princeton University glaciologist Michael Wolovick thinks it's not a bad idea to consider other ways to forestall marine ice sheet collapse. This week, he is presenting as-yet unpublished research that looks at the possibility of building an artificial sill in the ocean to support Thwaites or other glaciers with similar structures. It would basically be a crutch—perhaps a mass of material protected by boulders rising from the sea floor—that serves to block warm water. "It could slow the marine ice sheet collapse or, in some cases, reverse it," he told Oceans Deeply, based on what his, admittedly very preliminary, simplified modeling has shown. Even if it could work, building a sill large enough to stabilize Thwaites would be an unprecedented and astronomically expensive ocean infrastructure project that falls somewhere between adapting to climate risks and geoengineering the Earth to forestall them. Serious discussion of such ideas has long been controversial. Geoengineering of any kind risks offering intransigent politicians excuses to keep spewing carbon and inevitably leads to negative or unintended consequences and ethical quandaries. Still, today scientific discussion of even more radical ideas that directly reduce the planet's temperature—from seeding the atmosphere with cooling sulfate aerosols, to fertilizing the ocean with iron, to marine cloud brightening to reflect sunlight—is now growing louder and more serious.

Trump to Drop Climate Change as National Security Threat - President Donald Trump's new national security strategy will reverse an Obama-era declaration that placed climate change as a major threat facing the nation.  Trump's "America First" plan will instead focus on four themes surrounding economic security for the U.S: “protecting the homeland and way of life; promoting American prosperity; demonstrating peace through strength; and advancing American influence in an ever-competitive world," the Associated Press reported, quoting senior administration officials. “Climate change is not identified as a national security threat but climate and the importance of the environment and environmental stewardship are discussed," a senior administration official explained to the Guardian .  The move reflects the Trump administration's stance— and downright indifference —towards global warming. In June, the president announced his intention to withdraw the U.S. from the landmark Paris climate agreement . Another official explained to the Guardian that Trump's remarks about exiting the Paris agreement “would be the guidepost for the language in the [national security strategy] on climate." According to the Federalist , which first obtained a draft document of the national security strategy, the Trump administration would actively oppose efforts to reduce the burning of fossil fuels for energy.  "U.S. leadership is indispensable to countering an anti-growth, energy agenda that is detrimental to U.S. economic and energy security interests," the document stated, per the Federalist.

Trump EPA pick for Chicago office cut enforcement, scrapped climate change information in Wisconsin - The Trump administration's pick to lead the Environmental Protection Agency's Midwest office is a former Wisconsin state official who rolled back enforcement of anti-pollution laws, reduced funding for scientific research and scrubbed references to human-caused climate change from government websites.Cathy Stepp, who since August has been a deputy regional administrator in the EPA's Kansas City, Kan., office, will take over the top spot at the agency's Chicago outpost less than two years after the Obama administration ousted a predecessor over the agency's lax response to the Flint, Mich., water crisis.The Midwest office traditionally has been one of the agency's biggest and busiest, prosecuting companies that pollute the air, water and land in Illinois and five other states around the Great Lakes. The Trump administration has been pushing for deep cuts in the EPA's budget and proposing massive layoffs of agency employees.An EPA statement announcing Stepp's appointment Tuesday included references to her background as a homebuilder, Republican state lawmaker and director of the Wisconsin Department of Natural Resources under Republican Gov. Scott Walker. "Cathy Stepp's experience working as a statewide cabinet official, elected official, and small business owner will bring a fresh perspective to EPA as we look to implement President Trump's agenda," EPA Administrator Scott Pruitt said in the statement.

Senator pledges to force Trump to re-nominate his ‘extreme’ choice to head environmental office -  The Senate traditionally allows pending White House nominees to be voted on when Congress re-convenes in a new year. But President Donald Trump’s choice to head the influential White House Council on Environmental Quality (CEQ) has proven so controversial that a senator has pledged to force the president to re-nominate the candidate if he wants her to be reconsidered in 2018.Sen. Tom Carper (D-DE), the top Democrat on the Senate Environment and Public Works Committee, intends to object to any unanimous consent agreement that would allow the nomination of Kathleen Hartnett White to serve as chair of the CEQ to be held over into the second session of the 115th Congress.“Throughout her nomination process, Kathleen Hartnett White has confirmed what her record clearly shows: her views are extreme, her words are staggeringly inappropriate and her disrespect for science and our nation’s chief environmental laws is a danger to public health,” Carper said Tuesday in a statement. Carper also accused White of copying and pasting the work of other Trump nominees when given the chance to clarify comments she made last month at her confirmation hearing. In other responses to the follow-up questions, the nominee chose to “double down” on some of her most “concerning stances,” the senator added.

 E.P.A. Employees Spoke Out. Then Came Scrutiny of Their Email. - NYT — One Environmental Protection Agency employee spoke up at a private lunch held near the agency headquarters, saying she feared the nation might be headed toward an “environmental catastrophe.” Another staff member, from Seattle, sent a letter to Scott Pruitt, the E.P.A. administrator, raising similar concerns about the direction of the agency. A third, from Philadelphia, went to a rally where he protested against agency budget cuts.Three different agency employees, in different jobs, from three different cities, but each encountered a similar outcome: Federal records show that within a matter of days, requests were submitted for copies of emails written by them that mentioned either Mr. Pruitt or President Trump, or any communication with Democrats in Congress that might have been critical of the agency.The requests came from a Virginia-based lawyer working with America Rising, a Republican campaign research group that specializes in helping party candidates and conservative groups find damaging information on political rivals, and which, in this case, was looking for information that could undermine employees who had criticized the E.P.A.Now a company affiliated with America Rising, named Definers Public Affairs, has been hired by the E.P.A. to provide “media monitoring,” in a move the agency said was intended to keep better track of newspaper and video stories about E.P.A. operations nationwide. But the sequence of events has created a wave of fear among employees, particularly those already subject to special scrutiny, who said official assurances hardly put them at ease. “This is a witch hunt against E.P.A. employees who are only trying to protect human health and the environment,” said Gary Morton, an E.P.A. employee in Philadelphia, who works on preventing spills from underground storage tanks. His emails were targeted seven days after he participated in a union rally in March challenging proposed budget cuts. “What they are doing is trying to intimidate and bully us into silence,” he said.

The EPA Hired a Major Republican Opposition Research Firm to Track Press Activity -- Using taxpayer dollars, the Environmental Protection Agency has hired a cutting-edge Republican PR firm that specializes in digging up opposition research to help Administrator Scott Pruitt’s office track and shape press coverage of the agency. According to federal contracting records, earlier this month Pruitt’s office inked a no-bid $120,000 contract with Definers Corp., a Virginia-based public relations firm founded by Matt Rhoades, who managed Mitt Romney’s 2012 presidential campaign. Following Romney’s defeat, Rhoades established America Rising, an ostensibly independent political action committee that works closely with the Republican National Committee and Republican candidates to mine damning information on opponents. Other higher-ups at Definers include former RNC research director Joe Pounder, who’s been described as “a master of opposition research,” and senior vice president Colin Reed, an oppo-research guru billed as “among the leaders of the war on [Sen. Elizabeth] Warren.”   According to its website, Definers’ clients include Fortune 500 corporations, political groups, and nonprofits. In the past, both Marco Rubio and John McCain used their services, and since the 2016 election so has Rep. Diane Black (R-Tenn.). The client list for America Rising includes the RNC, Republican candidates such as Sen. Pat Toomey (R-Penn.), and super-PACs such as the Mitch McConnell-linked Senate Leadership Fund and Karl Rove’s American Crossroads.  The company also specializes in using the press and social media to “validate your narrative.” According to the company’s website, one of the tools to help do this is its “Definers Console” media-tracking technology. Reed said his firm contracted with Pruitt’s office at the EPA, which is the first governmental client to pay for the Definers Console. The technology promises “war room”-style media monitoring, analysis, and advice, according to marketing materials. A brochure for the Console assures users that they will be able to “monitor for potential crises, as well as to track their message dissemination, relevant responses to their messaging, and what competitors’ actions have been.”  Besides monitoring media, users will get analysis and input from their employees whose experience in political campaigns and the business world helps create a unique approach “to intelligence gathering and opposition work. This experience informs the way we gather, synthesize, and disseminate information.”

Definers Public Affairs, Group Known for Stalking and Harassing Climate Advocates, Hired by EPA to Run Media War Room -  A Republican-aligned research group with links to a campaign to stalk and intimidate environmental groups, journalists and campaigners has been handed a $120,000 contract to help the U.S. Environmental Protection Agency ( EPA ) shape its media coverage. Virginia-based Definers Public Affairs was given the 12-month "no bid" contract to provide "news analysis and brief service" to the EPA, as reported by Mother Jones . Definers is the corporate arm of America Rising LLC , America Rising PAC and its opposition research and tracking service, America Rising Squared —known as AR2.  Definers Public Affairs was founded and launched in 2015 by America Rising founders Matt Rhoades and Joe Pounder.  Pounder is a Republican strategist and former research director for the Republican National Committee and worked on Marco Rubio's failed 2016 nomination campaign. Rhoades was Mitt Romney's campaign manager in 2012.  America Rising ran a concerted campaign to attack environmentalists and targeted individuals such as climate campaigner Bill McKibben, who was followed and filmed by the group's trackers.  Others targeted with attack tactics and adverts include billionaire philanthropist and environmentalist Tom Steyer and New Yorker journalist Jane Mayer , whose work has uncovered the influences of petrochemical billionaires and Republican donors Charles and David Koch . Brian Rogers, an executive director at AR2 and a senior vice president at Definers, said his campaign would "hold Steyer and the Environmentalist Left accountable for their epic hypocrisy and extreme positions which threaten America's future prosperity."  Speaking about the accusations leveled at him, Steyer said , "They have to know they're lying. It's completely dishonest, unethical, and pitiful. And it's creepy."

The EPA hired a ‘war room’-style media monitoring company. | Grist: Because that’s not weird or hostile at all. As Mother Jones reported Friday, the EPA signed a $120,000 contract (using taxpayer money) with the opposition research firm Definers Corp. earlier this month. Definers brings hawkish political strategies to the public relations services it provides to corporations and nonprofits. “At the heart of the Definers Public Affairs’ system is our information operation — our media monitoring and rapid response mechanism known as the War Room,” the company advertises. “A War Room offers the flexibility and dynamism necessary for robust intelligence gathering.” Not only does the company monitor news coverage, it also claims to “build and influence media narratives, move public opinion and provide powerful ammunition for your public relations and government affairs efforts.”  Definers has deep Republican ties. Its current president, Joe Pounder, was previously research director for the Republican National Committee. Its founder, Matt Rhoades, led Mitt Romney’s presidential campaign in 2012. After that campaign, Rhoades launched America Rising, which the Wall Street Journal called “the unofficial research arm of the Republican Party.” EPA spokesperson Nancy Grantham told Mother Jones, “The Definers contract is for media monitoring/newsclip compilation.” Sounds like EPA Administrator Scott Pruitt’s plan to sway public opinion by speaking almost exclusively to right-wing media wasn’t working out as he’d hoped.

EPA chief Pruitt had office swept for surveillance bugs | TheHill: The head of the Environmental Protection Agency (EPA) had his office professionally examined earlier this year to look for covert surveillance devices. The EPA paid $3,000 in March to Edwin Steinmetz Associates to do a “sweep for covert/illegal surveillance devices” in Administrator Scott ’s office at the agency's Washington, D.C., headquarters, documents provided to The Hill show. The EPA source who provided the documents on the condition of anonymity said the sweep, which came weeks after Pruitt’s arrival at the agency, did not uncover any bugs. Pruitt, Oklahoma's former attorney general, has taken a number of steps to guard his security and privacy in his time as EPA head.  He is the first EPA administrator to have a 24-hour security detail, encompassing a staff of dozens of agents at a six-figure annual cost, often pulling agents away from environmental enforcement matters. He paid nearly $25,000 for a secure phone booth in his office, despite an existing secure compartmentalized information facility elsewhere in the building.

E.P.A. Officials, Disheartened by Agency's Direction, Are Leaving in Droves - — More than 700 people have left the Environmental Protection Agency since President Trump took office, a wave of departures that puts the administration nearly a quarter of the way toward its goal of shrinking the agency to levels last seen during the Reagan administration. Of the employees who have quit, retired or taken a buyout package since the beginning of the year, more than 200 are scientists. An additional 96 are environmental protection specialists, a broad category that includes scientists as well as others experienced in investigating and analyzing pollution levels. Nine department directors have departed the agency as well as dozens of attorneys and program managers. Most of the employees who have left are not being replaced. The departures reflect poor morale and a sense of grievance at the agency, which has been criticized by President Trump and top Republicans in Congress as bloated and guilty of regulatory overreach. That unease is likely to deepen following revelations that Republican campaign operatives were using the Freedom of Information Act to request copies of emails from E.P.A. officials suspected of opposing Mr. Trump and his agenda. The cuts deepen a downward trend at the agency that began under the Obama administration in response to Republican-led budget constraints that left the agency with about 15,000 employees at the end of his term. The reductions have accelerated under President Trump, who campaigned on a promise to dramatically scale back the E.P.A., leaving only what he called “little tidbits” in place. Current and former employees say unlike during the Obama years, the agency has no plans to replace workers, and they expect deeper cuts to come. ProPublica and The New York Times analyzed the comings and goings from the E.P.A. through the end of September, the latest data that has been compiled, obtained under the Freedom of Information Act. The figures and interviews with current and former E.P.A. officials show the administration is well on its way to achieving its goal of cutting 3,200 positions from the E.P.A., about 20 percent of the agency’s work force.

Updated: GOP includes BEAT fix, drops nuclear credits in Tax Bill - After weeks of closed-door negotiations, Republicans in Congress have reconciled two competing versions of tax legislation.The House version, passed last month, sparked concern in renewable energy circles with provisions to cut the wind production tax credit and a $7,500 federal tax incentive for electric vehicles. The Senate version was expected to be friendlier to renewable energy, but the sector was startled by the last-minute inclusion of the BEAT provision, added on Thanksgiving eve shortly before the bill passed. The BEAT provision targets “earnings stripping" — cross border payments multinational companies make to overseas affiliates to reduce their tax bills. The provision aims to close that loophole by setting a minimum tax on corporate income. Originally, the provision required every company to quantify 10% of their taxable income, including cross-border payments and, in a second calculation, quantify their tax liability. If the tax liability is less than the taxable income calculation, the government would collect the difference as a tax. Under that text, wind and solar tax credits could reduce a corporation's tax liability, increasing their tax bills. Renewable energy groups said that could push banks out of the tax equity market, stifling as much as $12 billion in financing. The final bill aims to avoid that by allowing companies to offset up to 80% of BEAT tax payments accrued due to energy tax credits.  “It’s a high enough percentage to keep the credits, but not too high to have people pay zero taxes,” Sen. Rob Portman (R-OH) told Bloomberg on Friday.   The renewable energy industry was relieved by the changes on Friday, but still harbored some concerns about the impact of BEAT. 

Tax Bill Largely Preserves Incentives for Wind and Solar  — The final text of the Republican tax bill made public Friday largely preserves key tax credits for wind and solar power and electric vehicles, reversing language in earlier versions that could have slowed the growth of renewable energy across the United States.The last-minute changes, made as lawmakers reconciled the House and Senate versions of the tax legislation, reflect the growing political clout of the wind and solar industries, which now provide more than 7 percent of the nation’s electricity and are two of the fastest-growing energy sources.“As wind and solar projects have soared in the U.S., in both red and blue states, so has the industry’s influence in Washington, D.C., on both sides of the aisle,” said Dan W. Reicher, director of the Center for Energy Policy and Finance at Stanford.While some industry groups said they still had concerns about a technical change in the final bill that could negatively affect a key financing tool used for wind and solar projects, they expressed relief that most of the major incentives for renewable energy had survived the negotiations.

Tax bill boosts oil, gas drilling--and renewable energy (AP) — The Republicans' tax package would boost traditional forms of energy such as oil and gas while also supporting renewable energy such as wind and solar power — and even extend a hand to buyers of electric cars. An agreement by House and Senate negotiators would open Alaska's Arctic National Wildlife Refuge to drilling, while preserving tax credits for wind power and other clean energy. The bill also would extend a tax credit of up to $7,500 for purchases of plug-in electric vehicles such as the Tesla Model 3 and Chevrolet Bolt. Republicans rolled out the bill late Friday. Opening the remote Arctic refuge to oil and gas drilling is a longtime Republican priority that most Democrats fiercely oppose. The 19.6-million-acre refuge in northeastern Alaska is one of the most pristine areas in the United States and is home to polar bears, caribou, migratory birds and other wildlife. Alaska Sen. Lisa Murkowski and other Republicans say drilling can be done safely with new technology, while ensuring a steady energy supply for West Coast refineries. Murkowski, who chairs the Senate Energy and Natural Resources Committee, said opening the refuge to drilling is "the single-most important step we can take to strengthen our long-term energy security and create new wealth." The House and Senate are expected to vote on the $1.5 trillion tax legislation next week as GOP leaders push the most sweeping rewrite of the tax code in more than three decades. The bill preserves a phase-out of tax incentives for both the solar and wind industries passed in 2015. Tax credits for wind are set to expire in 2020, and solar credits in 2022. 

US setting stage for solar trade war with China - An unreleased White House document offers the strongest hint yet that the Trump administration is laying the groundwork for punitive tariffs on Chinese-made solar power equipment — a step that would promote the president’s “America First” trade agenda while sharply increasing the costs of solar power in the U.S. The prospect of such tariffs, which President Donald Trump could announce in January, has deeply alarmed the U.S. solar installation industry. It warns that it could lose tens of thousands of jobs if the cost of solar spikes, slowing the booming growth that sun-powered energy enjoyed during the Obama administration. ..But the White House is preparing to argue that trade barriers are needed to foster solar manufacturing inside the United States, something it calls important to both national security and the economy, according to a document draft obtained by POLITICO. The paper argues that cheap solar imports allow China to unfairly profit from Americans’ use of renewable power and gain influence in the developing world’s energy infrastructure. “While solar energy is forecast to play a larger role in the world’s energy mix, other countries stand to benefit significantly more than U.S. workers,” says the four-page paper, which is circulating within executive branch agencies for comment. 

Trump signs executive order to expand critical minerals production, says it will end America’s ‘vulnerability’-- President Trump signed an executive order Wednesday instructing his deputies to devise “a strategy to reduce the Nation’s reliance on critical minerals” that are largely imported and used to produce everything from smartphones to weaponry. The directive comes a day after the U.S. Geological Survey published its first assessment of the country’s critical minerals resources since 1973, an analysis the agency began in 2013. The report concludes that 20 out of the 23 critical minerals the nation relies on are sourced from China. “The United States must not remain reliant on foreign competitors like Russia and China for the critical minerals needed to keep our economy strong and our country safe,” Trump said in a statement. Interior Secretary Ryan Zinke, who has backed expanded mining production on federal land, has lobbied the White House to make the issue of critical minerals a top policy priority. He briefed reporters on the new USGS report Tuesday, saying “we are vulnerable as a nation” because we rely so heavily on imports from China. While the United States has significant deposits of most of the critical minerals it currently buys from overseas, market considerations largely drive mining. The United States was ranked as the world’s largest producer of such minerals until 1995, but since then, China has led the globe. “It is time for the U.S. to take a leading position,” Zinke said. “And it’s not that we don’t have the minerals in the U.S. It’s likely we do.” 

Trump Administration to Grant Mining Leases That Will Benefit Landlord of President’s Daughter Ivanka Trump - WSJ - The Trump administration said Friday it will renew mining leases to extract copper and nickel adjacent to a Minnesota wilderness area, reversing an Obama administration decision and giving a victory to a Chilean billionaire who is renting a mansion to the family of the president’s elder daughter. The Democratic administration of former President Barack Obama in its waning days blocked a plan by a company controlled by the family of Andrónico Luksic to build a giant copper-and-nickel mine adjacent to a Minnesota wilderness...

U.S. biodiesel production still increasing despite expiration of tax credit -- Through the first nine months of 2017, U.S. biodiesel production levels were slightly higher than 2016 levels, despite the expiration of a federal biodiesel blender's tax credit at the end of 2016. Domestic biodiesel production may continue to increase because of changes to import policies such as those recently announced by the U.S. Department of Commerce on biodiesel imports from Argentina and Indonesia.  Biodiesel production increased over time largely because of state and federal incentives. The federal biodiesel blender's tax credit, valued at $1 per gallon (gal), expired several times prior to 2016, most recently at the end of 2014. In those earlier years, Congress ultimately voted to reinstate the tax credit retroactively.  Biodiesel qualifies as an advanced biofuel as part of the Renewable Fuel Standard (RFS), a program implemented by the U.S. Environmental Protection Agency (EPA) to promote the incorporation of biofuels into the nation’s fuel supply. To demonstrate compliance with the RFS, refiners and importers of petroleum products must either blend advanced biofuels such as biodiesel or buy credits called renewable identification numbers (RINs). Biodiesel is often combined with petroleum diesel in blends ranging from 5% to 20% biodiesel. On average, biodiesel accounted for about 4% of total diesel consumption in 2016. Similar to corn ethanol, biodiesel production is concentrated in the Midwest and delivered by rail and truck across the country.  Since 2014, foreign biodiesel imports—primarily from Argentina and Indonesia—have increased in the East Coast and Gulf Coast regions. In 2016, biodiesel imports from Argentina reached 449 million gallons and accounted for nearly 20% of U.S. biodiesel consumption.  However, in April 2017, the U.S. Department of Commerce (DOC) initiated two investigations into whether biodiesel imports from Argentina and Indonesia put U.S. biodiesel producers at a disadvantage.  In November, the DOC issued an affirmative final determination on countervailing duties for Argentina and Indonesia, assigning rates ranging from 34% to 72%, based on the producer or importer of biodiesel.  Depending on the outcome of the International Trade Commission antidumping investigation, the combined effect of the final orders may more than double the price of biodiesel from these two countries.

The Missing Piece in Plans for an All-Electric Vehicle Fleet: Electricity - The New York Times has a piece today on barriers to the replacement of internal combustion-powered vehicles to an all-electric fleet in the United States.  It talks about production costs, the availability of key minerals and the need for a charging station infrastructure, but it oddly passes over the most obvious impediment, at least from the perspective of climate change, the large increase it would require in electrical generating capacity.If the goal is, at it should be, rapid decarbonization of the economy, conversion to electric powertrains is worth doing only if it results in the replacement of petroleum by renewable energy sources, so lets look at the arithmetic. According to the latest version of Lawrence Livermore’s invaluable energy spaghetti diagram, 25.7 quads of energy, in the form of petroleum, were used as inputs to the transportation sector.  (A quad is a quadrillion BTUs, approximately the amount of energy in eight billions gallons of gasoline.)  Electric vehicles vary in their efficiency, and there might be improvements on this front in the future, but lets use the common assumption that EV’s are four times as energy efficient as ICV’s; that means we are looking at about 6.4 quads of added electrical demand. Electricity output in 2016 was 12.6 quads, which implies we would need a bit over 50% more capacity to accommodate an all-electric fleet.  Of course, the actual expansion would be less than this because EV’s could take advantage of off-peak capacity.  Nevertheless, from a decarbonization perspective, the critical constraint is not capacity as such but energy inputs as fuel.  A natural gas plant might be able to put out more electricity over a 24-hour cycle without additional capital investment, but only by burning more gas.   So somewhat more than 50% additional electricity is needed; how much of this can come from non-carbon sources?  The most optimistic scenario is one in which nuclear energy is included in this (non-carbon) mix, so assume the goal is simply to zero out coal and gas.  These two sources currently account for 62% of inputs into the electrical generating sector.  No doubt we can get significant reductions simply through efficiency measures; think of all those electrically-heated buildings leaking energy through poor insulation.  If for convenience we lump together increases in non-carbon inputs and efficiency savings, this would need to total 23.3 quads, the current delivery of coal and gas to US electrical power stations, if the services provided by electricity use were to remain constant. 

Rick Perry’s fake grid crisis just got undermined by more grid experts -  Energy Secretary Rick Perry wants to bail out coal and nuclear plants. He says the US energy grid is experiencing an urgent crisis — that its reliability and resilience are in immediate danger unless those power plants are saved. There is no evidence to support this position, though Perry and his allies in the coal and nuclear industries repeat it like a mantra. Numerous credible analysts have examined the question, including Perry’s own DOE, and not one has uncovered a crisis. On the question of urgency, Perry is simply wrong, no matter how many times he repeats it. There’s no reason to rush into anything. (I wrote a longer piece on Perry’s proposal last week.)But even if there’s no immediate crisis, the larger question remains: Is the ongoing loss of coal and nuclear plants going to impact reliability in the future? As it happens, the authority on the issue — the North American Electric Reliability Corporation (NERC), a nonprofit established by the electricity industry to track reliability — just issued its annual Long-Term Reliability Assessment, which casts some light on the debate. A few journos have cast the report as a direct rebuke to Perry, as though it says the grid is fine and everything is peachy. But that’s not quite right. NERC has concerns, some of which echo Perry’s. But NERC definitely doesn’t support anything like Perry’s bailout.  It is instructive to look more closely at exactly where NERC and Perry part ways — it helps expose the crony capitalism at the core of Perry’s proposal.

 Bitcoin may accelerate climate change, one meteorologist writes - The surging cryptocurrency bitcoin may be degrading the environment, one meteorologist wrote last week. Writing for the online publication Grist Eric Holthaus argued that the process of mining bitcoins is a huge energy drain, one that will only make it harder to mitigate the affects of climate change. “It’s certain that the increasing energy burden of bitcoin transactions will divert progress from electrifying the world and reducing global carbon emissions,” he writes. “Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day,” he wrote.Based on current trends, he writes that by 2019 the bitcoin network will use more energy than the the entire United States. That growth will prompt people to build more power plants. And Holthaus worries those power plants will utilize so-called dirty technologies - like coal plants.

Why the bitcoin craze is using up so much energy - The exploding price of the cryptocurrency bitcoin in recent months has triggered doubts not only about the financial sustainability of the rally, but about the environmental sustainability of the currency itself. One alarmist article in Newsweek said that bitcoin computer operations could consume “all of the world’s energy by 2020.” The website Digiconomist claims that bitcoin operations use as much energy as Denmark, or enough to power 3,071,823 U.S. households. Other analysts say the true figure is smaller, albeit hard to measure because it is spread around the world, generated by an unclear mix of machines and co-mingled with other sources of electricity demand. But several experts told The Washington Post that bitcoin probably uses as much as 1 to 4 gigawatts, or billion watts, of electricity, roughly the output of one to three nuclear reactors. That would amount to less than 1 percent of U.S. electricity alone and no more than 0.14 percent of global electricity generation. The reason bitcoin uses a lot of energy is rooted in the way the bitcoin network operates. A digital currency, bitcoin is not controlled by any central bank or commercial clearinghouse but by a network of users who expend large amounts of computing power, and thus energy, building a so-called “blockchain” of bitcoin payments transactions. To compile this comprehensive record, the bitcoin network relies on “miners.” Bitcoin miners have to perform a phenomenally large number of computer calculations to track and verify transactions and solve complex puzzles to obtain bitcoin rewards. As bitcoins become more popular and valuable, the puzzles miners face grow more difficult, and therefore the demand for high-powered computer processing grows as well. That means more energy usage. “If the price of bitcoin continues to rise, it will continue to use more energy,” said Mike Reed, director of the Blockchain Program Office for Intel Corp. The reason, he said, is that the price represents “an economic incentive to add more mining equipment to the network … and that incentive is built in.” 

Tesla’s big battery outsmarts lumbering coal units - The Tesla big battery is having a big impact on Australia’s electricity market, far beyond the South Australia grid where it was expected to time shift a small amount of wind energy and provide network services and emergency back-up in case of a major problem. Last Thursday, one of the biggest coal units in Australia, Loy Yang A 3, tripped without warning at 1.59am, with the sudden loss of 560MW and causing a slump in frequency on the network. What happened next has stunned electricity industry insiders, such was the rapid response of the Tesla big battery to an event that happened nearly 1,000km away. Even before the Loy Yang A unit had finished tripping, the 100MW/129MWh had responded, injecting 7.3MW into the network to help arrest a slump in frequency that had fallen below 49.80Hertz. Data from AEMO shows that the Tesla big battery responded four seconds ahead of the generator contracted at that time to provide frequency control and ancillary services to the Gladstone coal generator in Queensland. By the time Gladstone had gotten out of bed and put its socks on so it can inject more into the grid, the fall in frequency had already been arrested and was being reversed. Gladstone injected more than Tesla did back into the grid, and took the frequency back up to its normal levels of 50Hz, but by then Tesla had already put its gun back in its holster and had wandered into the bar for a glass of milk.

B.H.P. Billiton, Acknowledging Climate Change, to Quit Coal Group -— One of the world’s largest coal companies, acknowledging the growing momentum toward addressing climate change, said it planned to pull out of a major industry group over its environmental stances. B.H.P. Billiton, the British-Australian mining company, said in a report Tuesday that it planned to withdraw from the World Coal Association, an international lobbying group, because of differences in climate and energy policies. The report also noted that B.H.P. would review its relationship with the U.S. Chamber of Commerce in light of the Trump administration’s decision to withdraw from the Paris climate accord.The move highlights the delicate considerations huge mining companies must contend with as they seek to balance profit with social and environmental awareness.It represents the latest example of a business that is largely built around traditional fossil fuels responding to investor and government concern over climate change. Last week, the oil and gas giant BP said it would spend $200 million to acquire a large stake in a solar power developer, while Norway’s Statoil and France’s Total have also made investments in renewables.  “While we won’t always agree with our industry associations, we will continue to call out material differences where they exist and we will take action where necessary, as we have done today,” Geoff Healy, the company’s chief external affairs officer, said in a statement. B.H.P. invited the industry body to provide a response before it makes a final decision next March 31 on pulling out of the group. It will similarly seek a response from the U.S. Chamber of Commerce before officially withdrawing. In a statement, the World Coal Association said it was “disappointed” and added that “we do not feel that the report accurately reflects the views of the WCA.” It said that it had “always supported a balanced approach that integrates climate and energy policy” and that it hoped “to be able to continue working with B.H.P. on this basis in the future.”

Coal's bleak future is stagnant demand, volatile trading (Reuters) - Moribund global demand growth and volatile pricing are what coal producers face in the next five years, with not even some bright spots in Asia able to outweigh a bleak outlook for Europe and the United States, and lower consumption in top user China. That’s the central message of the International Energy Agency’s Coal 2017 report, which outlines a future in which coal remains a significant source of global energy, but one that is decreasing in importance. Global coal demand will grow by only a compound 0.5 percent a year over the 2018-22 period to 5,534 million tonnes of coal equivalent (mtce), up just 177 mtce from 2016’s consumption, the IEA said. Top consumer China is expected to drop 0.1 percent a year to 2,787 mtce by 2022, while demand in the United States will fall 0.9 percent per annum over the five-year forecast period, and that in developed countries in Europe by 1.6 percent per annum. India remains the best hope for coal producers, with thermal coal demand expected to climb 3.3 percent a year to 605 mtce by 2022. Positive contributions to growth are also expected from newer consumers such as Pakistan and countries in Southeast Asia. But overall, it’s pretty grim reading for coal miners, traders and their political backers, such as U.S. President Donald Trump and the ruling Liberal Party in top exporter Australia. The IEA report also continues a trend of increasingly bearish forecasts from the agency, as it has steadily reduced its expectations for coal’s share of global energy. The IEA’s 2012 coal report forecast that global coal consumption would rise to 6,169 mtce in 2017, but the reality has turned out somewhat differently. The IEA didn’t provide a forecast for 2017 in its latest report, but said demand in 2016 was 5,357 mtce and estimated 2018 at 5,445 mtce. 

IEA Says World Coal Demand Will Rise, Despite Slashing Forecast Growth in India - The International Energy Agency (IEA) has once again forecast that world coal demand will rise, despite halving its outlook for growth in India. The IEA's Coal 2017 report, published Monday, sees a small increase in global coal demand from 2016 to 2022, with growth in India and southeast Asian countries outweighing declines in rich nations and China. Since 2011, the IEA has consistently forecast rising coal demand, even as it has repeatedly adjusted its figures downwards in light of lower-than-expected growth. Some analysts believe the agency remains behind the curve in its outlook for coal (see below). Carbon Brief runs through the IEA's changing coal forecasts for India and other key world regions.  Each year, the IEA publishes a series of six-year forecasts for key energy markets. For example, Coal 2017 looks at the market for the fuel out to 2022, broken down by country and sector. The report's top line notes how global coal demand fell in 2015 and 2016, with the combined fall being the largest it has ever recorded in more than 40 years of data. It goes on to say that coal demand will increase by 177 million tonnes of coal equivalent (Mtce, 3 percent) in the years to 2022.  After two years of declines, this low growth will round off a "decade of stagnation" for coal, the IEA said. In a foreword to the report, IEA Executive Director Fatih Birol wrote: "Looking ahead, this stagnation masks important regional variations. As coal use continues to decline in many parts of the world these declines are offset by continued growth in India [+135Mtce], Southeast Asia [+70Mtce] as well as several other countries where today coal's role is small but is on the rise, such as Pakistan and Bangladesh [+35Mtce]."  You can see this regional variation in the map, below.

Betraying Ratepayers and Clean Energy Future, Georgia Panel Approves Vogtle Nuclear Reactors - Georgia's public utility commission voted 5-0 on Thursday to continue construction on two half-finished nuclear reactors that will cost an estimated $25 billion, even though the project is now " more than $10 billion over budget and five years late ." Opponents of nuclear power were disappointed by the unanimous decision, which the Wall Street Journal noted was considered "a victory for Southern Co., whose subsidiary Georgia Power is the primary owner of the Alvin W. Vogtle Electric Generating Plant, which has two existing reactors." The project has faced opposition from local residents as well as national groups that emphasize the long-term risks of nuclear power. "Georgia Power should scrap this disaster immediately and instead transition away from dangerous nuclear and fossil fuel-based electric generation and toward a 100 percent clean energy economy that creates good jobs, protects our environment, and shields our communities from the gross financial risks associated with bad bets like Vogtle," said Ted Terry, director of the Sierra Club's Georgia Chapter, after the vote.   "Georgia Power's profits have soared because they've been allowed to pick the pockets of families, schools and churches for a boondoggle that even the [public utility commission's] staff has called too uneconomic to continue—yet today commissioners chose not to stop it," Terry added. "The commission has failed Georgia's hard-working families and businesses today by choosing to be lapdogs for Georgia Power instead of watchdogs for the people of Georgia."  "Most people have to pay for their mistakes, but Georgia Power is still profiting from theirs," said Kurt Ebersbach, senior attorney for the Southern Environmental Law Center. "There's something wrong with a system that rewards this kind of failure."

 Hinkley Point: the ‘dreadful deal’ behind the world’s most expensive power plant -- Hinkley Point, on the Somerset coast, is the biggest building site in Europe. Here, on 430 acres of muddy fields scattered with towering cranes and bright yellow diggers, the first new nuclear power station in the UK since 1995 is slowly taking shape. When it is finally completed, Hinkley Point C will be the most expensive power station in the world. But to reach that stage, it will need to overcome an extraordinary tangle of financial, political and technical difficulties. The project was first proposed almost four decades ago, and its progress has been glacial, having faced relentless opposition from politicians, academics and economists every step of the way.Some critics of the project have questioned whether Hinkley Point C’s nuclear reactor will even work. It is a new and controversial design, which has been dogged by construction problems and has yet to start functioning anywhere in the world. Some experts believe it could actually prove impossible to build. “It’s three times over cost and three times over time where it’s been built in Finland and France,” says Paul Dorfman, from the UCL Energy Institute. “This is a failed and failing reactor.” Others have pointed to the cost. At present, the estimated total bill for Hinkley Point C is £20.3bn, more than twice the London Olympics. To pay for it, the British government has entered into a complex financial agreement with Électricité de France (EDF), the energy giant that is 83% owned by the French government, and China General Nuclear Power Group (CGN), a state-run Chinese energy company. Under this contract, British electricity consumers will pay billions over a 35-year period. According to Gérard Magnin, a former EDF director, the French company sees Hinkley as “a way to make the British fund the renaissance of nuclear in France”. He added: “We cannot be sure that in 2060 or 2065, British pensioners, who are currently at school, will not still be paying for the advancement of the nuclear industry in France.”

US nuclear tests killed far more civilians than we knew - When the US entered the nuclear age, it did so recklessly. New research suggests that the hidden cost of developing nuclear weapons were far larger than previous estimates, with radioactive fallout responsible for 340,000 to 690,000 American deaths from 1951 to 1973.The study, performed by University of Arizona economist Keith Meyers, uses a novel method (pdf) to trace the deadly effects of this radiation, which was often consumed by Americans drinking milk far from the site of atomic tests. From 1951 to 1963, the US tested nuclear weapons above ground in Nevada. Weapons researchers, not understanding the risks—or simply ignoring them—exposed thousands of workers to radioactive fallout. The emissions from nuclear reactions are deadly to humans in high doses, and can cause cancer even in low doses. At one point, researchers had volunteers stand underneath an airburst nuclear weapon to prove how safe it was:The emissions, however, did not just stay at the test site, and drifted in the atmosphere. Cancer rates spiked in nearby communities, and the US government could no longer pretend that fallout was anything but a silent killer. Congress eventually paid more than $2 billion to residents of nearby areas that were particularly exposed to radiation, as well as uranium miners. But attempts to measure the full extent of the test fallout were very uncertain, since they relied on extrapolating effects from the hardest-hit communities to the national level. One national estimate found the testing caused 49,000 cancer deaths. Those measurements, however, did not capture the full range of effects over time and geography. Meyers created a broader picture by way of a macabre insight: When cows consumed radioactive fallout spread by atmospheric winds, their milk became a key channel to transmit radiation sickness to humans. Most milk production during this time was local, with cows eating at pasture and their milk being delivered to nearby communities, giving Meyers a way to trace radioactivity across the country. The National Cancer Institute has records of the amount of Iodine 131—a dangerous isotope released in the Nevada tests—in milk, as well as broader data about radiation exposure. By comparing this data with county-level mortality records, Meyers came across a significant finding: “Exposure to fallout through milk leads to immediate and sustained increases in the crude death rate.” What’s more, these results were sustained over time. US nuclear testing likely killed seven to 14 times more people than we had thought, mostly in the midwest and northeast.

Fracking opponents in Brookfield seek longer comment period, public hearing - Opponents of proposed plans to install additional fracking-waste injection wells in Trumbull County have sent a letter to the Ohio Department of Natural Resources, Division of Oil and Gas, seeking a 60-day extension of the time for submission of public comments. They urge the deadline be moved from Dec. 25 to Feb. 25, 2018. To have a deadline for comment on Christmas day is unreasonable, the letter said. The letter, dated Dec. 11, was sent via electronic mail to James Zehringer, director of ODNR, and Richard Simmer, chief of the Division of Oil and Gas, by several residents of Brookfield and the Northeastern Ohio region, who also seek a public hearing on the matter. The letter says that additional fracking-waste injection wells in the region of Trumbull County “will greatly exacerbate the potential environmental downside of drilling waste deposal wells, in the form of groundwater pollution and exhaustion of available solid waste disposal facilities.” Construction of a fracking waste injection site in Brookfield began on about Nov. 13, 2017, but it’s not a “done deal,” say opponents, who also say that additional ODNR permits are required for the company, Highland Field Services, to fully operate an injection fracking waste well – much of it to come from out of state if the wells are eventually approved.

Ohio injection well opponents seek longer comment period, public hearing - Opponents of proposed plans to install additional fracking-waste injection wells in Trumbull County, Ohio, have sent a letter to the Ohio Department of Natural Resources’ (ODNR) Division of Oil and Gas, seeking a 60-day extension for public comments.  They urge the deadline be moved from Dec. 25, to Feb. 25, 2018, the Youngstown Vindicator newspaper reports. To have a deadline for comment on Christmas Day is unreasonable, the letter said. The letter, dated Dec. 11, was sent to James Zehringer, director of ODNR, and Richard Simmer, chief of the Division of Oil and Gas, by several residents of Brookfield and northeastern Ohio, who also seek a public hearing on the matter, the Vindicator reported. The letter states additional fracking-waste injection wells in the region of Trumbull County “will greatly exacerbate the potential environmental downside of drilling waste deposal wells, in the form of groundwater pollution and exhaustion of available solid waste disposal facilities,” Kallanish Energy learns. Construction of a waste injection site in Brookfield began in mid-November, but it’s not a “done deal,” say opponents, who also told the Vindicator additional ODNR permits are required for the company, Highland Field Services, to fully operate an injection fracking waste well – much of the waste to come from out of state if the wells are eventually approved.

Wayne forest oil-gas auction nets $944K - Athens NEWS -- Around 50 environmental activists hailing from multiple Ohio counties rallied at the U.S. Forest Service’s Athens District Headquarters Thursday afternoon to protest the scheduled auction of oil-and-gas leases on the Wayne National Forest on the same day.  The online auction took place in spite of the protest. According to a news release issued by the BLM on Friday, the agency’s Eastern States quarterly oil-and-gas lease sale resulted in competitive bids for more than 1,184 available acres in Ohio and Louisiana, bringing in around $1.015 million. Of those acres, 350 were offered in the Wayne’s Marietta Unit, all in Monroe County north of Marietta.The Marietta Unit sale netted $944,000 of the total, which according to the BLM will be split between the state of Ohio and the federal government. Much of the Ohio portion ends up going to counties under the Payment in Lieu of Taxes program that compensates counties that lose property tax revenue as a result of federal land ownership within the county. The money is supposed to be used for local schools and roads.A big part of those payments in counties with substantial oil-and-gas drilling activities comes from revenue derived from mineral extraction, including oil and gas. Opponents decry the environmental degradation resulting from oil-and-gas drilling/fracking, storage and transmission on public lands, including pollution to streams and rivers, wildlife and vegetation, among other adverse effects. They also cite the negative impacts that fossil-fuel extraction and burning have on climate change.

 Agreement reached on West Virginia fracking landfill | Columbus Ledger-Enquirer: Environmentalists have reached an agreement with Antero Resources to monitor for radioactivity and bromide around its landfill in northern West Virginia that takes the waste from recycled groundwater used in hydraulic fracturing for natural gas. It settles an appeal of by the West Virginia Rivers Coalition and West Virginia Highlands Conservancy of the permit for the landfill, which takes salt byproducts from Antero's adjacent wastewater recycling facility. Both are located on 447 acres (181 hectares) in Ritchie and Doddridge Counties. The groups say the permit allows discharging stormwater runoff and associated pollutants into tributaries of the Hughes River upstream within 5 miles (8 kilometers) of Harrisville's public water system intake.

 Second court challenge filed over water quality certification for Mountain Valley Pipeline (Roanoke Times) A group of landowners, conservation groups and a member of the Virginia House of Delegates brought a court challenge Monday to a state board’s finding that a natural gas pipeline would pose no danger to the streams and creeks that lie in its path. The petition for review, filed in the 4th U.S. Circuit Court of Appeals, marks the second time the State Water Control Board has been sued over its Dec. 7 decision to issue a water quality certification for the Mountain Valley Pipeline. Del. Sam Rasoul, D-Roanoke, is listed as the first of 16 petitioners who contend the board lacked adequate information on which to find a “reasonable assurance” that the 303-mile long buried pipeline would not contaminate the waters of Western Virginia. Like a similar challenge filed Dec. 8 by the Sierra Club and three other environmental organizations, the brief petition does not detail the grounds on which a challenge will be based. But in a statement announcing the court filing, the petitioners pointed to the different way in which the water board handled a permit sought by Mountain Valley and a second one that was granted the following week for the Atlantic Coast Pipeline, a similar project in Central Virginia. Although the water board gave approval for the Atlantic Coast Pipeline, which is backed by Dominion Energy, it took the unusual step of delaying the effective date until several environmental impact reports are completed. No such condition was made for the Mountain Valley Pipeline. “It makes no sense,” said Mara Robbins, a n organizer with the Blue Ridge Environmental Defense League, one of the petitioners in the second court challenge. “They delayed the ACP permitting until erosion and sedimentation reports are complete. Many of the issues presented were identical. Yet the permits for the ACP were delayed and the ones for the MVP were not? They need to go back to the drawing board and get this right.” 

Atlantic Coast Pipeline wants to start cutting down trees - Though it still lacks several key approvals, the Dominion Energy-led Atlantic Coast Pipeline project has asked federal regulators to allow workers to begin cutting down trees along some portions of the 600-mile route in West Virginia, Virginia and North Carolina. Dominion made the request with the Federal Energy Regulatory Commission last week. Opponents are urging the commission to reject it, noting that permits for the project are missing or unfinished, as are effective water quality certifications from Virginia and North Carolina and stormwater plan approval from West Virginia. Requests for reconsideration and stays by FERC are likewise still pending, among other objections raised in a filing submitted by the Southern Environmental Law Center in Charlottesville on behalf of more than a dozen conservation groups. “At this point, it is unknown whether Atlantic will obtain all of the necessary approval and permits to move forward with its project,” the document says. “The commission must reject Atlantic’s attempts to cut corners and pre-empt state authority by denying the company’s premature request.” Dominion says the workers will stay away from wetlands and waterways, will refrain from using heavy equipment, and will not remove stumps or roots that could lead to soil erosion. The cut timber will stay onsite until all other approvals have been obtained. And the chainsaw-wielding contractors will only cut trees on property that the company has secured access to via easement agreements with owners, said Dominion, which also has begun eminent domain proceedings against some landowners. “We want to get as much of this work done as possible within the federal tree-felling window in order to protect migratory birds or bats or other sensitive species,” said Aaron Ruby, a Dominion spokesman. “FERC has a well-established process for authorizing this activity and we’re following the process.” 

Judge Sides with Big Oil in Maine Pipeline Case - In a case that has national ramifications, a federal judge has ruled against the city of South Portland, Maine, in its latest effort to stop the coastal town from becoming a destination for Canadian tar sands oil.  The case centers around an existing pipeline owned by oil companies ExxonMobil, Shell, and Suncor. The Portland Montreal Pipeline currently moves refined oil from South Portland to Montreal, Canada. However, since Canada is awash in oil and currently exports over three million barrels a day to the U.S., there is very little demand there for U.S. oil. As a result, the pipeline is not operating close to full capacity. The oil companies that own the Portland Pipe Line Corporation (PPLC) now want to reverse the pipeline’s direction to bring Canadian tar sands oil to South Portland, where it would be exported. In 2014, the city of South Portland passed the Clear Skies Ordinance, banning the export of crude oil from the city. This ordinance was designed to protect local air quality because the plans to bring tar sands oil to South Portland require building two smokestacks on the waterfront,  located adjacent to residential areas. These pollution control towers would burn off the toxic volatile components of the tar sands oil mixture.  In 2013, prior to the city passing the Clear Skies Ordinance, residents of South Portland gathered the 4,000 signatures required to place a measure on the ballot, which would allow voters to decide whether or not they wanted to allow tar sands oil in their community. That’s when the oil industry started paying attention. The American Petroleum Institute ended up spending over $750,000 to help defeat the ballot measure, which lost by fewer than 200 votes.

Gas-fired power generation in New England this winter and next - This winter will be the last go-round for ISO New England’s Winter Reliability Program, under which the electric-grid operator in the natural gas pipeline-challenged region provides financial incentives to dual-fuel power plants if they stockpile fuel oil or LNG as a backup fuel. This coming spring, a long-planned “pay-for-performance” regime will go into effect, and gas-fired generators that can’t meet their commitments to provide power during high-demand periods — such as the polar vortex cold snaps that hit the Northeast in early 2014 — will pay potentially significant penalties. Today, we discuss the pitfalls that the pipeline capacity-challenged region may encounter as its power sector becomes increasingly gas-dependent. The NATGAS Permian Report is a weekly natural gas fundamentals analysis focusing entirely on the key market drivers within the Permian basin. The report contains details and forecasts around natural gas production, demand, and pricing. It offers a summary of pipeline outflows and capacities from the Permian to neighboring regions, outlining the key shifts in flows to the West, MidCon, and Texas intrastate markets. Bostonians and other New Englanders pride themselves on their winter hardiness. They scoff at doomsday nor’easter forecasts from the Weather Channel. They think nothing of putting on five layers of L.L. Bean clothing to watch Tom Brady and the Patriots play in subzero temperatures at Gillette Stadium. That New England hardiness and inventiveness may come in handy. As we’ve said in a number of blogs [I’m (Not) Shipping Up to Boston and Don’t Give Up On Us, among others], in the past few years the region’s power sector has been shutting down coal and oil-fired generation units and nuclear plants, and building new natural gas-fired combined-cycle and peaking units to replace their capacity. At the same time, New Englanders have been among the fiercest opponents of new gas pipelines and gas-pipeline expansions that would enable considerably more gas from the nearby Marcellus and Utica production regions in Pennsylvania, West Virginia and Ohio to flow into Connecticut, Rhode Island and Massachusetts in particular.

New US FERC chairman promises 'fresh look' at gas pipeline approval policies -- Under increased scrutiny and heightened environmental opposition, the US Federal Energy Regulatory Commission will take a comprehensive "fresh look" at its policies for reviewing and approving natural gas pipeline projects, the new head of the agency said Thursday. Chairman Kevin McIntyre, who took his seat at the commission December 7, announced at the commission's open meeting that it was time to take a look at FERC's longstanding policy statement on the issuance of pipeline certificate orders.The policy, which has been in place since 1999, is more than ripe for review, given the tremendous changes to the natural gas industry since the policy was instituted, all of the commissioners on the panel agreed."Without prejudging anything and without intending to forecast a policy direction, ... it's a matter we believe of good governance to take a fresh look at this area and to give all stakeholders and the public an opportunity to weigh in on" whether changes to the existing policy are warranted, McIntyre said.The format and scope of the review have yet to be determined, but could take the form of a notice of inquiry, a call for a technical conference or a number of other formats available to the commission. "I guarantee, whatever it is, it will be open and transparent and thorough, and it will invite the views of all stakeholders to ensure we are doing everything we can to accurately and efficiently assess pipeline applications that we receive and process," McIntyre said.

  Henry Hub spread to Asia, Europe at record high - The price spreads between Henry Hub and benchmark gas markets in Asia and Europe are at three-year highs in December and could continue to widen in the coming weeks. The netback to Henry Hub from Platts JKM, the benchmark price for spot LNG delivered to northeast Asia, was assessed Monday at $8.11/MMBtu. The netback from the UK's NBP market climbed as high as $8.83/MMBtu in mid-December, although that netback has narrowed in recent days. Still, those spreads have offered offtakers of US LNG the best margin yet for export profits. Including transportation costs, liquefaction losses and shipping outlays, Platts Analytics estimates the arbitrage profit on those netbacks at roughly $4.25/MMBtu to Asia and $3.65/MMBtu to Europe. Attractive export margins for US LNG come as a combination of factors have conspired to lift gas prices in Asia, Europe, the Middle East and India. In northeast Asia, strong gas demand in China this winter has even seen the country's independent buyers bidding for cargoes in an effort to capture profits with downstream sales into the domestic gas market. In Japan and South Korea, a recent influx of colder temperatures is also helping to keeping gas demand and LNG prices elevated in the region. The JKM was assessed Tuesday up 5 cents to $10.85/MMBtu for front-month, February-delivered cargoes, S&P Global Platts data shows. In Europe too, gas prices are sharply higher this winter, owing to higher demand for gas-fired generation. More recently, prices have seen additional support from colder temperatures and a series of supply disruptions caused by an Austrian gas hub explosion and temporary production outages in the North Sea and in Norway.

USGC crude exports pick up as LOOP Sour-Dubai spread widens -- Tumbling differentials for US Gulf Coast medium sour crudes as part of an end-of-year selloff are opening arbitrage opportunities for those grades to move across the Atlantic Ocean or head east, S&P Global Platts data show. The Platts LOOP Sour-Dubai spread, used to measure the arbitrage for US Gulf Coast sour grades to Asia, has gradually widened in recent weeks and ended last week at its widest value since mid- to late-November. On Friday, the 10-day moving average spread was $1.63/b, with LOOP Sour less than Dubai. The spread has widened six of the past nine trading days since reaching of 82 cents/b on December 5, Platts data showed. Platts data suggests the cost to move crude from the USGC to the West Coast of India is about $2.30/b compared with $2.60/b to Singapore and $3/b to China. Recent Platts fixture reports show a number of companies fixing or looking to fix crude tankers out of the Gulf Coast. Last week, Shell, BP, Unipec, Petrochina and Swiss Oil fixed eight tankers with a combined 1.02 million mt of capacity. By comparison, five ex-USGC tankers with a combined 620,000 mt of capacity were heard fixed in over a week one month ago, Platts data shows. Unipec had the largest fixture, fixing a to-be-named VLCC at an as-yet unknown rate to move crude to Singapore. Platts assessed the dirty VLCC Caribbean-Singapore route at $3.9 million Friday. 

The last leg of the Dakota Access Pipeline is nearing construction   - Pipeline operator Energy Transfer Partners received two major permits this week—the most recent on Thursday—for its Bayou Bridge Pipeline in Louisiana. This 163-mile long crude oil pipeline, owned in part by Phillips 66, carries the same oil that runs through Energy Transfer Partners’ more notorious Dakota Access Pipeline. Unhappy opponents of the project are gearing up for nonviolent direct action. “The Houma Nation and all those south of the proposed Bayou Bridge pipeline route deserve the right to clean water for drinking, for bathing, for fishing, for life.” The Bayou Bridge Pipeline brings the crude oil from North Dakota’s Bakken Formation to an oil export terminal hub in St. James Parish, Louisiana. If the pipeline is built, roughly 480,000 barrels of oil are expected to travel through it a day. Pipeline critics are especially worried about an oil spill on nearby wetlands.Now that the Louisiana Department of Environmental Quality issued the water quality certification Tuesday and the Army Corps of Engineers approved the pipeline’s right of way Thursday, the pipeline’s construction is almost certain to begin—and soon. It’s already secured the state’s coastal use permit and approval of the St. James Parish Council. Just a couple hurdles remain in the pipeline’s way.“This moves us to the final step of the permitting process, which is a permit from the Atchafalaya Levee District and approval from the Coastal Protection Restoration Authority, both of which we anticipate receiving shortly,” pipeline reps wrote on a Facebook post Thursday.  An indigenous-led camp launched in June to begin mobilizations against the project. So far, they’ve mostly done prayerful walks and collaborative art projects. This recent—and unsurprising—move now throws camp members into action-mode as they prepare for nonviolent direct action, and that includes civil disobedience.

U.S. Bank Quietly Joins $4B Deal With Dakota Access Owner After Declaring End to Oil and Gas Pipeline Loans -- At a shareholder meeting this past spring, U.S. Bank announced it would be the first large American bank to completely stop issuing loans for oil and gas pipeline construction projects. Environmental groups, indigenous activists and divestment advocates hailed U.S. Bank's announcement as a triumph. Yet that triumph—and the bank's commitment—seems less sure with the news that U.S. Bank has entered into a new $4 billion loan deal with the company behind the contentious Dakota Access pipeline (DAPL).  For months, the bank had been under fire for financing the Dakota Access pipeline by providing over a quarter billion dollars worth of funding to its builder, Energy Transfer Partners (ETP). Environmentalists famously dropped a banner calling on U.S. Bank to divest from DAPL at the New Years 2017 Minnesota Vikings and Chicago Bears football game. The language of the bank's new policy seemed blunt. "The company does not provide project financing for the construction of oil or natural gas pipelines," U.S. Bancorp, parent company of U.S. Bank, wrote in its April 2017 Environmental Responsibility Policy. Divestment advocates cheered. "We applaud this progressive decision from U.S. Bank," an Honor the Earth representative said in a statement, as the bank's new policy made headlines . Some advocates remained skeptical, however, pointing out that the line of credit extended to Energy Transfer Partners wouldn't be covered by that language, because it could be considered a loan for the company as a whole, not the more specific "project financing." And U.S. Bank's CEO told shareholders that his bank wouldn't end its existing Energy Transfer Partners deal, saying that instead it would "fulfill that contract and commitment." "We know there are always loopholes through which banks will try to pass off responsibility," Rachel Heaton of Mazaska Talks and a Muckleshoot Tribe member told Yes Magazine , "but we will continue to resist until these banks completely divest from all pipeline and fossil fuel corporations and incorporate the Free, Prior, and Informed Consent of Indigenous peoples into their corporate lending structures."

Trump halts funding for offshore drilling safety study | TheHill: The Trump administration has paused its funding for a major study meant to improve how regulators enforce offshore oil and natural gas drilling safety. The congressionally chartered National Academies of Sciences, Engineering and Medicine said Thursday that the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) sent a stop-work order for the study earlier this month. The National Academies had already gathered a committee of researchers for the study and conducted a meeting on the matter in October.“The National Academies are grateful to the committee members for their service and disappointed that their important study has been stopped,” it said in a statement. BSEE told the National Academies that it would decide within 90 days whether to resume funding. BSEE requested the study in 2016 as part of an ongoing effort to implement lessons learned from the 2010 Deepwater Horizon disaster and oil spill in the Gulf of Mexico. BSEE spokesman Gregory Julian said the pause will allow the agency to evaluate whether the National Academies study is duplicating efforts already underway to improve its inspections. “As BSEE moves forward with implementing a risk-based inspection program to strengthen and improve its existing inspection program, the [National Academies] study was paused by BSEE to allow time to ensure that there are no duplicate efforts,” he said. 

Keane Group buying new fracking fleets - Houston's Keane Group said it is spending $115 million to order three new fracking fleets to prepare for a busy 2018, especially in West Texas' booming Permian Basin. The hydraulic fracturing company, said the new fleets will add about 150,000 hydraulic horsepower to give Keane about 1.3 million horsepower, including 800,000 dedicated to the Permian. Keane, which trades under the stock ticker "FRAC" on the New York Stock Exchange, focuses on well completion and pressure pumping services, especially the fracturing, or fracking, of underground shale rock to release oil and gas. "Supply-and-demand fundamentals for U.S. oil and gas well completions remain highly constructive for quality completions service providers," said Keane Chairman and CEO James Stewart. "Favorable conditions have continued to improve throughout the year, and robust 2018 capital budgets announced by producers in recent weeks have amplified and validated the growing demand for our services, which remains in excess of supply." Keane redeployed all of its idled fracking fleets this year after the end of a more than two-year bust in oil prices. Now, Keane is expanding its fleet to prepare for growing activity levels. Keane went public early this year after expanding in 2016 through the acquisition of Calgary-based Trican Well Services' pressure pumping business.

 Tellurian plans US gas pipelines; seeks to boost Permian, Haynesville takeaway -- LNG developer Tellurian proposed Monday building two additional natural gas pipelines to move increasing output of shale supplies in the Permian and Haynesville shale plays to the US Gulf Coast and boosting the access to cheap feedgas for its planned Driftwood export terminal in southwest Louisiana. The announcement comes as the Houston-based company tries to convince investors and LNG buyers in Asia, Europe, the Middle East and Latin America that its liquefaction facility will be a low-cost, high-return option among the dozen or so terminals eyeing a startup early in the next decade. While none of the second wave of US projects has taken a positive final investment decision this year, Tellurian is aiming to prove commercial viability in 2018, at the same time as it will be soliciting shipper interest in its proposed 2 Bcf/d Permian Global Access Pipeline and 2 Bcf/d Haynesville Global Access Pipeline. The company's previously proposed 4 Bcf/d Driftwood Pipeline is proceeding through the regulatory process. Together, the three pipelines are projected to cost $7.3 billion. "The Tellurian Pipeline Network would serve the approximately 8 Bcf/d of incremental natural gas demand expected by 2025 in southwest Louisiana," CEO Meg Gentle said in a statement. While traditionally an oil play, the Permian in West Texas and southeastern New Mexico has been seeing a surge in associated gas being lifted, and producers are increasingly looking for takeaway options to move those supplies to the coast, where the resources are in high demand for both domestic use and exports.

Kinder Morgan to move ahead with $1.7 billion pipeline -  Houston's Kinder Morgan said Thursday it's ready to move forward with its $1.7 billion gas pipeline from West Texas to the Corpus Christi area after signing Apache Corp. as a major customer. The project, expected begin operation by October 2019, is meant to capitalize on the shale boom in West Texas' Permian Basin. While companies are primarily drilling for oil, a lot of associated natural gas also is produced from the shale rock - even more than initially projected. The goal is to transport the gas to hubs near Corpus Christi and Houston, where it can then be shipped to power plants for electricity generation, to liquefied natural gas export terminals, or to Mexico, which is buying more American natural gas for its power generation. The 500-mile project is 50 percent owned by Kinder Morgan. Two other pipeline companies, Targa Resources of Houston and DCP Midstream, a joint venture of Houston's Phillips 66 and Calgary-based Enbridge, each hold 25 percent stakes. Construction is expected to start in the first quarter of 2018. 

Nebraska regulators deny TransCanada request on Keystone XL route (Reuters) - Nebraska regulators on Tuesday denied TransCanada Corp’s request to amend its route application for the proposed Keystone XL pipeline through the U.S. state, a potential setback for the company as it seeks to head off legal challenges. The Nebraska Public Service Commission (PSC) issued an approval for the line in late November, removing what appeared to be the last big regulatory obstacle for the long-delayed project, which has been backed by U.S. President Donald Trump. But the commission’s approval was not for the route TransCanada had singled out in its application. Instead, the commission approved an alternative route that shifts it closer to an existing pipeline right-of-way down the eastern side of the state, a move opponents of the pipeline have said violates state statutes. TransCanada filed a motion last month with the commission seeking permission to retrospectively amend the route application, a move that a company official said was intended to prevent lawsuits that could delay the project. The commission on Tuesday voted 5-0 against the motion. TransCanada said in a statement that it would review the decision to determine next steps for Keystone XL, but added that it believed the project remained economically viable. “It is important to remember that this project has widespread support within the U.S. and Canadian federal governments, as well as state officials in Montana, South Dakota and Nebraska,” the company said.

Nebraska upholds Keystone XL approval, sparking likely court battle - Nebraska regulators on Tuesday upheld their decision to allow TransCanada to build the stalled 830,000 b/d Keystone XL crude pipeline, albeit on an alternative route. The state Public Service Commission order denied requests by TransCanada and pipeline opponents to reconsider the November 20 approval. TransCanada could not immediately be reached for comment. Lawyers for Nebraska landowners opposed to the project said Tuesday's denial represents "the absolutely worst decision possible for TransCanada and the best possible outcome for landowners and the protection of their property rights." "The PSC process is now over and the appeal process of the PSC decision can now begin and run all the way through the courts, with TransCanada's own denied motion for reconsideration foretelling its likelihood of success on appeal," the Domina Law Group said. TransCanada said earlier in December that the alternative route would not likely increase the estimated $6.3 billion project cost. Still, the company has yet to make a final investment decision. The PSC voted last month for the company's "mainline alternative" -- not the more direct route that TransCanada preferred. The approved route in eastern Nebraska heads east sooner toward the existing Keystone pipeline and parallels it for 96 miles. 

High levels of benzene released at Weld County oil and gas site -- Anadarko Petroleum has self-reported the release of high levels of a cancer-causing chemical at a tank battery site in Dacono near Weld County Roads 10 and 15. According to a report provided to COGCC, the state agency responsible for regulating the industry, the oil and gas operator discovered the contaminated ground water and soil while trying to dig up an old pump in early December. Anadarko had to remove 200 barrels of tainted ground water, and lab tests found benzene 900 times the amount allowed by the state. Benzene is a natural part of crude oil and gasoline, but is known to cause cancer. "It's hard to argue the fact that you have extremely high levels of benzene -- well what causes it, it's not farming wheat," Tom Eubanks said. Eubanks flies his remote-control model planes at an airstrip right next to the oil and gas site where the contaminated ground water was found. For several days, he said he watched crews haul out the toxic water and soil. "I saw a string of three dump trucks come in here and then haul dirt out and they made three trips in one day. And then the second day they were still hauling dirt out," Eubanks explained. According to the report, the operator also removed nearly 10,000 cubic feet of polluted soil -- enough to fill 383 hot tubs. "I think that doesn't surprise me one bit," Eubanks said. A spokeswoman for Anadarko said the company is in the process of removing a tank battery at the site and that's how they discovered the toxic ground water, something the operator and COGCC both said is not uncommon while doing this kind of work. The big question that remains is are the nearby water wells safe? 

 Colorado's Extraction Oil & Gas to spend up to $840M drilling, fracking next year - Denver’s Extraction Oil & Gas Inc., which works solely in Colorado, says it expects to spend between $770 million and $840 million in capital expenditures in 2018.   Extraction’s Chairman and CEO Mark Erickson called the 2018 spending plan “modestly smaller” than this year’s plan, but said the company expects to grow its production 75 percent next year compared to this year.  For 2018, the company said it plans to drill up to 175 horizontal wells during the year that will have an average lateral length of 1.8 miles.   Outside of drilling and fracking on new and existing wells, Extraction said it expects to spend between $120 million and $150 million on other expenditures — and pay for those activities by selling assets considered non-strategic.   The company said it’s working on financing infrastructure projects related to its planned operations in Broomfield and Hawkeye, which is in Adams and Arapahoe counties.

North Dakota oil output jumped more than 78,000 b/d in October: state -  North Dakota oil production averaged nearly 1.19 million b/d in October, up more than 78,000 b/d from September and the highest average output since August 2015, bolstered by the OPEC supply cut agreement and global economic growth, the state Department of Mineral Resources reported Friday.October's average output was still roughly 42,000 b/d below the all-time monthly output record set in December 2014, but was the highest month-to-month  increase in state history, according to Lynn Helms, the state's top oil and gas regulator. Statewide natural gas production averaged more than 2.06 Bcf/d, up from 1.95 Bcf/d in September and a new all-time high, the state agency said. There were also an all-time high of 14,250 producing wells in North Dakota in October, up 51 from September, the agency said.

 Residents report nosebleeds and headaches after new leak at Aliso Canyon natural gas facility - LA Times: Southern California Gas Co. late Monday reported a leak at the Aliso Canyon natural gas storage facility during a routine operation to pressurize equipment after maintenance. In a community alert, the company said the leak occurred about 4:55 p.m. and didn’t pose any health risks, though it did produce a noticeable odor.But Andrew Krowne, a Northridge resident who developed a cellphone application for those within 18 miles of the facility to report health issues, said 34 people reported symptoms including headaches, nosebleeds, and burning of the eyes and throat. The leak was shut off within about 50 minutes and residents were notified about 7:40 p.m., according to the utility’s alert. Article continues belowSince Krowne’s app became available in October, more than 150 users have reported 2,200 symptoms, he said. The facility is the site of the largest methane leak in U.S. history. Starting in 2015, a ruptured well spewed tens of thousands of tons of gas, forcing roughly 8,000 families in the northwest San Fernando Valley from their homes. Many complained of health issues that included cancer, nausea and nosebleeds. The blowout, which at its peak more than doubled the methane emissions of the entire Los Angeles Basin, took more than four months to plug. It sparked a political firestorm, with residents and elected officials demanding that the facility be shut down. “It has no business being around homes,” Krowne said. 

California Cities Are Suing Oil, Gas And Coal Companies Over Climate Change — The city of Santa Cruz and Santa Cruz County announced Wednesday the filing of separate lawsuits in state court against 29 oil, gas and coal companies seeking damages related to the companies’ impact on global climate change. The jurisdictions will join the cities of San Francisco and Oakland, the counties of Marin and San Mateo, and San Diego County’s city of Imperial Beach in filing lawsuits to hold specific fossil fuel companies accountable for contributing to more frequent crises like wildfires, droughts and strong storms. The Santa Cruz County and city officials believe that the defendants have been aware of their role in extensive pollution for nearly 50 years. The city of Santa Cruz’s final complaint document states, “Defendants’ historical and current fossil fuel extraction and production records are publicly available in various fora. These include university and public library collections, company websites, company reports filed with the U.S. Securities and Exchange Commission, company histories and other sources.” What sets Santa Cruz County and the city’s lawsuits apart from the others is that they are the first to call out not just the detriments of sea level rise, but disruptions to the hydrologic cycle caused by fossil fuel pollution. The lawsuits each cite a variety of peer-reviewed studies and agencies like the National Oceanic and Atmospheric Administration and NASA. Santa Cruz County will be hit especially hard by 2030, when an expected sea level rise of 4 inches would put 850 buildings and assets valued at $742 million in danger, according to their lawsuit. The city of Santa Cruz’s lawsuit states the city has spent millions of dollars to offset flooding and storm damage. Main roadways are a serious concern in the event of 4 inches of sea level rise since portions may need to be fortified or completely replaced because of coastal erosion.. 

Wall Street Returns To U.S. Shale With A Bang -- Investors have grown wary of U.S. shale after years of disappointing returns, and they have pressed shale companies to rein in reckless drilling practices. But with money still pouring into the shale sector, there’s no sign yet that Wall Street is withholding investment in the industry.Shale executives have gone to great lengths in recent months to reassure investors that they are pursuing a more conservative strategy, foregoing aggressive drilling plans to prioritize profits. Despite what could be a seismic shift in the shale sector, Big Finance continues to shower shale companies with money.According to a series of interviews conducted by Reuters with industry experts, there is no shortage of capital interested in shale drilling. “If you’ve got the rocks, you can get the money,” Buddy Clark, co-chairman of the energy practice group at law firm Haynes Boone, told Reuters.Private equity is taking on a larger role in the shale industry as traditional banks pare back lending. Since 2014, investors have funneled $200 billion to private equity firms that have a focus on energy, according to the WSJ, citing data from Preqin. Armed with cash and hungry for yield, private equity firms have injected $20.26 billion into energy deals so far this year, more than 36 percent higher than in 2016, Reuters says. The latest example of that trend came from Warburg Pincus LLC, which just a few days ago announced a $780 million investment into ATX Energy Partners. ATX will use the money to purchase assets from larger oil producers, but notably, ATX is a new venture without any drilling assets to date.  Reuters reports that new financial instruments are popping up, servicing the needs of shale drillers and filling the void that traditional lending has left. “The upstream industry has been really creative in how it pursues financing of late,” Charlie Leykum, founder of private equity firm CSL Capital Management LLC, told Reuters. These instruments include Drillcos, which give investors more control over cash flow until certain returns are met.

US crude oil production could be more than Saudi Arabia in January - graphs -- The Dec 8, 2017 weekly EIA oil production report was that US production was at 9.78 million barrels per day. The US may end December with 9.9 million barrels per day. Rystad Energy’s comprehensive well data for the United States shows that domestic oil production could pass 9.9 million barrels per day in December 2017. U.S. shale production is expected to rise for a 13th consecutive month to a new record in January, the U.S. Energy Information Administration said on Monday.January output is forecast to increase by 94,000 bpd to 6.41 million bpd, according to the EIA’s monthly drilling productivity report.This could put US production at 10.1 million barrels per day. US Crude oil production will be over 10 million barrels per day in January and this will be more than Saudi Arabia. The US will likely add 1 million barrels per day in 2018 and will pass Russia’s 11 million barrels per day.On an all liquids basis US production will be over 15 million barrels per day and should go beyond 16 million barrels per day.

Saudi Arabia Reportedly Looking At U.S. Shale Assets To Diversify Aramco - Saudi Arabia is reportedly looking at natural-gas assets in Texas shale basins and is in talks with a U.S. liquefied natgas producer as it looks to break into U.S. shale. Saudi Arabia is reportedly looking at natural-gas assets in Texas shale basins and is in talks with a U.S. liquefied natgas producer as it looks to break into U.S. shale. State-run oil giant Saudi Aramco is in early negotiations with Tellurian to buy a stake or some of its natural gas. The report also said Armaco has asked about assets in the Permian and Eagle Ford shale formations. If the company starts production in the U.S., it would be the first time it had any output from outside the kingdom. It also would come after three years of struggles to cool shale's growth, which has upended markets that Saudi Arabia once swayed as the swing producer. But the kingdom's domestic energy needs may be prompting an embrace of its U.S. rivals. Investing in shale would give Saudi Arabia access to the U.S. industry's ability to quickly start and stop production projects and use that knowledge back at home. "Saudi Arabia has a lot of shale, a lot of tight gas," said Jim Krane, an energy analyst at Rice University's Baker Institute for Public Policy. "Aramco needs to get to the gas because Saudi Arabia is very short on natural gas. The only way to get to it without imports is to tap into shale." Saudi Aramco won't be the first Middle Eastern country to invest in U.S. shale; the UAE's Mubadala sovereign fund has invested in a private equity firm in U.S. shale, the report said. 

U.S. tax overhaul likely to spur spending by refiners, pipeline cos - (Reuters) - U.S. refiners and pipeline companies are likely to embark on a capital spending spree in the next year, fueled by a provision in the recently-passed U.S. tax bill that rewards investment in new projects, said energy industry lobbyists and analysts. On Wednesday, Congress gave final approval to the biggest overhaul of the U.S. tax code in 30 years, the first major legislative victory for President Donald Trump since he took office. The bill contains a bonus depreciation provision that allows all companies to immediately write off the full costs of capital improvements, instead of depreciating the new asset over time. The immediate expensing of capital costs will make less financially-attractive projects more viable and free up capital for stock buybacks and increased dividends. The benefit begins to phase out in 2023, which means companies could look to advance projects to take advantage. "Every major refining company has a list of projects they want to get approved that are ranked by profitability and risk," said Charles Kemp, vice president of Houston-based energy consultancy Baker & O'Brien Inc. The bill, he said, will motivate companies to look further down those lists, "and noticeably increase capital budgets." The U.S. energy industry has emerged as one of the winners of the historic tax package passed this week. The S&P Oil and Gas Refining Marketing Index is up 27 percent this year, and hit a record this week on optimism over the bill's passage. In addition to lower corporate rates, the net effect of the immediate write-off provision will boost the present value of capital investments by roughly 4 to 10 percent, Kemp said. That essentially makes projects more profitable, more quickly. Moving up projects could be advantageous for refiners and pipeline operators such as Valero and Energy Transfer Partners, as they spend billions yearly to expand plants and build pipelines to move increasing volumes of petroleum. All refining and pipeline companies contacted by Reuters declined to comment on the implications of the tax package, though some expressed support for the reform in general. Refiners have already started evaluating capital projects to determine whether marginal ones have become profitable and whether any can be advanced into the five-year window, said two refining lobbyists based in Washington D.C., "We have a lot of north and south pipelines, but not a lot east and west. And there's a lot of demand for exports, so we will see a real uptick in capital investment to meet that demand." 

GOP Tax Bill: How the Environment Lost - The Republican tax bill , which is likely headed to President Donald Trump 's desk in the next few days, has major repercussions for our precious environment.   While the electric vehicle industry and the wind and solar sector can breathe a little easier that the sweeping legislation preserves their tax credits, fossil fuel producers are likely cheering the opening of the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling.  The controversial provision, a proposal from Senator Lisa Murkowski (R-Alaska), would auction off an area known as the “ biological heart " of the Arctic Refuge that's home to crucial wildlife habitats, including one-third of all polar bear denning habitat in the U.S. and one-third of the migratory birds that come to the Arctic Refuge. It is also considered sacred to the indigenous Gwich'in people, who sustain themselves from the caribou that migrate there.  Oil drilling in the refuge has been sought by conservative lawmakers for decades despite opposition from 70 percent of Americans. "Congress has committed the ultimate sellout of America's public lands with such a devious and shortsighted action in one of the wildest places left in the world," said Jamie Rappaport Clark, president and CEO of Defenders of Wildlife . "Shame on those who supported this abhorrent assault on our natural legacy." Proponents of arctic drilling say the plan would help pay for the massive tax cuts, with Murkowski insisting that her rider would raise “more than $1 billion within 10 years and it will likely raise over $100 billion for the federal Treasury" over time. But critics contend that with oil prices below $60 a barrel, it's not even certain that oil companies would want to open up one of Earth's most remote and harshest areas, nor would drilling raise enough revenue to offset the massive deficit forecasts created by the tax bill.  Notably, the renewable energy sector did not escape the widely unpopular bill's effects scot-free, as it includes the Base Erosion Anti-Abuse Tax (BEAT) program that would "undermine our capacity to use renewable energy tax credits, which have value only if they can be monetized," according to a letter addressed to the Senate from clean energy trade groups.

Factbox: Oil, natural gas industry wins big in tax bill - Congress this week passed a sweeping tax overhaul package that includes major wins for the domestic oil and natural gas industry.The legislation was approved by the House and Senate Tuesday, but needed technical corrections from the House on Wednesday. President Donald Trump is expected to sign the bill into law by early January.The bill opens up hundreds of acres in Alaska, off limits for decades, to drilling; maintains tax breaks for producers, including some industry lobbyists concede were not a priority; and calls for millions of acres to be sold from government oil stocks. Upstream, downstream breaks. The bill keeps numerous oil and gas industry-friendly tax breaks in place, including deductions for intangible drilling costs, percentage depletion, or amortization of geological and geophysical costs. A earlier House version of the bill had proposed eliminating a credit for producing oil and natural gas from marginal wells and an enhanced oil recovery credit. Industry groups were not fighting the change since those credits were so rarely used, but congressional negotiators kept them in anyway.  The refining industry successfully lobbied to keep manufacturing depreciation and interest deductions in place in the bill, and last-in, first-out accounting practices preferred by refiners will remain. Senator John Cornyn, Republican-Texas, also included language that allows income from publicly traded partnerships, including master limited partnerships, to qualify for a 23% pass-through deduction, a change pushed for by refiners. The bill will allow development in the Coastal Plain of the Arctic National Wildlife Refuge, a 1.5 million-acre section in northwestern Alaska currently off limits to drilling without congressional approval and an environmental impact study. The bill requires the US Interior Department to hold at least two areawide lease sales offering a minimum of 400,000 acres each within 10 years.

Drilling in Arctic Refuge Gets a Green Light. What’s Next?  --  President Trump on Wednesday was poised to sign the new tax bill, passed by Congress, which lifts a decades-old ban on oil and gas drilling in the Arctic National Wildlife Refuge in northeastern Alaska.  Both supporters and opponents say it could be years before the first lease sale, a precursor to any drilling. The new legislation requires that the Department of Interior conduct one sale within four years and a second within seven. But there are many steps that must be taken before those sales can be held, and the process is not completely clear. Lawsuits and other actions by opponents of drilling could slow things, both before and after any lease sales.The Interior Department will have to identify lands in the 1.5 million acres of the refuge along the coastal plain, known as the 1002 area, for leases. Once the department comes up with a list of options, there will be at least one comment period in which the public will have a chance to be heard. One question mark is whether new seismic studies will be undertaken. Such studies can reveal underground formations that have high oil development potential, and the only ones that were done in the refuge are more than three decades old. Based on the old studies, the United States Geological Survey has estimated that the 1002 area contains from 5 to 16 billion barrels of oil. David W. Houseknecht, a senior research geologist with the survey, said the agency was about to re-analyze the data using improved software in hopes of reducing the uncertainty of that estimate. But new studies using modern three-dimensional technology could produce even better estimates. The Interior Department in September proposed allowing new studies, but it is unclear whether oil companies, if allowed, would undertake them, or whether the Interior Department would wait for them to be done before conducting a sale. Oil companies have bid on drilling leases in other areas with less-than-ideal information.

The Alaskan senator who just opened America's largest wildlife refuge to drilling wants to study ocean acidification - Alaska Senator Lisa Murkowski has spent decades seeking oil. Specifically, oil that lies beneath the tundra of the Arctic National Wildlife Refuge (ANWR). With this week’s passage of a GOP tax bill containing a provision to open ANWR to drilling, she’s finally achieving her goal.  But you know what else Murkowski wants to do? Study climate change. On Tuesday, Murkowski’s office announced that the Senator was co-sponsoring a bill that would direct the National Oceanic and Atmospheric Administration to assess the vulnerability of coastal communities to ocean acidification. The Coastal Communities Ocean Acidification Act of 2017 was a bi-partisan effort, crafted in concert with Senators Maria Cantwell (D-WA), Susan Collins (R-ME), Gary Peters (D-MI), and Sheldon Whitehouse (D-RI). A version of the same bill was introduced to the House in May. There’s no indication of when the bill might get a vote in either chamber.  “Alaska’s culture and economy thrive on so many resources that come from the ocean,” Murkowski said in a statement. “This proactively addresses a very real issue and will help us all gain a deeper understanding of how ocean acidification is affecting our coastal and subsistence communities throughout Alaska.” For Murkowski, toeing the line between industry and the environment is nothing new.In stark contrast many of her GOP colleagues, the Republican Senator routinely acknowledges that climate change is real and a threat. At the same time, she has pushed for more offshore and onshore drilling throughout the state, and championed exports of natural gas and crude oil. But in a year when “both sides” has become our internet meme stand-in for humanity’s rapidly-decaying ability to form a consensus reality, Murkowski’s pivot to ocean acidification—the very same week that her dreams of sucking black gold from America’s largest wildlife refuge received a Congressional stamp of approval—feels a bit on the nose.

Federal report finds ‘huge’ increase in North Slope oil -- The Trump Administration Friday heralded a "huge" increase in the North Slope's oil potential as it released an updated geological assessment of a large region that factors in big, recent oil discoveries and other new data. The area assessed centers around the giant National Petroleum Reserve in Alaska, and is estimated to contain a mean of 8.7 billion barrels of undiscovered oil that can be produced using existing technology.That is a sharp jump from a 2010 assessment of the same area that pegged the estimate at 1.5 billion barrels, the Interior Department said Friday. "New discoveries have changed our geologic knowledge of the area – and these assessments show that the North Slope will remain an important energy hub for decades to come in order to meet the energy needs of our nation," Interior Secretary Ryan Zinke said in the prepared statement.In recent years following the U.S. Geological Survey's 2010 assessment, ConocoPhillips has announced the Willow discovery within the reserve's boundaries. Just to the east on state land, Spanish multinational Repsol and other oil companies are pursuing the large Pikka discovery. Those two discoveries alone could produce some 220,000 barrels of oil daily, the companies have said. That amount would sharply boost the roughly 550,000 barrels of oil flowing through the trans-Alaska pipeline.

A Dam(n) Big Fracking Problem - More than half of 48 dams that oil and gas companies built in recent years without first obtaining the proper permits had serious structural problems that could have caused many to fail. And now, the BC Oil and Gas Commission, which appeared to be asleep at the switch in allowing the unlicensed dams to be built in the first place, is frantically trying to figure out what to do about them after the fact. Information about the unprecedented, unregulated dam-building spree is contained in a raft of documents that the commission released in response to freedom of information requests filed by the Canadian Centre for Policy Alternatives. The documents obtained by the CCPA, along with other materials recently posted on the OGC’s website, reveal that 28 of at least 48 unlicensed dams on Crown (meaning public) lands had significant structural flaws or other problems belatedly identified by commission staff.All the dams were built to trap fresh water used by energy companies drilling and fracking for gas in northeast B.C. In some fracking operations in the region, companies are pressure-pumping the equivalent of 64 Olympic-size swimming pools of water underground to break open gas-bearing rock formations, triggering earthquakes in the process.The OGC paved the way for the construction of the dams by granting companies numerous permits under the Land Act to use public lands to “store water.”But in approving the applications, commission personnel failed to ask basic, critical questions: How did companies intend to store the water? In tanks? In pits? Behind dams?Since the OGC didn’t ask, the companies didn’t disclose that they planned to build dams — lots of them. Nor did they disclose that in many cases the water sources for their dams would be creeks and other water bodies that the companies were not entitled to draw from because

Canada oil producers exhaust options as pipelines, railroads fill - (Reuters) - Canadian oil producers are running out of options to get crude to market as pipeline and rail capacity fills up, driving prices to four-year lows and increasing the risk of firms having to sell cheaply until at least late 2019.   This will drive down the profit margins for the oil sands industry, already struggling to compete with cheaper and abundant supplies from U.S. shale. A number of foreign oil majors have left Canada’s oil sands to invest in more profitable U.S. shale plays, selling over $23 billion in Canadian assets this year alone.  Canada’s oil sands output is still growing - but only as projects under construction are completed and smaller expansions come online. Oil firms are not commissioning large new projects because they cannot build them profitably with oil in the $50s a barrel.  The deeper discount on crude means next year could be just as tough for Canadian producers from a price perspective as 2017, even though international crude prices have strengthened.  “We have a build-up of supply and that’s only going to get worse next year. We are adding more and more pressure into a constrained export system,” The volume of crude in storage has hit record levels in western Canada and heavy crude is trading near its widest discount to U.S. crude CLc1 since December 2013, driven by increased supply and a leak on TransCanada Corp’s Keystone export pipeline last month. The discount on Canadian heavy crude blew out to as much as $28 a barrel below the West Texas Intermediate benchmark, pushing the outright price of Canadian barrels to less than $30. Many traders and analysts expect the discount to be wider in 2018 than the negative $12 a barrel year-to-date average as oil supply rises. Canada’s oil sands output is forecast to climb by 315,000 barrels per day next year and 180,000 bpd in 2019 to 3.2 million bpd, according to RBC Capital Markets, which described the growth as “unprecedented” and said exports will materially exceed pipeline capacity in early 2018.

Canada's Trans Mountain crude pipeline oversubscribed by 35% in January - Kinder Morgan Canada will limit crude oil nominations on its Trans Mountain pipeline system by 35% in January, meaning the line will carry 65% of nominated volumes, the company said Thursday.January volumes on the Trans Mountain mainline system are expected to be 264,285 b/d, down from 309,604 b/d in December, Kinder Morgan said in an email.Exports from the Westridge Dock, near Vancouver, are expected to be 76,491 b/d, compared with 78,917 b/d in December. Throughput on the Puget Sound pipeline is expected to be 118,200 b/d, compared with 148,368 b/d in December. The Trans Mountain pipeline ships Canadian crude from Edmonton, Alberta, to the Westridge export terminal in Burnaby, British Columbia, and on to the connected Puget Sound pipeline to Seattle-area refineries.

Before building a $400 million pipeline, make sure your neighbors are on board - A chunk of Sempra Energy’s natural gas pipeline sits in the dirt behind a community center in the village of Loma de Bacum in northwest Mexico. Guadalupe Flores thinks it would make a great barbecue pit. “Cut it here, lift the top,’’ he says, pointing to the 30-inch diameter steel tube. “Perfect for a cook-out.’’ It would be an expensive meal. The pipeline cost $400 million, part of a network that’s supposed to carry gas from Arizona more than 500 miles to Mexico’s Pacific coast. It hasn’t done that since August, when members of the indigenous Yaqui tribe – enraged by what they viewed as an unauthorized trespass their land – used a backhoe truck to puncture and extract a 25-foot segment. They left the main chunk about a mile from the community center, perpendicular to the rest of the pipeline, like a lower-case t. The impact extends far beyond Loma de Bacum and its 4,500 residents. Arizona’s gas exports to Mexico have plunged 37 percent since the shutdown, hitting an eight-month low in December. Mexico’s state utility is having to burn fuel oil instead to generate power, raising costs. It’s not an isolated case. Mexico’s opening of its energy industry has succeeded in attracting capital, but it’s also been beset by territorial or environmental disputes, often involving the country’s myriad indigenous groups. When protest turns into sabotage, there’s a risk that investors will be put off from future phases, like an extensive shale development. It’s also grist to the mill of the leftist frontrunner for next year’s presidential election, who’s vowing to reverse some of the reforms.The Yaquis of Loma de Bacum say they were asked by community authorities in 2015 if they wanted a 9-mile tract of the pipeline running through their farmland -- and said no. Construction went ahead anyway. 

Venue of last resort: the climate lawsuits threatening the future of big oil -  In early October, 22 state and federal judges hailing from Honolulu to Albany got a crash course in scientific literacy and economics. The three-day symposium was billed as a way to help the judges better scrutinize evidence used to defend government regulations.But the all-expenses-paid event hosted by George Mason University’s Law & Economics Center in Arlington, Virginia, served another purpose: it was the first of several seminars designed to promote “skepticism” of scientific evidence among likely candidates for the 140-plus federal judgeships Donald Trump will fill over the next four years. The lone science instructor was Louis Anthony Cox Jr, a risk analyst with deep industry ties whose recent appointment as chair of the US Environmental Protection Agency’s clean air scientific advisory committee drew condemnation in public-health circles. Since 1988, Cox has consulted for the American Petroleum Institute, a lobby group that spent millions to dispute the cancer-causing properties of benzene, an ingredient in gasoline, and is now working to question the science on smog-causing ozone. He’s also testified on behalf of the chemical industry and done research for the tobacco giant Philip Morris.For a $4,000 honorarium, Cox delivered two closed-door lectures at George Mason: “a primer on the scientific method” followed by a session aimed at “understanding what science can and cannot do”. Included in his presentation were slides urging judges to be wary of EPA science on fine particles – a pollutant he has been researching for API. Based in George Mason’s Antonin Scalia Law School, the Law & Economics Center espouses a free-market approach to policy. A 2013 investigation by the Center for Public Integrity found that the libertarian thinktank hosted more judicial conferences than any other university program in the country, fueled by conservative and big-business donors. Over the past two years, roughly $4.5m of $18.6m in contributions to the Law & Economics Center came from oil and gas interests, including Koch Industries, ConocoPhillips, ExxonMobil and API, which represents more than 650 corporations.

Adapt Or Die: Oil Majors In The New World - The world’s biggest public oil company is facing a challenge: it needs to continue to grow in a world that is drastically different from what it used to be, back when Exxon reigned supreme and the world had insatiable hunger for its oil. That time is now behind us.Today, we have the Paris Agreement on climate change, a major drop in large new oil discoveries on a global level, sanctions against two of the countries with the biggest oil reserves in the world, and, of course, a shift from oil to gas and renewable energy.All of these are potential headache inducers for Exxon, and this is reflected in the movement of its stock price and analyst price targets, according to a Bloomberg article. While the shares of the company still trade at a premium to its peers, this premium is shrinking, Kevin Crowley writes, as the giant struggles to keep up with the changing times.For starters, it is finding it hard to replace its reserves—a problem shared by most large oil companies after the oil price crisis dried up funding for new discoveries. The situation is made worse by U.S. sanctions against Russia and Venezuela, sanctions that specifically target the oil industry and prevent Exxon from taking advantage of their still-abundant resources.So, Exxon is actively seeking oil elsewhere. The company recently spent US$1.2 billion on exploration blocks in the pre-salt zone of the Brazilian continental shelf, which is widely believed to be the new hotspot for the oil industry. Exxon also recently announced oil discoveries offshore Equatorial Guinea and Guyana, so it is by no means sitting idly by, waiting for the sanctions to expire so it can return to Russia. Exxon is also expanding into gas and LNG: just yesterday the company announced the completion of a deal with Italian Eni for the acquisition of a 25-percent interest in a prolific gas block in Mozambique. Exxon will be responsible for building and operating all LNG facilities at the site, which holds an estimated 85 trillion cu ft of gas.

Oil Discoveries At Lowest Point Since The 1940s - The oil industry discovered the least amount of oil in 2017 in almost eight decades, breaking the previous record low set in 2016. The global oil industry has discovered less than seven billion barrels of oil equivalent so far this year—a drop-off from the 8 billion boe discovered last year. Last year’s total was the lowest since the 1940s. The 2017 figure is down by more than half from the 15 billion boe discovered in 2014-2015, and down sharply from the 30 billion boe discovered in 2012. The plunge is the result of a third consecutive year of relatively low upstream exploration budgets. So many oil companies slashed their spending on exploration when the market downturn began in 2014, and they have yet to restore that spending to anything close to pre-2014 levels. “We haven’t seen anything like this since the 1940s,” Sonia Mladá Passos, Senior Analyst at Rystad Energy, said in a statement. “The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined)—compared to over 50 percent in 2012.” The reserve-replacement ratio measures the volume of oil that is discovered relative to what is produced in a given year. The idea being, the industry needs to discover 100 percent of what it produces in order to avoid a decline in reserves. Rystad Energy says that 2006 was the last year in which the industry posted a reserve-replacement ratio above 100 percent. The implication is that the world is burning through oil at a faster rate than the industry is discovering new reserves.

The world's largest oil and gas companies are getting greener after fighting with shareholders for months - The world's largest oil-and-gas companies are going green. At least that's what they're saying.   Companies like Exxon Mobil — which counts Secretary of State Rex Tillerson among its former CEOs — and Shell have pledged to reduce their emissions, and have publicly adopted plans to disclose risks climate change poses to their core businesses.  After bowing to shareholder pressure, Exxon said in an SEC filing earlier this month that it would report the "impacts" that climate change and environmental policies have on the company. The disclosure would include implications of the 2 degrees Celsius warming limit set by the Paris Climate Agreement in 2015, as well as how the company is positioning its business for a "lower-carbon future."  Shell, one of Exxon's largest competitors, is taking its climate commitment a step further. The oil-and-gas conglomerate announced earlier this month a pledge to reduce its net carbon emissions 20% by 2035, and 50% by 2050.   A whopping 63% of the Exxon's shareholders supported the proposal for the company to disclose how climate change will affect its business, though Exxon initially rejected the proposal in May.   Vanguard, the world's largest provider of mutual funds, is one the largest shareholders in Exxon. In November, Vanguard announced that it would push companies it holds shares in to disclose climate risks.   But some in the climate community are still skeptical that the shift will be meaningful.  "ExxonMobil is still investing aggressively in developing future reserves under the assumption that economies worldwide will continue to rely heavily on fossil fuels,"

Exporting Fracking: 8 Countries Ripe For Tight Oil Drilling Outside The U.S. - What are the prospects for tight oil outside the US?   If U.S. tight oil can emerge so quickly to disrupt the market, perhaps other plays out there might have the same effect. Our Upstream analyst teams closely monitor the progress of multiple unconventional oil and gas plays all over the world. We predict that tight oil plays across eight countries will contribute to global supply by the late 2020s. Algeria, Colombia, China, Egypt and Mexico each have an embryonic tight oil industry, and shouldn’t have much impact in that period. Argentina, Canada and Russia are rather more advanced.  Argentina has the most growth potential over the next decade. The Vaca Muerta has a resource of 2-3 billion bbls of oil (as wells as 9.5 bn boe of gas) on the third of the play that has been tested so far either by horizontal or vertical drilling. The remaining two-thirds of the play needs further testing to confirm similar productivity levels. Current activity is mainly focused on developing gas which has had superior well productivity and price incentives are in place till 2021. Vaca Muerta tight oil volumes are running at around 36,000 b/d, but there is scope for significant upside with resource break evens of under US$50/bbl (NPV15). Most tight oil projects are in the pilot stage with operators planning to move to full development by 2020.  Canada today is the biggest tight oil producer outside the US. Maturing oil-prone plays and low prices have reduced production from the 2014 peak by about 5% to the current 335,000 b/d. Liquids production is split between tight oil (200,000 b/d) and condensate (135,000 b/d). There are a number of individual plays in the shadows of the Rocky Mountains, including the world class gas-charged reservoirs of the Duvernay and Montney. These have been productive for oil and condensate, but folding has made Rockies geology more complex - sweet spots are smaller than those of the giant US counterparts. Most of the Canadian oil-prone plays, many of which are shallow, low-cost formations in the prairies of Saskatchewan, have already peaked. We forecast tight oil production will be flat at 200,000 b/d over the next decade as new drilling offsets declines.  .  Russia is the tight oil dark horse. There is already around 1 million b/d of production from unconventional Tyumen and Achimov 'hard to recover' reservoirs that require horizontal drilling and fracking. But volumes from the Bazhenov and Domanik, the two plays classified as ‘tight oil’, are just 20,000 b/d.

UK medium-range storage natural gas stocks down over 50% since end-November - The amount of gas held within the UK's medium-range natural gas storage facilities has fallen by more than 50% since the end of November on the back of high demand allied to weaker UK gas production, an analysis of data by S&P Global Platts showed. Gas stocks held within the UK's seven medium-range reservoirs combined began Thursday's gas day at 594 million cu m, less than half the 1.211 Bcm held at the start of the November 28 gas day, data from National Grid showed.Withdrawals from medium-range reservoirs have been well above seasonal trends in December due to falls in both UK Continental Shelf production and weaker withdrawals from the long-range Rough reservoir, in addition to high UK gas demand on the back of below-average temperatures during the middle of the month.As a result, MRS stocks began Thursday's gas day well below levels seen in previous years, standing 333 million cu m lower year on year and 151 million cu m shy of the bottom of the five-year range.However, stocks were set to receive a boost in late December with NBP price spreads incentivizing injections due to the January contract trading above contracts for December delivery.The NBP January contract was assessed at 58.75 pence/therm Thursday, 2.75 p/th higher than the weekend contract (Saturday-Tuesday) and 1.25 p/th above the working-days-next-week contract (Wednesday-Friday), Platts data showed. Indeed, data from Platts Analytics' Eclipse Energy showed MRS reservoirs injected a net 11 million cu m into stock during Thursday's gas day, set to boost stock levels back above the 600 million cu m mark as a result.

Platts JKM breaks above $11/MMBtu on stronger North Asia winter LNG demand - Platts JKM for February delivery cargoes, the new front month, continued its recent uptrend and tested higher through the week to end at $11.075/MMBtu Friday, on the back of additional North Asia LNG demand and limited Pacific supply. Further information on Malaysian Petronas' mid-January delivery cargo supported bullish sentiment in the prompt market, with the deal reported done at above $11/MMBtu to a Japanese end-user. While several traders noted that Japanese and South Korean end-users would likely rely on inventory drawdown to avoid spot procurement, there were concerns over fast depletion of inventory amid colder regional weather. Meanwhile, private Chinese LNG buyers were reported to be active in the market seeking prompt cargoes to accommodate potential terminal slots to be given by PetroChina, according to multiple sources. In India, Gail was reported to have issued a tender seeking two cargoes for H1 and H2 February delivery, according to multiple sources. Bharat Petroleum Corporation Limited's buy tender seeking a January 19-21 delivery cargo was reported to have been awarded at just below $10/MMBtu earlier in the week. BPCL's tender seeking cargoes for May, August and October delivery next year was reported to have been awarded at around 11.5% Brent oil slope. Decoupling of West India prices to Northeast Asia prices amid an imbalance in regional demand widened the differential further by 45 cents/MMBtu on the week. In Indonesia, Pertamina was heard to have issued an Expression of Interest, with restricted participation, to offer 13 cargoes for February to November 2018. In the Atlantic, thin trading ahead of Christmas as well as expectations of warmer weather eased NBP prices, opening up the NBP-JKM gap to above $3/MMBtu over the week. 

The World's Biggest Offshore Boom Is Accelerating - In a sign that Brazil’s offshore sector is competitive in a world of $50–$60 oil prices, two large oil companies just announced significant investments in oil fields in the South American nation.  Total SA announced on Monday a final investment decision in a massive offshore oil field in Brazil’s Santos Basin, and the French oil giant boasted of low production costs. “The decision to launch the large-scale development of the Libra field is a major step for Total in Brazil,” Arnaud Breuillac, Total’s President of Exploration & Production, said in a statement. “We have worked with Petrobras, the operator, and our partners to secure technical costs below 20 dollars per barrel. This proves that we are capable of developing competitive deep offshore projects.”The Libra field is located about 180 kilometers off the coast of Rio de Janeiro in ultra-deep water, a pre-salt field that is considered to be Brazil’s largest discovery, with estimated reserves of between 8 and 12 billion barrels. It was discovered in 2010 and dramatically raised expectations for future growth, ushering in a period of bullishness and confidence in the country’s direction.The field is finally getting some large-scale investment for development. Total said it would use a floating production storage and offloading (FPSO) unit that would have a production capacity of 150,000 bpd and 17 wells. It is expected to come online by 2021. But more FPSOs will be added to eventually scale up output to 600,000 bpd.Statoil made a separate announcement on Monday, agreeing to take a 25 percent stake in Brazil’s Roncador field, an acquisition from Petrobras valued at $2.9 billion. The Roncador field has been producing for almost two decades, and as of November it was producing 240,000 bpd. Statoil has expertise in squeezing more oil out of mature fields. Roncador is thought to hold 10 billion barrels of oil equivalent (boe), with about 1 billion boe remaining. Statoil is confident it can boost that figure 1.5 boe. The move will triple Statoil’s production in Brazil to 110,000 bpd. The investment announcements are significant because Brazil is picking up momentum after years of disappointment. Petrobras had to repeatedly downgrade its forecast for production growth, succumbing to a future of more modest ambitions. The state-owned oil company can claim the mantle of the most indebted oil company in the world, a debt pile that once vastly exceeded $100 billion.

Colombia begins importing bulk LPG as natural gas reserves, output fall - Colombia has begun receiving is first sustained imports of bulk liquid propane gas, with volumes expected to rise significantly in the coming years as the country's natural gas reserves and output continue to decline. Juan Manuel Morales, an attorney and spokesman for G-5, a Bogota-based consortium including Colombia's five largest LPG distributors, said Thursday the group took receipt of its first shipment of 1,600 mt on November 14 at a port near Cartagena from Vitol, the London-based energy trading, refining, and transport firm. The LPG was produced by a US Gulf Coast refiner and delivered via bulk cargo ship. Terms of the six-month firm contract the consortium signed with Vitol, which has offices in Houston, call for the Colombian group to receive at least 4,000 mt/month of LPG through April. By mid-2019, Morales said imports likely will have doubled to 7,000-8,000 mt/month, possibly reaching 10,000 mt/month by 2022. So far, five additional cargoes of 1,600 mt have arrived since the initial shipment. Colombian domestic consumption of LPG is stable at 49,000-51,000 mt/month, Morales said, so current and projected imports by the consortium represent a significant portion of the gas that Colombians consume. G-5 members serve 80% of the domestic liquid propane consumers.

Is A Russia-Cuba Energy Deal In The Works? --The chief executive of Russian state oil major Rosneft met yesterday with Cuba’s President Raul Castro, suggesting that the two are working on an energy deal, Reuters reports. Rosneft started exporting crude oil to the Caribbean island earlier this year as its main supplier, Venezuela, struggled with a decline in its own production, and in October Sechin said there were plans to increase oil shipments to Cuba. Rosneft also plans to invest in refining in Cuba, it became clear after a meeting between Sechin and Cuba’s Energy Minister Alfredo Lopez. More specifically, the company will take part in the modernization of the Cienfuegos refinery—a joint venture between Cupet and PDVSA that last week became officially fully Cuban. PDVSA held 49 percent in the refinery, and according to a former government official from the South American country, Cuba took over the stake as payment for debts that had been incurred from tanker rentals and professional services. The refinery has a daily capacity of 65,000 barrels of crude, but in August this year it only processed about 24,000 bpd, the Cuban daily said. What’s more, Venezuela’s oil industry troubles led to a change in the grades it sent to Cienfuegos to heavier ones that are more difficult to process. Cuba has been dependent on Venezuelan oil imports for as much as 70 percent of its domestic energy needs, but with Venezuelan production falling, the island has turned to alternative suppliers. It also has plans to develop its own oil and gas resources. There are few foreign energy companies operating in Cuba, but one of these, Australian Melbana Energy, has set its sights on an onshore deposit dubbed Block 9, which, according to the company, could have reserves of between 1.18 billion and over 44 billion barrels of oil, with the recoverable portion estimated at around 637 million barrels.

The Beginning Of The End For Norwegian Oil  --   The demise of the North Sea doesn’t necessarily mean the end of Norway’s petroleum era - far from it. Still, despite significant reserves in the Barents Sea, Norway is about to embark upon a long period of structural decline as its benchmark fields inch closer to depletion and its reserves taper before our very eyes.The average Norwegian might not even perceive the difference between an oil-rich Norway and one that is past its prime. The nation’s massive external and fiscal net position, as well as its complete energy independence thanks to hydropower, allows for great flexibility regarding future policies. Yet its oil workers must prepare for a future that is much more Arctic, smaller-scale and gas-based.There’s ample evidence to conclude that all the sweet spots of Norway’s continental shelf have been found. The latest shelf licensing round (24) elicited a weak response, with only 11 companies applying for production licenses. There was plenty to bid for—102 blocks were up for grabs (never before did the Norwegian Petroleum Directorate offer so much, with an overwhelming majority of them in the Barents Sea), but due to their remoteness from formations deemed to be the most hydrocarbon-rich, bidders were only half as numerous as they were during the previous licensing round in 2015.Other factors also contributed, including ongoing legal disputes whether drilling in the Arctic breaches Point 112 of Norway’s constitution (“natural resources should be managed based on long-term considerations, safeguarded for future generations”) and questions over the admissibility of drilling in Russia-disputed Svalbard waters (10 blocks) might have scared away an investor or two.

France bans fracking and oil extraction in all of its territories -  France’s parliament has passed into law a ban on producing oil and gas by 2040, a largely symbolic gesture as the country is 99% dependent on hydrocarbon imports. In Tuesday’s vote by show of hands, only the rightwing Republicans party opposed, while leftwing lawmakers abstained. No new permits will be granted to extract fossil fuels and no existing licences will be renewed beyond 2040, when all production in mainland France and its overseas territories will stop. Socialist lawmaker Delphine Batho said she hoped the ban would be “contagious”, inspiring bigger producers to follow suit. France extracts the equivalent of about 815,000 tonnes of oil per year – an amount produced in a few hours by Saudi Arabia. But centrist president Emmanuel Macron has said he wants France to take the lead as a major world economy switching away from fossil fuels – and the nuclear industry – into renewable sources. His government plans to stop the sale of diesel and petrol engine cars by 2040 as well. Above all the ban will affect companies prospecting for oil in the French territory of Guyana in South America, while also banning the extraction of shale gas by any means – its extraction by fracking was banned in 2011. 

France Approves World's First Ban on Fracking and Oil Production -The French parliament passed a law on Tuesday that bans exploration and production of all oil and natural gas by 2040 within mainland France and all overseas territories.  Under the new law, France will not grant new permits or renew existing licenses that allow fracking or the extraction of fossil fuels . French President Emmanuel Macron , who has cast environmental protection as a key presidential policy , celebrated the vote. "Very proud that France has become the first country in the world today to ban any new oil exploration licences with immediate effect and all oil extraction by 2040. #KeepItInTheGround #MakeOurPlanetGreatAgain," he tweeted.  Some, however, consider the gesture largely symbolic as the country is 99 percent dependent on hydrocarbon imports and extracts very little of its own oil and gas. According to Quartz , France produces about 16,000 barrels a day—much less in comparison to Saudi Arabia's output of 10.4 million barrels or Russia's 10.5 million barrels.

Why One Giant Gas Field Is a Big Deal for Egypt - The gas imports which once helped Egypt avert power blackouts may soon be a thing of the past. Eni SpA’s massive "Zohr" natural gas field, the Mediterranean Sea’s largest offshore field, started production earlier this month. Its huge reserves could prove a permanent remedy to the most populous Arab nation’s power needs and bring Egypt closer to its goal of energy self-sufficiency. Discovered in August 2015, Zohr is often described as a "supergiant" field because it has estimated reserves of about 30 trillion cubic feet, equal to the reserves of Israel and Oman combined, making it the largest gas discovery in the Mediterranean Sea. The field covers an area of about 100 square kilometers. On Dec. 16, gas from Zohr began to flow to a facility in Port Said city, with initial production of 350 million cubic feet per day. Daily output is expected to rise to about 1 billion cubic feet in June, and then to 2.7 billion by the end of 2019. President Abdel-Fattah El-Sisi has vowed to tackle the energy shortage as a priority. The project could also eventually enable Egypt to return to exporting gas. Previously, Egypt had sufficient supplies to export gas by pipeline to Jordan and Israel. Gas shortages began after the 2011 uprising against then president Hosni Mubarak.  Sporadic sabotage of its pipeline in the Sinai Desert by Islamist militants also throttled exports.  Zohr’s output is enough to cover the gap between Egypt’s total gas consumption, which stood at 4.9 billion cubic feet per day in 2016, and its total daily production of 4 billion cubic feet, according to data from the BP statistical review. Consumption outstripped production in 2015 reversing a trend of more than a decade. Egypt now imports liquefied natural gas, or LNG, at high costs to meet its energy needs. It first purchased the fuel in 2013. It bought a total of 89 LNG cargoes from international suppliers in fiscal year 2015/2016 at the cost of $2.2 billion, according to the oil ministry. Egypt’s government will issue another tender for LNG purchases in early 2018 to cover needs for the second quarter. It plans to stop importing the fuel by the end of next year because of gas from Zohr, Tarek El-Molla, Egypt’s oil minister, said in a November interview. Initial production from the field has raised Egypt’s gas production to 5.5 billion cubic feet a day, according to oil ministry data.

Feature: Indonesia to postpone LNG imports as domestic output rises -- Indonesia is planning to postpone LNG imports until at least mid-2019 because of more gas produced at the Eni-led Jangkrik field than was expected, leading to more LNG supply from Bontang. The decision could affect the long-term contract between state-owned Pertamina and Houston-based LNG exporter Cheniere Energy. Under the contract, 1.52 million mt/year of LNG was to be supplied from Corpus Christi in Texas from 2018-2019. Since then, the date of first commercial delivery has been redefined as 2019, in line with the project's completion timeline, a Cheniere Energy's spokesman said Wednesday. While long-term LNG contracts tend to lack a mechanism to defer or cancel a significant supply volume, the inherent flexibility of US LNG means offtakers can either resell the volumes to third parties or divert them to alternative markets. Pertamina could resell the LNG to portfolio sellers and take it only when needed, or integrate the volumes into its portfolio for delivery to customers either in Indonesia or elsewhere in Asia, market sources said. Earlier this year, Pertamina was in negotiations with a portfolio seller for the swap of 0.7 million mt of LNG over five years from its contractual offtake commitment with Cheniere. Djohardi Angga Kusumah, Pertamina's senior vice president for gas and power, said in May that an agreement would be signed by the end of 2017, but no updates were available. The swap would take place over the initial five years of Pertamina's 20-year contract with Cheniere, starting from 2018, Kusumah said at the time. The agreement would be similar to another US LNG swaps deal Pertamina signed with France-based portfolio seller Total in February 2016, he added. Under the agreement, Total will buy from 2020 onwards around 0.4 million mt/year of Pertamina's contracted LNG volumes from Corpus Christi LNG. Total will also supply from its global portfolio to Pertamina a volume growing over time from 0.4 million mt/year to 1 million mt/year. Pertamina has contracted to buy more than 4 million mt/year from international markets, with delivery before 2025, including 1.52 million mt/year from Cheniere. The first stage of Cheniere's supply, 0.76 million mt/year, was initially due to start in 2018, and the second from 2019.

Analysis: Soaring Brent pushes Indonesia to process sour crudes in 2018 -- The sustained strength in key Brent crude following the recent shutdown of the North Sea Forties pipeline has encouraged Asian end-users to switch from the expensive sweet crude complex in December, with Indonesia feeling the urge to upgrade its refinery systems next year to handle high sulfur crude oil. Unlike many highly sophisticated refineries in Northeast Asia, Indonesian end-users have limited feedstock procurement options as a majority of the refineries are not capable of handling sour crudes, increasing the pressure on state-owned Pertamina to make the necessary changes to help reduce the country's dependency on costly imported sweet crudes. Last week, Pertamina said it will start to modify its refineries to process more high sulfur crude oil in 2018. The modification program will start next year at the 125,000 b/d Balongan, 260,000 b/d Balikpapan and 348,000 b/d Cilacap refineries, a senior official told S&P Global Platts recently. "We want to upgrade all our refineries gradually to be able to process sour crude. We will not add new units in the refineries but only upgrade the existing ones," Pertamina's refining director Toharso said. "With the modification, we expect our refineries can process either sweet crude or sour crude," Toharso added. 

Putin’s Mr. OPEC Becomes an Oil Market Player - When they meet, they often drive in the same car. When they make a visit together, they tweet the world smiling selfies. And when Alexander Novak, the Russian energy minister, and Khalid Al-Falih, his Saudi counterpart, speak they exchange so many pleasantries that oil investors talk about a “bromance.” While neither man is the ultimate arbiter of oil policy in his country, the blossoming relationship between them has helped to deliver an unprecedented period of cooperation that is re-shaping the global oil market and energy geopolitics. For Al-Falih, the spotlight is natural. But for Novak it is all new: The soft-spoken, poker-faced Russian has now become one of the key voices in global oil markets after Moscow joined forces with OPEC to cut production and lift prices. His role is likely to become even more important over the coming months as the market’s focus shifts toward a possible exit from the cuts. “We now have to literally parse every Novak word—he has become the enigma,” says Helima Croft, global head of commodity strategy at RBC Capital Markets LLC and a former analyst at the Central Intelligence Agency. “Having that role in this market makes him one of the most visible Russian officials.”   Within Russia, Novak is seen as a consummate technocrat: intelligent and hard-working, a shrewd implementer of the Kremlin’s policies in the face of often challenging domestic and international energy politics. “He is one of the most promising people in the government—very smart, level-headed and diplomatic.”  The Russian energy minister demonstrated those qualities at the last OPEC meeting in Vienna, when the cartel agreed to extend output cuts to the end of 2018. Novak was a key driver of the push for Libya and Nigeria, whose surging production earlier this year helped to crash oil markets, to agree to cap their output, according to people familiar with the discussions. He even used Russia’s political ties to help the negotiations with the two countries. That’s unusual: The issue would traditionally be resolved within OPEC, as both countries are members, without the involvement of outsiders.

The Great Oil Swindle by Chris Martenson... When it comes to the story we're being told about America's rosy oil prospects, we're being swindled.  At its core, the swindle is this: The shale industry's oil production forecasts are vastly overstated. And the swindle is not just affecting the US.  It's badly distorted everything from current geopolitics to future oil forecasts. The false conclusions the world is drawing as a result of the self-deception and outright lies we're being told is putting our future prosperity in major jeopardy. Policy makers and ordinary citizens alike have been misled, and everyone -- everyone -- is unprepared for the inevitable and massive coming oil price shock.  Our thesis at Peak Prosperity is that the world’s equity and bond markets are enormous financial bubbles in search of a pin. Sadly, history shows there’s nothing quite as sharp and terminal to these sorts of bubbles as a rapid spike in the price of oil. And we see a huge price spike on the way. As a reminder, the US still remains a net oil importer (more on that below). At approximately 96 million barrels per day of oil consumption, each $10 rise in the price of oil per barrel means that oil consumers have to redirect an additional $960 million dollars each day(!) away from such things as profits, discretionary spending, and debt payments. Instead, that money is sent to the oil producers.  So a future price shock that tacks on an addition $50/bbl to the current price (bringing the total price of oil back over $100/bbl) would translate into $4,800 million ($4.8 billion) per day. That's some $1.7 trillion per year of “redirected spending” that used to go to some other purposes but will now go to oil producers and oil producing nations.  This is why I love quoting Jim Puplava's observation that the price of oil is the new Fed Funds rate.  It has more ability to determine the future of the economy than interest rates.

Factbox: Forecasters offer differing oil outlooks for 2018 -   Three of the most closely watched oil market forecasters have divergent outlooks for next year, especially in terms of demand and the pace of market rebalancing, as seen in their recent monthly reports published earlier this week. The International Energy Agency appeared less cheerful about the prospects for the market balancing in 2018, with a stern warning about growth in supply and demand. "We see that 2018 might not be quite so happy for OPEC producers ... 2018 may not necessarily be a happy new year for those who would like to see a tighter market. Total supply growth could exceed demand growth," the IEA said Thursday. OPEC's statistical arm was not as worried about the supply-and-demand balance, but anticipates much stronger demand for its own crude next year, despite a steady rise in US production. The US Energy Information Administration, in its Short-Term Energy Outlook, was the most optimistic in terms of demand, seeing demand growth of 1.62 million b/d.The IEA continued to maintain a less enthusiastic tone on demand growth for next year at 1.29 million b/d while OPEC's forecast was at 1.51 million b/d. All three expect a steady rise in non-OPEC oil production. led by the US next year. The EIA and IEA expect non-OPEC supply to grow by 1.68 million b/d and 1.60 million b/d, respectively, in 2018. OPEC forecast 990,000 b/d of extra non-OPEC supply to hit the market next year. EIA also forecast that global oil consumption will outpace supply by 370,000 b/d this year, but in 2018, supply will outpace demand by 50,000 b/d. Below are key forecasts for the global oil market from the IEA, EIA and OPEC. The figures are taken from the IEA's Oil Market Report, the EIA's Short-Term Energy Outlook and OPEC's Monthly Oil Market Report, all released earlier this month.

OPEC vs IEA: Who's Right On Oil Prices? -- Last week, the International Energy Agency made a lot of OPEC brows furrow when itwarned that 2018 may not be a very happy new year for the cartel.  U.S. shale supply, the IEA said in its December Oil Market Report, is set to grow more than OPEC has estimated and this could be the undoing of the production cut that boosted prices this year.  OPEC, for its part, has insisted that U.S. shale production won’t grow as much as the IEA says, baffling some observers who now wonder who they should believe.   OPEC has a history of underestimating U.S. shale. This underestimation led to the glut that sank prices in 2014. Now it stands to reason that the cartel is more cautious in its estimates of U.S shale oil developments, but this caution does not necessarily have to be reflected in comments. Let’s not forget that comments from OPEC officials—whether or not grounded in facts—have had a direct and immediate effect on prices from events such as the shutdown of the Forties pipeline network last week.  So, it would make sense to lean more towards what the IEA says, and it says that non-OPEC supply next year will probably rise by 1.6 million bpd—a 200,000 bpd upward revision on the previous OMR. U.S. shale production alone will, according to IEA’s latest estimate, grow by 870,000 bpd in 2018. Meanwhile, demand will rise by 1.3 million barrels daily next year, hinting at another glut in the making.   Now, OPEC’s last forecast is that non-OPEC supply next year will rise by just 990,000 bpd next year to 58.81 million bpd, although the group does caution that any non-OPEC supply growth forecast involves considerable uncertainties regarding U.S. shale production growth. For the U.S. specifically, OPEC forecasts a 1.05-million-barrel daily supply growth next year, which will be partially offset by declines in producers such as Russia, China, and Mexico, among others.  That’s quite a discrepancy between IEA and OPEC figures, but it’s not the only one.The two more notably disagree on when the glut will be over. IEA is skeptical about it disappearing before the end of next year, while OPEC is upbeat, believing the market will return to balance in the second half of 2018 as demand growth accelerates.   Sometimes OPEC’s forecasts sound like developments that the cartel can will into existence, and this market rebalancing forecast is one of these cases. It’s true that some OPEC members have been very diligent in their compliance to the lower production quotas. Others not so much, so those from the first group have actually cut more than they agreed to in order to compensate for the non-compliant ones.

Hedge funds show signs of exhaustion in oil: Kemp - (Reuters) - Hedge fund managers have boosted their bullish positions in Brent futures and options in response to the shutdown of the Forties oil pipeline, according to an analysis of regulatory and exchange data.But bullishness in Brent cannot completely conceal the increasing staleness of long positions in the rest of the rest of the petroleum complex, as prices fail to rise further and the end of year approaches.Portfolio managers raised their net long position in Brent by 10 million barrels to a record 544 million barrels in the week ending on Dec. 12 ( positions in Brent rose by 8 million barrels, which was relatively modest given the complete outage of the Forties pipeline system, while short positions were trimmed by 1 million barrels.But across the five major petroleum contracts as a whole, which include NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil, as well as Brent, the net long position was cut by 3 million barrels.Net long positions in WTI and gasoline were each cut by 8 million barrels with only heating oil up by 3 million barrels.Hedge funds' net long position in gasoline has been cut by 26 million barrels or 26 percent over the last four weeks.There has been no real increase in hedge fund positions in petroleum since the second half of November, as managers become more cautious following the big rise in prices since June.The near-record number of long positions in petroleum has itself become a significant source of downside risk if and when hedge fund managers attempt to realise some profits.Fund managers still hold more than eight long positions in petroleum for every short position, up from a ratio of less than 2:1 at the end of June.In the past, such lopsided positioning has often preceded a sharp reversal in prices when hedge fund managers attempt to crystallise some of their paper gains.

Oil prices rise on ongoing North Sea outage, Nigeria strike  (Reuters) - Oil prices rose on Monday amid an ongoing North Sea pipeline outage and because a strike by Nigerian oil workers threatened its crude exports. Signs that booming U.S. crude output growth may be slowing also supported crude prices, although the 2018 outlook still points to ample supply despite production cuts led by OPEC. Brent crude futures, the international benchmark for oil prices, were at $63.72 a barrel at 0821 GMT, up 49 cents, or 0.8 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $57.70 a barrel, up 40 cents, or 0.7 percent. The higher prices came on the back of a strike by Nigerian oil workers and the ongoing North Sea Forties pipeline system outage, which provides crude that underpins the Brent benchmark. North Sea operator Ineos declared force majeure on all oil and gas shipments through its Forties pipeline system last week after cracks were found. "The force majeure ... is acting as a major prop for crude," In Nigeria, the Petroleum and Natural Gas Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, started industrial action on Monday after talks with government agencies ended in deadlock, potentially hitting the country's production and exports. "Oil prices are getting a bounce... as the Nigerian oil union talks have hit an impasse and will begin strike action," In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday. Despite the dip in drilling, activity is still well above this time last year, when the rig count was below 500, and actual U.S. production has soared by 16 percent since mid-2016 to 9.8 million barrels per day (bpd). This means U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively. 

US oil benchmark ends slightly lower -- Oil futures saw a mixed finish Monday, with the U.S. benchmark slipping in quiet trade to close in negative territory.West Texas Intermediate crude oil for January delivery the U.S. benchmark, declined 14 cents, or 0.2%, to end at $57.16 a barrel after earlier trading as high as $57.78.Brent oil for February, the global benchmark, gained 18 cents, or 0.3%< to close at $63.41 a barrel.The moves mirrored a mixed session on Friday, when WTI rose 0.5%, but Brent shed 0.1%.,There was no clear catalyst for the turn lower for WTI. Analysts noted that Nigerian oil workers suspended a strike, according to Bloomberg, agreeing to reopen negotations with management next month. Position squaring ahead of the expiration Tuesday of the January WTI contract may have played a role, traders said.U.S. futures had already turned lower when the U.S. Energy Information Administration forecast crude production from seven major shale regions would grow by 94,000 barrels a day in January.The earlier optimism for the U.S. benchmark came after Baker Hughes reported that the number of active U.S. rigs drilling for oil was down 4 at 747 last week, breaking a three-week string of rising rig numbers. A drop in rigs implies a slowdown in drilling activity, which is usually boost oil prices. Brent was underpinned by the closure of North Sea Forties pipeline due to a power outage. “The outage of the North Sea’s most important oil and gas pipeline is continuing to lend support,” analysts at Commerzbank said in a note. “As a result, there is currently a lack of a good 400,000 barrels per day of Forties oil, the leading oil type in the Brent basket. This should preclude any fall in the Brent price for the foreseeable future,” they added. In other energy products on Monday, gasoline rallied 1.1% to $1.6725 a gallon, while heating oil climbed 1.1% to $1.9252 a gallon. Natural gas jumped 5.1% to $2.745 per million British thermal units, rebounding from a nearly 10-month closing low set Friday. The bounce came after forecasts were revised to show much colder than previously expected temperatures across much of the U.S. in the latter part of this month and early January, according to analysts at TFS Energy.

Oil near $57 on expectations of lower crude stockpiles - Houston Chronicle: Oil traded near $57 a barrel for a third day before data expected to show that surplus crude inventories in the U.S. continued to diminish as global markets rebalance. Futures rose 0.7 percent in New York after slipping 0.2 percent on Monday. Inventories probably lost 3 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Nigerian oil workers suspended strike action and agreed to continue talks next month, while output from a Libyan field returned to normal after a power outage. Oil has rallied the past three months as the Organization of Petroleum Exporting Countries and its allies reduce supply to drain a global glut. The unprecedented cooperation among producers, which has now been extended until the end of 2018, has crude prices on their way to a second annual advance. "As long as the agreement between Saudi Arabia and Russia holds to curb production, oil prices will stay in the region of $60," Paolo Scaroni, vice-chairman of NM Rothschild & Sons and former chief executive officer of Eni SpA, said in a Bloomberg television interview on Tuesday. "Oil prices are also OK for the shale-oil producers, which need a price of around $60 if they want to make some money. In total, the situation is stable." West Texas Intermediate for January delivery, which expires Tuesday, added 37 cents to $57.53 a barrel on the New York Mercantile Exchange. Total volume traded was about 52 percent below the 100-day average. The more-active February futures rose 34 cents to $57.56 at 12:58 p.m. in London.

 Oil Market On Edge Following Outages - Oil prices initially rose on Monday on news that Nigerian oil workers went on strike, raising fears of a supply outage. The strike was called off, however, leading to a selloff in oil prices. But the lingering outage of the Forties pipeline continues to support Brent prices. Nigeria oil workers’ strike begins…and ends. A union for Nigerian oil workers declared a strike on Monday on demands for improved working conditions went unaddressed, raising questions about supply outages in the African nation. Last year, a strike at an ExxonMobil (NYSE: XOM) project temporarily idled more than 500,000 bpd. This week’s strike affected workers at dozens of oil companies. However, the strike was also called off on Monday as talks seemingly started to get somewhere, although details remain sparse. The issue is important for the global oil market – an outage at a major oil producing country could lead to sharply higher prices, particularly with the market making substantial progress at lowering inventories. The EIA’s Drilling Productivity Report predicts a rise of 94,000 bpd in U.S. oil supply in January, compared to December. The gains will be led by the Permian Basin with a 68,000-bpd increase, with smaller contributions from other shale plays. The estimate shows that U.S. shale (the Permian, mostly) is still growing strongly. Western Canada Select prices have melted down this month, as rising supply is bumping up against a lack of pipeline infrastructure. WCS normally trades at a discount to WTI, often by $10 to $15 per barrel, but the discount widened sharply to as much as $28 per barrel in the last week. Alberta oil producers are suffering from this steep discount, and although crude is increasingly moving by rail (for a heftier fee), rail companies cannot entirely resolve the issue. Rail companies don’t want to make investment decisions that could span decades for a problem that might only last a few years. With new pipeline capacity a few years away at least, the steep discount for Canadian oil could linger for a while. The capacity shortage is expected to grow worse – Canada’s oil sands will add 315,000 bpd of new supply in 2018 and 180,000 bpd in 2019.

Oil Gains as Pipeline Outage Continues | Fox Business: Oil prices rose Tuesday, helped in part by the continuing outage of a North Sea pipeline and reports that Russia's largest oil company could envision continuing production curbs past 2018. U.S. crude futures traded up 30 cents, or 0.52%, at $57.46 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 39 cents, or 0.62%, to $63.80 a barrel on ICE Futures Europe. Russian oil giant PAO Rosneft is "contemplating cuts beyond 2018, which is probably supporting things a bit," said Thomas Pugh, commodities economist at Capital Economics. The Organization of the Petroleum Exporting Countries and 10 producers outside the cartel, including Russia, agreed late last month to extend an accord to hold back nearly 2% of crude production through the end of 2018. The deal, first agreed a year ago, was meant to rein in a global supply glut that has weighed on prices since 2014. Pavel Fedorov, PAO Rosneft's first vice president, reportedly said that an OPEC-led agreement to curb crude output "could be extended" after it expires at the end of next year, according to Reuters. Oil prices have also been propped up since the closure of the Forties Pipeline System in the North Sea last week. The outage, which could last for weeks, stops the flow of around 450,000 barrels of North Sea oil a day.

WTI/RBOB Extend Gains After Bigger Than Expected Crude Draw -- WTI/RBOB inched higher on the day ahead of tonight's API data and then WTI knee-jerked higher as the data showed a much-bigger-than-expected 5.2mm crude draw.API

  • Crude -5.2mm (-440k exp)
  • Cushing +70k
  • Gasoline +2.001mm (+2.45mm exp)
  • Distillates -2.85mm (+250k exp)

A very mixed bag as the series of crude draws continues and gasolines builds... “Export numbers have definitely been stronger than anything we’ve seen in recent history,” says Brad Hunnewell, senior equity analyst at Rockefeller. “That’s going to be an important driver to watch.” WTI/RBOB prices had lifted into the API print buit the machines got very confused as the data hit with RBOB dropoping before joining crude higher...

 Brent prices caught in the calm before the storm? Kemp (Reuters) - Crude oil traders have started to price in the resumption of North Sea shipments on the Forties pipeline, with spot prices stalling and nearby calendar spreads returning to levels before the pipeline was shutdown.Pipeline owner Ineos is working on several repair options and said it expects operations to resume within 2-4 weeks of the original shutdown on Dec. 11 ("Ineos awaiting custom parts to fix Forties oil pipeline", Reuters, Dec. 19). Brent futures for delivery in February have eased back to under $64 per barrel from a high of almost $66 immediately after the shutdown, and are no higher than they were at the start of November.The February-March calendar spread has shrunk to just 31 cents backwardation from a peak of nearly $1 per barrel, and is almost back to where it was before the rupture ( spreads for the first six months have continued to tighten, but in line with the pre-shutdown trend, and now show little impact from the disruption.The strong and consistent rally in crude and products prices between the end of June and early November appears to have petered out, at least for the time being.Hedge funds and other money managers are sitting on a record bullish position in Brent futures and options and a near-record position in crude and products derivatives more generally.But with the exception of Brent, there has been no significant advance in positions in U.S. crude, gasoline and heating oil, as well as in European gasoil since the second half of November.In fact, hedge funds have lightened their bullish positions in WTI, gasoline and European gasoil since the end of last month, as fund managers have taken some profits after the rally. The build up of a massive bullish long position in oil and the limited number of short positions that remain to be covered as itself become a major risk to prices.

WTI/RBOB Algos Confused As Crude Draws, Gasoline Builds, & Production Jumps Again --WTI/RBOB held gains overnight following API's reported crude draw (despite the gasoline glut) but after DOE confirmed a 5th weekly crude draw and 6th weekly gasoline build, algos were confused with prices chaotic. Production hit a new record high.North Sea and Canadian crude supply disruptions are suppressing U.S. imports and encouraging exports. DOE:

  • Crude -6.5mm (-3.15mm exp)
  • Cushing +754k
  • Gasoline +1.24mm (+2.3mm exp)
  • Distillates +769k (+250k exp)

This is the 5th weekly draw in crude in a row (and sixth weekly build in gasoline), perhaps the unexpected build in Distillates is spooking markets...  Bloomberg Intelligence energy analyst Fernando Valle: Heightened U.S. refinery utilization is shifting the supply glut from crude inventories to refined products, particularly gasoline. Exports have risen, but are not enough to offset higher production and a seasonal demand slowdown.Distillate demand, on the other hand, is rising, domestically and abroad.Crack spreads have stayed near $20 a barrel since Hurricane Harvey, which may lead refiners to shift gasoline yield toward distillates. Total crude inventories are the lowest since Oct 2015 (but as is clear remain well elevated from old norms)...

What Will Drive The Next Oil Price Crash? - As we roll into 2018, analysts and investors are more optimistic that the oil market will further tighten next year and support higher oil prices, but rising U.S. shale production will likely cap any significant price gains.  On the demand side, expectations are that global economic growth will support solid oil demand growth.  On the supply side, Venezuela’s dire situation, possible new sanctions on Iran, and increased tension in the Middle East mostly with the Saudi-Iran issues and the Iraq-Kurdistan standoff may take more barrels off the market than OPEC and friends plan, and send geopolitical jitters through the oil market. However, according to energy policy expert Michael Lynch, there remain three potential events in the markets that could send oil prices tumbling. These include a large correction in the U.S. stock market that could spread to a sell-off in commodities; one of the OPEC members or Russia breaking away from the unusually strong compliance to the cuts we have seen so far; and U.S. oil production rising so much as to make OPEC see it as a threat to its long-term oil market share. In markets, there are already some signs that we may be seeing some bubbles,Bitcoin being the most likely candidate, according to Lynch. In addition, the price to earnings ratio of the S&P 500 index is now over 25, well above the mean historical average of just over 15. Last week, Fed Chair Janet Yellen said, referring to the high valuation in some asset classes, “the fact that those valuations are high doesn’t mean that they are necessarily overvalued.” According to VTB Capital’s Global Macro Strategist Neil MacKinnon, the ultra-low volatility in U.S. equities this year is “very vulnerable” to shocks, and current stability could actually bring future instability.According to Lynch, if the U.S. market moves into bear territory next year with a big correction, it could spread the financial contagion to commodities such as oil. Another potential threat to oil prices is that of an OPEC/non-OPEC pact participant beginning cheating outright—Iraq and Russia, for example—which could lead to the Saudis deciding to let the price of oil drop, Lynch argues.

Oil Prices Rise After Strong Crude Inventory Draw - The Energy Information Administration reported yet another inventory draw for last week, making it the fifth one in a row with falling inventories. The authority said inventories had gone down by 6.5 million barrels, to 436.5 million barrelsAnalysts had expected a draw of 4.5 million barrels, more modest than API’s latest estimate that pegged crude oil inventories 5.2 million barrels lower last week.Yet traders are not only watching crude oil inventory movements: gasoline stockpiles last week jumped by 1.2 million barrels, the EIA said. This could dampen the bullish mood among market participants, though not by much as there are other events speculators are watching, such as the growth in U.S. shale production and international politics. Last week the bullish bets on WTI stood at a nine-month high, data from CFTC showed.Refineries processed 17.1 million barrels of crude per day last week and produced 10.1 million barrels per day of gasoline, unchanged from the week before.Interestingly, as inventories have been falling over the past five weeks, production of crude oil in the United States has been growing. The daily rate reached 9.78 million barrels in the week to December 8, from 8.95 million bpd at the start of the year. All forecasts point to a consistent further increase in U.S. production, which may well undermine OPEC and Russia’s production cut efforts. Meanwhile, WTI has been benefitting by the Forties pipeline shutdown, although the shutdown’s impact on Brent, the international benchmark, has been more pronounced. Earlier this week, Ineos, the operator of the pipeline, said the shutdown could last for a month as custom parts needed to be made. According to Bloomberg, the shutdown could take some 5.5-13 million barrels from global oil markets for the duration.

Oil prices stable on lower US crude stocks, but rising output weighs - Oil prices were stable on Thursday after posting strong gains late in the previous session on the back of a drop in US crude inventories.Another rise in US oil production, which is close to breaking through 10 million barrels per day (bpd) is capping crude prices as it undermines efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to tighten the market through withholding output this year and next.US West Texas Intermediate (WTI) crude futures were at $58.05 a barrel at 0126 GMT, down 3 cents from their last settlement. Brent crude futures, the international benchmark for oil prices, were at $64.58 a barrel, down 8 cents.   Both crude benchmarks gained around 1 per cent during the previous session. Traders said falling US crude oil inventories were supporting the market. US crude inventories fell by 6.5 million barrels in the week to December 15, the Energy Information Administration (EIA) said on Wednesday. Overall crude stocks, excluding the US Strategic Petroleum Reserve, fell to 436 million barrels, the lowest since October, 2015.The rebalancing of supply and demand is a result of OPEC and Russian led voluntary production cuts. Despite this, the energy minister of Saudi Arabia, the world's top crude exporter and OPEC's de-facto leader, said it would take more time to rein in the global supply overhang, which was created by strong global production increases in the years up to 2015.

OPEC starts working on oil supply cut exit strategy: sources (Reuters) - OPEC has started working on plans for an exit strategy from its deal to cut supplies with non-member producers, two OPEC sources said, a sign that an eventual winding down of the deal is coming onto producers’ radar, at least in theory. The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers on Nov. 30 extended an oil output-cutting deal until the end of 2018 to finish clearing a glut. But the market is increasingly interested in how producers will exit the deal once the excess is cleared. Two OPEC sources said the group’s secretariat in Vienna has been tasked to work on a plan with different options and it was too early now to say what the plan would look like. “It’s a continuity strategy, rather than exit,” one of the OPEC sources said. Oil prices have rallied this year and are trading near $64 a barrel, close to the highest since 2015, supported by the OPEC-led effort. This is above the $60 floor that sources say OPEC would like to see in 2018. Publicly, OPEC ministers say it is too early to talk of an exit strategy. But OPEC has said producers want to continue working together beyond the end of 2018, including on supply management. While oil prices have risen to levels seen as favorable by OPEC, the stated goal of the supply cut is to reduce inventories in developed economies, which built up after a supply glut emerged in 2014, to the level of the five-year average. OPEC is making progress and said in October OECD inventories stood 137 million barrels above the five-year average. Since the start of deal in January, the overhang relative to that average is down by 200 million barrels, Kuwait’s oil minister said on Wednesday. [OPEC/M] A discussion on exiting the deal may be needed before December 2018 if, as OPEC expects, the world oil market returns to balance by late 2018. OPEC and its allies hold their next full ministerial meeting in June, which will be a opportunity to review progress. 

 Brent up to 2015 high on hopes OPEC will not end supply cuts abruptly - Brent oil prices edged up enough on Thursday to close at the highest since the summer of 2015 as OPEC started working on plans for an exit strategy from its deal to cut crude supplies, fueling hopes it would not end supply cuts abruptly. The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers on Nov. 30 extended an oil output-cutting deal until the end of 2018 to finish clearing a glut. But the market is increasingly interested in how producers will exit the deal once the excess is cleared.*:nL8N1OK2O6 Two OPEC sources said the group's secretariat in Vienna has been tasked to work on a plan with different options and it was too early now to say what the plan would look like. "Fading prospects for a hard exit from the (OPEC) deal has provided some support to prices," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London, noting global oil markets were expected to be volatile next year as details pertaining to an exit strategy emerge. Brent futures LCOc1 gained 34 cents, or 0.5 percent, to settle at $64.90 a barrel, while U.S. West Texas Intermediate crude CLc1 rose 27 cents, or 0.5 percent, to settle at $58.36 per barrel. That was the highest close for Brent since June 2015 and for WTI since Nov. 24. Earlier Thursday, crude prices were trading down after the operator of Britain's Forties pipeline in the North Sea said it was expected to restart in early January after repairs over Christmas.

Forties Pipeline System Repairs Scheduled to Complete by Christmas - Ineos revealed Thursday that repair work on the Forties Pipeline System (FPS) is scheduled to complete around Christmas, based on current estimates. The company expects to bring the pipeline progressively back to normal rates early in the new year and has already initiated the planning phase necessary to begin recommissioning the system. “Ineos continues to work with the emergency services, relevant authorities and regulators as it implements the code compliant repairs on the FPS pipeline,” Ineos said in a company statement. “We apologize to our customers and the local community for the issues that this creates and we are working hard to minimize the impact of the pipeline closure as far as possible,” Ineos added. A controlled shutdown of the FPS was implemented on December 11, after a hairline crack was found in the system at Red Moss, south of Aberdeen. Earlier this month it was revealed that independent oil and gas firms EnQuest plc and Premier Oil plc could lose millions of dollars in the event of a prolonged shut down of the FPS. 

UK's Forties North Sea oil pipeline should fully restart in early Jan -Ineos (Reuters) - One of the biggest and most important oil pipelines in the North Sea, Britain’s Forties pipeline, should restart in early January after repairs of a crack over Christmas, the pipeline’s operator Ineos said on Thursday. “Work on the pipeline is progressing well and based on current estimates Ineos is planning to complete the repair around Christmas,” it said in a statement. “Ineos has initiated the planning phase necessary to begin recommissioning the system, including the Kinneil facility, as soon as the pipeline repair is complete.” ”Initially a small number of customers will send oil and gas through the pipeline at low rates as part of a coordinated plan that allows Ineos to carefully control the flow into the system. “Based on current estimates the company expects to bring the pipeline progressively back to normal rates early in the new year,” Ineos said. 

OilPrice Intelligence Report: Christmas Brings Quiet To The Oil Markets: Oil prices were flat amid light trading at the end of the week after strong gains on Thursday. The EIA reported some mixed figures – more strong oil production gains from the U.S., but also a sizable drawdown in crude inventories. The approaching holidays has the market subdued.  Saudi oil minister Khalid al-Falih told Reuters that the inventory surplus will be eliminated in the second half of 2018, and the earliest date to reassess the market will be at the OPEC meeting in June. And while the IEA has forecasted strong supply growth next year from U.S. shale, al-Falih says demand will help drive the market towards rebalancing. “[T]he untold story is demand. Demand has been extremely healthy in the last couple of years. 2017 will prove to be a very robust year in terms of demand and we expect that momentum to continue,” al-Falih said. Separately, Reuters reported that OPEC has quietly started working on an exit strategy behind the scenes, and the group will reportedly consider several options. “It’s a continuity strategy, rather than exit,” one of the OPEC sources told Reuters The operator of the Forties pipeline system, Ineos, said that the pipeline will be repaired by Christmas and will restart operations by January. “Based on current estimates the company expects to bring the pipeline progressively back to normal rates early in the new year,” Ineos said.  CEO Bob Dudley told the FT that he isn’t worried about shale threatening conventional oil producers in the long-term. He argued that shale won’t be able to grow forever, so the threat to permanently low oil prices is not as big as most people think. “There are cracks appearing in the model of the Permian being one single, perfect oilfield,” he said. Over the long run, that could diminish shale’s importance. “I don’t think [U.S. shale] will be the perfect swing producer now,”

Oil Prices Stable On Flat Oil Rig Count - The number of active oil and gas rigs rose this week, according to Baker Hughes data, increasing by 1 rig, for a total of 931 rigs currently in operation in the United States—278 rigs above this time last year.The number of oil rigs in the U.S. stayed the same, while the number of gas rigs climbed by 1. The number of oil rigs stands at 747 versus 523 a year ago. The number of gas rigs in the U.S. now stands at 184, up from 129 a year ago.For Canada’s part, the number of oil and gas rigs fell hard, by 28 rigs, with gas and oil rigs each falling by 14.At 1:00pm EST, the price of a WTI barrel was down $0.11 (+0.19 percent) to $58.25, while the Brent barrel was trading up $0.16 (-0.11 percent) to $64.50. Prices had come off a previous years-ago high earlier on Friday, as rising US output and news surfaced that Forties will be back up and running at normal capacity in early January.The hotspot Permian Basin gained one rig for the week, but things are looking up for the Permian, as Kinder Morgan announced on Thursday that, with its partners, it will go ahead with its $1.7 billion gas pipeline project that will alleviate existing bottlenecks that prevent more gas from flowing out of the basin.US crude oil production continues to climb a weekly basis, placing further pressure on prices. U.S. crude oil production for the week ending December 15 was 9.789 million barrels per day—another record for 2017, and the ninth straight weekly increase.  At 1:06pm EST, WTI was trading at $58.26 with Brent trading at $64.49.

U.S. oil extends win streak to 4 days as rig count remains stable - Oil futures erased modest losses Friday to end with gains after data showed the number of U.S. oil rigs remained steady this week. West Texas Intermediate crude for February delivery on the New York Mercantile Exchange rose 11 cents, or 0.2%, to settle at $58.47 a barrel. The U.S. benchmark posted a 2% rise for the week, marking its first weekly gain in three weeks. February Brent crude , the global benchmark, rose 35 cents, or 0.5%, to end at $65.25 a barrel, marking a 3.2% weekly advance. Volume was light ahead of the Christmas holiday on Monday. The gains saw WTI futures extend a win streak to four sessions, while Brent has risen for five straight. Read:When do financial markets close for Christmas? ( Baker Hughes said the number of U.S. oil rigs was unchanged at 747 this week. Traders are keeping an eye on the count amid concerns shale producers could move to ramp up production next year in response to higher prices. That said, it was the shutdown of the Forties Pipeline System in the North Sea that was the main focus for oil traders this week. The pipeline was shut down last week after operator Ineos discovered a hairline crack in a pipe, stopping the flow of 450,000 barrels of North Sea oil a day. That tightening of supply had buoyed prices over the past week. But Ineos said Thursday it expects to bring pipeline flows "progressively back to normal rates" early in the New Year. "Doing the simple arithmetic, if the pipeline restarts on 1 January, the outage will have resulted in a loss of 8.4 [million barrels] (21 days at 400,000 barrels a day); if the pipeline restarts on 8 January, the outage will be 11.2 Mb (28 days at 400 kb/d). The actual number will depend not only on the dates and the pipeline, but also on the pace of ramp-up of the oil fields themselves," which doesn't alwasy go smoothly, said Societe Generale oil analyst Michael Wittner, in a Friday note. Crude prices have risen more than 20% since September, as a result of renewed geopolitical risk to supply in the Middle East, declining global inventories and OPEC's ongoing efforts to curb production.

Saudi energy minister: Premature to discuss changes in OPEC-led pact (Reuters) - Saudi Arabia’s energy minister said it is premature to discuss any changes to the OPEC-led supply cut pact as market rebalancing is unlikely to happen until the second half of 2018 even with the current outage of the North Sea Forties pipeline. Any potential exit from current cuts would be done gradually once the market returns to balance but drawing down inventories will still take more time, Khalid al-Falih told Reuters on Wednesday. “We haven’t seen any major declines in inventories that we didn’t expect. As we said last month, we still have approximately 150 million barrels of overhang, and it is going to take the second half 2018 to draw that down,” Falih said. “We expect the first few months of 2018 to be either flat or a build (in inventories) as it is typically the case with the seasonality with the oil market especially on the demand side,” he said in an interview in Riyadh. “So I think it is premature to discuss any potential changes in our course, and the earliest opportunity to assess where the market is in a major way would be in June.” OPEC and 10 other producers led by Russia last month extended an agreement to cut oil production by 1.8 million bpd until the end of next year. The alliance is targeting the elimination of an oil glut to bring global oil inventories back to the industry’s five-year average. Crude prices firmed on Wednesday, supported by a larger-than-expected drop in U.S. inventories and the continued outage of Britain’s North Sea Forties pipeline system. Falih, who holds the OPEC presidency this year, said he does not expect the shutdown of the key North Sea pipeline to affect supply significantly. 

Saudi Economy Contracts For First Time In 8 Years, Unveils Record Spending Spree To Boost Growth --Back when oil was at $100 and above, the Saudi economy was firing on all cylinders, and nobody even dreamed that the crown jewel of Saudi Arabia - Aramaco - would be on the IPO block in just a few years. However, with oil stuck firmly in the $50 range, things for the Saudi economy are going from bad to worse, and today Riyadh - when it wasn't busy preventing Yemeni ballistic missiles from hitting the royal palace - said its economy contracted for the first time in eight years as a result of austerity measures and the stagnant price of oil, as the Kingdom announced record spending to stimulate growth. OPEC's biggest oil producer said 2017 GDP shrank 0.5% due to a drop in crude production, as part of the 2016 Vienna production cut agreement, but mostly due to lower oil prices. The last time the Saudi economy contracted was in 2009, when GDP fell 2.1% after the global financial crisis sent oil prices crashing. Riyadh also posted a higher-than-expected budget deficit in 2017 and forecast another shortfall next year for the fifth year in a row due to the drop in oil revenues: the finance ministry said it estimates a budget deficit of $52 billion for 2018. More surprising was the Saudis announcement of a radically expansionary budget for 2018,projecting the highest spending ever despite low oil prices in a bid to stimulate the sluggish economic, saying it expects the GDP to grow by 2.7%. While we wish Riyadh good luck with that, we now know why confiscating the wealth of ultra wealthy Saudi royals was a key component of the country's economic plan...

Saudi Arabia Sees Non-Oil Economy Rebounding on State Spending - Saudi Arabia Arab expects its economy to rebound in 2018, a crucial year for Prince Mohammed bin Salman’s blueprint for the post-oil era, as authorities ease an austerity drive that hurt growth. The non-oil economy, the engine of job creation in the kingdom, is expected to grow “north of 3 percent,” Finance Minister Mohammed Al-Jadaan said in an interview with Bloomberg TV in Riyadh on Tuesday. That’s twice the 2017 rate. After two years of austerity, Saudi officials rolled out plans that seek to balance the need to rebuild state coffers while avoiding crippling private businesses. An expanding economy could make it easier to advance key elements in the prince’s long-term plan in 2018, including selling a stake in state-run oil giant Aramco to help create the world’s largest sovereign wealth fund. The government plans to raise total spending to 1.1 trillion riyals ($293 billion) from 926 billion in 2017. The increase will help counter revenue-boosting measures, such as the introduction of value-added taxation and a levy paid by companies on expat workers. Overall growth is expected to rebound to 2.7 percent after lower oil prices drove a 0.5 percent contraction in 2017.

Mohammed bin Salman’s ill-advised ventures have weakened Saudi Arabia’s position in the world - Crown Prince Mohammed bin Salman (MbS) of Saudi Arabia is the undoubted Middle East man of the year, but his great impact stems more from his failures than his successes. He is accused of being Machiavellian in clearing his way to the throne by the elimination of opponents inside and outside the royal family. But, when it comes to Saudi Arabia’s position in the world, his miscalculations remind one less of the cunning manoeuvres of Machiavelli and more of the pratfalls of Inspector Clouseau. Again and again, the impulsive and mercurial young prince has embarked on ventures abroad that achieve the exact opposite of what he intended. When his father became king in early 2015, he gave support to a rebel offensive in Syria that achieved some success but provoked full-scale Russian military intervention, which in turn led to the victory of President Bashar al-Assad. At about the same time, MbS launched Saudi armed intervention, mostly through airstrikes, in the civil war in Yemen. The action was code-named Operation Decisive Storm, but two and a half years later the war is still going on, has killed 10,000 people and brought at least seven million Yemenis close to starvation. The Crown Prince is focusing Saudi foreign policy on aggressive opposition to Iran and its regional allies, but the effect of his policies has been to increase Iranian influence. The feud with Qatar, in which Saudi Arabia and the UAE play the leading role, led to a blockade being imposed five months ago which is still going on. The offence of the Qataris was to have given support to al-Qaeda type movements – an accusation that was true enough but could be levelled equally at Saudi Arabia – and to having links with Iran. The net result of the anti-Qatari campaign has been to drive the small but fabulously wealthy state further into the Iranian embrace. Saudi relations with other countries used to be cautious, conservative and aimed at preserving the status quo. But today its behaviour is zany, unpredictable and often counterproductive: witness the bizarre episode in November when the Lebanese Prime Minister Saad Hariri was summoned to Riyadh, not allowed to depart and forced to resign his position. The objective of this ill-considered action on the part of Saudi Arabia was apparently to weaken Hezbollah and Iran in Lebanon, but has in practice empowered both of them. What all these Saudi actions have in common is that they are based on a naïve presumption that “a best-case scenario” will inevitably be achieved. There is no “Plan B” and not much of a “Plan A”: Saudi Arabia is simply plugging into conflicts and confrontations it has no idea how to bring to an end.   

Saudi Government Seeks "Amicable Exchange" - $6 Billion For al-Waleed's Freedom -- In case you were wondering what the going-rate was for one of the world's richest men's freedom... it's $6 billion... in unencumbered cash (not Bitcoin). That is the price that Saudi authorities are demanding from Saudi Prince al-Waleed bin Talal to free him from detention. The 62-year-old prince was one of the dozens of royals, government officials and businesspeople rounded up early last month in a wave of arrests the Saudi government billed as the first volley in Crown Prince Mohammed bin Salman’s campaign against widespread graft.According to the Mail, al-Waleed, who is (or was, until recently) one of the richest men in the world, has also been hung upside down and beaten. The Saudi government has disclosed few details of its allegations against the accused,but as The Wall Street Journal reports, people familiar with the matter said the $6 billion Saudi officials are demanding from Prince al-Waleed, a large stakeholder in Western businesses like Twitter, is among the highest figures they have sought from those arrested.While the prince's fortune is estimated at $18.7 billion by Forbes - which would make him the Middle East’s wealthiest individual - he has indicated that he believes raising and handing over that much cash as an admission of guilt and would require him to dismantle the financial empire he has built over 25 years.Prince al-Waleed is talking with the government about instead accepting as payment for his release a large piece of his conglomerate, Kingdom Holding Co., people familiar with the matter said. The Riyadh-listed company’s market value is $8.7 billion, down about 14% since the prince’s arrest.

Saudi Arabia's Crown Prince, who is leading a crackdown on corruption, bought the world's priciest home -- Saudi Arabia's Crown Prince Mohammed bin Salman has been revealed to be the owner of the world's priciest residence.  The extravagant Chateau Louis XIV sold in 2015 to an unnamed Middle Eastern buyer for over $299 million, making it the most expensive residence in the world at the time — and Salman acquired the 57-acre estate through a Saudi-owned investment company managed by his personal foundation, The New York Times reported, citing documents and interviews.  The Times reported that the chateau was purchased through a series of proxy companies in France and Luxembourg, allowing Salman to maintain his anonymity. Those companies are owned by Eight Investment Company, a firm managed by the head of Salman's personal estate, according to the report.  Advisers to the royal family say the megamansion belongs to Salman, the report says.  The villa is part of a series of high-scale acquisitions for Salman, including a $500 million yacht and a luxury vacation palace in Morocco.  The lavish chateau, near the Palace of Versailles, was constructed over three years by Cogemad, an ultraluxury developer.

Saudis Intercept Houthi Ballistic Missile Targeting Riyadh Royal Palace -- For the third time in roughly seven weeks, Houthi rebels have fired a ballistic missile at the Saudi capital of Riyadh, according to a spokesperson. This time, the target was al-Yamamah palace in the Saudi capital. US President Donald Trump notably held meetings with the Saudi king at the al-Yamamah palace during his May trip to the kingdom. Witnesses in Riyadh reported hearing a blast and seeing a plume of smoke. Saudi security officials did not immediately comment on the incident, according to Haaretz.Loud boom heard in central Riyadh -- big enough that we felt it shake our tower. No official statement on cause yet. We're looking into it. #???_??????_??_??????— Vivian Nereim (@viviannereim) December 19, 2017 Houthis launched two ballistic missiles at Saudi Arabia in November, but neither hit their targets. One was reportedly fired at King Khalid International Airport in Riyadh while the other was fired at a Saudi oil refinery.According to Russia Today, the Saudi-led coalition that has been battling the rebels in Yemen has reportedly shot down the missile, according to Russia Today. Saudi state TV claimed the missile – a Burkan 2H ballistic missile - was intercepted by Saudi defenses…

The Fight For Syria's Last Al Qaeda Holdout: Russian Jets Launch Nonstop Airstrikes Over Idlib -- The Russian Aerospace Forces launched a large number of airstrikes over the southern countryside of the Idlib Governorate overnight on Thursday, targeting the positions of Hayat Tahrir Al-Sham (HTS/al-Nusrah) around the town of Abu Dali. Russian jets flying out of the Hmaymim Military Airbase began their attack by launching airstrikes over the towns of Abu Dali and Musharifah. Not long after launching this attack, the Syrian Army was able to overwhelm the jihadist rebels of Hayat Tahrir Al-Sham that were attempting to defend the town; they would then retreat before their entire front-line collapsed. Momentum against the al-Qaeda insurgents began early this week when the Syrian Arab Army (SAA) scored a new advance in the southeastern countryside of Idlib, capturing a small town that was under jihadist control. Led by elements of the Republican Guard and 4th Mechanized Division, the SAA stormed the town of Al-Ruwaida on Monday, striking the jihadist defenses from its southern flank. With this latest advance in southeast Idlib, the Syrian Army has managed to establish a strong presence in this once jihadist dominated province in northern Syria. At the same time, elsewhere in Syria thousands of people gathered in Saadallah al-Jabiri square in Aleppo on Thursday to join a military parade marking one-year since the Syrian government retook the city. The military were greeted by many of the city’s residents carrying pro-government banners and images of President Bashar al-Assad.

The Ultimate In Irony: Syrian Army Rolls Into Idlib With US Weapons Captured From ISIS -- The Syrian Arab Army’s (SAA) Tiger Forces arrived in northern Hama this week with a big surprise from their previous operations in the Deir Ezzor Governorate. Units from the Tiger Forces were seen armed with US-manufactured weapons that were seized from the Islamic State (ISIS) during the two month long battle in Deir Ezzor. According to a military source in Hama, the Syrian Army’s Tiger Forces are planning to use the US-manufactured weapons against the jihadist rebels in the upcoming battle for the Idlib Governorate. Among the US-manufactured weapons transferred to the Idlib front were a large number of TOW missiles that were previously supplied by Washington to the rebel forces in Syria before they were later sold to the Islamic State. The rapid defeat of Islamic State forces in eastern Syria over the last several months has seen the Syrian Arab Army capture untold quantities of military equipment from the terrorist group, most of which will likely go into the raising of new pro-government formations. As Syrian pro-government forces chased ISIS out of its main strongholds along the western shore of Euphrates River, the jihadist faction never had the time to re-locate its weapons stockpiles. The inevitable result of this was that such stockpiles came into the possession of the Syrian Army. As video evidence has shown time and time again, the vast loot accumulated thus far comprises not only small arms, but also heavy weapons including mortars, howitzers, field guns, technicals, armored personnel carriers, main battle tanks and guided missiles.

 Erdogan says Turkey aims to open embassy in East Jerusalem (Reuters) - Turkey intends to open an embassy in East Jerusalem, President Tayyip Erdogan said on Sunday, days after leading calls at a summit of Muslim leaders for the world to recognize it as the capital of Palestine. It was not clear how he would carry out the move, as Israel controls all of Jerusalem and calls the city its indivisible capital. Palestinians want the capital of a future state they seek to be in East Jerusalem, which Israel took in a 1967 war and later annexed in a move not recognized internationally. The Muslim nation summit was a response to U.S. President Donald Trump’s Dec. 6 decision to recognize Jerusalem as Israel’s capital. His move broke with decades of U.S. policy and international consensus that the city’s status must be left to Israeli-Palestinian peace negotiations. Erdogan said in a speech to members of his AK Party in the southern province of Karaman that Turkey’s consulate general in Jerusalem was already represented by an ambassador. “God willing, the day is close when officially, with God’s permission, we will open our embassy there,” Erdogan said. Jerusalem, revered by Jews, Christians and Muslims alike, is home to Islam’s third holiest shrine as well as Judaism’s Western Wall - both in the eastern sector - and has been at the heart of the Israeli-Palestinian conflict for decades. Foreign embassies in Israel, including Turkey‘s, are located in Tel Aviv, reflecting Jerusalem’s unresolved status. A communique issued after Wednesday’s summit of more than 50 Muslim countries, including U.S. allies, said they considered Trump’s move to be a declaration that Washington was withdrawing from its role “as sponsor of peace” in the Middle East. 

Chinese companies poised to help rebuild war-torn Syria - China is turning towards the Middle East and is ready to play a major role in helping to rebuild war-torn Syria. The world’s second biggest economy has already pledged US$2 billion for reconstruction work at the aptly-named First Trade Fair on Syrian Reconstruction Projects in Beijing. “China appears determined to take on a central role,” said Dr Gideon Elazar a lecturer at Bar-Ilan University in Tel Aviv and a post-doctoral fellow at Ben-Gurion University, specializing in Asian Studies. “One factor motivating the country’s involvement is the One Belt-One Road Initiative – a planned attempt to establish and control a modern day Silk Road connecting China, the Middle East and Europe. This might mark a shift in the geo-strategic reality of the region,” he added. Beijing already has strong ties with President Bashar al-Assad and sees a golden opportunity on the horizon now that Syria is edging towards peace after a brutal civil war. More than 30 Chinese companies, including infrastructure construction giants China Energy Engineering Corporation and China Construction Fifth Engineering Division, are reported to have visited the country this year. The main topic of discussions with provincial governors was major infrastructure projects. “With the gradual collapse of ISIS and the impending conclusion of the Syrian civil war, it is becoming clear that China will (have a crucial part to play),” Elazar said. “Indeed, its involvement in Syria has been on the rise over the past several months.” 

Chinese officials point fingers as gasification crisis worsens (Reuters) - When an inspector from a local environmental protection bureau visited a small village in China’s Shandong province in October to check on a gasification project, she said village officials became tearful in lamenting how far behind schedule they were. For years, the village has been haunted by pollution from nearby coal mines and chemical plants. The village had been rushing to finish installing new gas boilers for residents as they ditched their old coal stoves, the inspector told Reuters. The boilers are part of an ambitious gasification program under which millions of households, and some industrial users, are switching from coal to natural gas for heating, as Beijing tries to clean the tainted air in northern China after decades of galloping growth. The effect of the dramatic switch has been felt globally, with internationally shipped gas prices almost doubling this year to more than $10 per million British thermal units, the highest since the end of 2014. It has also been felt locally due to poor coordination among government bodies and gas producers, and miscalculations in demand, which have sent gas prices soaring, left many residents freezing in their homes, and shuttered factories. Where there is gas supply, it cannot reach homes in some cases as the replacement gas infrastructure has not been installed. “Everyone’s job is linked to whether we can meet the target,” the environmental protection inspector said, declining to be named and refusing to identify the village due to sensitivity of the matter. In China, policy targets are trickled down to the village official level with the objectives generally understood to be the minimum to be achieved. “If we did not meet the target, we will get bad performance reviews and we will start worrying about our careers,” the inspector said. She declined to specify the targets. 

Ships in a bottleneck: China, Australia ports clogged as coal, iron ore demand soars (Reuters) - More than 300 large dry cargo ships are having to wait outside Chinese and Australian ports in a maritime traffic jam that spotlights bottlenecks in China’s huge and global commodity supply chain as demand peaks this winter. With some vessels waiting to load coal and iron ore outside Australian ports for over a month, key charter rates have jumped to their highest in more than three years. Placed end-to-end, the total delayed fleet would stretch more than 40 miles, enough to span the English Channel from Dover to Calais and back. As well as choking supplies to the world’s second-biggest economy, the clog is costing extra in a shipping sector operating on tight margins, just as it recovers from its worst downturn in more than three decades. Charterers of capesize ships - the largest bulk dry cargo carriers - face paying an extra $1 million per vessel, assuming a 45-day wait, according to fixture data on the Reuters Eikon terminal. “There are some ports in east Australia that have 80 vessels anchored, which translate into 20-25 days of delay and congestion,” said Ziad Nakhleh, managing director of Greek ship owner Teo Shipping. Shippers and brokers said the delays were typical, especially during the peak demand winter season, as bad weather including fog and strong winds in China and infrastructure issues in Australia exacerbate increased demand for vessels to satisfy China’s soaring minerals appetite.  Australian ports affected include Queensland export terminals at Hay Point and Dalrymple Bay, where there are 76 capesize and panamax vessels - named for being the largest size than can navigate the Panama Canal - waiting to load, according shipping data in Thomson Reuters Eikon.

China risks escalating trade row with US and EU after it cuts export taxes on steel | South China Morning Post: China will scrap export duties on some steel products in the new year, the country’s finance ministry said in a statement on Friday, a move that is likely to worsen Beijing’s trade disputes with the United States and the European Union. Both the Americans and Europeans have accused China of dumping excess steel products on their markets and the US recently slapped tariffs of up to 265 per cent on steel imports from Vietnam that were sourced from Chinese materials. This week at the ministerial meeting of the World Trade Organisation, the US, EU and Japan signed a joint statement to pressure China to address overcapacity and forced technology transfer.According to the World Steel Association, China is the world’s largest steelmaker, producing 808.4 million tonnes last year, followed by Japan with 104.8 million tonnes. China imposes export taxes on some steel products, generally ranging from 5 to 10 per cent, and Chinese officials have often cited those duties to support the argument that the government is not deliberately encouraging steel exports. Over the past 11 months, China’s net exports of steel products have fallen by 35 per cent annually to 57.7 million tonnes, according to data from China’s General Administration of Customs. Earlier this year, the China Iron and Steel Association, an industry lobby group, urged the government to adjust export duties on some products, warning that imports were hurting domestic producers. It came after China was the subject of a total of 119 trade remedy investigations involving alleged cases of dumping last year. Half the cases in question, which covered 27 countries and regions, involved steel exports with a total value of US$7.9 billion, according to the finance ministry. 

Xi convenes economic meeting under shadow of Trump’s strategic threat | South China Morning Post: Translating President Xi Jinping’s “high quality” growth ideas into actions and policies was expected to be the focus as some 400 cadres and provincial governors gathered at a heavily guarded hotel in Beijing on Monday for China’s annual economic conference. But the three-day session to map out the economic agenda for 2018 comes amid headwinds from across the Pacific, with US President Donald Trump set to officially label China as a competitor when he lays out the national security strategy on Monday. Analysts said a less friendly Washington, Trump’s tax cut plans and the Federal Reserve’s interest rate rises could complicate Beijing’s campaign to reduce debt and curb pollution next year. “China could take a wait-and-see approach as there are still many uncertainties around implementing these policies,” said Larry Hu, chief China economist at Macquarie Securities in Hong Kong. Domestic deleveraging, however, poses a much bigger threat to the world’s second largest economy. “It could be the biggest downside risk next year,” Hu said. Ahead of the conference, the 25-member Politburo outlined three key economic tasks for 2018 – risk prevention, poverty reduction and pollution control – and highlighted the need to reduce macroeconomic leverage ratios and provide support for the real economy. The Chinese leadership under Xi has managed to stabilise China’s growth in 2017 – headline growth in the first three quarters was 6.9 per cent, while the yuan exchange rate has strengthened against the dollar by about 4 per cent and foreign exchange reserves have gone up for 10 consecutive months. 

China Faces Pushback in the UN on Belt-Road Initiative, Retreats Quietly - China’s efforts to project its ‘One Belt One Road’ as the panacea for the world faced a serious setback this week at the United Nations, when a coalition led by India and the US pushed back and forced Beijing to retreat. The laudatory language about OBOR inserted last year by hyperactive Chinese diplomats was dropped as more and more countries asked for details on China’s financing mechanisms and environmental standards in pushing the gargantuan scheme. The hard work of coalition building over the last two months was done by a team of young Indian diplomats from India’s permanent mission. Japan and several members of the EU joined in to raise questions and counter China’s narrative. The results were there for all to see when on December 11, the UN General Assembly adopted the two resolutions minus the language used in 2016 that had essentially equated world peace with promoting OBOR. What it proved – in however small a measure – is that China is not invincible, especially if others can present a united front. “It is possible to fight the dragon,” a UN observer commented. “Success comes to those who dare.” India took the lead in questioning the language, the US joined in, and the others slowly followed, including many EU members. Some in the EU are more aware or are less beholden to the Chinese than some others, making the internal debates rancorous and time-consuming. But the clear US position is important in influencing the more recent EU members who are more prone to falling under Chinese influence.

How La Niña’s icy grip may bolster China’s resolve in the South China Sea | South China Morning Post: La Niña is back, as China’s current cold snap attests. But it’s an ill wind that blows no good and for those who argue that China’s strategic interests lie in reinforcing its position in the South China Sea, La Niña merely bolsters their stance. It might be a weather event, but it has profound economic and geo-economic implications. As defined by the US’ National Oceanic and Atmospheric Administration, La Niña is “a natural ocean-atmospheric phenomenon marked by cooler-than-average sea surface temperatures in the central Pacific Ocean near the equator.” That lends itself to a colder winter in China and by extension to higher energy use for heating. China’s changing energy mix can only reinforce Beijing’s determination to secure its presence in the seaways of the South China Sea. Colder weather conditions and higher demand for energy for heating, coupled with China’s drive to curtail air pollution by reducing its dependency on coal as an energy source, has led to a spike in the country’s demand for liquefied natural gas (LNG) as an alternative fuel source. That increase in Chinese demand has, in turn, helped drive up both the spot price for LNG and the rates for hiring the tankers by which that energy is delivered. Strong demand from China has helped to push up the spot price for the Asia-delivery LNG benchmark. As the Post reported on Saturday, data from China’s national bureau of statistics showed the price of LNG in the first 10 days of December reached 6,967 yuan per tonne (US$1,053), representing a 23.6 per cent increase when compared with the last 10 days of November.

Insight: Hoping to extend maritime reach, China lavishes aid on Pakistan town (Reuters) - China is lavishing vast amounts of aid on a small Pakistani fishing town to win over locals and build a commercial deep-water port that the United States and India suspect may also one day serve the Chinese navy.  Beijing has built a school, sent doctors and pledged about $500 million in grants for an airport, hospital, college and badly-needed water infrastructure for Gwadar, a dusty town whose harbour juts out into the Arabian Sea, overlooking some of the world’s busiest oil and gas shipping lanes. The grants include $230 million for a new international airport, one of the largest such disbursements China has made abroad, according to researchers and Pakistani officials. The handouts for the Gwadar project is a departure from Beijing’s usual approach in other countries. China has traditionally derided Western-style aid in favour of infrastructure projects for which it normally provides loans through Chinese state-owned commercial and development banks. “The concentration of grants is quite striking,” said Andrew Small, an author of a book on China-Pakistan relations and a Washington-based researcher at the German Marshall Fund think tank. “China largely doesn’t do aid or grants, and when it has done them, they have tended to be modest.” Pakistan has welcomed the aid with open hands. However, Beijing’s unusual largesse has also fuelled suspicions in the United States and India that Gwadar is part of China’s future geostrategic plans to challenge U.S. naval dominance. 

Chinese Fighters Violate Taiwanese, Korean And Japanese Airspace --In keeping with China’s strategy of methodically encroaching on its geopolitical rivals via air force and naval drills in the Pacific, both Japan and South Korea scrambled fighter jets earlier this week as China suddenly expanded the scope of naval drills being held in the waters off the Korean peninsula. The Associated Press reported that China sent a squad of fighter jets and bombers on a long-range military drill to the Sea of Japan. During their journey, the planes traveled through South Korean, Japanese and Taiwanese air defence zones, a move widely seen as China flexing its military muscles and asserting its dominance in the region. The drills marked the first time China has sent warplanes through the strait that lies between South Korea and Japan.

 War drills conducted to prepare U.S. military for invasion to seize North Korea's nuclear weapons - The United States Military has conducted joint training operations with South Korean forces to practice removing nuclear weapons from North Korea in the event of war, according to reports.Citing military sources, South Korea’s Yonhap News Agency reported that the “Warrior Strike” exercise took place north of Seoul between Tuesday and Friday. Hundreds of soldiers from both sides took part in the training to remove weapons of mass destruction from the North.The training exercise comes amid escalating tensions between North Korea and its perceived enemies, with Russia and China also conducting air defense drills against the rogue state this week. President Donald Trump previously stated that the United States would use “fire and fury” to “totally destroy North Korea,” and referred to North Korean leader Kim Jong Un as a “madman” and “little rocket man.”Those remarks prompted Rep. Ted Lieu and Rep. Ruben Gallego to send a letter to Defense Secretary James Mattis in September outlining concerns surrounding the use of military force against North Korea.“We believe it is wrong to use military force without first exhausting all other options, including diplomacy,” the letter stated. “We also believe it would be unconstitutional for the Administration to start a war with North Korea without Congressional authorization.” Mattis responded to the letter on October 27 via the Office of the Chairman of the Joint Chiefs of Staff, saying, “The only way to ‘locate and destroy—with complete certainty—all components of North Korea’s nuclear weapons programs’ is through a ground invasion.”

North Korea Reportedly Testing Anthrax-Tipped ICBMs -US intelligence believes North Korea is still between 12 and 18 months away from gaining the ability to load a nuclear warhead onto one of its ICBMs, but South Korean intelligence reportedly has credible evidence that Kim Jong Un and his regime have begun testing loading anthrax onto the country’s ICBMs, according to Japan's Asahi newspaper. As Asahi reports (via Google Translate) Recently, an information source in Seoul revealed that North Korea has started experiments to mount biological weapons anthrax on the intercontinental ballistic missile (ICBM). The United States also gained similar information and said that "North Korea is threatening the United States with nuclear and biological chemical weapons" in the "National Security Strategy" announced on the 18th.North Korea has started experiments such as heat and pressure equipment to prevent anthrax from dying even at a high temperature of over 7,000 degrees generated at the time of ICBM 's reentry into the atmosphere. In part, there is unconfirmed information that it has already succeeded in such experiments. According to a former US government official, the US forces have been collecting information on the fact that North Korea is cultivating anthrax bacteria from the US for the past, the US military started spreading smallpox and anthrax I was vaccinating. In May 2011, we also conducted a joint US and Korean joint exercises assuming North Korea's biological weapons terrorism for the first time.

‘North Korea is a time bomb’: government advisers urge China to prepare for war | South China Morning Post: China must be ready for a war on the Korean peninsula, with the risk of conflict higher than ever before, Chinese government advisers and a retired senior military officer warned on Saturday. Beijing, once seen as Pyongyang’s key ally with sway over its neighbour, was losing control of the situation, they warned. “Conditions on the peninsula now make for the biggest risk of a war in decades,” said Renmin University international relations professor Shi Yinhong, who also advises the State Council, China’s cabinet. North Korea says nuclear war inevitable because of military drills by US and South Korea Shi said US President Donald Trump and North Korean leader Kim Jong-un were locked in a vicious cycle of threats and it was already too late for China to avert it. At best, Beijing could stall a full-blown conflict. “North Korea is a time bomb. We can only delay the explosion, hoping that by delaying it, a time will come to remove the detonator,” Shi said on the sidelines of a Beijing conference on the crisis.Addressing the conference, Wang Hongguang, former deputy commander of the Nanjing Military Region, warned that war could break out on the Korean peninsula at any time from now on until March when South Korea and the United States held annual military drills. “It is a highly dangerous period,” Wang said. “Northeast China should mobilise defences for war.” 

Cyber-attack: US and UK blame North Korea for WannaCry - The US and UK governments have said North Korea was responsible for the WannaCry malware attack affecting hospitals, businesses and banks across the world earlier this year. The attack is said to have hit more than 300,000 computers in 150 nations, causing billions of dollars of damage. It is the first time the US and UK have officially blamed them for the worm. Thomas Bossert, an aide to US President Donald Trump, first made the accusation in the Wall Street Journal newspaper. Mr Bossert, who advises the president on homeland security, said the allegation was "based on evidence". He did not produce any evidence in the article, but said US findings concurred with judgments from other governments and private companies. He added that Australia, Canada, and New Zealand also share the US conclusion that North Korea was behind the attack. Following the interview, the UK Foreign Office also blamed "North Korean actors using their cyber programme to circumvent sanctions". The National Cyber Security Centre assessed that is "highly likely" that the North Korean Lazarus hacking group had committed the attacks, Minister for Cyber Lord Ahmad said in a statement. In May, Windows computers hit by the cyber-attack had their contents locked, with users asked to a pay a ransom to have their data restored. EU police body Europol called the scale of the attack "unprecedented".

'Pacifist' Japan Is Building Missile Bases To Counter China And North Korea -- Yesterday, we published a report about an incident involving South Korea, Japan and China that nearly escalated into a full-blown skirmish, as Japan and South Korea were forced to order intercepts of Chinese military aircraft as a squadron of fighters and bombers flew over the waters between South Korea and Japan - an area that has historically been off limits to Chinese aircraft. It wasn't until after the Chinese aircraft had dispersed that Chinese military commanders disclosed that the intrusion was part of a "military exercise." When China’s South Korean counterparts called to ask why they hadn’t been given advanced warning of the drills, the Chinese authority in charge reportedly responded that the element of surprise was part of the drill.In recent months, Beijing has insisted that it needs to prepare its military in the event of an armed conflict on the Korean peninsula - an excuse for bulking up its military presence at an uncomfortably close proximity to its geopolitical archrival, Japan. In response, Japanese Prime Minister Shinzo Abe is accelerating Japan's militarization as the country inches closer to abandoning its post-WWII policy of pacifism. The latest example of this shift was highlighted by the Wall Street Journal in a report published Wednesday aboutJapan's push to build a military installation equipped with antiaircraft and antiship weapons on the island of Ishigaki, a Japanese holding situated near Taiwan, and just miles away from a Chinese waters. Of course, Japan is facing a more immediate threat in North Korea - which has twice fired intermediate-range ballistic missiles over the Japanese island of Hokkaido. But as both powers pose increasingly immediate threats to Japanese security, Japan is being forced to swiftly build up its military deterrants as the possibiilty of an armed conflict in the region becomes increasingly less remote. Case in point, Abe is expected later this week to approve another boost in military spending - something that would've been unthinkable just a decade ago.

 Japan's Exports Boom But Inflation Refuses To Follow The Script - Japanese exports boomed in November 2017, rising +16.2% versus a year earlier and beating consensus expectations of +14.7%. It was the fifth straight month of double-digit growth and the strongest since August. Last month, growth of +14.0% had undershot expectations of +15.7%. Imports in November grew slightly less than expected at +17.2% versus the consensus of +18.0%. The trade surplus of 113.4 billion yen ($1 billion) contrasted with expectation of a 40 billion yen ($0.4 billion) deficit. According to Bloomberg, "Japan’s exports grew for a 12th straight month in November, topping economists’ expectations, as external demand continued to fuel the nation’s longest stretch of economic growth since the 1990s." A yearlong recovery in exports has kicked Japan into higher gear, fueling record profits and rising capital spending during the longest economic expansion since the mid-1990s. Confidence among the nation’s large manufacturers has reached the highest level in a decade, while sentiment is rising even among smaller companies. The wage growth needed to drive a self-sustaining recovery remains elusive, though, even as the labor shortage intensifies, prompting the government to plan to offer tax benefits to encourage higher pay. "We can expect exports will remain strong enough to lead Japan’s economy, with solid demand from U.S. and China," said Norio Miyagawa, a senior economist at Mizuho Securities Co., who cited global demand for semiconductors and IT-related goods. "Without any sign of weakening in exports, Japan’s economy will probably keep recovering gradually," Miyagawa said. "The BOJ must be gaining confidence in the economy with today’s export data."

Bank Of Japan Leaves Policy Unchanged As Expected - Admits "Inflation Weakening" -- As expected, The Bank of Japan left all of its various machinations of monetary policy unchanged with Kataoka the lone dissenter (preferring a more aggressive stance of yield curve control). The key line in the statement appears to be "inflation expectations have remained in a weakening phase," which is the enabling narrative of lower and moarer for longer.

  • BOJ Maintains Policy Balance Rate at -0.100%
  • BOJ Maintains 10-Year JGB Yield Target at About 0.000%
  • No change in the 80 trillion yen target for bond buying, a figure that the BOJ hasn't been meeting for some time and that's assumed to be removed whenever the central bank does decide to fine-tune its policy.

Overall the language in the statement is very similar with no real change in tone.The decision on QQE with Yield Curve Control made in 8-1 vote, with Kataoka dissenting again.Kataoka says BOJ needs to buy JGBs so yield for duration of 10 years and longer declines, while stating that BOJ should make it clear it will ease if achieving the price target is delayed by domestic factorsBOJ also raises assessment on capex and view of consumption.Back in October, the BOJ said in its economic outlook: "With regard to the risk balance,upside and downside risks to economic activity are generally balanced, and risks to prices are skewed to the downside." No such risks cited in today's policy statement.

Deepest India Bond Rout in 17 Years Shows No Sign of Abating -- Indian bonds are sliding at the fastest pace in almost two decades, and the selloff isn’t showing signs of easing.The yield on benchmark 10-year notes, up for a fifth month in D ecember, will rise further by end of March, according to 10 of 15 respondents in a Bloomberg survey. Some see it going from 7.25 percent on Thursday to as high as 7.50 percent, as a potentially wider fiscal deficit risks more debt sales by the government and elevated oil prices threaten to fan already-rising inflation.If that wasn’t enough, this week brought another headwind. A slim poll victory for Prime Minister Narendra Modi’s ruling Bharatiya Janata Party in his home state of Gujarat stoked speculation that his administration will resort to populist measures to woo voters ahead of the 2019 general election.“The uncertainty surrounding government borrowings is hanging like a sword over the bond market,” said Vijay Sharma, executive vice president for fixed income at PNB Gilts Ltd. in New Delhi. “Worries about additional bond sales have heightened after the not-so convincing BJP win in Gujarat and investors want clarity on the government’s fiscal stance.” The 10-year yield will be at 7.25 percent by the end of March, according to the median estimate in a Bloomberg survey conducted earlier this week. The yield’s seven-basis point jump in just the past two days has seen it already touch that level on Thursday. It has surged 78 basis points since the end of July.

MSF survey provides clear evidence of the Burmese military’s mass murder - A report based on surveys by the medical relief organisation, Médecins Sans Frontières (MSF), has provided the first detailed study of the horrific scale of killings by military, police and Buddhist nationalist thugs of the Rohingya population in Burma’s Rakhine state. In what the MSF says is a conservative estimate, at least 6,700 died violent deaths at the hands of the security forces and associated gangs in the 31-day period from August 25. Of these, 730 were children under the age of five. There have been numerous reports of individual atrocities, missing family members, grave site discoveries and satellite images of burnt-out Rohingya villages. Previous estimates of the number of deaths were based on this scattered information.The Burmese military led by General Min Aung Hlaing and backed by the National League for Democracy (NLD) government has dismissed all of these accounts out of hand.In September, in the period covered by the MSF report, NLD leader Aung San Suu Kyi blamed the violence in the Rakhine on Rohingya “terrorists” and condemned reports of Burmese army atrocities as “fake news photographs” and “a huge ice berg of misinformation.” The government claimed no more than 400 were killed during this period of which most were “extremist terrorists.”Since August 25, 647,000 people have fled into refugee camps in neighbouring Bangladesh, already overcrowded with previous Rohingya refugees, creating a massive humanitarian crisis. The Muslim Rohingya are regarded by Burmese Buddhist chauvinists as “illegal immigrants” from Bangladesh and have been persecuted and denied citizenship for decades. The sheer scale of the exodus has made clear that army operations begun on August 25, supposedly in response to small-scale attacks by the Arakan Rohingya Salvation Army, were aimed at driving the Rohingya out of Rakhine state where many have lived for generations. The United Nations has described it as “ethnic cleansing.”

Billionaire Tycoon Will Be Next President Of Chile -- A billionaire who has been described as one of the world’s wealthiest politicians just won his second non-consecutive term as president of Chile when he defeated his center-left opponent in what observers are calling a landslide victory in Sunday's election. As the Washington Post reported, Sebastián Piñera, of the right-leaning National Renovation party and conservative Let’s Go Chile coalition, defeated center-left candidate Alejandro Guillier, of the ruling New Majority coalition, by 9 percentage points, turning the current government out of office. Piñera previously governed Chile between 2009 and 2014. Turnout increased between yesterday’s vote and a Nov. 19 runoff, as large numbers of conservative voters showed up at the polls, while leftists stayed home.

The Global Economy Is Partying Like It’s 2008 - In late 2008, at a meeting with academics at the London School of Economics, Queen Elizabeth II asked why no one seemed to have anticipated the world’s worst financial crisis in the postwar period. The so-called Great Recession, which had begun in late 2008 and would run until mid-2009, was set off by the sudden collapse of sky-high prices for housing and other assets — something that is obvious in retrospect but that, nevertheless, no one seemed to see coming.Are we about to make the same mistake? All too likely, yes. Certainly, the American economy is doing well, and emerging economies are picking up steam. But global asset prices are once again rising rapidly above their underlying value — in other words, they are in a bubble. Considering the virtual silence among economists about the danger they pose, one has to wonder whether in a year or two, when those bubbles eventually burst, the queen will not be asking the same sort of question.This silence is all the more surprising considering how much more pervasive bubbles are today than they were 10 years ago. While in 2008 bubbles were largely confined to the American housing and credit markets, they are now to be found in almost every corner of the world economy. As the former Federal Reserve chairman Alan Greenspan recently warned, years of highly unorthodox monetary policy by the world’s major central banks has created a global government bond bubble, with long-term interest rates plumbing historically low levels.

Up to One Million Enslaved Migrants in Libya Are Victims of ‘Europe’s Complicity’ - A report by Amnesty International details how European governments are actively supporting a sophisticated system of abuse and exploitation of refugees and migrants.  “European governments are knowingly complicit in the torture and abuse of tens of thousands of refugees and migrants detained by Libyan immigration authorities in appalling conditions in Libya,” Amnesty International charged in the wake of global outrage over the sale of migrants in Libya.In its new report, ‘Libya’s dark web of collusion’, Amnesty International (AI) details how European governments are actively supporting a sophisticated system of abuse and exploitation of refugees and migrants by the Libyan Coast Guard, detention authorities and smugglers in order to prevent people from crossing the Mediterranean.The Geneva-based UN International Organisation for Migration (IOM) estimates that the number of migrants trapped in Libya could amount to up to one million, and it is now rushing to rescue the first 15,000 victims through a massive repatriation emergency plan. A major airlift is underway as IOM starts flying 15,000 more migrants from Libya before year end.“Hundreds of thousands of refugees and migrants trapped in Libya are at the mercy of Libyan authorities, militias, armed groups and smugglers often working seamlessly together for financial gain. Tens of thousands are kept indefinitely in overcrowded detention centres where they are subjected to systematic abuse,” said John Dalhuisen, AI’s Europe Director, on December 12.“European governments have not just been fully aware of these abuses; by actively supporting the Libyan authorities in stopping sea crossings and containing people in Libya, they are complicit in these abuses,” Dalhuisen affirmed. “By supporting Libyan authorities in trapping people in Libya, without requiring the Libyan authorities to tackle the endemic abuse of refugees and migrants or to even recognise that refugees exist, said Dalhuisen, European governments have shown where their true priorities lie: namely the closure of the central Mediterranean route, with scant regard to the suffering caused.

Europe’s migrants are here to stay - It’s time to face the truth. We cannot and will never be able to stop migration. The refugee crisis in Europe may be subsiding, but migration globally will not stop. Today, on International Migrants Day, more than 244 million people are living outside their country of birth. Human mobility will increasingly define the 21st century. If we want to be ready for it, we need to start preparing now. Migration is an emotional, sensitive and political issue. It has helped determine elections across Europe and the world. But we can no longer talk only about crisis management: Migration is our new reality. The time has come to start thinking, talking and acting about migration in a more comprehensive and long-term way, putting in place policies aimed at promoting integration and inclusion. Over the last two years, Europe has been primarily engaged in addressing the immediate urgencies of the global migration and refugee crisis — and quite successfully so. Irregular flows have dropped by 63 percent. More than 32,000 refugees have been relocated within Europe. More than 25,000 people in need of protection have been resettled to the Continent, with another 50,000 expected to arrive in the next two years. And thousands of migrants have been helped on the ground in Libya in cooperation with international partners. * * * Of course, a lot still remains to be done in the European Union. We need to deliver on our promises to evacuate thousands of migrants from Libya either through resettlement or assisted voluntary return in the coming months. We need to reach a comprehensive and fair asylum reform by June. We must also enhance legal channels for economic migration with a more ambitious Blue Card for highly skilled workers and kick-start targeted labor migration pilot projects in key third countries. But we cannot continue taking an ad hoc approach, thinking and acting with only short-term deadlines in mind. When it comes to migration, we’re in it for the long haul. This not a problem to solve or a challenge to address. Migration is deeply intertwined with our policies on economics, trade, education and employment — to name just a few.

Hundreds of migrants out in open along Serbia’s EU borders  – Several hundred migrants were camping along Serbia's borders on Monday, sleeping rough in make-shift shelters from the cold as they look for a chance to cross into neighboring European Union countries. Amid biting wind and freezing temperatures, the migrants huddled around small fires in an abandoned factory near Croatia's border, as aid groups distributed food and warm drinks. "These people continue to stay outside in very inhumane and unsafe conditions.... There is no clear access to water or sanitation facilities," said Andrea Contenta, a humanitarian affairs adviser in Serbia for Doctors Without Borders. Contenta added that while officials have closed off the so-called Balkan route — leading from Turkey to Greece or Bulgaria, and on to Macedonia and Serbia — migrants still use it to cross illegally and face dangers. "We cannot continue to say that the Balkan route is closed," he insisted. "We have to acknowledge that people are still (moving) along the Balkans, and we need to find the way to avoid," putting them at risk. Though numbers of migrants in the Balkans have been reduced, Serbian officials said about 300 to 400 people have been staying out in the open, along with some 4,000 who are in asylum centers hoping to move on to wealthier European countries. Thousands of people have been stranded since the March 2016 closure of the Balkan route. Many migrants have since tried repeatedly to cross the borders with Croatia or Hungary, but have been pushed back to Serbia by police in those countries or have been stopped by a barbed-wire fence at Hungary's border. Forced to cross the borders illegally in most cases, migrants have turned to smugglers to guide them across. Wrapped in woolen blankets, caps and shawls, some of the migrants camping on Monday held their feet above the fire to keep warm. Others tried to wash mud off their shoes as aid workers brought water to the make-shift shelter.

Catalonia election: Separatist parties keep their majority - BBC News: Catalan separatist parties are on track to win most seats in the new regional parliament, setting the stage for more confrontation with Spain's government. However the Citizens party, which wants Catalonia to remain a semi-autonomous part of Spain, is the biggest party. As a result, it is unclear who will be given the right to form a government. The Madrid government stripped Catalonia of its autonomy and called the election after declaring an October independence referendum illegal. With nearly all votes counted, the pro-independence parties Together for Catalonia (JxCat), Republican Left of Catalonia (ERC) and Popular Unity (CUP) were together on course to win a total of 70 seats, giving them a majority. Within the separatist party block, ousted Catalan President Carles Puigdemont's JxCat was slightly ahead of the ERC, led by his former deputy, Oriol Junqueras. Speaking in Brussels, where he is in self-imposed exile, Mr Puigdemont said the "Catalan republic" had won and "the Spanish state has been defeated". The situation called for "rectification, reparation and restitution," he said. He is accused by Spanish prosecutors of rebellion and sedition. Mr Junqueras faces the same charges and is currently in prison. Citizens (Cs) had 25% of the vote, winning 37 seats in the 135-seat chamber. Its leader Inés Arrimadas told the BBC her party had been "victorious". She said forming a coalition would be "difficult - but we will try". 

ECB sued over decision to freeze help to Greek banks during crisis  (Reuters) - Former Greek finance minister Yanis Varoufakis and a German parliamentarian are suing the European Central Bank to gain access to a document underpinning the ECB’s decision to freeze vital funding to Greek banks in 2015. That move left Alexis Tsipras’ government with little choice but to shut down banks and impose capital controls, weakening his negotiating position with the country’s international lenders during bailout negotiations. Eventually, hard-liner Varoufakis resigned and Tsipras made a deal that gave Greece cash in return for austerity measures and reforms. Varoufakis and a German leftist parliamentarian, Fabio De Masi, are asking the European Union’s top court to force the ECB to disclose a legal opinion that informed that decision, which they say might be unlawful. “By restricting liquidity to the Greek banking sector to force cuts in pensions, tax increases and fire-sale privatisations, the ECB overstepped its mandate,” De Masi said. After their request was rejected by the ECB, Varoufakis and De Masi are turning to the General Court of the European Union to obtain the document. An ECB spokesman said the legal opinion preceded the decision to withhold funding by at least two months. The ECB decided not to disclose it to protect its legal advisers and its internal deliberations, he said. The ECB’s Agreement on Emergency Liquidity Assistance (ELA), published earlier this year, prohibits national central banks from providing ELA if it “interferes with the objectives and tasks” of the Eurosystem, such as maintaining price stability and safeguarding payments. 

 Swiss hit back after EU limits stock exchange access (Reuters) - Swiss relations with the European Union soured on Thursday as Bern promised retaliation over what it called unacceptable limitations on Swiss stock exchanges’ access to the EU single market. The row threatened to set back ties between neutral Switzerland and its main trading partner that had been thawing after the Swiss parliament last year skirted voters’ demand for immigration quotas for EU citizens. Swiss President Doris Leuthard accused the EU of trying to undermine Switzerland as a financial centre by granting its stock exchanges only temporary access to the bloc. Bern wants the same regulatory status for Swiss bourses as those in other countries have, enabling EU investors to trade in Switzerland, a crucial source of exchange volume. The European Commission agreed to grant Swiss exchanges only one year of access, part of a broader deal aimed at defining Bern’s ties with the bloc. Only Britain abstained in a vote by EU members on Wednesday. It had lobbied for full Swiss access, officials said, reflecting London’s bid for preferable access for its own financial services after the country leaves the European Union. “Switzerland fulfils the conditions for recognition of stock market equivalence every bit as much as the other third countries that have been granted indefinite recognition,” Leuthard told reporters. “Switzerland therefore considers this limited recognition to be a clear case of discrimination. Linking this technical dossier with institutional issues is extraneous and unacceptable.” 

Call off Brexit bullies or face defeat, Tory peers tell Theresa May -Theresa May was warned on Sunday by Tory peers that she will face a string of parliamentary defeats over Europe in the House of Lords if she tries to “bully” members of the second chamber into backing an extreme form of Brexit.After 11 Conservative MPs joined opposition parties to inflict a humiliating loss on the government last week, Tory grandees are warning that the spirit of rebellion will spread to the Lords unless May shows she respects parliament and decisively rejects those with “extreme views” in her own party. Writing in the Observer, two Tory peers, the former pensions minister Ros Altmann and Patience Wheatcroft, a former editor of the Sunday Telegraph, say they are appalled at the insults heaped by hardline Brexiters on MPs who voted with their consciences, and at the “strong-arm” tactics of the Tory whips. The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides, free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election. Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but  is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules.

Brexit: Mrs May’s twilight world -- The media coverage of the European Council and its negotiating guidelines has been beyond dire, completely failing in its basic duty to inform.  Looking at Saturday's coverage in the print media, only the Financial Times and the Daily Telegraph even thought to run stories on their front pages and not anywhere did we see an adequate report explaining the content of the Council guidelines and their potential effect if the transition proposals are accepted. When it comes to the factual reportage of the contents of an EU document, it seems that simple task is beyond the capability of both print and broadcast media. It has thus taken more than a day for something of the story to emerge, the delay allowing it to be framed in terms of statements by Chancellor Philip Hammond and some of the more notorious "Ultra" politicians. The responses demonstrate yet again the inability of the media to process EU news unless it can be pinned to UK personalities, and expressed as a "biff-bam" conflict. Looking at the broader context of this document, no sensible person will deny that a transition period is needed. It was this blog, after all, which argued – long before the referendum was announced – for the Efta/EEA option as a means of bridging the gap between full membership and the status we seek as a fully independent nation. But for the EU to insist that we continue to be bound by the entirety of EU law in order that we should be able to continue trading with EU Member States, when the Single Market acquis extends only to about a quarter of the law in force, is neither necessary nor logical.  As such, extending the UK membership of the EU, but without representation, hardly qualifies as "transition". This is not a "bridge" from the UK's current situation to another, but an extension of it, delaying the point at which it must move from one status to the other. There is no gradual process. The leap at the end is just as severe as if there had been no extension.  That the EU's demands might even have to be considered, though, reflects Mrs May's basic error of going too early with her Article 50 notification, before an adequate (or any) exit plan had been devised. Had she followed the tempo of the Flexcit plan (without necessarily adopting the plan itself), she would have held off making the notification until alternatives had been devised.

Brexit: feeding from the same trough - The media had perhaps one opportunity to get it right, and set the agenda for the next few months that reflects the reality we face. They blew it. Instead of hard analysis of Friday's European Council, most went for the easy shots with two of the Sunday newspapers (the Express and the Sunday Telegraph) buying into the No. 10 propaganda and offering authored puffs from Theresa May. Thus we have the front-page headline in the Telegraph blaring: "May: I've proved doubters wrong". Her government "is getting on with the job", May says. "We are proving the doubters wrong and we will stick to the task: securing the best possible Brexit and building a Britain fit for the future – stronger, fairer, ever more global, and a country that truly works for everyone". The Observer, ignoring the puff, focused on the coming parliamentary battle rather than the events just past, and the Mail on Sunday chose to exclude the EU from its front page altogether.  On its inside pages, it too buys into the No. 10 propaganda and Mrs May's "summit victory", the headline borrowed from the Telegraph, declaring: "May claims she's 'proved the doubters wrong'".  Ever on the lookout for a domestic biff-bam slant, the paper then adds: "but the fragile Tory truce cracks as Boris says Britain must leave EU rules behind on the eve of crunch Cabinet talks". The reference to "Cabinet talks" is to the discussions scheduled for today, and for tomorrow when for the first time the full Cabinet is to be formally asked for its views on the type of trade deal we should push for. As for "Boris", this is a reference to the Sunday Times. It has plumbed the depths, delivering an inane interview with the Foreign Secretary who, once again, has demonstrated his complete failure to grasp the EU and trade issues.

EU’s Michel Barnier Clears Throat to Tell the UK It Won’t Get a Special Deal…After God Knows How Many EU Leaders Have Already Said That --  Yves Smith - The UK press is in a tizzy tonight over the EU’s lead trade negotiator Michel Barnier having had to stoop to make extremely explicit a position the EU has taken from the morning after the Brexit vote: any future relationship has to fit within the framework set by existing deals. The most common expression has been “no cherry picking” which along with the many other variants, EU leaders have including in public pronouncements on Brexit. An exclusive interview with Barnier in Prospect set off the pathetic spectacle of the UK press and officialdom reacting badly when forced to swallow even a tiny dose of Brexit reality. Key sections of the interview: “The British had the idea they could mingle everything: the price for past commitments, the financial issue and the future. We said: first we settle the past, like in any separation, then we start talking about the future. So parallel talks will start probably next March. The actual negotiations on the future relationship will only begin once the UK leaves the EU.”…. Barnier continues: “They have to realise there won’t be any cherry picking. We won’t mix up the various scenarios to create a specific one and accommodate their wishes, mixing, for instance, the advantages of the Norwegian model, member of the single market, with the simple requirements of the Canadian one. No way. They have to face the consequences of their own decision.” As we said earlier, there’s be nothing new in what Barnier said above. WTO and EU trade officials have said that the UK cannot negotiate a new trade pact with the EU until it is a third country, meaning it has left the EU. Yet Barnier seems to be making a one-man PR push to try to cut through the fog in Britain. He said pretty much the same thing a few days earlier. Per Politico: Speaking at a press conference after a meeting of foreign affairs and EU ministers in Brussels, he said there is not enough time to do anything more detailed, but also that agreeing a full trade deal would be prevented by legal and technical constraints. His comments were in stark contrast to those of the U.K. Brexit Secretary David Davis, who told the BBC’s Andrew Marr program on Sunday that barring “minor tinkering” by the time of Britain’s exit date of March 2019, “we would expect the substantive trade deal to be struck.” He said that the formality of signing would need to happen “one minute, or one second, after we leave.”

Gibraltar becomes latest sticking point in Brexit talks -  Brussels is piling pressure on the UK to resolve a 300-year-old Anglo-Spanish dispute over the Rock of Gibraltar if it wants to secure a quick deal on its post-Brexit transition period. The European Commission on Wednesday will adopt a four-page mandate to cover the second phase of Brexit negotiations, making clear a bilateral agreement is needed between London and Madrid on Gibraltar if the overseas territory is to be covered by transition arrangements and not cast out of the single market on Brexit day. According to language seen by the Financial Times, the mandate will underline that “territories under British protection” — a term that covers Gibraltar — will exit the EU with the UK in March 2019, meaning arrangements for them need to be settled as part of the transition talks.The language builds on a commitment from Brussels this year that Gibraltar would not be covered by any post-Brexit arrangements without Madrid’s approval.Brussels’ pressure for the UK to iron out its differences with Spain over the Gibraltar question threatens to complicate time-pressed transition talks which the UK government wants concluded, in principle, by March next year, so that negotiations can then move on to addressing the terms of the permanent future EU-UK relationship. Theresa May, the UK prime minister, is seeking rapid agreement on a transition period of about two years, something London hopes will give reassurance to businesses nervous about the possibility of losing EU market access and considering relocation.

Theresa May rebukes EU’s Barnier over ‘bespoke’ Brexit trade deal - Downing Street has hit back at the European Union as the new battle lines for a Brexit trade deal were drawn. Theresa May's spokesman expressed confidence that UK financial services would "get a good overall deal" despite Brussels' chief negotiator Michel Barnier ruling out a special offer for the City of London. The spokesman said Britain would demand a "significantly more ambitious" agreement with Brussels than its one with Canada. And he branded a Norway-style arrangement "democratically unsustainable, because it would mean automatically adopting all EU rules without influence or a vote". The spokesman also appeared to suggest Brussels would back down over its own red lines. He said: "This is the beginning of the phase two negotiations. "You would expect the Commission to be setting out their position. I would imagine you will hear a lot more from them before you hear less." It came after a "unified" Cabinet meeting on Tuesday, the first formal discussion by ministers to thrash out a preferred divorce 'end state'. Some 25 ministers contributed at the discussion that lasted just under two hours - but the topic of immigration was not mentioned. Another round-table on the "long-term partnership" is scheduled for early 2018, the spokesman said, with the UK needing to be "creative" in its approach. It puts the pressure on the Government to come up with and agree on its desired 'end state' and transition terms. Labour MP and Open Britain supporter Chuka Umunna said: "It is disgraceful and a dereliction of duty that the Cabinet has only today - eighteen months after the referendum - had an opening full discussion about what our future relationship with Europe should look like. "The problem is clear. The Cabinet cannot agree among themselves about what Brexit outcome they want beyond an unrealistic ambition to have cake and eat it." 

 David Davis to warn EU it cannot cherrypick in Brexit trade deal talks - Brexit secretary David Davis will warn the European commission that it cannot “cherrypick some sectors” when negotiating a trade deal, according to a senior government official, who said the UK planned to treat goods and services as inseparable. Responding to EU figures setting out their stall, the Whitehall source insisted that while trade talks would be complex, “they either want to have a broad economic relationship with the UK, or they don’t”. The source dismissed the idea that Britain would have to choose between a simple free trade agreement, which would focus largely on goods but not on the services that make up almost 80% of the UK economy, or a more comprehensive arrangement inside the single market and customs union. They also suggested that ministers across government had held meetings with a “full sweep of EU member states” and were confident some would be pressing internally for the commission to secure a bespoke and strong deal with the UK. “We are regularly approached by foreign governments and businesses who tell us that they want a fully functioning economic relationship with Britain which goes beyond the more rigid and unambitious suggestions from the commission,” they said. Ministers including Davis are thought to believe that countries such as Belgium, Ireland and the Netherlands see trade with the UK as particularly important to their economies. As such, they would be nervous of any moves that resulted in Britain crashing out of the EU on to World Trade Organisation rules. The suggestion comes after Theresa May chaired a critical discussion of her “Brexit inner cabinet”, in which she and nine leading ministers discussed – for the first time – what “end state” Britain should be pushing for in the negotiations. The prime minister told colleagues that the government must aim high in the next phase of EU negotiations. But she is likely to face some division within her top team, which includes former remainers such as Philip Hammond and Amber Rudd and the key Brexiters, Michael Gove and Boris Johnson. Although the cabinet is united in swinging behind Davis’s suggestion that the UK will seek a “Canada plus plus plus” deal – adding services to the free trade agreement that exists – there are disagreements on how achievable that is.

Government backs down on Brexit date as bill clears key hurdle - The government has accepted a compromise over its plans to put the Brexit date into law as Theresa May’s flagship piece of legislation cleared a key hurdle in the House of Commons. After eight gruelling days of debate spread over several weeks, and an embarrassing defeat over the issue of a meaningful vote on the final Brexit deal, MPs rejected a series of other amendments to the EU withdrawal bill, allowing it to pass on to its next stage. The widely-expected climbdown by the government was confirmed on Wednesday morning when Brexit minister Steve Baker put his name to a compromise drawn up by Conservative MP Oliver Letwin. Letwin’s amendment tweaked the government’s own amendment, leaving the Brexit date (29 March, 2019) in the legislation, but giving MPs the power to push it back if the EU27 agree. The option to push Brexit back comes as Michel Barnier warned that any transition deal would have to end by 2021. Photograph: Francois Lenoir/Reuters Paul Blomfield, of Labour’s shadow Brexit team, said: “After a humiliating defeat in the Commons last week, the government has now been forced into an embarrassing climbdown by amending it’s own amendment. Theresa May would be well advised to use the Christmas break to reflect on her chaotic approach to Brexit and stop putting party politics above the national interest.” The withdrawal bill is aimed at bringing EU law onto the UK statute book in preparation for Brexit, allowing ministers so-called Henry VIII powers to tweak it where necessary. 

May Goes to Poland to Seek Brexit Ally After Firing Her Deputy - U.K. Prime Minister Theresa May arrived in Poland on Thursday to attempt to get close -- but not too close -- to its new government, as she sought to move the agenda forward after firing her closest political ally. May was forced to tell First Secretary of State Damian Green to resign Wednesday afternoon after an inquiry into his behavior found he’d made misleading statements over pornography found on his parliamentary computer by police nearly a decade ago. Green is the third Cabinet minister to quit in two months. A couple of recent Brexit-related successes mean the prime minister is better equipped to handle Green’s departure than she might have been a month ago: The European Union has agreed to move negotiations on to the next phase, and late Wednesday, May’s flagship Brexit Bill completed the detailed scrutiny stage of its journey through the House of Commons. Still, his departure leaves her without her closest ally in the Cabinet. The flight to Warsaw gave May a chance to consider how she will manage without him. In the short term at least, she’s not likely to appoint a new deputy, according to two people familiar with the matter. The position of first secretary of state was tied to Green because he was a close and trusted friend as well as someone who understood and shared May’s political agenda, one official said. May took her most senior ministers with her to Poland for a summit where she’s promising cooperation on defense and security as part of a charm offensive to win friends in Europe before negotiations on post-Brexit trade start in March. 

Gibraltar Condemns EU, Spain Over Threats to Brexit Transition - The British territory of Gibraltar attacked the European Union for the “shameful” treatment of its citizens in Brexit negotiations on Friday, in an escalating dispute that threatens to derail the talks.Deputy Chief Minister of Gibraltar Joseph Garcia accused Spain of seeking to use Brexit to advance its 300 year-old claim to the 2.6 square miles (6.7 square kilometers) of U.K. territory on the southern tip of the Iberian peninsula. Garcia attacked the EU for “totally unacceptable” discrimination against its pro-European people.Under EU negotiating guidelines, a separate two-year transition phase for Gibraltar will need to be negotiated directly between the governments in London and Madrid. British officials fear Spain will threaten to veto efforts to strike the Brexit transition deal that businesses want if Theresa May refuses to negotiate that separate deal to cover the disputed territory.“For us, the view that Brussels has put forward is totally unacceptable,” Garcia said in an interview with Bloomberg TV on Friday. “It is shameful that these pro-European people in Gibraltar should be treated by the European Union in this way.”May wants to strike a transition deal by March 2018. She hopes this will stop U.K.-based businesses relocating by giving th em certainty that commercial regulations won’t suddenly change on Brexit day, and allow the talks to move on quickly to discussing a long-term trade deal with the EU.

Brexit breaks delicate interdependence between Ireland and UK - Ireland’s relations with Britain have gone through an historical cycle of dependence, independence and interdependence which is now being replicated by Britain’s changing relations with the European Union. Despite the key differences of scale and power between the two islands, their relations have always been mediated and balanced by wider European alliances. That pattern has come into play once again in the Brexit negotiations. The late Ronan Fanning concluded his elegant biography of Éamon de Valera in 2015 by observing the symmetry about the timing of the joint admission of Ireland and Britain to Europe in 1973 – “the same year that British-Irish interdependence in regard to Northern Ireland found first expression in the Sunningdale Agreement: for the last year of his presidency was the moment when the doctrine of interdependence he had first dimly delineated in 1920 became the core of national policy”. The reference is to de Valera’s interview with the Westminster Gazette in which he argued, using an analogy drawn from Cuba’s relations with the United States, that “an independent Ireland would see its own independence in jeopardy the moment it saw the independence of Britain seriously threatened”. Fanning sees this as the basis for De Valera’s subsequent doctrine of “external association” with the British empire, made explicit in 1921 and publicised in the Treaty debates as Document No 2. “Mutual self-interest would make the people in these two islands, if both were independent, the closest possible allies in a moment of real danger to both,” de Valera said in the interview. He illustrated his case by drawing five separate and independent circles inside a larger one, representing members of the British Commonwealth within the empire. Ireland was drawn as another circle outside the large one but contacting it. Fanning argues that de Valera culpably failed to explain this complex idea properly during and after the Treaty negotiations but effectively realised it in the 1936 External Relations Act during the British abdication crisis and then applied it in Ireland’s benevolent neutrality towards Britain and its allies during the second World War. 

Exclusive – After Grenfell fire, same builders rehired to replace dangerous cladding, Reuters finds (Reuters) - Some building companies that installed dangerous cladding on social housing blocks across Britain are now winning new contracts following the Grenfell Tower blaze to remove their original work and install panels that can pass safety tests, a Reuters review shows. The safety of high-rise buildings has come under scrutiny since the Grenfell disaster in June which killed 71 people. The British government, which ordered a series of tests to establish which types of cladding panels met fire safety rules, said those on the London tower block did not comply. A Reuters review identified 65 other towers with cladding of a type that was approved by local building inspectors, but which government tests found did not comply with the statutory regulations. The towers were clad by major builders including French groups Engie and Bouygues, and Britain’s Galliford Try, Forrest, Wates Group, Rydon Group and Willmott Dixon. The Reuters review was based on publicly available building planning permission documents, which detail the work carried out and the materials used, as well as visits to the towers and statements from housing providers and builders. For 29 of the buildings, the same builders that installed the cladding have won new contracts to remove or replace the panels, according to the owners of the buildings, who said they were paying millions of pounds for the work. The rehired companies are Willmott Dixon, Wates and Engie. 

Twitter suspends Britain First leaders - Twitter has suspended the accounts of two leaders of a British far-right group shortly after revising its rules on hate speech. Paul Golding, Britain First's leader, and Jayda Fransen, his deputy, can no longer tweet and their past posts no longer appear.  The organisation's official Twitter page has suffered the same fate. It appears that three of Ms Fransen's posts that President Trump retweeted have gone from his feed as a result. The messages had featured anti-Muslim videos and proved highly controversial when the American leader shared them in November. British Prime Minister Theresa May's spokesman said it had been "wrong for the president to have done this". Ms Fransen and Mr Golding were arrested earlier this week over separate behaviour relating to Northern Ireland.

HMS Queen Elizabeth: Leak found on new aircraft carrier - BBC --The UK's new aircraft carrier, HMS Queen Elizabeth, is leaking because of a faulty seal.The Royal Navy's future flagship, which was commissioned by the Queen earlier this month in Portsmouth, has a problem with one of its propeller shafts.The fault on the £3.1bn carrier was first identified during sea trials.A Royal Navy spokesman said the ship was scheduled for repair and the fault did not prevent it from sailing again early in the new year.According to the Sun newspaper, HMS Queen Elizabeth has been taking on up to 200 litres of sea water every hour because of the fault. BBC defence correspondent Jonathan Beale said the problem was "highly embarrassing" for the Royal Navy and just one of a number of snags still to be rectified.

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