week ending Dec 30

 Fed could surprise markets with more interest rate hikes than expected - Wall Street economists are warming to the idea that the Fed may raise interest rates four or more times next year, moving faster than its current forecast. The Fed has been forecasting three interest rate hikes for 2018, but the market has spent the past year doubting it will move even twice because of the sluggish pace of inflation — and until the second half of the year — the sluggish pace of growth. But growth has picked up to the point where there is potential for a three-quarter run of 3 percent growth, something that last happened in 2005."I think four times is likely given the juice from the tax cuts," said Mark Zandi, chief economist at Moody's Analytics. "That'll push unemployment below 4 percent and put a lot of pressure on the Fed to normalize rates much more quickly."The Fed's policymaking committee raised the benchmark short-term federal funds rate by a quarter percentage point to a range of 1.25 to 1.5 percent in December. The Fed raised rates three times this year and five times since it took the rate to zero during the financial crisis.Stock strategists, meanwhile, say an unexpectedly aggressive Fed could be one of the biggest headwinds for stocks in the coming year if the economy does not also keep up its growth pace. Economists surveyed in the CNBC/Moody's Analytics rapid update see an average 2.7 percent average growth for the fourth quarter, and Zandi said growth could continue in the high 2 percent range next year."It's not that the Fed could get too aggressive. It's that the market didn't price it in," said Diane Swonk, CEO of DS Economics. "The market hasn’t gone beyond anything that is considered Goldilocks." She said the stock market has been riding high on a boost from the tax bill, which cuts corporate taxes to 21 percent from 35 percent.

 Bond Markets Really Are Signaling a Slowdown - Bloomberg -- When it comes to the economic outlook, the bond market is smarter than the stock market. That Wall Street adage appears to be on the money from a cyclical vantage point, with key indicators in the fixed-income markets independently corroborating slowdown signals from the Economic Cycle Research Institute’s leading indexes.The yield curve is widely considered to be among the most prescient indicators. That’s why its flattening this year has been troublesome for an otherwise optimistic consensus to explain away.This hasn’t stopped optimistic analysts from dismissing the yield curve’s message on the grounds that inflation expectations have been declining in recent years, or that foreign central banks like the European Central Bank and the Bank of Japan continue to artificially suppress their bond yields, pulling down U.S. yields. We’re reminded of Sir John Templeton’s warning that “this time it’s different” are the "four most costly words in the annals of investing" -- but that’s effectively what it means to simply ignore the slowdown signals emanating from the fixed-income markets.  Of course, there’s no Holy Grail in the world of forecasting, which is why we look at a wide array of leading indexes that each includes many inputs. From that vantage point, the yield curve flattening actually makes a lot of sense. Growth in ECRI’s U.S. Short Leading Index, which doesn’t include the yield curve, has been falling since early this year (top line in chart), pointing to a U.S. growth rate cycle downturn that should become evident in coming months.

3-Month Bills Turmoil Ahead Of March Debt Ceiling Showdown: Bid To Cover Plunges To 8 Year Lows -- Congress once again punted on a formal decision how to keep government funded and what to do with America's debt ceiling and as a result US legislators simply kicked the can on the agreement of raising the nation’s borrowing limit for another few months. However, with the Treasury expected to breach the ceiling as soon as late March, today's $45 billion 3-Month Bill auction was closely watched as it serves as a fresh gauge of investor anxiety about the ongoing impasse.As a reminder, in the first week of December, the Treasury deployed a series of extraordinary measures to stay under the debt ceiling cap since it was reinstated on December 8. But T-bill investors, in both the primary and secondary market,  remain especially wary given questions over what’s known as the debt ceiling’s drop-dead date. Quoted by Bloomberg, Justin Mandeville of Inveso said that the late-December bill auctions “speak volumes to investors being cautious as to when the potential drop-dead date will be,” adding that “we saw it back in July when we had concerns about the October bills.” And sure enough, having just concluded, the 3M bill was especially ugly, pricing at 1.445%, or a 3bps tail to the 1.415% When Issued, with Indirect Buyers fleeing, and taking down just 20.1% of the finally allotment, down from 30.8% in the last 6 auctions, while Primary Dealers had no choice but to step up aggressively from 61.9% in the 6MMA, to 74% as Direct interest also fizzled from 7.3% in the last 6 auctions to just 5.9%. But nowhere was the revulsion quite so visible as in the bid to cover, which plunged from 3.04 in the past 6 auctions to just 2.71 on Dec. 26: this was the lowest Bid to Cover since January 2009.

Demand Slides For 2Y Treasuries As Yield Surges To Highest Since Sept 2008 - The last time the yield on a 2-Year TSY auction was as high as it was today - 1.922% to be specific, tailing the When Issued 1.899% by 0.3bps - was just a few days after Lehman Brothers failed, with one difference: back then it was sliding, while now the rate on 2Y paper is surging, up from just 1.21% at the start of the year, and up from 1.765% just last month thanks to the latest Fed rate hike. The Bid to Cover was only 2.515, a steep drop from last month's 2.725% and well below the 2.88 6-auction average; it was the lowst BTC since last December's 2.436%.  The internals were just as ugly, with the Indirect takedown sliding to 39.97% - the first sub-40% award since last December, and far below the 49.2% 6MMA. Directs were awarded 14.5%, below the 17% in November and 16.3% 6 month average, leaving Dealers with the bulk of the work, and award, at 45.5%, the highest since the 58% dealers took down in December of 2016, and far above both last month's auction (41.2%) and the 6 month average (34.5%). And yet, while today's 2Y auction was just as ugly as the 3Month Bill auction earlier, it was so for different reasons, chief of which were year end window dressing as well as concerns about rising rates in the coming year. Overall, however, should 2018 buyside demand remain as lousy as it was in today's various Bill and Note auctions, the Fed may soon have no choice but to return to the market and monetize some more debt.

Demand Tumbles For 5Y Treasuries As Tailing Auction Leads To Highest Yield Since 2011 -- After yesterday's ugly, tailing 2-Year auction, it is probably not a big surprise that today's sale of $34 billion in 5Y Treasurys was just as ugly.The auction printed at a high yield of 2.245% - the highest since March 2011 - and well above last month's 2.066% largely thank to the recent Fed rate hike. More troubling is that the auction tailed the When Issued 2.228% by a whopping 1.7bps, the biggest tail going back at least 2 years.The internals were also lo usy, with the Bid to Cover sliding from 2.46 in November to just 2.36, the lowest since June and well below the 6 month average of 2.49. And, just like yesterday's 2Y auction, the bidside demand tumbled, with Indirects awarded only 58.4% of the final allotment, the lowest since April, and below the 66.8% 6 month average, Directs left with 7.9%, also below the 6 month auction average of 9.7%, leading to the biggest Dealer award since April, at 33.7%, 50% higher than November's 22.8%, and well above the 6 month average of 23.4%. What is strange is that today's ugly auction priced amid a backdrop of a relentless bid for longer-dated paper, and certainly 5Y, and not even the ugly auction did much to unsettle the yield on 5Y paper which had dipped to the lowest in a week ahead of the results, and has barely budged higher after the print.

The Treasury Yield Curve Is Crashing Most Since Brexit -- Remember the post-tax-reform, pre-Christmas spike in yields and the yield curve? Yeah, that's all over now!!!!Treasury yields are down 4 days in a row with a major collapse occurring today as the long-end plunges over 8bps - the most in 3 months. The 2s30s yield curve is down over 8bps - the biggest-single-day flattening since Brexit (June 2016)...  his is the biggest 4-day drop in 30Y yields since February.  Notably 10Y yields dropped back below 2.4% (YTD unch)...  The yield curve is crashing...  The biggest 1 day flattening since Brexit... All of which is fascinating given that net spec positioning is near record long the long-end...

In An Unexpected Outcome, Trump Tax Reform Just Blew Up The Treasury Market -- Over the past week we have shown on several occasions that there once again appears to be a sharp, sudden dollar-funding liquidity strain in global markets, manifesting itself in a dramatic widening in FX basis swaps, which - in this particular case - has flowed through in the forward discount for USDJPY spiking from around 0.04 yen to around 0.23 yen overnight. As Bloomberg speculated, this discount for buying yen at future dates widened sharply as non-U.S. banks, which typically buy dollars now with sell-back contract at a future date, scrambled to procure greenbacks for the year-end. However, as Deutsche Bank's Masao Muraki explains, this particular dollar funding shortage is more than just the traditional year-end window dressing. Instead, the DB strategist observes that the USD funding costs for Japanese insurers and banks to invest in US Treasuries - which have surged reaching a post-financial-crisis high of 2.35% on 15 Dec - are determined by three things, namely (1) the difference in US and Japanese risk-free rates (OIS), (2) the difference in US and Japanese interbank risk premiums (Libor-OIS), and (3) basis swaps, which illustrate the imbalance in currency-hedged US and Japanese investments. In this particular case, widening of (1) as a result of Fed rate hikes and tightening of dollar funding conditions inside the US (2) and outside the US (3) have occurred simultaneously. This is shown in the chart below.

Where is Trump’s Cabinet? It’s anybody’s guess - The Cabinet members carrying out President Donald Trump’s orders to shake up the federal government are doing so under an unusual layer of secrecy — often shielding their schedules from public view, keeping their travels under wraps and refusing to identify the people and groups they’re meeting.A POLITICO review of the practices of 17 Cabinet heads found that at least eight routinely decline to release information on their planned schedules or travels — information that was more widely available during the Obama and George W. Bush administrations. Four other departments — Agriculture, Labor, Homeland Security and Education — provide the secretaries’ schedules only sporadically or with few details. The Treasury Department began releasing weekly schedules for Secretary Steven Mnuchin only in November.In addition, at least six Cabinet departments don’t release appointment calendars that would show, after the fact, who their leaders had met with, what they discussed and where they traveled — a potential violation of the Freedom of Information Act, which says agencies must make their records “promptly available to any person.” Two departments — Education and the Environmental Protection Agency — have released some of those details after watchdog groups sued them. This information clampdown is occurring with little oversight by Trump’s White House, which said only that agencies should follow the law when it comes to deciding what information to release.  Government watchdog groups and activists who closely follow the departments’ policies say the secrecy is more than just a Trumpian swipe at political enemies and a meddlesome news media: It’s an attempt, they say, to conceal the special access that some powerful interests have gotten in shaping policies that directly affect them.

Income distribution and GDP, it matters - Daniel Becker -- I have this pile of income data sorted out from Saez’s work (the GDP is BEA). My thoughts regarding our economy is that income inequality (or equality) matters. It matters so much, that it is the all defining focus of government in a democracy. Every policy made should be judged against this goal of ever greater equality as we use the tool called “economy” for the betterment of our lives.For most (even the tippy-top earners), the biggest share of income is not earned from money, but from labor, whether physical or cognitive. Because of this, there must be effort as reflected in our policy toward regulation and initiatives that continually work to equalize the share of income. I am confident, that just as Cactus showed there is a low and high to top marginal rates correlating with GDP growth rates, the same is true for share of income. That’s my thoughts. I sorted out the share of income in dollars and percentages in the past and have posted them. This time I look at per capita income and compare them to GDP.   Using 1976 as the center point of the range because it is the low point of the share of income for the top 1%, there are 5 times that GDP doubled for an average of 8.6 years per doubling. This during the time that income share was becoming more equal. As income became less equal over the next 32 years, there are only 3 doublings of GDP or once every 10.6 years. Also, the time between doubling is increasing to more than during the prior 43 years.  Now, for the class war aspect. In the first 43 years, the top 1% saw their income double only 3 times (1 every 14.3 yrs) compared to the bottom 99% seeing theirs double 4 times (1 every 10.75 yrs). During the next 32 years, the top 1% has experienced 4 doublings, one every 8 years compared to the 99% experiencing this only twice, one every 11 years.Here is the graph that illustrates the relationship of shifting income share and GDP growth. Following Spencer’s p ast suggestion, the graph is a logarithmic scale.

The National Debt Disappeared -  Mike Kimel -   Other than a small number of fiscal conservatives who are ignored by their own party, it doesn’t seem like anyone really cares about the National Debt any more. That’s a relatively new thing. Doing something about the Debt was one of the platforms of the GW Bush campaign in 2000. Of course, what he actually did to the Debt was the precisely the opposite of what he told us he was going to do. Then came Obama, whose economic policies – certainly with respect to anything that could affect the Debt – could best be described as a continuation of what GW started. Why anyone would look to a disaster as an example to follow, I cannot say, but people who become President tend to be unusual. At present, it seems that we have entered a period of unholy alliance between most Democrats and most Republicans. The former want to spend taxpayer money on social programs, the latter want to cut taxes and to spend taxpayer money on things that aren’t social programs, and both groups essentially get what they want the most. At least for now. Which brings me to the point. I can’t tell you how all this ends, but I can tell you that the longer it goes on, the less well it ends.

Defense Department: The War On Terror Has Cost $250 Million A Day For 16 Years -- American taxpayers have spent $1.46 trillion on wars abroad since September 11, 2001. The Department of Defense periodically releases a “cost of war” report. The newly released version, obtained by the Federation of American Scientists Secrecy News blog, covers the time from the September 11th terrorist attacks through mid-2017. The Afghanistan War from 2001 to 2014 and Iraq War from 2003 to 2011 account for the bulk of expenses: more than $1.3 trillion. The continuing presence in Afghanistan and aerial anti-ISIS operations in Iraq and Syria since 2014 have cost a combined $120 billion.The report’s costs include only direct war-related expenses such as operating and maintaining bases, procuring equipment, and paying for and feeding troops. It most notably does not include the expense of veteran’s benefits for troops who serve in these wars or the intelligence community’s expenses related to Global War on Terror.A 2011 paper from Harvard Kennedy School professor Linda Bilmes estimated the cost of veterans’ benefits as $600 billion to $1 trillion over the next 40 years.  Since then, the number of veterans receiving compensation for service-related disability has increased drastically. According to the Veterans’ Benefits Administration’s 2016 annual benefits report , 1,060,408 veterans are receiving service-related benefits, averaging $15,907 a year.  According to the Congressional Research Service, the only war in U.S. history to cost more than the Global War on Terror is World War II, at more than $4.1 trillion in present dollars. Direct war-related expenses from the Vietnam War cost $738 billion in today's dollars.

North Korea says new U.N. sanctions an act of war (Reuters) - The latest U.N. sanctions against North Korea are an act of war and tantamount to a complete economic blockade against it, North Korea’s foreign ministry said on Sunday, threatening to punish those who supported the measure. The U.N. Security Council unanimously imposed new sanctions on North Korea on Friday for its recent intercontinental ballistic missile test, seeking to limit its access to refined petroleum products and crude oil and its earnings from workers abroad. The U.N. resolution seeks to ban nearly 90 percent of refined petroleum exports to North Korea by capping them at 500,000 barrels a year and, in a last-minute change, demands the repatriation of North Koreans working abroad within 24 months, instead of 12 months as first proposed. The U.S.-drafted resolution also caps crude oil supplies to North Korea at 4 million barrels a year and commits the Council to further reductions if it were to conduct another nuclear test or launch another ICBM. In a statement carried by the official KCNA news agency, North Korea’s foreign ministry said the United States was terrified by its nuclear force and was getting “more and more frenzied in the moves to impose the harshest-ever sanctions and pressure on our country”. The new resolution was tantamount to a complete economic blockade of North Korea, the ministry said. “We define this ‘sanctions resolution’ rigged up by the U.S. and its followers as a grave infringement upon the sovereignty of our Republic, as an act of war violating peace and stability in the Korean peninsula and the region and categorically reject the ‘resolution’,” it said. “There is no more fatal blunder than the miscalculation that the U.S. and its followers could check by already worn-out ‘sanctions’ the victorious advance of our people who have brilliantly accomplished the great historic cause of completing the state nuclear force”, the ministry said. North Korean leader Kim Jong Un on Nov. 29 declared the nuclear force complete after the test of North Korea’s largest-ever ICBM test, which the country said puts all of the United States within range. Kim told a meeting of members of the ruling Workers’ Party on Friday that the country “successfully realized the historic cause of completing the state nuclear force” despite “short supply in everything and manifold difficulties and ordeals owing to the despicable anti-DPRK moves of the enemies”..  

How the US Department of Energy Shapes North Korea Policy - In the debate over how the United States should counter the threat presented by North Korea’s nuclear weapons, several government agencies have overtaken the American narrative. The State Department tries to negotiate with North Korea. The Defense Department examines military alternatives. The Central Intelligence Agency (CIA), the Defense Intelligence Agency (DIA), and the National Security Agency (NSA) surveil developments on the Korean Peninsula. Many, however, have ignored the unique expertise that the Department of Energy (DOE) lends to the intelligence community.The Office of Intelligence and Counterintelligence (OICI), DOE’s in-house intelligence agency, specializes in monitoring nuclear proliferation. Whereas the CIA specializes in human intelligence, the DIA in military intelligence, and the NSA in signals intelligence, OICI can draw on the knowledge of nuclear physicists and other scientists working at the DOE National Laboratories and Technology Centers, such as the Lawrence Livermore and Los Alamos National Labs, in its intelligence efforts. On its website, DOE is attempting to recruit specialists in computer security, counterintelligence, human resources management, and intelligence analysis, providing insight into the range of OICI’s work. In addition to its own employees, OICI depends on scientific and technical intelligence offered by the likes of Dr. Siegfried S. Heckler, a former director of Los Alamos who has traveled to North Korea seven times, even inspecting its nuclear reactors . Heckler declined to comment on his trips to North Korea and his work with OICI, but has previously advocated for negotiations with Kim Jong-un. As the preeminent intelligence agency on nuclear proliferation around the world, OICI has several methods of collecting information on North Korea’s nuclear weapons. The expertise available to OICI often exceeds what other intelligence agencies can offer policymakers. Sharon Squassoni, a former official at the Arms Control and Disarmament Agency (ACDA), the State Department, and the Congressional Research Service, now at the Center for Strategic and International Studies, found herself deferring to DOE intelligence.

Trump Warns China - "No Friendly Solution" If They Keep Cheating On Korean Oil Exports - President Trump took aim at President Xi this morning in a very clear tweeted warning that follows US spy satellite evidence that showed China allowing oil exports to North Korea.Trump exclaimed "caught red-handed" and said he was "very disappointed" by China's actions. Perhaps more notable is that he explained "there's no friendly solution" if this continues...Caught RED HANDED - very disappointed that China is allowing oil to go into North Korea. There will never be a friendly solution to the North Korea problem if this continues to happen!— Donald J. Trump (@realDonaldTrump) December 28, 2017As a reminder, this is what President Trump is upset about, according to South Korea's Chosun Ilbo, U.S. recon satellites have photographed around 30 illegal transactions involving Chinese vessels selling oil to North Korea on the West Sea in October. The images allegedly showed large Chinese and North Korean ships transacting in oil in a part of the West Sea closer to China than South Korea. The satellite pictures even showed the names of the ships.   A government source said, “We need to focus on the fact that the illicit trade started after a UN Security Council resolution in September drastically capped North Korea’s imports of refined petroleum products.”  Meanwhile, on paper, China’s trade with North has recently collapsed after U.S. President Donald Trump unleashed a barrage of sanctions in September targeting North Korea’s imports of refined petroleum products.

It’s a THAAD, THAAD, THAAD World - WAR HAWKS HAVE A LONG HISTORY of pitching the illusion of a survivable nuclear war to an American public that tends to be unenthusiastic about dying in a holocaust of fire and radiation. If the prospect of nuclear war is downplayed, public opinion may be more open to belligerent foreign policy that openly flirts with it. Perhaps the most explicit example of this attempt at messaging came from T.K. Jones, Reagan’s Undersecretary of Defense for Civil Defense Planning: Nuclear war is not nearly as devastating as we had been led to believe. If there are enough shovels to go around, everybody’s going to make it. . . . You can make very good sheltering by taking the doors off your house, digging a trench, stacking the doors about two deep over that, covering it with plastic so that rainwater or something doesn’t screw up the glue in the door, then pile dirt over it. It’s the dirt that does it. This attempt to burnish the image of Armageddon coincided with a near-suicidal binge of brinksmanship, defense spending, and saber-rattling by the Reagan administration that took the nation closer to all-out nuclear war than it had been since the Cuban Missile Crisis. We have such a leader now. As Trump and his fellow lunatic Kim Jong-Un engage in a global and public dick-measuring contest, the prospect that one or both of these unstable megalomaniacs could pull the trigger forms part of the background noise of modern life. If our parents and grandparents lived in fear of a strategic nuclear exchange with the USSR, the zeitgeist of the Trump Era is the persistent fear that the end of the world (or a substantial part of it) will be a farce perpetrated by two bald men fighting over a comb. Even if the names, locations, and precise technologies change, the message is consistent, and it is again being disseminated: It won’t be so bad. Ten, twenty million. Tops.

‘Doomsday Machine’ author Daniel Ellsberg says Americans have escaped self-annihilation by luck –(interview & transcript)  The military analyst turned whistleblower who leaked the Pentagon Papers looks at the existential threat of America’s nuclear capacities in his new memoir, “The Doomsday Machine.” Very little has changed, says author Daniel Ellsberg, when it comes to what he calls the immoral and insane policies regarding nuclear weapons. William Brangham sits down with Ellsberg to discuss the looming danger.

Beijing complicates Washington’s Afghan strategy - After a meeting in Beijing on Tuesday of the China-Afghanistan-Pakistan Dialogue, a newly created trilateral format, Chinese Foreign Minister Wang Yi made a major announcement that Beijing and Islamabad will look at extending the US$57 billion China-Pakistan Economic Corridor (CPEC) to Afghanistan.The joint press release after the meet said the three countries “reaffirmed their commitment to improving their relations, deepening mutually beneficial cooperation, advancing connectivity under the Belt and Road Initiative.” Wang was forthright later at a press conference: “China and Pakistan are willing to look at with Afghanistan, on the basis of win-win, mutually beneficial principles, using an appropriate means to extend the China-Pakistan Economic Corridor to Afghanistan.”Pakistani Foreign Minister Khawaja Asif chose his words carefully, saying Pakistan and China are “iron brothers” and the successful implementation of the CPEC “will serve as a model for enhancing connectivity and cooperation through similar projects with neighboring countries, including Afghanistan, Iran and with Central and West Asia.”The Chinese proposal has triggered mixed emotions in the Pakistani mind. The Xinhua news agency reported separately that during a bilateral meeting with Wang, the visiting Afghan Foreign Minister Salahuddin Rabbani called China “a forever and reliable partner” and pledged that his country was “ready to actively participate in the Belt and Road Initiative.” Pakistan’s principal worry would be that its “iron brother” is steadily transforming as a moderator.The trilateral  meeting in Beijing was a Chinese initiative, which was unveiled during Wang’s shuttle diplomacy between Kabul and Islamabad in June. To be sure, Beijing has staked its prestige on fostering amity between Afghanistan and Pakistan, a daunting challenge that Western powers have failed to cope with. But by introducing the Belt and Road Initiative (BRI) into the matrix, Beijing displays new thinking.

The Afghan war: Trump and Putin battle for Uzbek support - As the year 2017 ends, the Afghan war is approaching an inflection point. The bloodiest year of the 17-year-old war is about to begin. The pep talk given by US Vice-President Mike Pence at Bagram airbase on Thursday harped on about “victory” and “winning” as the objective of the war. Pence claimed that the US strategy was already “bearing fruit” and “we’ve put the Taliban on the defensive.” But crunch time is coming. What stood out was the way Pence openly threatened Pakistan. “For too long Pakistan has provided safe haven to the Taliban and many terrorist organizations, but those days are over. President Trump has put Pakistan on notice,” he said.The big question is how the US can afford to get tough with Pakistan, which controls the transit routes to Afghanistan. Does Trump have a Plan B? Apparently, that’s a work in progress. On December 19, on the eve of Pence’s surprise trip to Afghanistan, Trump telephoned the President of Uzbekistan Shavkat Mirziyoyev “to discuss regional security and to explore opportunities for improved cooperation.” The White House readout said Trump and Mirziyovev discussed “Uzbekistan’s role in Central Asia, including its support for President Trump’s South Asia strategy and United States’ efforts in Afghanistan.” The phone call marks a significant overture by Washington, which lacked a coherent Central Asia policy through the past decade. It came a fortnight after Afghan President Ashraf Ghani paid a highly productive visit to Tashkent on December 4-6. Agreements were reached on Uzbek supplies of agricultural and pharmaceutical goods, construction and transport equipment. 

Trump Says US ‘Foolishly Spent $7 Trillion in the Middle East’ - One day after a massive Thursday loss at the UN General Assembly on the Jerusalem issue, President Trump complained on Twitter that the US “foolishly spent $7 trillion in the Middle East,” suggesting the focus needed to shift to US infrastructure. This comment was perceived by some reporters as being about Trump’s threat to withdraw foreign aid from countries that voted against him at the UN, as well as lamenting how little influence the US had actually bought. Of course, the $7 trillion is mostly not foreign aid, but military spending, and as President Trump is always eager to remind people, he is particularly supportive of massive military increases, and has continued and escalated overseas operations, largely in the Middle East, since taking office. Trump has, however, been fond of presenting the money spent on the Middle East as a waste, making a similar claim back in February, albeit when it was just $6 trillion, and complaining then that the US didn’t get a single oil well out of all that war. It is still noteworthy, however, that President Trump does have these moments of reflection, wherein he actually tries to assess what the US has gotten out of all this spending in the Middle East. It is disheartening, at the same time, that he is able to ascertain that the money was wasted, but has no intentions of not continuing to squander money at an increased rate in the Middle East.

Getting Kicked, Taking Names - The world just did to Donald Trump the one thing that he hates more than anything—it disrespected him. The odd thing is, he could have avoided the humiliation if only he knew a little about international relations or valued what his advisers tried to teach him above his most craven political instincts.  On Thursday afternoon, the U.N. General Assembly voted 128–9 (with 35 member states abstaining) to declare null and void the United States’ recent recognition of Jerusalem as the capital of Israel—a recognition that Trump had bestowed on Dec. 6. The U.N. vote has no binding effect, but it is a loud rebuke of Trump, just three days after he boasted that he had restored the world’s respect for American leadership.  The rebuke is amplified by the fact that Trump had announced the day before that he would revoke financial aid for any country that voted for the resolution. “Let them vote against us,” he said at a cabinet meeting on Wednesday. “We’ll save a lot. We don’t care. But this isn’t like it used to be where they could vote against you and then you pay them hundreds of millions of dollars. We’re not going to be taken advantage of any longer.” Trump’s U.N. ambassador, Nikki Haley, wrote a letter to other delegates, warning, “The U.S. will be taking names” during the roll call. “As you consider your vote,” she elaborated, “I encourage you to know the president and the U.S. take this vote personally. She then tweeted, “At the UN we’re always asked to do more and give more. So, when we make a decision, at the will of the American ppl, abt where to locate OUR embassy, we don’t expect those we’ve helped to target us.”  It is doubtful that Trump will follow through on this threat—which will make him look still more petulant—but if he does take action, it will severely damage U.S. interests, even as he has defined them.  The countries that voted for the resolution— or, as Trump sees it, against him—include four of the five biggest recipients of U.S. aid: Afghanistan, Iraq, Egypt, and Jordan. They also include countries that Trump has courted since taking office—Saudi Arabia, Russia, China, India, Pakistan, and Vietnam. They also include every country in Western Europe.

US Slashes United Nations' Budget By $285 Million Following "Stunning" Jerusalem Rebuke - The United States announced a $285 million cut in the United Nations' "bloated" budget for next year, negotiated by UN Ambassador Nikki Haley. A statement by the United States Mission to the United Nations reads:  Today, the United Nations agreed on a budget for the 2018-2019 fiscal year. ‎Among a host of other successes, the United States negotiated a reduction of over $285 million off the 2016-2017 final budget. In addition to these significant cost savings, we reduced the UN’s bloated management and support functions, bolstered support for key U.S. priorities throughout the world, and instilled more discipline and accountability throughout the UN system. Pleased with the cuts, Haley added "you can be sure we’ll continue to look at ways to increase the UN’s efficiency‎ while protecting our interests."   The move follows a contentious week at the U.N., after 128 nations voted in a "stunning rebuke" of President Trump's decision to recognize Jerusalem as the capital of Israel. Prior to the vote, Trump threatened to cut foreign financial aid to any countries who opposed the move - first with a tweet by Ambassador Nikki Haley threatening that the US would be "taking names," followed by comments made by Trump to reporters last Tuesday, according to Reuters. 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.Haley also circulated a letter to all UN member states effectively warning them not to vote against Trump's decision. "As you consider your vote, I want you to know that the President and U.S. take this vote personally," she wrote. "The President will be watching this vote carefully and has requested I report back on those countries who voted against us."

 Russian comedians prank Nikki Haley into commenting on fictional country | TheHill: A pair of Russian comedians appear to have successfully prank-called U.S. Ambassador to the United Nations Nikki Haley by posing as a Polish government official. The two comedians, Vladimir Kuznetsov and Alexei Stolyarov, posted a video over the weekend in which a woman identified as Haley believes she is speaking to Polish Prime Minister Mateusz Morawiecki. “Let me start with very much thanking you for the support we received on the vote today,” Haley says. “We will never forget it.”Haley was referring to the U.N. vote last week to condemn President Trump’s decision to recognize Jerusalem as Israel’s capital. Poland was one of 35 countries who abstained from voting on the resolution.  The man posing as Morawiecki then asks Haley about the fictional island of Binomo in the South China Sea. "You know Binomo?" the man said, to which Haley replied “yes, yes.”   "They had elections and we suppose Russians had its intervention,” the man said. "Yes, of course they did, absolutely," Haley replies. “We’ve been watching that very closely, and I think we will continue to watch that as we deal with the issues that keep coming up about the South China Sea.” The man posing as Morawiecki asks Haley what the United States plans to do about the fictional island of Binomo."Let me find out exactly what our stance is on that, and what if anything the U.S. is doing or thinks should be done, and I will report back to you on that as well,“ she says. A spokesman for Haley, John Degory, told The Post and Courier “we have nothing to share on that at this time” when asked about the video.’

Homeland Security Increasingly Means Putting Agents Outside the Homeland - NYT - The Department of Homeland Security is increasingly going global. An estimated 2,000 Homeland Security employees — from Immigration and Customs Enforcement special agents to Transportation Security Administration officials — now are deployed to more than 70 countries around the world. Hundreds more are either at sea for weeks at a time aboard Coast Guard ships, or patrolling the skies in surveillance planes above the eastern Pacific Ocean and the Caribbean Sea. The expansion has created tensions with some European countries who say that the United States is trying to export its immigration laws to their territory. But other allies agree with the United States’ argument that its longer reach strengthens international security while preventing a terrorist attack, drug shipment, or human smuggling ring from reaching American soil. “Many threats to the homeland begin overseas, and that’s where we need to be,” said James Nealon, the department’s assistant secretary for international engagement. In Germany, some lawmakers have questioned the department’s counterterrorism Immigration Advisory Program, where travelers at foreign airports are investigated and sometimes interviewed by plainclothes Customs and Border Protection officers before they are allowed to board flights to the United States. Those American officers can recommend that airlines deny boarding to foreign passengers. A Government Accountability Office report found that the customs officers stopped 8,100 known or suspected terrorists, or individuals with connections to terrorist groups, from traveling to the United States in 2015, the most recent year that data is available.

As Good As It Gets? -- So they got their tax cut done. In the middle of the night again no less, despite the vast majority of the American people not wanting it. The reason may simply be that the American public is not believing the false narratives that are being sold to them. And who can blame them? It starts at the top after all. When Donald Trump claims the tax plan would personally hurt him everyone knows that’s simply not true. And still his agents insists on defending the lie by lying some more. So I had to ask, does truth still matter? The answer may not reveal itself for months to come. US corporations will see benefits to GAAP earnings and they will increase dividends and buybacks. All true. But they will not hire more or pay more. We already know this:  And since none of these things have to do with organic business growth corporations will eventually face a situation where in the following years an unfavorable comparison will emerge as the artificial earnings benefits are priced in and then earnings growth will look to drag in comparison as the organic growth won’t make up for the artificial delta. Ironically then pressure for efficiency improvements will arise and companies will rightsize in the name of efficiency gains to make up the difference, i.e. layoffs. So ironically corporate tax cuts in the long term will do the opposite of what they were advertised to do. One can virtually see it coming. But hey. Party away.Fact is the tax cuts will not pay for themselves and deficits will be gigantic and the US treasury is already set to sell $1.3 trillion in debt next year alone.

Trump to Mar-a-Lago Crowd: ‘You All Just Got a Lot Richer’ - Hours after signing the massive GOP tax cuts into law on Friday, President Trump told ultra-wealthy members of Mar-a-Lago that “you all just got a lot richer,” CBS News reported Sunday morning.Trump reportedly made the comments to a group of friends eating dinner at his exclusive Florida club, where membership costs a cool $200,000 and annual fees run to $14,000.In the past few months, Trump has made halfhearted efforts to assure Americans that the richest Americans — and he in particular — would not be rewarded by the Republican tax bill.“The rich will not be gaining at all with this plan. We are looking for the middle class and we are looking for jobs — jobs being the economy,” Trump said in September.  “This is going to cost me a fortune,” he claimed in November. “This is not good for me.” But Americans weren’t buying that line, with good reason: It’s bunk. While it’s true that most Americans will see a small tax cut next year, the richest of the rich will see the vast bulk of the bill’s benefits over the course of the next decade. And between changes to the estate tax, rules that disproportionately benefit commercial real-estate companies like Trump’s, and other provisions, the president stands to enrich himself to the tune of millions of dollars per year. Precisely how much is impossible to know, since the president continues to refuse to release his tax returns. Between his proudly plutocratic comments at Mar-a-Lago and reports that he’d made multiple outwardly racist remarks in the Oval Office, it’s a good weekend to remember that despite his mendacious reputation, President Trump has the capacity to be completely candid about his true beliefs.

"You All Just Got A Lot Richer" - Trump Confirms The Biggest Problem With The GOP Tax Cut -- As we’ve pointed out time and time again, the biggest problem with the Trump tax cuts is that they overwhelmingly benefit the rich. In fact, shortly after the initial nine-page outline of the program was unveiled by Gary Cohn and Steven Mnuchin, the nonpartisan Tax Policy Center released an analysis that showed the wealthiest 1% of Americans would accumulate more than 80% of the benefit from the tax bill.This is a huge problem – particularly if the administration hopes to come anywhere near the 2.9% rate of GDP growth sustained over the next 10 years, a feat that would amount to the longest period without a recession in US history.That’s because when the wealthy receive tax breaks, they tend to save the money instead of putting it to productive use – at least at first. One need only glance at this chart from JP Morgan to see how shabbily middle- and working-class voters are treated by the tax bill. The massive expansion of the deficit that will result from the drop in government revenues t guaranteed to occur once the law takes effect will quickly send the national debt to 100% of GDP. This is problematic, because interest rates are beginning to rise, making borrowing more expensive. And President Trump has yet to unveil his $1 trillion infrastructure plan which, though it’s expected that it will rely mostly on private-public partnerships, will still likely tack even more on the debt.Well, President Donald Trump effectively confirmed our analysis this weekend when, upon returning to  Mar-a-Lago, he haughtily told its members “you all just got a lot richer,"according to the New York Post. Trump made the announcement during a dinner at Mar-a-Lago – the “Winter White House” – on Friday evening, boasting to his fellow one-percenters that the “biggest in history” tax cut he signed earlier in the day would make them even wealthier, CBS reported, citing people sitting near the president’s table who heard the remarks.

Diverting Class Warfare Into Generational Warfare - Dean Baker - With the Republicans having just passed a $1.5 trillion tax cut, the bulk of which goes to the richest 1 percent, it was inevitable that the generational warriors would come out of the woodwork and resume the attack on Social Security and Medicare. Generational warriors try to divert attention away from how our economy has redistributed income upwards over the last four decades, and convince a large portion of today's workers that their real problems stem from their parents' and grandparents' overly generous retirement benefits.The opening shot in this new round of generational warfare showed up earlier this month in The Atlantic Magazine. It told the classic story about how seniors are getting too much money back from Social Security and Medicare, the same thing we've been seeing for decades. (There is little expectation of originality if you're in the business of promoting generational warfare.)In fact, middle-income seniors will get somewhat less back from Social Security than they paid into the system. The cost of Medicare benefits does exceed their taxes, but this is because Americans pay twice as much for our doctors, drugs, medical equipment and other health care items than people in other wealthy countries.The real problem is high-income people in the health care sector making too much money, not the country being too generous to its seniors. But, the folks promoting generational warfare aren't interested in clamping down on the rich doctors and drug companies; they want us to go after retired school teachers and retail clerks. Even if Social Security and Medicare were more generous, it would still say almost nothing about generational equity. While the generational warriors would like to have everyone focus on the cost of programs that primarily serve the elderly, paying for these programs has a trivial impact on the well-being of the working population. Policies that affect the distribution of income within generations are vastly more important.

Sanders Slams Trump for ‘Bragging’ About Millions of Americans Losing Healthcare -- In an interview on CNN's "State of the Union" on Sunday, Sen. Bernie Sanders (I-Vt.) slammed President Donald Trump for "bragging" about a provision in the GOP tax bill that could leave 13 million more Americans without health insurance and argued that the U.S. should instead be working toward guaranteeing healthcare to all Americans as a right."Instead of bragging about more Americans without health insurance, we should join every other major country on Earth, guarantee healthcare for all people, and end the absurdity of paying twice as much per capita for healthcare as every other major nation," the Vermont senator said. Sanders was reacting to Trump's recent comments on the GOP tax bill's repeal of the Affordable Care Act's individual mandate. Trump claimed that the provision "essentially" repeals Obamacare, and insisted that he will "come up with something much better." The Republican Party's previous healthcare push, Sanders was quick to note, resulted in a bill that would have thrown more than 20 million Americans off their health insurance. Sanders' remarks came in a wide-ranging interview in which he also denounced Trump for lying about who benefits from his tax plan and said Republicans should be "very" worried about their 2018 electoral prospects, given the deep unpopularity of their tax legislation."What we're seeing in Alabama, what we're seeing in Virginia, New Jersey and in states all across this country, are large voter turnouts, are people standing up and fighting back and demanding that we have a government that represents all of us, not just the one percent."The Vermont senator also denounced Congress's lack of action to protect Dreamers, calling it a "moral outrage."

Kicking Away Tiny Tim’s Crutch Because His Father Voted for Trump - Today Corey Robin, whom I've begun following lately, posted this on Facebook, referring to this tweet from Eric Alterman.  (Doug Henwood also noticed the tweet.)  I'm glad I'm not the only person who's noticed the behavior he's talking about: I'm surprised when liberal writers and journalists say they're fine with Trump voters losing their jobs, health care, access to potable water, and so on, because they had it coming to them. Since jobs, health care, and clean water are critical to one's survival, such calls are essentially an endorsement of death on the installment plan for one-half the country. Imagine the reaction of these very same writers and journalists if the radical left were to call for—or endorse—the death of their domestic political enemies. Or if the radical right were to do so.  Recently my Right Wing Acquaintance Number One gleefully linked to an article about child malnutrition in Venezuela, sneering at that country as a "worker's paradise."  Of course, those children had voted for Chavez and Maduro, so they had brought their misery on themselves.  A day or so later RWA1 linked to a story about Roy Moore's attack on the gay son of his victorious opponent Doug Jones; RWA1 declared that Moore, like the late Fred Phelps, was of Satan.  I commented that RWA1 needs people like Moore and Phelps so that he can pretend to be a moderate while he does a happy dance at the plight of starving brown children.  I might also have pointed out that child malnutrition is a serious problem in the United States, thanks to the policies of both parties over the past few decades; but I doubt RWA1 cares about that either, since those children probably voted for the "aspiring Mussolini" Barack Obama. Robin's post sparked some discussion, with a few people actually defending Alterman's remarks.  Later in the thread Robin added: I also think comments like the one I posted are not symptoms of populism; they're symptoms of tribalism. Party tribalism, where your team is the good guys and the other team is the bad guys. Even tribalism is too fancy: it's just groupiness and cliques. That again is why you see a lot of heated rhetoric from this quarter but no action. Unlike Corey Robin, I'm not all that surprised by Alterman's sentiment, since I've seen so much of it already -- just extremely pissed off. But it also makes me feel a bit more hopeless, because it means that the people who are supposedly, nominally, on my side are really not, which means that there may be hardly anyone to make common cause with. In the US at least. As a result, I get called a nihilist, which is funny but stupid - and also depressing since it comes from people who are nominally on my side. Well, you live and learn.

The People That Capitalism Makes - By now many people have had a good laugh at the expense of young Wyatt, heir to the least-known of the infamous Koch brothers. He drew national attention last week over a promotional video for his luxury Hawaiian shirt company, which sells a broad range of garish designs from pink handcuffs to orange cannolis for $140 each. Perhaps due to its toxic infamy, the Koch connection is disguised in the shirts’ marketing—the brand is simply “Wyatt Ingraham.” But Koch, who is featured in the video driving a Humvee and partying on a yacht, became a conveniently cartoonish symbol of the kind of person who stands to benefit from the Republicans’ massive tax giveaway: you couldn’t really find a more amusing counterpoint to the idea that the rich are useful to society.    Koch presents such an exaggerated image of the “leisure class” that he seems to have stepped straight out of a piece of Soviet anti-capitalist propaganda. He is the child of a billionaire who appears to spend most of his time shopping, lunching, and playing tennis at Mar-a-Lago. He has contributed nothing of any obvious worth to the world—save a series of unfortunate designer shirts, yet stands to inherit a billion dollars (tax-free, if Republicans get their way). And not only is he the kind of extravagant man who spends $180,000 on an engagement ring, but he is also the kind of petty man who fights a legal battle to get it back once the wedding gets called off.   Heck, the shirts he designs are literally covered with pictures of money bags. (See photo above.) If anyone ever again dares to use the word “meritocracy” to describe the United States, the only reply you need is a large color photograph of Wyatt Koch.  He’s the entire economic system wrapped in a zany neon shirt.

Hey, Paul Ryan — More babies won’t fix bad policy | TheHill: Last week, Rep. Paul Ryan (R-Wis.) said that low birth rates were going to be the new economic challenge for America. As The Hill reported, the Speaker suggested that fewer babies puts Medicare and Social Security at risk. Yet, earlier this month, Ryan also recommitted to cutting spending on what Republicans like to call “entitlement programs” — typically referring to Medicare, Medicaid and Social Security. These programs provide a safety net to our most vulnerable citizens, but they’ve been in Ryan’s crosshairs for years. Meanwhile, he and other congressional Republicans are handing out fiscal favors to wealthy corporations, the most entitled class in the country. The Republican tax bill contains historic corporate tax reductions and other corporate giveaways, as well as lowering the tax rate for the wealthiest Americans. The theory that cutting taxes for the rich will trickle down to boost the economy hasn’t panned out in the past. And now it seems that Ryan is counting on procreation to save the economy.This hypothetical yet-to-be-born generation of economic saviors will have their work cut out for them, especially if they inherit the America of today’s GOP. In a country where it pays to be rich, but everyone else gets fewer benefits, there is an increasingly difficult job market and more barriers to the basic building blocks of success, such as healthcare and education. But that’s just the beginning of what these babies will face. Population growth doesn’t solve problems, it actually exacerbates them. When the economy is only measured according to metrics of infinite growth, it misses the point that we live on a finite planet with finite resources.  If everyone on Earth lived like Americans, we’d need five planets to meet the demand on natural resources. As our population and wasteful, polluting industries grow unchecked, so will that number. Yet we only have one Earth, and our debt to the planet is being collected with unprecedented drought, severe weather events and the sixth mass extinction crisis.

Trump’s tax law creates new challenges for IRS -- The Republican tax bill is the law of the land — but for federal officials, the work is just beginning. The Treasury Department and the IRS now have a mammoth task on their hands as they seek to turn the sweeping tax provisions passed by Congress into new rules and regulations. The tax law, which President Trump signed on Friday, generally takes effect in January and includes significant changes to the tax code, including to deductions and pass-through income. Guidance from the IRS will be crucial in helping taxpayers and tax preparers navigate the changes.“[The IRS] will have a series of challenges,” said Mark Everson, who helmed the IRS from 2003 to 2007 and now serves as vice chairman of alliantgroup.The most pressing task for the IRS is to issue new guidance on tax withholdings from people’s paychecks. The agency said it expects to put forth guidance in January that “will allow taxpayers to begin seeing the changes in their paychecks as early as February.” Withholdings are currently based in part on taxpayers’ personal exemptions, but those are eliminated under the new law. Some tax and payroll experts had been concerned that employees would have to complete new W-4 forms in 2018, since workers fill them out to have the correct amount of taxes withheld from their pay. However, the IRS said the new guidance “will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.”  A few of the provisions in the tax law are retroactive to 2017, including a lower threshold for the medical expense deduction. The IRS will need to incorporate these smaller changes in their forms for the upcoming filing season.Most of the other changes take effect for 2018, which means the IRS will have roughly a year to develop new forms, instructions and guidance for the tax filing season that starts in 2019.

Marco Rubio thinks the GOP tax plan helps corporations too much - Sen. Marco Rubio says the GOP "probably went too far" in slashing the tax burden on corporations.  The Florida Republican told the News-Press of Fort Myers that corporations will largely use their major tax cut to buy back shares or increase dividends to shareholders — which "isn't going to create dramatic economic growth." "If I were king for a day, this tax bill would have looked different. I thought we probably went too far on (helping) corporations," Rubio told the newspaper in the interview published Friday. "By and large, you're going to see a lot of these multinationals buy back shares to drive up the price. Some of them will be forced, because they're sitting on historic levels of cash, to pay out dividends to shareholders."  "That isn't going to create dramatic economic growth. (But) there's a lot of things in the bill that I have supported for a long time (such as) doubling the Child Tax Credit. And it is better — significantly better — than the current code," he continued.  The tax plan that President Donald Trump signed into law last week permanently chops the corporate tax to 21 percent from 35 percent. Republicans say the change — which starts Monday — will drive domestic investment, boost wages and fuel economic growth over time.  At least a dozen companies — including mammoth employers like AT&T and Boeing — announced plans to raise their minimum wages, increase capital investment or hand out employee bonuses after the plan's passage. While Republicans have cheered those announcements, some critics of the corporate tax cut have maintained most of those benefits will likely go to shareholders rather than workers.

New tax law spells big changes for companies’ approach to executive compensation - Francine McKenna - The federal tax-reform bill signed into law by President Trump does not touch stock options and deferred compensation, but it does make substantial changes to executive compensation that necessitate additional disclosures this year and in the coming few years. Currently commissions and performance-based compensation are not subject to the $1 million limit for individual compensation that companies can deduct on their tax returns. The tax bill not only eliminates this exception but extends the applicability of the deduction limit, found in Section 162(m), to include a company’s CFO and adds in all foreign companies publicly traded in the U.S. in the form of American depositary receipts. The final bill’s proposed definition may also include some additional corporations that are not publicly traded, such as large private C or S corporations, depending on interpretations. The new law also allows some employees of private companies to defer immediate taxation for up to five years on the gain from exercising a vested stock option or when a share of restricted stock becomes vested. The deferral isn’t available to owners of 1% or more of shares, the chief executive officer, the chief financial officer and of the four most highly compensated officers for any of the last 10 years.Because it was pushed by lobbyists to incentivize private companies to broaden the employee population that gets shares, it also requires that corporations provide stock compensation to at least 80% of its employees with the same rights and privileges in order to qualify for the tax deferral.  Michael Melbinger, a partner at law firm Winston & Strawn LLP who also blogs about the latest developments regarding responsible compensation practices atCompensationStandards.com, told MarketWatch in an interview that not only does the Republican tax legislation not impose terrible tax consequences on stock options and deferred compensation, but, based on his more than 30 years’ experience in these matters, “the elimination of the performance-based compensation exception will lead to a surge in the popularity of incentive stock options, and an uptick in the use of deferred compensation for covered employees.” That’s already happening. Netflix announced on Thursday it would eliminate performance bonuses for its top executives and substantially increased base salaries, citing the elimination of an exception to a deductibility cap for performance bonuses that quashes any incentive to prioritize bonuses over salaries.

This one weird trick lets blue states avoid Trump’s tax hike -- Now that the Republican tax reform bill is officially law, blue states are scrambling to figure out ways around one of the law’s few actual tax increases: its new limit on deducting state and local taxes. Under current law, taxpayers not claiming the standard deduction can deduct both their state and local property taxes, and either their state and local income taxes or their state and local sales taxes, whichever is higher. The Republican bill added a new $10,000 maximum for all state and local tax deductions, effectively raising taxes on wealthy people in those states and reducing a key federal subsidy that makes it easier for states to charge high taxes on rich residents. A few possible options have emerged to evade the new limit, reduce taxes on blue state residents, and reduce future pressure for state tax cuts that the federal law could create. New York Gov. Andrew Cuomo, a Democrat, and the government of DC are urging residents to prepay their 2018 property taxes in 2017, so they can still be deducted. Another route would be for states to create dollar-for-dollar tax credits for all charitable contributions made to the state government. Charitable donations are still deductible under the GOP, so reclassifying state taxes as charity would enable residents to still deduct them at the federal level. But perhaps the most promising option, teased by a large group of tax law experts and vocally championed by prominent liberal economist Dean Baker, is for states to repeal their income taxes and replace them with employer-side payroll taxes. This might appear like a minor technical change. But it would not only totally offset the new limit on deducting state taxes — it would amount to a sizable tax cut for many middle-class families and would vastly simplify tax preparation by freeing people up from filing their own state taxes.

Radical economic populism is the only thing that can save the Democrats now -  Sociologist A.R. Hochschild observed that many Trump voters feel like they're waiting in line to reach the American dream and the line is slowing down, all while the government is helping particular people — "immigrants, blacks, women, refugees" — to cut ahead. Many liberals probably think that sounds racist, untrue, or both. But the "deeper story" is actually anchored in reality more than they realize.  America's welfare aid is both skimpier and far more targeted to the poor than most Western safety nets. Ostensibly, that reduces spending and focuses help on the most needy. But it also inevitably leaves most Americans feeling left out.  ObamaCare is illustrative of this reality. Medicaid, which the Affordable Care Act expanded, may be stingy with providers and does not always have great networks, but overall, its recipients have to deal with relatively little cost-sharing — a major plus for those who get Medicaid. But people who make too much to qualify for Medicaid fall into the exchanges, where deductibles are eye-watering and insurance subsidies phase out far too soon. As a result, only the bottom 20 percent of Americans saw their incomes dramatically and systemically improved by the health reform law. The story is the same for most other major programs: food stamps, TANF, housing assistance, energy assistance, child tax credits, and more. Nearly half of the money goes to the bottom 20 percent of the income ladder.  Government benefits that rise higher up the income ladder are often hidden in the tax code: Think of the deduction for mortgage payments, or the tax break to employers for providing health insurance. But the plight of white working-class Americans goes beyond the structural problems with government benefits. Decades of wage stagnation, disappearing jobs, and lost benefits have rotted away livelihoods for huge numbers of middle and lower-middle-class Americans. The costs of education, housing, and health care have skyrocketed, chewing into family budgets. Nearly half of Americans cannot afford an emergency expense of $400, and even many upper-class workers effectively live paycheck to paycheck.

 The Republican Party doesn’t know where to go after tax reform - House Speaker Paul Ryan, having fulfilled one of his long-term goals by passing tax reform, is now after his white whale: entitlement reform. Despite numerous promises not to touch popular programs like Medicare, Medicaid, and Social Security in order to pay for a deficit-busting tax plan, Ryan began laying the groundwork for social spending cuts weeks before President Donald Trump signed the Tax Reform and Jobs Act into law. “We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said in early December. “Frankly, it’s the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements—because that’s really where the problem lies, fiscally speaking.” But other Republican leaders are pumping the breaks. Trump has indicated that he would like to turn to infrastructure, citing the possibility for bipartisan legislation. And Mitch McConnell, Ryan’s counterpart in the Senate, told reporters that entitlement reform will only happen with bipartisan support. “The sensitivity of entitlements is such that you almost have to have a bipartisan agreement in order to achieve a result,” McConnell told reporters last week. A number of Republican senators, including Shelley Moore Capito, Dean Heller, and Jeff Flake either changed the subject when asked about entitlement reform or insisted that it be bipartisan. There’s simply no way that bipartisan entitlement reform is going to happen. Given the number of narrow party-line votes held in the Senate in 2017, it seems more likely that the insistence on bipartisanship is a polite way of telling Ryan that the issue is too politically sensitive in an election year. Of course, tax reform passed both the House and the Senate on a party-line vote, despite being hugely unpopular.

Donald Trump’s Path To 300 House Votes On Infrastructure Runs Through The Black Caucus   ― Donald Trump opponents have been urging Democrats since the day after the election to offer the incoming president nothing but across-the-board resistance to his agenda. Anything else, the argument goes, is tantamount to an endorsement of racism, misogyny and Islamophobia. Liberal magazine writers have been particularly outspoken in support of the strategy of all-out opposition, arguing that only complete obstruction will drive Trump’s approval numbers low enough for Democrats to capitalize, whereas bipartisan cooperation will only make him more popular. “Charles Schumer is leading Democrats to their doom,” warned New York magazine’s Jonathan Chait, slamming the incoming Senate minority leader for pledging to work with Trump on an infrastructure bill. Slate’s Jamelle Bouie warned that Democrats who collaborate “run the real risk of being co-opted, of bolstering the political prospects of ethno-nationalism in the name of a broad ‘populism’ that isn’t actually at play. An infrastructure bill doesn’t outweigh the impact of Trump’s attacks on communities of color, even if it’s influenced by the left. Communities of color need physical and economic security.” The people who represent those communities of color, however, are much more ready to make a deal. The Huffington Post spoke with 11 of the 45 members of the Congressional Black Caucus in the House of Representatives and found the vast majority skeptical but willing to work on an infrastructure bill with Trump, even if Trump cuts House Minority Leader Nancy Pelosi and her lieutenant, Rep. Steny Hoyer (D-Md.), out of the process.  “The biggest mistake Obama made was trying to work directly with Boehner and Cantor. He should’ve gone straight to the Tuesday Group,” said Sam Geduldig, a lobbyist who is one of K Street’s top donors to the GOP, referring to a group of moderate House Republicans that has since dwindled. “My firm and our clients are looking at this as an opportunity to team with black lobbyists and black caucus members to put together a coalition and work with the rank and file to bypass Pelosi and Schumer. We know Trump won’t make the same mistake as Obama.”

America needs a massive infrastructure bill. But we won’t get one. - Republicans will do what they always do and cling to the supposed principles that exist only as cover for their lack of real ones. I wonder which GOP senator will give the most throat-clearingly bathetic and barf-inducingly sanctimonious speech about the neglected virtues of fiscal responsibility that he was sent to Washington to uphold only months after support the budget-gutting tax bill? My money is on Ted Cruz. This is not cynicism on my part. Indeed, the Republican campaign against President Trump's plans for infrastructure began before he was officially the Republican nominee in 2016. Even Trump's own economic advisers are made sick by the prospect of the federal government spending money on infrastructure, especially if it involves paying "inflated union wages." For people like Stephen Moore of the Heritage Foundation, it is an article of faith that the federal governments cannot fund or develop effective infrastructure, and it is the duty of the rest of us to suffer to prevent the reality of fast Japanese trains, clean Swiss airports, and other horrors from encroaching upon their paradise of ipso facto incompetence. In a fantasy world in which the GOP were capable of removing its ideological blinders, the Democrats could still be counted upon to prevent anything good from happening for which their opponents could take credit, a pattern that dates back at least as far as Congress' rejection of Richard Nixon's plans for universal health care and a guaranteed minimum income. Even if a bill did gain support among House and Senate Republicans, it would not tax the imaginations of parodists to think up the ludicrous statements Democratic leaders would issue explaining their reasons for opposing it. There will always something materially irrelevant — a renewal of DACA, say — to the issue at hand that they will ask to see tacked on in bad faith.

Five obstacles to Trump's infrastructure ambitions | TheHill: President Trump plans to put his long-awaited infrastructure package at the top of his 2018 agenda, eager to notch another legislative victory now that he’s signed a major tax overhaul. The White House will unveil “detailed legislative principles” in January outlining Trump’s infrastructure vision, which lawmakers will use as a blueprint to craft a bill while Trump works to sell the idea to the public, state and local officials and members of Congress. “We’re going to get infrastructure; infrastructure is the easiest of all,” Trump said in the Oval Office last week when he signed the tax bill into law. “People want it, Republicans and Democrats.”But the ambitious rebuilding effort could face roadblocks in both parties, with Republicans concerned about new government spending and Democrats wary of handing Trump another win. Here are five obstacles that could knock Trump's infrastructure plan off course. 

ObamaCare proves surprisingly resilient | TheHill: ObamaCare is showing its resilience after a year where in which it took a beating but survived. A surprisingly high number of people signed up under the law in the enrollment period that ended last week: 8.8 million, just short of the 9.2 million from last year. And that was despite the Trump administration’s attacks on the health-care law, cutbacks on outreach and an enrollment period that was half as long as previous ones. The enrollment numbers suggest that a core group of people, though smaller than what architects of the law originally imagined, wants health insurance and will sign up despite any obstacles in their way. “The ACA seems to have more lives than your neighborhood cat,” said Larry Levitt, a health policy expert at the Kaiser Family Foundation. “It’s a smaller and less functional program than supporters had originally hoped, but it’s still doing the job of [keeping] the uninsured rate at the lowest level ever,” he added. In Congress, the zeal among Republicans for repealing the law appears to be fading somewhat. Some lawmakers are still pushing to revive repeal efforts next year, but important figures are signaling that would be difficult and it could be time to move on. “I think we’ll probably move on to other issues,” Senate Majority Leader Mitch McConnell (R-Ky.) told NPR.

Net Neutrality: The Coming Battles in the Congress and the Courts – Lambert -  Since this is the holiday season, everything in the Beltway has ground to a halt, including the net neutrality battle. The holiday season has not, however, prevented the ISPs from using their monopoly power to muscle through rate hikes. Digital Music News:In all cases, these are increases for essentially the same services, with [Karl Bode of DSLReports] noting that American will be stuck paying ‘significantly more money for the same service in the new year’. In many cases, the changes are padded into existing bills, with most consumers failing to see the changes.In the case of Comcast, increases are happening across the board… Another major ISP, Cox, is increasing the rates for all of its internet service packages…. Similarly, Frontier Communications is tacking on a sneaky surcharge for internet customers…. Similarly, Frontier Communications is tacking on a sneaky surcharge for internet customers. Now, those rate increases are about as crass and heavy-handed as you can get, especially considering the timing. Consider that, when Moody’s makes the argument that the threat of reputational damage will prevent the ISPs from (say) throttling traffic:Moody’s Investors Service said in a note Friday the FCC vote was “credit positive” for internet service providers that could have faced rate regulation under the 2015 rules that would have treated them like public utilities.Moody’s said providers “will tread lightly when it comes to engaging in paid prioritization and throttling, as there could be significant negative public reaction to these acts.”Moody’s said “at least in the near term, the cost of negative publicity on their existing businesses far outweighs the benefit of additional revenue streams these companies can generate from paid prioritization agreements.” Really? At any rate, let’s now look at actions in the Congress, and the Courts. Mostly, I’ll be laying out the actions Congress critters and potential plaintiffs may take, without doing anythiing more than speculating on the likelihoods of success. It’s worth noting that the only people who really like Pai’s rule are the ISPs, not the public:

Net neutrality repeal sets up changes to internet - The repeal a few weeks ago of the Open Internet Order, or net neutrality, was met with a furious backlash as proponents of the policy warned of vast changes to the way the internet is used and the possibility of freezing out certain sites, news and viewpoints.  The 3-2 FCC vote in mid-December rolls back several of the provisions in the 2015 rules, according to Pelkey. The classification of Title II carriers was overturned in the vote, as were any prohibitions on ISPs blocking, throttling or discriminating against internet content and access. While ISPs are free to decide who has access to what, and to charge more for services, he said they must disclose that they’re doing it. For consumers, it remains to be seen how ISPs will react – with the understanding that they’ll most likely look into ways to maximize profit, he said. “They’ll push the envelope as much as they can to make money,” he said. “That’s a byproduct of capitalism. You can rest assured that it will happen.”  Barring an injunction through legal action, there’s a 90-day window for the new rules to go into place.“You’re likely to see subtle changes at first,” he said. “You may see add-on packages. You may see subtle pricing changes. You may see speed changes on some things. There’s no reason to think a company like Verizon won’t prioritize their own content first.”There could also be things such as social media packages. But Pelkey said that while there may be more options, prices are likely to increase. “It’s piecemealing the access,” he said. “You’ve seen cable companies do this with television. You have basic cable, and then you have premium channels that you have to add on and pay for, and sports packages. ... It’s a very similar dynamic.”  Until now, companies haven’t been able to break up internet access into packages.   “Now ISPs are free to modify that in any way that makes them money,” he said.

What Net Neutrality Really Means For You (And For Us) HuffPo ― The repeal of net neutrality isn’t great news for consumers. Giant internet service providers that control their own media empires will be able to push you toward their content while serving up their rivals’ content at molasses-slow speeds. Consumers could be driven into walled content gardens where what you read and watch will be partly determined by which company provides your internet service. And now, absent the regulatory protection of net neutrality, Verizon and other internet service providers can favor our content while discriminating against the competition’s. Verizon did not respond to a request for comment. The company wasn’t the first internet service provider to build a media empire, and it may not be the last — ISPs and tech companies have been acquiring content providers like HuffPost for decades. Because of this sort of consolidation, much more of the internet — and access to it — is dominated by just a handful of companies, less than even a few years ago. Soon those internet service providers that have vertically integrated media empires will be able to operate much like the old closed system of television — controlling both the production of media and the means of distributing it, warned Mitch Stoltz, a senior attorney at the Electronic Frontier Foundation.“What the customer is presented with is what’s convenient and easy to find,” Stoltz said. “And where your eyes and ears get steered comes more and more under control of the [internet service provider].” In other words, major ISPs will be able to promote the media companies they own — like this one — while punishing competitors’ offerings. That will force consumers, who often have no choice in internet service providers, into walled gardens of content that the ISPs create.

Net Neutrality, Technical Solutions: A New, Neutral, Corporate Net, Municipal Broadband, Mesh Networks (and Gamers) – Lambert -  In our previous post, we looked at the timing of FCC Chair Pai’s rollback of net neutrality. In this post, I want to look at technical work-arounds that can preserve net neutrality for some parts of the Internet. (As we shall see, the technical aspects are interesting and even beautiful, but institutional and political aspects are just as important, perhaps more so.) First, I’ll look at the solution of having tech giants like Google create their own ISP, one which maintains net neutrality, and build or buy enough broadband to cover the United States. Then, I’ll look at municipal broadband as proven out in Chattanooga, Tennessee. Finally, I’ll look at “mesh networks,” which try to eliminate the gatekeeping function of ISPs entirely, by eliminating ISPs.  This solution to the strangulation of net neutrality in the coils of the ISP has been proposed in Bloomberg, as I suppose it would be: The plan to end net neutrality is also a major threat to companies that do business on the internet. This is because internet service providers could block or limit access to certain sites altogether. For example, they could cut off access to Netflix and instead sell entertainment streaming services of their own. (Sound crazy? In 2014, Netflix paid Comcast to stop a slowdown of its site.) That’s why members of the Internet Association — companies such as Google, Facebook, Twitter, Amazon, Uber, Netflix, Airbnb and eBay — support net neutrality. Members of the Internet Association could band together to fund an internet service provider that would guarantee neutrality and offer service to every American at affordable rates. Google Fiber could build out its existing services nationwide with funding from these other companies who have a huge interest in protecting open access to the net. Even if the effort is costly, it would be less expensive than the potential alternative of customers being unable to access their sites. Well and good, I suppose, unless Google starts throttling content all on its own, which through its search monopoly it’s already doing. But do the members of the Internet Association really have all that much incentive to protect net neutrality any more?

Saving the Free Press From Private Equity - There is a standard story about the death of newspapers. After decades of enjoying easy profits from print ad income, publishers were blindsided by the internet revolution. Free information on the web cut into their core audience, especially among the young. The expenses of paper, printing, and delivery—“trucks and trees”—made them increasingly uncompetitive in a digital age. Publishers were slow to adjust. By the time owners figured out how to monetize web content, Google and Facebook had gotten there first, and were taking an estimated 80 percent of digital ad revenues. The crash of 2008 only hastened the decline. A few national newspapers with unique franchises—The New York Times, The Wall Street Journal, and The Washington Post—have begun to figure out the digital transition, using paywalls, new digital content, and complementary business strategies to realize income from other sources. They will survive, even thrive. But the real tragedy for the civic commons is occurring at the level of regional papers. Local dailies and weeklies are in a slow death spiral. They missed the digital rendezvous. Operating losses cause owners to lay off staff and shrink content, further depressing readership and ad income, leaving little to reinvest in digital. Local web-only media are feisty in a few places, but no substitute for a robust newspaper, whether print, web, or a blend. This story is all too true as far as it goes. But it leaves out one major player: the private equity industry. Private equity has been gobbling up newspapers across the country and systematically squeezing the life out of them to produce windfall profits, while the papers last. The cost to democracy is incalculable. Robust civic life depends on good local newspapers. Without the informed dialogue that a newspaper enables, the public business is the private province of the local commercial elite, voters are uninformed, and elected officials are unaccountable. 

Judge blocks Trump refugee order - A federal judge has partially blocked an order President Donald Trump issued in October suspending admission of refugees from 11 countries, most of which are majority Muslim. U.S. District Court Judge James Robart issued a nationwide preliminary injunction Saturday afternoon that prevents the administration from halting or diverting resources from refugee applications brought on behalf of family members of immigrants already in the U.S. The injunction does not provide relief for refugees who lack a "bona fide relationship" with individuals, businesses or schools in the U.S.  The Seattle-based judge, who was appointed by President George W. Bush, said Trump's October order violated provisions in immigration laws passed by Congress governing criteria and procedures for admission of refugees."Congress set forth the specific statutory elements that individuals must satisfy to be admitted as a refugee," Robart wrote in his 65-page order. "Congress also specified criteria as to who would be excluded from the definition ... By either prohibiting refugees from [the selected] countries from participating in [the U.S. Refugee Admissions Program] or by grafting on the additional requirement that refugees from [those] countries must also 'fulfill critical foreign policy interests' to qualify, the agencies impermissibly redefine the term 'refugee.'"Robart also said the policy changes Trump sought to impose should have been published for notice and comment from the public before they were implemented.

Trump Sends Fewer Mexicans Home Despite Deportation Talk - President Donald Trump sent 26 percent fewer Mexicans back home this year through November than Barack Obama did in the same period in 2016, despite vows to crack down on illegal immigration, Mexican government data show. About 152,000 Mexican nationals were repatriated from the U.S. between January and November, according to data from Mexico’s Interior Ministry that were first reported by Milenio newspaper. That compares with just under 205,000 in the first 11 months of 2016. Trump, who took office Jan. 20, has vowed to expel potentially millions of undocumented immigrants and to build a wall along the Mexican border. He also ended, at least temporarily, Obama-era protections against deportation of people who were brought to the U.S. illegally as children. Officials at U.S. Immigration and Customs Enforcement pointed to their statistics when asked for comment. An ICE report of data through early October showed that removals of Mexican nationals were down, but administrative arrests of all immigrants were up 30 percent in fiscal year 2017. It concludes that the decrease in removal numbers overall compared to fiscal year 2016 was primarily due to about 17 percent fewer migrants apprehended at the border. “For Mexicans who enter illegally, effective tools like expedited removal have led to increased deterrence, which has impacted entry levels," The Mexican government defines repatriation as an administrative measure dictated by migration officials through which a foreign person is returned to their country of origin. 

What Ever Happened to Donald Trump's Wall? It's in Pieces, in the Desert --  Almost a year into Donald Trump’s presidency, the border wall he passionately promoted throughout his election campaign amounts to eight prototypes, no more than 30 feet long each, sitting in a desert outside San Diego. No funding has been appropriated by Congress to advance the project beyond the testing phase. There’s no final design. And despite Trump’s rallying cry that Mexico would pay for the barrier, that country hasn’t contributed a peso. The wall, an emotional centerpiece of Trump’s populist candidacy, is resurfacing as Washington turns from tax legislation to a fight over government spending for the rest of the fiscal year. A spending package Congress plans to debate in January will test whether his promise can ever be fulfilled. Tensions over immigration are returning to center stage as Democrats seek to use the January spending measure to restore legal protections against deportation to hundreds of thousands of people brought to the U.S. illegally as children. Trump has said he would like an agreement to fund the wall in return, and he resumed pressing for the wall even as he celebrated Republicans’ tax overhaul. “We’re calling on Congress to fund the border wall, which we’re getting very close to,” Trump said Dec. 20 during a Cabinet meeting at the White House. “We have some wonderful prototypes that have been put up. And I may be going there, very shortly, to look at them in their final form.”

House Expected to Unite on Crackdown of H-1B Visa Program in the New Year - Bipartisanship in the House is making it harder for foreign outsourcing to fill U.S. jobs. Both sides of the aisle are on board for a full House vote expected on the H-1B visa bill in the new year. Lawmakers have yet to set a date to discuss the matter after the Judiciary Committee unanimously voted on the measure last month. The bill would require firms to either pay workers more or prove they tried to recruit Americans first.President Trump condemned the program as rampant with abuse and a source of unfair competition. House members made sure the wording did not affect companies like Facebook, instead focusing on IT outsourcing companies.  According to the San Jose Mercury News, 67% of tech workers in Silicon Valley are foreigners. Trump if he wished could prevent government contracts to companies hiring an ‘excessive’ number of H-1Bs.

Sessions rescinds Justice Dept. letter asking courts to be wary of stiff fines and fees for poor defendants -- Attorney General Jeff Sessions is rescinding an Obama-era Justice Department letter that asked local courts across the country to be wary of slapping poor defendants with fines and fees to fill their jurisdictions’ coffers, part of a broad rollback of guidance that Sessions believes overreached. It’s the latest move in Sessions’s effort to dramatically reshape the Justice Department by undoing many of the reforms imposed by his predecessors and giving the institution a harder edge. Sessions is revoking 25 previous guidance documents dating back decades and covering topics as diverse as ATF procedures and the Americans With Disabilities Act. In a statement, Sessions said he was ending “the long-standing abuse of issuing rules by simply publishing a letter or posting a web page.” “Congress has provided for a regulatory process in statute, and we are going to follow it,” Sessions said. “This is good government and prevents confusing the public with improper and wrong advice.” In less than a year in office, Sessions has imposed a new charging policy that calls for prosecutors to pursue the most serious offenses possible, even when that might trigger stiff mandatory minimum sentences. He has restored the use of private prisons. And he has adjusted the department’s legal stances on issues involving voting rights and lesbian, gay, bisexual and transgender individuals in ways that put him at odds with his most immediate predecessors.

‘Horrifying Step Backwards’ as Sessions Retracts Guidance Designed to End Abuse of Poor by Courts - Civil rights advocates accused Attorney General Jeff Sessions of "turning back the clock" on criminal justice reforms after the Department of Justice rescinded Obama-era guidance that protected low-income defendants from being forced to pay gratuitous fees to local courts."Profit-minded court policies targeting the most economically vulnerable Americans have resulted in a resurgence of unconstitutional but widespread practices penalizing the poor and people of color," said Kristen Clarke, president of the Lawyers' Committee for Civil Rights Under the Law. "Attorney General Jeff Session's decision to retract guidance from the Justice Department rooting out practices resulting in a perpetual cycle of fines, debt and jail of America's poor is a horrifying step backwards in ongoing efforts to reform the criminal justice system."Under President Barack Obama, the DOJ issued a warning to local courts in May 2016 regarding the common practice of handing fines to poor defendants in order to boost their own revenues."Individuals may confront escalating debt; face repeated, unnecessary incarceration for nonpayment despite posing no danger to the community; lose their jobs; and become trapped in cycles of poverty that can be nearly impossible to escape," wrote Vanita Gupta, the head of the DOJ's civil rights division at the time, and former Office for Access to Justice director Lisa Foster. "Furthermore, in addition to being unlawful, to the extent that these practices are geared not toward addressing public safety, but rather toward raising revenue, they can cast doubt on the impartiality of the tribunal and erode trust between local governments and their constituents."The "Dear Colleague" letter of guidance sent by Gupta and Foster, which was not legally binding, cited examples of unfair demands for payment made by municipal courts, including drivers who could be ordered to pay a penalty of $300 for a driving citation and told that a court date could only be scheduled after the payment was made. Such requirements "can have the effect of denying access to justice to the poor," they wrote.

Trump wants Postal Service to charge ‘much more’ for Amazon shipments (Reuters) - President Donald Trump called on the U.S. Postal Service on Friday to charge “much more” to ship packages for Amazon, picking another fight with an online retail giant he has criticized in the past.  “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump wrote on Twitter. The president’s tweet drew fresh attention to the fragile finances of the Postal Service at a time when tens of millions of parcels have just been shipped all over the country for the holiday season. The U.S. Postal Service, which runs at a big loss, is an independent agency within the federal government and does not receive tax dollars for operating expenses, according to its website. Package delivery has become an increasingly important part of its business as the Internet has led to a sharp decline in the amount of first-class letters.   The president does not determine postal rates. They are set by the Postal Regulatory Commission, an independent government agency with commissioners selected by the president from both political parties. That panel raised prices on packages by almost 2 percent in November.  Amazon was founded by Jeff Bezos, who remains the chief executive officer of the retail company and is the richest person in the world, according to Bloomberg News. Bezos also owns The Washington Post, a newspaper Trump has repeatedly railed against in his criticisms of the news media.  In tweets over the past year, Trump has said the “Amazon Washington Post” fabricated stories. He has said Amazon does not pay sales tax, which is not true, and so hurts other retailers, part of a pattern by the former businessman and reality television host of periodically turning his ire on big American companies since he took office in January.

Whistleblower Guardian for Spies Escorted Out of Intelligence Agency Building -- The chairman of the the U.S. Senate Judiciary Committee is demanding to know why an employee in charge of whistleblower outreach was removed from his workplace “pending a tribunal.”“I just learned that Dan Meyer, the Executive Director of Intelligence Community Whistleblowing and Source Protection, was placed on administrative leave and escorted out of his offices pending a tribunal before senior executives to consider his proposed termination,” wrote Sen. Chuck Grassley, a Republican from Iowa, in a letter sent November 29 to Director of National Intelligence Dan Coats and Wayne Stone, the acting director of Office of the Inspector General of the Intelligence Community.The intelligence community inspector general is tasked with conducting audits across the intelligence agencies and independently responding to whistleblower retaliation complaints.The watchdog office has been involved in independent reviews of the Boston Marathon bombing, as well as former Secretary of State Hillary Clinton’s use of a private email server.It has also recently been embroiled in a turf war fraught with competing personalities and visions on how to provide resources for potential whistleblowers, as reported in an investigation by Foreign Policy. Dan Meyer, the man in charge of outreach to whistleblowers, had his duties and privileges revoked, and now he has been kicked out of his office pending an investigation

DOJ Opens Probe Into Bundy Prosecutors Who Hid Evidence -- The Department of Justice (DOJ) has opened a probe into federal prosecutors of the recent trial of Nevada rancher Cliven Bundy, E&E News reports. Bundy faced criminal charges related to a 2014 standoff with Bureau of Land Management (BLM) agents. After the prosecutions numerous missteps and “willful” withholding of evidence that would aid the Bundy’s defense, the judge ruled a mistrial Wednesday, The Oregonian reports.The DOJ did not say whether it would pursue another trial against Cliven Bundy and others involved in the 2014 standoff, according to E&E News.Attorney General Jeff Sessions “personally directed that an expert in the department’s discovery obligations be deployed to examine the case and advise as to next steps,”DOJ deputy director of public affairs Ian Prior told The Oregonian.“This is every prosecutor’s nightmare,” retired federal prosecutor Kent Robinson said.Weeks before U.S. District Judge Gloria M. Navarro declared a mistrial of the case, a memo written by a BLM agent assigned to investigate the agency’s actions during the 2014 raid on the Bundy ranch was released. The memo contained serious allegations of misconduct and likely illegal activities by BLM officials and prosecutors, led by acting Nevada U.S. Attorney Steven Myhre, throughout the raid and trial of Cliven Bundy. Throughout the trial, Myhre and his team of prosecutors were caught violating the Brady law six separate times for refusing to turn over exculpatory evidence that could help the Bundys.Myhre had removed the agent responsible for the memo, Larry Wooten, from his position investigating the BLM in February, confiscating all his records and data. Wooten wrote his 18 page memo from memory and leaked it the DOJ.

Brooklyn Prosecutors Investigating $300 Million Loan To Kushner's Real-Estate Firm - As we pointed out yesterday, the mainstream media made another glaring error in its coverage of President Trump earlier this month when Handlesblatt, a German newspaper,reported that Special Counsel Robert Mueller had subpoenaed Deutsche Bank – the country’s largest lender – for records pertaining to Trump’s finances. Fortunately, the New York Times corrected the record when it reported that the subpoena had nothing to do with Mueller’s probe – it was actually requested by prosecutors in the Eastern District of New York who are reportedly looking into The Kushner Companies – the family business of Trump son-in-law and senior adviser Jared Kushner. However, the Times was unable to determine exactly what the probe is related too – though they ventured a guess that it could be the Kushner’s use of a controversial visa designed to encourage foreign investment in the US. The Kushner Companies are already reportedly being investigated for their use of the visa, called the EB-5, to help finance two projects in New Jersey. As it happens, today the Wall Street Journal reported that the investigation is related to a nearly $300 million loan made one month before election day. The prosecutors who sent the subpoena are the same ones who are investigating the Kushner Co’s use of an EB-5 visa, but it’s unclear if this is part of that investigation, or a separate matter.Federal prosecutors in New York are examining a $285 million loan that Deutsche Bank AG made one month before election day last year to the real-estate company run by the family of Jared Kushner, according to a person familiar with the matter.Prosecutors from the Brooklyn U.S. attorney’s office issued a document request in mid-November to Kushner Cos., asking for contracts and other information pertaining to the loan from the bank, this person said.Chris Taylor, a spokeswoman for Kushner Cos., said the company “has cooperated and will continue to cooperate with any reasonable request for information.”  In October 2016, the Kushner Cos. finalized a $285 million loan from Deutsche Bank as part of a refinancing package for the purchase of a retail space in the former New York Times building in Times Square. At the time of the transaction, Mr. Kushner was chief executive officer of Kushner Cos. and was advising the presidential campaign of his father-in-law, Donald Trump.

 No longer a ‘lonely battle’: How the campaign against the Mueller probe has taken hold --- For months, efforts to discredit special counsel Robert S. Mueller III’s investigation into Russian meddling in the 2016 campaign flickered at the fringes of political debate. Now, the allegation that FBI and Justice Department officials are part of a broad conspiracy against President Trump is suddenly center stage, amplified by conservative activists, GOP lawmakers, right-leaning media and the president himself. The clamor has become a sustained backdrop to the special counsel investigation, with congressional committees grilling a parade of law enforcement officials in recent days. “Until recently, it has been a lonely battle,” said Tom Fitton, whose conservative watchdog group Judicial Watch has helped drive the charges by unearthing internal Justice Department documents. “Our concerns about Mueller are beginning to take hold.” The partisan atmosphere is a sharp departure from the near-universal support that greeted Mueller’s selection as special counsel in May — and threatens to shadow his investigation’s eventual findings. Trump, while vowing to cooperate with the special counsel, has also encouraged attacks on Mueller’s credibility, tweeting that the investigation is “the greatest Witch Hunt in U.S. political history.” The controversy, percolating for months, escalated dramatically in early December with the revelation of text messages in which one of Mueller’s former top investigators, Peter Strzok, called Trump an “idiot” last year and predicted Democratic candidate Hillary Clinton would win the election in a landslide.As the deputy head of counterintelligence at the FBI, Strzok played a critical role in both the Clinton email investigation last year and the Russia probe before he was removed by Mueller this summer. Rep. Jim Jordan (R-Ohio), who met with Fitton earlier this year and has for months alleged that the FBI was working against Trump’s election, said in an interview that many of his Republican colleagues now share his view that there has been an orchestrated effort against Trump. 

The quiet probe into Clinton email investigation could be a landmine for Robert Mueller — In early January, news that the Justice Department’s inspector general launched an investigation into the government's disputed handling of the Hillary Clinton email inquiry was quickly overtaken by the chaotic run-up to President Trump’s inauguration. Nearly a year later, Inspector General Michael Horowitz’s wide-ranging review of the FBI and Justice’s work in the politically-charged Clinton case now looms as a potential landmine for Russia special counsel Robert Mueller. For months, Horowitz’s investigation — which has amassed interviews with former Attorney General Loretta Lynch, former FBI Director James Comey and other key officials — had been grinding on in near anonymity. That is, until earlier this month when the inspector general acknowledged that Mueller was alerted to a cache of text messages exchanged between two FBI officials on his staff that disparaged Trump. The communications, involving senior counter-intelligence agent Peter Strzok and bureau lawyer Lisa Page, were gathered in the course of Horowitz’s internal review of the Clinton case, which Strzok also helped oversee. Horowitz’s investigation is not examining Mueller’s operation. But the disclosures already have provided a hammer to Trump loyalists who are escalating their criticisms of the legitimacy of the special counsel’s inquiry.

Classified Huma Abedin Emails Found On Anthony Weiner's Laptop Discussing Hamas, Israel And Palestinian Authority - This afternoon, the State Department has just released the infamous batch of work-related emails from the account of top Hillary Clinton aide Huma Abedin that were discovered by the FBI on a laptop belonging to Abedin's estranged husband, and convicted pedophile, Anthony Weiner near the end of the 2016 presidential campaign.  As you may recall, the discovery of these emails on Weiner's computer is what prompted Comey to re-open the Hillary Clinton email investigation roughly 1 week prior to the election, a decision which the Hillary camp insists is the reason why they lost the White House.  Of course, while the Hillary campaign attempted to dismiss the emails as just another 'nothing burger', the Daily Mail reports that an initial review of the 2,800 documents dumped by the State Department reveal at least 5 emails classified at the 'confidential level,' the third most sensitive level the U.S. government uses.The classified emails date from 2010-2012, and concern discussions with Middle East leaders, including those from the United Arab Emirates, Israel, the Palestinian Authority, and Hamas - which was declared a terrorist organization by the European Court of Justice in July. Large portions of the 2,800 page release were redacted prior to release by the State Department. According to the Daily Mail, three of the emails were sent either to or from an address called "BBB Backup," which one email identifies as a backup of a Blackberry Bold 9700 - presumably belonging to Abedin. As a civilian, Weiner - though once a congressman, was unlikely to have possessed the proper clearance to view or store the classified documents on his laptop.  A sample of the documents can be seen below, first, a "Call Sheet" prepared for Hillary's discussion with Israeli Prime Minister Benjamin Netanyahu:

Trump slams FBI, Clinton for 'garbage' dossier | TheHill: President Trump on Tuesday lashed out at the FBI and the Clinton campaign on the Russia dossier compiled against him and his 2016 campaign. "WOW, @foxandfriends 'Dossier is bogus. Clinton Campaign, DNC funded Dossier. FBI CANNOT (after all of this time) VERIFY CLAIMS IN DOSSIER OF RUSSIA/TRUMP COLLUSION. FBI TAINTED.' And they used this Crooked Hillary pile of garbage as the basis for going after the Trump Campaign!" Trump tweeted, the latest in his ongoing smear on the FBI. The dossier, a compilation of opposition research against the 2016 Trump campaign, was partly funded by Clinton's campaign and the Democratic National Committee (DNC). It included several incendiary claims against Trump and his campaign that have loomed over his presidency. While the research for the dossier was originally aimed at finding information on the entire field of GOP candidates, it alleged ties between the Trump campaign and Moscow that eventually became the focus of the project. Some Republicans on the House Intelligence Committee, which has investigated witnesses in connection with the dossier, have begun to probe into the FBI's and Justice Department's handling of the look into the claims included in the document. BuzzFeed News published the controversial dossier in January, which includes many salacious claims that have not been verified. Trump has also targeted the FBI in recent weeks for what many Republican lawmakers believe was a biased and politically motivated approach to its investigation of collusion between Russia and the Trump campaign.

McCain Associate Subpoenaed Over Trump Dossier --Several months ago it emerged that the Republican sponsor behind the Fusion GPS Trump project was hedge fund billionaire Paul Singer, a fact which surprised many who expected that John McCain would be the GOP mastermind looking for dirt in Trump's past. However, a new and credible McCain trail has emerged in the annals of the "Trump Dossier" after theWashington Examiner reported that the House Intelligence Committee issued a subpoena to an associate of John McCain over his connection with the salacious dossier containing unverified allegations about Trump and his ties to Russia, which many speculate served as the illegitimate basis for FISA warrants against the Trump campaign - permitting the NSA to listen in on Trump's phone calls - and which the president yesterday slammed as "bogus" and a "crooked Hillary pile of garbage." In the latest twist, committee Chair Devin Nunes (R-Calif.) wants to talk to David Kramer, a former State Department official and current senior fellow at the McCain Institute for International Leadership at Arizona State University, about his visit to London in November 2016. During his trip, at McCain's request Kramer met with the dossier's author, former British spy Christopher Steele, to view “the pre-election memoranda on a confidential basis,” according to court filings and to receive a briefing and a copy of the Trump dossier. Kramer then returned to the U.S. to give the document to McCain. McCain then took a copy of the dossier to the FBI's then-director, James Comey. But the FBI already had the document; Steele himself gave the dossier to the bureau in installments, reportedly beginning in early July 2016.

New Trump Executive Order Targets Clinton-Linked Individuals, Lobbyists And Perhaps Uranium One -- The Trump Administration quietly issued an Executive Order (EO) last Thursday which allows for the freezing of US-housed assets belonging to foreign individuals or entities deemed "serious human rights abusers," along with government officials and executives of foreign corporations (current or former) found to have engaged in corruption - which includes the misappropriation of state assets, the expropriation of private assets for personal gain, and corruption related to government contracts or the extraction of natural resources.  Furthermore, anyone in the United States who aids or participates in said corruption or human rights abuses by foreign parties is subject to frozen assets - along with any U.S. corporation who employs foreigners deemed to have engaged in corruption on behalf of the company. In fact, anyone in the world who has "materially assisted, sponsored, or provided financial, material or technological support for, or goods or services" to foreigners targeted by the Executive Order is subject to frozen assets.   The EO, based on the 2016 Global Human Rights Accountability Act, immediately added 13 foreign individuals to a list of "Specially Designated Nationals" (SDN) maintained by the Office of Foreign Assets Control (OFAC) - several of whom have ties to the Clintons, the Clinton Foundation, or Clinton associates (details below). Moreover, the Treasury Department sanctioned an additional 39 people,  for a total of 52 under the new order - including the son of Russia's prosecutor general.  The Order reads: I, DONALD J. TRUMP, President of the United States of America, find that the prevalence and severity of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, such as those committed or directed by persons listed in the Annex to this order, have reached such scope and gravity that they threaten the stability of international political and economic systems. Last Week's Executive Order could have serious implications for D.C. lobbyists who provide "goods and services" (e.g. lobbying services) to despots, corrupt foreign politicians or foreign organizations engaging in the crimes described in the EO. "Virtually every lobbyist in DC has got to be in a cold sweat over the scope of this EO," said an attorney consulted in the matter who wishes to remain anonymous.

Donald Trump is not attacking the FBI, even as he attacks the FBI | TheHill: There is something purposely inaccurate about how some in certain media circles are attempting to frame the “battle royale” ongoing between the president of the United States and the world’s premier law enforcement agency — the FBI. Let’s be clear. Donald Trump's considerable ego is at war with those who dare to imply the Russians helped him defeat Hillary Clinton in November of 2016. This has led him to square off against the FBI director he fired this past May, James B. Comey, Jr., who oversaw the early stages of the Russia collusion investigation. Comey’s relief in place thrust Deputy Director Andrew G. McCabe into the acting director position until Christopher Wray, Trump’s handpicked successor to Comey, was confirmed by the Senate and sworn in back in August. McCabe was no stranger to public scrutiny. He had been roundly criticized in right wing media circles once it was revealed this his wife, Dr. Jill McCabe, a one-time candidate for state office in Virginia, had taken a sizable campaign contribution from a political action committee affiliated with Virginia Governor Terry McAuliffe (D) — a longtime ally of Bill and Hillary Clinton. McCabe had failed to recuse himself until late in the Clinton private server email investigation. Revelations like this fuel Trump and impulsively prompt him to attack the current special prosecutor, Robert S. Mueller III, who was Comey’s predecessor at the bureau. Mueller’s appointment was once heralded by both sides of the political divide when he assumed the independent position ten days following Comey’s firing. What infuriated Trump and the right wing most was the fact that Mueller’s selection was made a day following Mueller’s job interview with Trump for the top position at the bureau, and with the knowledge that Mueller has had a long, personal relationship with Comey. The apparent tone deafness from Mueller, who is by all accounts shrewd D.C. tactician, is surprising. He’s compounded the doubts some have in the process by assembling a seemingly stacked prosecution team, rife with democratic party donors — including some who contributed to Clinton’s presidential run and actually served as counsel for the Clinton Global Initiative. Not one of his team donated to Trump. 

Trump Says Russia Inquiry Makes U.S. ‘Look Very Bad’ –   — President Trump said Thursday that he believes Robert S. Mueller III, the special counsel in the Russia investigation, will treat him fairly, contradicting some members of his party who have waged a weekslong campaign to try to discredit Mr. Mueller and the continuing inquiry. During an impromptu 30-minute interview with The New York Times at his golf club in West Palm Beach, the president did not demand an end to the Russia investigations swirling around his administration, but insisted 16 times that there has been “no collusion” discovered by the inquiry. “It makes the country look very bad, and it puts the country in a very bad position,” Mr. Trump said of the investigation. “So the sooner it’s worked out, the better it is for the country.” Asked whether he would order the Justice Department to reopen the investigation into Hillary Clinton’s emails, Mr. Trump appeared to remain focused on the Russia investigation. “I have absolute right to do what I want to do with the Justice Department,” he said, echoing claims by his supporters that as president he has the power to open or end an investigation. “But for purposes of hopefully thinking I’m going to be treated fairly, I’ve stayed uninvolved with this particular matter.”

War between Trump, media set to intensify | TheHill - Donald Trump’s unconventional presidency has roiled the media landscape, creating new dynamics that will play a major role in shaping his second year in office. Some of the leading names in print journalism and cable news have taken an unusually adversarial approach to covering Trump, leading to charges of bias and sparking a debate within the industry about whether the president is being covered fairly. Trump has responded by doing away with media interviews and press conferences almost entirely, even as he and his allies launch near-daily attacks on the media’s credibility. They’ve been given ample political ammunition from several high-profile corrections and retractions in coverage of Trump, usually pertaining to the investigation into Russian election meddling. Some press critics have accused media outlets of loosening their reporting standards in a frenzy to discredit the president. Even so, Trump’s presidency has been a bonanza for the media, delivering record ratings, subscriptions and web traffic, with the president’s admirers and detractors all lapping up coverage about him. The end result is that Trump will enter 2018 — a year in which the administration faces a special counsel investigation and the potential for impeachment-hungry Democrats to take control of Congress — with perhaps the most antagonistic relationship with the media of any president in modern times.

Russiagate Is Devolving Into an Effort to Stigmatize Dissent - Of all the various twists and turns of the year-and-a-half-long national drama known as #Russiagate, the effort to marginalize and stigmatize dissent from the consensus Russia-Trump narrative, particularly by former intelligence and national-security officials and operatives, is among the more alarming. An invasion-of-privacy lawsuit, filed in July 2017 by a former DNC official and two Democratic donors, alleges that they suffered “significant distress and anxiety and will require lifelong vigilance and expense” because their personal information was exposed as a result of the e-mail hack of the DNC, which, the suit claims, was part of a conspiracy between Roger Stone and the Trump campaign.According to a report in The New York Times published at the time of the suit’s filing, “Mr. Trump and his political advisers, including Mr. Stone, have repeatedly denied colluding with Russia, and the 44-page complaint, filed on Wednesday in the Federal District Court for the District of Columbia, does not contain any hard evidence that his campaign did.”   In a new development, in early December, 14 former high-ranking US intelligence and national-security officials, including former deputy secretary of state William Burns; former CIA director John Brennan; former director of national intelligence James Clapper; and former ambassador to Russia Michael McFaul (a longtime proponent of democracy promotion, which presumably includes free speech), filed an amicus brief as part of the lawsuit.  The amicus brief purports to explain to the court how Russia deploys “active measures” that seek “to undermine confidence in democratic leaders and institutions; sow discord between the United States and its allies; discredit candidates for office perceived as hostile to the Kremlin; influence public opinion against U.S. military, economic and political programs; and create distrust or confusion over sources of information.”  The brief claims that Putin’s Russia has not only “actively spread disinformation online in order to exploit racial, cultural and political divisions across the country” but also “conducted cyber espionage operations…to undermine faith in the U.S. democratic process and, in the general election, influence the results against Secretary Hillary Clinton.”

 Inspector general says mishandling of sexual harassment complaints at Justice Department is a ‘systemic’ problem - The Justice Department has “systemic” problems in how it handles sexual harassment complaints, with those found to have acted improperly often not receiving appropriate punishment, and the issue requires “high level action,” according to the department’s inspector general.Justice supervisors have mishandled complaints, the IG said, and some perpetrators were given little discipline or even later rewarded with bonuses or performance awards. At the same time, the number of allegations of sexual misconduct has been increasing over the past five years and the complaints have involved senior Justice Department officials across the country.The cases examined by the IG’s office include a U.S. attorney who had a sexual relationship with a subordinate and sent harassing texts and emails when it ended; a Civil Division lawyer who groped the breasts and buttocks of two female trial attorneys; and a chief deputy U.S. marshal who had sex with “approximately” nine women on multiple occasions in his U.S. Marshals Service office, according to investigative reports obtained by The Washington Post under a Freedom of Information Act request.  “We’re talking about presidential appointees, political appointees, FBI special agents in charge, U.S. attorneys, wardens, a chief deputy U.S. marshal, a U.S. marshal assistant director, a deputy assistant attorney general,” Justice Department Inspector General Michael E. Horowitz said in an interview.

The Senate Waited Until Christmas To Reveal How Many Harassment Settlements Were Paid Out --As the Christmas holiday weekend set in, the Senate Rules and Administration Committee released a report revealing the Senate has spent $1.5 million on workplace harassment settlements since 1998. The data, provided by the Office of Compliance, a little known administrative body that has quietly settled dozens of complaints against congressional offices, provides little by way of details, beyond an itemized list of violations and the corresponding settlement.GOP Sen. Richard Shelby of Alabama, who chairs the Rules Committee, said further particulars cannot be made public, in order to respect the confidentiality afforded to victims.“While the Rules Committee has been eager to provide this information in a transparent manner, it has been our priority to protect the victims involved in these settlements from further harm,” the senator said in a statement attending the report.“I am pleased that we have received assurances from Senate Legal Counsel that the release of this data does not violate confidentiality and as such, are able to make it public.”The report distinguishes between claims made against member-led offices and “other Senate employing offices.”Individual Senate offices have paid out nearly $600,000 in discrimination and harassment settlements, while other Senate employers paid out over $850,000. Listed violations include sex, age, and race discrimination, as well as violations of the Fair Labor Standards Act and the Family and Medical Leave Act.The largest settlements involved instances of race discrimination.The report does not include information about the alleged offenders, victims, or relevant incidents. In releasing the data, the Committee noted the Senate does not keep records respecting individual settlements, and is therefore reliant on the OOC’s data.“It should be noted that the Senate – unlike the House – does not have its own records of individual settlements and therefore cannot independently verify the accuracy of the data provided by the OOC,” the report reads.

 House discloses three more sexual harassment settlements totaling $115K | TheHill: The House Office of Compliance on Tuesday disclosed three additional sexual harassment settlements totaling $115,000 as advocates and lawmakers call for changes to how Congress handles accusations of sexual misconduct. The settlements are from fiscal 2008 through 2012. The information does not include to whom the settlements were paid or from which offices the complaints originated. "As I have stated from the beginning of this review, one case of sexual harassment is one case too many," Rep. Gregg Harper (R-Miss.), who chairs the House Administration Committee, said in a statement. "We must create a culture within our Capitol Hill community that instills in every employee and employer, new and old, that there is no place for sexual harassment in the halls of Congress." “As part of my Committee's review, I asked the Office of Compliance for a breakdown of the $17 million total amount that has been reported by their office for all cases involving claims of violations of the Congressional Accountability Act.” Harper said the committee’s investigations into logging settlements would continue, as it has yet to obtain all of the requested information. The total dollar amount paid out for House member-led offices between those fiscal years is $342,225.85. The data release comes as sexual harassment and misconduct policies on Capitol Hill have come under scrutiny after women came forward with various accusations against lawmakers of both parties in recent weeks. 

Will Trump regulators trade lighter rulemaking for tougher enforcement — When President Trump targeted Wells Fargo in a tweet earlier this month, he had an ominous message for the industry at large: His administration would limit regulation but would “make penalties severe when [institutions are] caught cheating.” Banks and industry experts were left wondering how seriously to take the warning. On the one hand, the tweet seemed aimed at countering a Reuters story indicating that the Consumer Financial Protection Bureau was reviewing and potentially scrapping an enforcement action against the embattled bank over fees it levied on mortgage holders. It is reasonable to conclude, therefore, that Trump's message was meant entirely for Wells, and not beyond that. But some observers say the tweet also suggests a broader policy about how the president views his administration’s approach to regulating: namely, that while the administration will seek to roll back regulations, it may punish wrongdoers with renewed vigor.   “While the tweet in and of itself may not be a statement of policy, it is consistent with the idea that the better way to protect consumers is not to burden the entire industry with detailed regulations, but to just target wrongdoing with enforcement actions,” said Benjamin K. Olson, a partner at Buckley Sandler and former regulator with the CFPB and Federal Reserve. H. Rodgin “Rodge” Cohen, senior chairman at Sullivan & Cromwell, said there is no way to know whether the tweet speaks more broadly than in the context of the Reuters story, since the administration’s top bank regulators are either not yet confirmed or have only been in place for a short time.. But Cohen said administrations have cultures and approaches that are not always formally written and yet are articulated from the top early on in a presidential term. Olson said that the tweet does have some predictive value if for no other reason than it articulates a view of many leaders in the Trump administration about positioning agencies, in particular the CFPB, to be more focused on enforcement than regulation.

Wall Street Journal analysis finds many fiduciary rule comments are fake | TheHill:  Many comments on the Labor Department website about the fiduciary rule, an Obama-era investing mandate, were found to be fake in a new analysis by The Wall Street Journal.  The Labor Department allows for public comments on its site to suggest changes to the rule, which will not be fully implemented until 2019. The analysis found that many of these suggestions were falsely attributed to people, though it is unknown who was behind the false comments.  The rule aims to legally mandate investment advisers to act in the best interest of their clients when planning their retirement by preventing them from hiding conflicts of interest. Under the rule, advisers must tell clients if they receive commissions for selling certain investment packages.   A Labor Department spokesman told the newspaper that falsely submitting statements or comments online to the federal government constituted a felony, and the department removes all fraudulent comments that it finds. A survey by Mercury Analytics sent to 345 people who appeared to be critical of the rule in their comments found that 20 of the 50 respondents did not post the critical comments attributed to them. The rule was originally set to go into effect in January 2018, but the Office of Management and Budget delayed its implementation until 2019 at the urging of Labor Department officials. Investors and lobbyists have fiercely opposed the rules in court, saying they will drive up the cost of investment services.

As FSOC rethinks SIFIs, will any nonbanks remain on the list? - — When Donald Trump took control of the White House and Republicans swept into power in Congress this year, most expected that the Financial Stability Oversight Council's role would be radically reshaped.  Instead, more than a year later, the FSOC’s role has gradually evolved. As the Trump administration finally gets its regulators into place, who will also serve on the interagency council created by the Dodd-Frank Act, changes are expected to accelerate. One area that the FSOC has already signaled change is rethinking the council’s Obama-era designations of nonbanks as systemically important financial institutions.   “They’ve pretty clearly shut the door on designating anybody,” said Marcus Stanley, policy director of Americans for Financial Reform. "The crisis showed the need for some federal consolidated backstop, and I think they’re going to drop that.” He noted that a report issued by the Treasury Department in November suggests that the council should apply SIFI designations only to those institutions whose risk of failure can be proven and where the benefits of designation can be shown to outweigh the costs. Those requirements seem to indicate that the Treasury would apply the label only if a company was already in financial distress.  As the council enters 2018, it is widely expected to drop its appeal of a ruling over its SIFI designation of MetLife. The insurance giant was designated in December 2014 but the company successfully sued to have that label rescinded. The case was being appealed by the council under the Obama administration, but for reasons that are not entirely clear, the Trump administration has not yet dropped the suit.  Pollock said that, in addition to de-designating the remaining insurance firms as SIFIs, the council should also consider assigning SIFI designations to two new firms: Fannie Mae and Freddie Mac. The government is already providing an explicit backstop to the two firms after seizing them and putting them in conservatorship nearly a decade ago. That should make it clear they constitute a systemic risk, according to Pollock.

Matt Stoller: “Monopoly is a Form of Lawlessness” -  Yves Smith - Matt Stoller gave a presentation at the Harvard Law Forum earlier this year on monopolies and what to do about them, focusing on the how the tech titans Google, Amazon, and Facebook are acting to supplant government. Readers may recall that Stoller is a former Congressional staffer who now works for the anti-monopoly think tank Open Markets. His talk draws on the research for his forthcoming book on monopolies in the 20th century. Stoller offers a short list of proposals on how to curb monopolies.  I found it encouraging that Harvard Law School has a audience for what in my youth would have been called anti-establishment thinking.

Barclays expects $1.3 billion writedown from US tax reform - Barclays expects to take a writedown of about 1 billion pounds ($1.34 billion) on its annual post-tax profit as a result of the U.S. tax overhaul, the bank said in a statement on Wednesday. The reform to the tax system signed into law by President Donald Trump on Dec. 22 will force the British lender to reduce the value of its deferred tax assets, prompting it to take a one-off charge in its results for the 12 months to the end of December. It will also lead to the bank's common equity Tier 1 capital ratio, a key measure of its financial strength, falling by about 20 basis points, the lender said. Since taking the helm at Barclays in December 2015, Chief Executive Jes Staley has streamlined the bank into a transatlantic lender focused on the United States and Britain. The restructuring has led it to exit a raft of non-core operations, such as its business in Africa and units in Asia, in a bid to simplify its structure and boost returns to shareholders. Barclays already slumped to a 628 million pound attributable loss in the nine months to the end of September following write-offs in the wake of its exit from Africa. The 1 billion pound charge to account for the U.S. tax changes is expected to push it further into the red. The $1.5 trillion tax overhaul is the biggest reform of the U.S. tax system since the 1980s and will see that corporate tax rate slashed to 21 percent from 35 percent. While Barclays said the reduction in the tax rate is expected to "positively impact" its future post-tax earnings in the United States, it also cautioned that the Base Erosion Anti-Abuse Tax (BEAT), which was included in the legislation and designed to prevent multinational firms from abusing the tax code, could significantly offset that benefit.

Change in tax rate will cost Capital One $1.9 billion in Q4 -  Capital One Financial and several other banks have disclosed the charges they expect to record in the fourth quarter due to lower values on their deferred tax assets.President Trump signed a tax-cut bill on Friday, lowering the corporate rate to 21% from 35%. Banks’ deferred tax assets are now worth less, since future tax deductions will be lower.Capital One, in McLean, Va., estimated that it will record a $1.9 billion fourth-quarter charge to cover the devaluation of its deferred tax asset.Capital One disclosed the estimate in a Tuesday regulatory filing, in which the $355 billion-asset company also announced that it had resubmitted its revised capital plan, per an earlier agreement with the Federal Reserve following this year’s annual stress tests. As part of the revised plan, Capital One reduced the size of its share-buyback plan by $850 million to $1 billion.

Goldman Warns Tax Reform Will Slash Its Q4 Earnings By $5 Billion - Goldman Sachs warned on Friday that it expects a $5 billion hit to Q4 earnings as a result of tax reform signed by President Donald Trump on Dec. 22, approximately two-thirds of which is due to the repatriation tax. As part of the GOP tax reform, a "repatriation tax” which allows companies to bring cash and assets held overseas to the U.S. by paying a one-time tax ranging from 8% on illiquid assets to 15.5% on cash and cash equivalents. It was introduced to encourage US companies to bring their vast overseas cash piles back home. In the 8-K, Goldman also said that the "remainder includes the effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates."The disclosure means the bank could post a steep loss for the quarter, albeit one driven by one time charges. Analysts expected Goldman's Q4 earnings to hit $2.08 billion.The repatriation tax "holiday" will allow Apple to bring back much if not all of its $252.3 billion foreign cash pile without a major tax hit - a long-standing company goal, while drugmaker Amgen last Friday also said it expects to incur tax expenses of $6 billion to $6.5 billion over time as it repatriates cash it has accumulated around the world because of the new law.As the FT notes, Goldman is one of the first US companies to publicly estimate the impact of the new repatriation tax on its earnings, and adds that given that the US tax reform was led by Steven Mnuchin and Gary Cohn, the former Goldman executives who are now senior figures in the Trump administration, its impact on the influential investment bank was always going to be closely watched.Ironically, in an analysis by none other than Goldman, the bank said that - drumroll - banks would be among the biggest beneficiaries from the sweeping changes to the US tax code that were signed into law by Mr Trump a few days before Christmas.

The Tax Plan Could Change How Wall Street Works -- Publicly traded partnerships, including private equity firms Apollo, Blackstone Group LP and Carlyle Group LP, are taxed differently than corporations. So should they take advantage of the overhauled tax rules to pay less in taxes? Or should they use this chance to change to an Inc. from an LLC or LP, which would increase tax bills but allow them to attract investments from mutual funds that have previously been out of reach? “We’re still analyzing,’’ Leon Black told the Goldman Sachs U.S. Financial Services Conference Dec. 6. “It’s an uncertain outcome.’’ Either way, it’s most likely a money-making outcome. The tax changes are a boon for firms such as Apollo, where Black is chief executive officer. The new lower corporate rate has made it possible for bigger publicly traded partnerships to consider the change. As it is, management fees, which typically account for 30 percent or more of their earnings, are already taxed at the corporate rate. That will drop. The legislation scarcely touched the 23.8 percent rate paid on incentive fees, also called carried interest, which incur no additional levy when paid out to shareholders. Double Tax If the partnerships converted to corporations, the incentive fees would be hit with a second layer of tax when they’re paid out. That would push the combined tax rate on incentive income paid out as dividends to nearly 40 percent, according to Peter Furci, co-chair of Debevoise & Plimpton’s global tax practice. But it would also allow the newly minted corporations access to indexes, and therefore the mutual-fund and ETF markets. About $2.2 trillion follows the S&P 500 Index, according to its website. As of June, $122.6 billion in assets tracked the Russell 2000 Index, the best-known small-cap U.S. stock index, and there was $1.1 trillion bet on Russell U.S. indexes overall, according to the company. The bigger universe of investors would likely boost the trading multiples of the firms’ stocks. It’s unclear how big the economic benefit of increased ownership would be, so the question is whether it would make up for the higher taxes. 

Banks Offer Cash-Strapped Clients a Way to Game Trump’s Tax Plan - Americans have a new reason to take on debt during the holidays this year: early taxes. Banks are seeing a wave of inquiries from customers in high-tax states rushing during the final days of the year to prepay 2018 property levies before a cap on deductions for state and local taxes comes into effect. One option: tapping home-equity lines or securities-backed loans to lessen the pain of a lump-sum outlay. Lenders including Bank of America Corp. and SunTrust Banks Inc. aren’t introducing specific products to solve the last-minute problem but are pointing clients to the credit they already have. Counties in several states are scrambling to produce 2018 bills for individuals after officials in New York and New Jersey ordered local governments to accept prepayment of property taxes. “The discussions we’re having now are, ‘Call your municipality and try to establish what your liability is. Call your mortgage holder,’ ” Tim Speiss, vice president of EisnerAmper Wealth Planning LLC, said in a Bloomberg Radio interview. Bank of America is making the credit lines available mostly to wealth-management customers at its Merrill Lynch or U.S. Trust units, according to a person briefed on the effort. While the firm’s consumer bank doesn’t offer personal loans, other clients can use products such as undrawn home equity lines of credit, said the person, who asked not to be identified speaking about customer inquiries. Many individuals pay their property taxes through an escrow account with their mortgage lender, leading banks to get calls on how they can facilitate prepayments. Banks are often pushing customers to speak with tax attorneys before making a change, since the move doesn’t make sense for everyone. PNC Financial Services Group Inc. has seen an increase in customers asking to prepay those taxes and is helping clients make payments through escrow accounts where possible, according to a spokeswoman. She didn’t clarify whether the bank was extending credit as part of the service.

Open APIs will irrevocably change banking – Bank Think - A new European Union payments directive is set to go live next month — and for U.S. bankers, it’s worth keeping an eye on. The second Payment Services Directive, or PSD2, will not only further integrate the European payments market, but also significantly increase security in electronic payments and digital account access and enhance consumer protections.  However, there’s a more radical change in store: The directive requires financial institutions and others to grant licensed third-party providers access to bank customer account information. This change will trigger a new revolution in payment services in Europe, and the U.S. should watch the developments with interest, including the many arguments over how to implement the model.

Dear Congress: Don’t drop the ball on reg relief – American Banker - There is plenty of room for optimism when it comes to the prospects for community bank regulatory relief in the near future. Amid so much partisan rancor in Washington, it appears that supporting the nation’s community banks really is just about the only thing Republicans and Democrats alike can agree on.The big break came, of course, with the Senate Banking Committee’s approval of bipartisan legislation to provide significant community bank regulatory relief. Following persistent outreach and leadership by community bankers, the panel voted 16-7 to send the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act to the Senate floor, where it could come up for a vote as soon as next month.  Community bankers are used to seeing substantial regulatory reforms advance through committee, or even through the full House of Representatives. But these measures too often fail to achieve final passage because of the Senate’s stringent supermajority requirement. This time is different.The multipronged regulatory relief bill was driven by a bipartisan coalition of lawmakers, including Mike Crapo, R-Idaho, chairman of the Senate Banking Committee, and committee Democrats Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia.  Not only was the legislation forged in bipartisanship, but it enjoys broad support in the Senate on both sides of the aisle. The bill has 20 original cosponsors, including five additional Democrats and Independent Sen. Angus King of Maine. A total of 11 Democrats have signed on to support the bill — indicating it has supermajority backing in the upper chamber. The only question at this point is this: can the bill remain focused on community banks to maintain its broad backing?   Community banks cannot let the megabanks jeopardize this vitally important legislation by getting their proverbial camel’s nose under the tent, which is why we’re advocating a clean bill in our continued outreach with lawmakers.

Citi Fined $11.5 Million For Telling Retail Investors To "Buy" Stocks When It Meant "Sell" - In a fine that is on one hand bizarre, and on the other vindication for all those who claim that banks still tell their customers to do one thing (i.e. "buy") while meaning the opposite, Citigroup was ordered to pay at least $11.5 million in fines and restitution to settle charges it displayed the wrong research ratings on more than 1,800 stocks, "causing many customers to own shares they never would have bought" a market regulator ordered on Thursday.FINRA fined Citigroup  $5.5 million and ordered it to pay at least $6 million to retail customers over errors that occurred between February 2011 and December 2015, and involved more than 38% of the equity securities that the New York-based bank covered.  From the filing:FINRA found that from February 2011 through December 2015, Citigroup Global Markets Inc displayed to its brokers, retail customers and supervisors inaccurate research ratings for more than 1,800 equity securities —more than 38 percent of those covered by the firm. Because of errors in the electronic feed of ratings data that the firm provided to its clearing firm, the firm either displayed the wrong rating for some covered securities (e.g., “buy” instead of “sell”), displayed ratings for other securities that CGMI did not cover or failed to display ratings for securities that CGMI, in fact, rated. The firm’s actual research reports, which were available to brokers, and the research ratings appearing in those reports, were not affected by these errors.  Specifically, Reuters notes  that FINRA accused Citi of sometimes displaying to customers, brokers and supervisors the wrong ratings, such as "buy" instead of "sell" while in other cases it would display ratings for companies it did not cover, or no ratings at all. It was unclear if Citi was punished for ever told clients to "sell" any security. Why: to create churn and collect commissions on trades that made zero sense. As Reuters explains, as a result of the flawed "ratings" brokers solicited thousands of transactions and negligently made inaccurate statements premised on wrong ratings, and many customers ended up owning stocks with “sell” ratings despite a prohibition on such ownership, FINRA said.

Peak Good Times? Stock Market Risk Spikes to New High  - Margin debt is the embodiment of stock market risk. As reported by the New York Stock Exchange today, it jumped 3.5%, or $19.5 billion, in November from October, to a new record of $580.9 billion. After having jumped from one record to the next, it is now up 16% from a year ago. Even on an inflation-adjusted basis, the surge in margin debt has been breath-taking: The chart by Advisor Perspectives compares margin debt (red line) and the S&P 500 index (blue line), both adjusted for inflation (in today’s dollars). Note how margin debt spiked into March 2000, the month when the dotcom crash began, how it spiked into July 2007, three months before the Financial-Crisis crash began, and how it bottomed out in February 2009, a month before the great stock market rally began:  Margin debt, which forms part of overall stock market leverage, is the great accelerator for stocks, on the way up and on the way down. Rising margin debt – when investors borrow against their portfolios – creates liquidity out of nothing, and much of this new liquidity is used to buy more stocks. But falling margin debt returns this liquidity to where it came from. Leverage supplies liquidity. But it isn’t liquidity that moves from one asset to another. It is liquidity that is being created to be plowed into stocks, and that can evaporate just as quickly: When stocks are dumped to pay down margin debt, the money from those stock sales doesn’t go into other stocks or another asset class, doesn’t become cash “sitting on the sidelines,” as the industry likes to say, and isn’t used to buy gold or cryptocurrencies or whatever. It just evaporates without a trace.After stirring markets into an eight-year risk-taking frenzy, the Fed is now worried that markets have gone too far. Among the Fed governors fretting out loud over this was Dallas Fed President Robert Kaplan who recently warned about the “record-high levels” of margin debt, along with the US stock market capitalization, which, at 135% of GDP, is “the highest since 1999/2000.” “In the event of a sell-off, high levels of margin debt can encourage additional selling, which could, in turn, lead to a more rapid tightening of financial conditions,” he mused.

It’s Official: Government Report Says Market Risks are “High and Rising” -- Pam Martens -  During Fed Chair Janet Yellen’s press conference on December 13, she had this to say about financial stability on Wall Street: “And I think when we look at other indicators of financial stability risks, there’s nothing flashing red there or possibly even orange.”  Where does Fed Chair Janet Yellen get her information on financial stability risks to the U.S. financial system? A key source for that information is the Office of Financial Research (OFR), a Federal agency created under the Dodd-Frank financial reform legislation of 2010 to keep key government regulators like the Federal Reserve informed on mounting risks.  On December 5, the OFR released its Annual Report for 2017. It was not nearly as sanguine as Yellen. In fact, it flatly contradicted some of her assertions. The report noted that numerous areas were, literally, flashing red and orange (OFR uses a color-coded warning system) – raising the question as to why Yellen would attempt to downplay those risks to the American people. Market risk is in the red zone. The report notes the following:“Market risks from a sharp change in the prices of assets in financial markets are high and rising. “Rising prices and falling risk premiums may leave some markets vulnerable to big changes. Risk premiums are returns in excess of returns on risk-free investments.“Such market corrections can trigger financial instability when the assets are held by entities that have excessive leverage and rely on short-term debt and other liabilities.  Overall credit risks, according to the report, are flashing orange. However, a number of sub-components are flashing red. According to the OFR report: “Some measures of credit risk have moderated since last year, reflecting crosscurrents of positive and negative developments. Credit risk from debt by nonfinancial corporations remains elevated. Nonfinancial corporate debt continues to grow, although at a slower pace than in 2016. Measures of firms’ debt-to-assets and debt-to-earnings ratios are red on the monitor heat map.

The world’s most valuable resource is no longer oil, but data - The Economist - A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year. Such dominance has prompted calls for the tech giants to be broken up, as Standard Oil was in the early 20th century. This newspaper has argued against such drastic action in the past. Size alone is not a crime. The giants’ success has benefited consumers. Few want to live without Google’s search engine, Amazon’s one-day delivery or Facebook’s newsfeed. Nor do these firms raise the alarm when standard antitrust tests are applied. Far from gouging consumers, many of their services are free (users pay, in effect, by handing over yet more data). Take account of offline rivals, and their market shares look less worrying. And the emergence of upstarts like Snapchat suggests that new entrants can still make waves. But there is cause for concern. Internet companies’ control of data gives them enormous power. Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the “data economy” (see Briefing). A new approach is needed.   Smartphones and the internet have made data abundant, ubiquitous and far more valuable. Whether you are going for a run, watching TV or even just sitting in traffic, virtually every activity creates a digital trace—more raw material for the data distilleries. As devices from watches to cars connect to the internet, the volume is increasing: some estimate that a self-driving car will generate 100 gigabytes per second. Meanwhile, artificial-intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict when a customer is ready to buy, a jet-engine needs servicing or a person is at risk of a disease. Industrial giants such as GE and Siemens now sell themselves as data firms.

Get ready for a 2018 cryptocurrency crime wave - 2018 could be the year of cryptocurrency hacks.   With bitcoin recently pushing past the $19,000 level (despite crashing hard on Friday) and a slew of other cryptocurrencies like ethereum, litecoin and Ripple making rapid price gains in its wake, it’s never been a more bullish time for digital currency investors. But there is always a price to be paid for such success and in this case cryptocurrency’s massive surge in popularity is likely to trigger an epic wave of crime. Already on December 4th, the SEC announced it shut down an initial coin offering (ICO) for allegedly defrauding investors of $15 million. However, while fraud is an inherent risk of cryptocurrency, as wallets, exchanges and ICOs all take place with little to no legal or regulatory oversight, it is hacking which presents a far more serious threat for investors because it is so widespread and so difficult for the average person to avoid. Hacking has been a recurring problem for this industry from the very beginning. In fact, a report last year from the US Department of Homeland Security found that 33% of bitcoin exchanges were hacked between 2009 and 2015, and one-off scams and attacks on individual investors have been occurring throughout that time as well. But if prices continue to rise, it will incentivize many more attacks. After all, cryptocurrency cyber heists are now extremely lucrative, with the opportunity to make tens of millions of dollars from a single attack. This will likely entice more hacking groups to expand their operations beyond traditional revenue streams – “banking Trojans,” “ransomware,” “carding,” etc. – to take on cryptocurrency investors as well. Cybercriminals go where the money is and right now the money is definitely in bitcoin.

The cost of bitcoin payments is skyrocketing because the network is totally overloaded - The problem came to a head in early December, when Steam, the popular downloadable video game store, announced it would stop accepting bitcoin payments for games, citing the currency's volatility and high transaction fees. Steam relied on a bitcoin payment system called BitPay. Among BitPay's other customers are Microsoft, online retailer NewEgg, and APMEX, which sells precious metals online.  Business Insider checked in with BitPay communication manager James Walpole to find out why bitcoin transactions have become so costly. Here's what he had to say: You might think that services like BitPay are to blame for bitcoin's high transaction costs. After all, BitPay's service, which lets merchants accept bitcoin as payment, is similar to a credit card processing service, and retailers are often complaining that credit card fees cut into their profits. But the fees charged by BitPay and similar companies represent only a small portion of the total cost of a typical bitcoin transaction. For its part, BitPay charges merchants a 1% processing fee per transaction. If a customer spends $10, BitPay keeps $0.10, while sending the vendor the remaining $9.90.  That's the same fee charged by BitPay rival CoinGate, but one that is less than what's charged by Stripe or Visa on credit card transactions. Those fees can add up over many transactions, but they're not what's making individual bitcoin payments so costly.   Walpole points the finger at bitcoin miners. Miners are the people or companies that record data in the bitcoin blockchain, the digital ledger that keeps track of all bitcoin transactions. Miners save those transactions in so-called blocks; they complete a block by solving ever-more-complex cryptographic puzzles. Mining has become an expensive proposition. It requires high-powered computers that use lots of energy. Miners are typically in the business to make money. They're compensated for their services in three ways. When they solve a particular puzzle and complete a block, they are awarded with newly created bitcoin. But they also collect fees from both individual bitcoin holders and from bitcoin payment processors such as BitPay.  Its those fees that have made using bitcoin so pricey.

Bitcoin Billionaires May Have Found a Way to Cash Out - Even in normal markets hundreds of millions of dollars of derivative settlement payments can cause instabilities and mispricings, as we have already seen between bitcoin futures and physical prices. It can also play havoc with calendar spreads (the difference between, say, a futures contract with delivery next month and one whose delivery is in six months) as well as the premium at which the Bitcoin Investment Trust open-ended fund trades. And don’t forget the spread among exchanges. In a crisis market, these issues could cause a break down. They are likely driving some volatility in bitcoin prices, and also probably keeping many institutional investors on the sidelines. But this week, one or more people delivered 275 bitcoin (valued at $4.5 million at the time) to the LedgerX clearinghouse, and wrote one-year calls 1 at a strike of $50,000 ($13.75 million in total) against them for a premium of $3,600 per coin ($990,000 total). 2 These are real bitcoin, and there is no need for any sort of settlement auction, the call option buyer can exercise and receive the physical bitcoin.  I spoke to some large bitcoin holders, most of whom have held for years and never sold, and all expressed at least some interest in doing similar trades. It is a natural one, the "bitcoin billionaires" -- the approximately 1,000 people who hold an estimated 40 percent of all bitcoin, or an average of around $350 million each -- reducing their exposure in return for some cash today. In turn, financial investors get a secure, levered exposure to bitcoin that is not hostage to an unproven price-setting and without the expense of setting up a system to hold physical bitcoin. 3 Bitcoin miners need cash for equipment and electricity bills (China this year cut off lending on bitcoin collateral) and early bitcoin adopters could stand to diversify their portfolios.  One trade doesn’t make a market, but if, say, 1 percent of all bitcoin were taken off the market and held as option collateral, 4 and financial investors put up cash in one-year derivatives, that could do a lot to stabilize the market. That means both reducing price volatility and giving confidence that market prices represent true trading prices for institutional quantities of bitcoin. This, in turn, could make Cboe and CME cash-settled futures more attractive, and thereby represent a solid base for bitcoin ETFs.

 The Three Big Delusions: Paper Wealth, A Booming Economy, And Bitcoin -- John Hussman , - Delusions are often viewed as reflecting some deficiency in reasoning ability. The risk of thinking about delusions in this way is that it encourages the belief that logical, intelligent people are incapable of delusion. An examination of the history of financial markets suggests a different view. Specifically, faced with unusual or extraordinary price advances, there is a natural tendency (particularly in the presence of crowds, feedback loops, and potential rewards) to look for explanations. The problem isn’t that logic or reason has failed, but that the inputs have been distorted, and in the attempt to justify the advance amid the speculative excitement, careful data-gathering is replaced by a tendency to confuse temporary factors for fundamental underpinnings.  The reason that delusions are so hard to fight with logic is that delusions themselves are established through the exercise of logic. Responsibility for delusions is more likely to be found in distorted perception or inadequate information. The problem isn’t disturbed reasoning, but distorted or inadequate inputs that the eyes, ears, and mind perceive as undeniably real.   Let’s begin by examining the anatomy of speculative bubbles. We’ll follow with a discussion of three popular delusions that have taken hold of the crowd, and the premises that drive them: the delusion of paper wealth, the delusion of a booming economy, and the delusion that is Bitcoin.

Trading tied to foreign exchange and interest rates dipped in 3Q: OCC -- Banks reported $6.4 billion in trading revenue in the third quarter, down 3.6% from the previous quarter, on falling interest rate and foreign exchange revenue, according to a report Tuesday by the Office of the Comptroller of the Currency. Trading was down 0.4% from a year earlier, driven by a 14.5% year-over-year decrease in combined revenue from interest rate-related and foreign exchange trading, which totaled $4.5 billion in the third quarter. "Since dealers often use interest rate contracts to hedge exposures in FX derivatives, it is useful to view these categories collectively," the OCC report said. Both equity- and credit-related trading revenue rose in the third quarter. Equity trading revenue of $1.2 billion was up 61.2% from a year earlier, while credit revenue of $470 million nearly tripled from a year earlier.In the third quarter, four large commercial banks represented 90% of all banks' notional derivative amounts and 86% of the industry's net current credit exposure, which is the primary metric the OCC uses to evaluate credit risk in bank derivative activities."A small group of large financial institutions continues to dominate derivative activity in the U.S. commercial banking system," the report said.Meanwhile, 39.6% of banks’ derivative holdings were centrally cleared, which is just over the 39% a year earlier. The OCC also reported that notional derivatives rose 6% to $188.3 trillion from a year earlier.

Card networks must give banks, merchants a vote on fraud prevention - Discover, American Express and Mastercard have all recently said they would stop requiring U.S. customers to sign when they buy something with a card. This was a welcome development and roundly applauded by merchants — a nice change from the often contentious relationships that have marked this industry.  This consensus should lead to a similar one on doing the best we can to stop fraud. The card networks tend to call the shots on what steps are needed to prevent fraud, but it's the banks and merchants that take the financial hit when theft occurs.  Signatures, of course, did nothing to prevent fraud. That is why everyone (though we’re still waiting on Visa) agreed they could be dropped.  The consensus is also there on making sure the right person is trying to use a card, though sometimes rhetoric obscures this consensus. The agreed upon way is used millions of times a day at ATMs throughout the country: we all simply enter a personal identification number, or PIN. Those four-digit numbers have proven effective in cutting fraud to a tiny percentage of what it is when not using a PIN. If it didn’t work, banks wouldn’t require PINs at ATMs. Merchants agree, and several have tried to require PINs on some or all of their debit transactions in order to protect against fraud. Oddly, Visa has fought those efforts with fines and lawsuits.  Why would Visa try to fight for more fraud? It might help to understand that when fraud does occur, the decision about who shoulders that cost boils down to a choice between the merchant and the card-issuing bank. While the card network (such as Visa) gets to decide who loses on the fraud, one thing is clear — Visa isn’t the one losing the money.  That raises real questions about how payment card fraud-prevention decisions are made. The card networks make these decisions themselves through their operating rules and control of payments organizations like PCI and EMVCo.  Merchants and banks — businesses that actually pay for fraudulent transactions — don’t get a vote. Instead, the networks that don’t have skin in the game make decisions behind closed doors.

Credit union regulator McWatters on shortlist to head CFPB - J. Mark McWatters, chairman of the National Credit Union Administration, is on the shortlist to potentially head the Consumer Financial Protection Bureau, according to industry observers. The move could help soften the sharp partisan fight that is brewing for whoever is tapped to take over the consumer agency — if President Trump ultimately chooses the credit union official.  “He’s pragmatic and measured, which will make it very difficult for Democrats to vilify him during the nomination process,” said Isaac Boltansky, an analyst at Compass Point Research & Trading.Other names that have been floated in recent weeks include Todd Zywicki, a law professor at George Mason University; Rep. Jeb Hensarling, R-Texas, who chairs the House Financial Services Committee; and Keith Noreika, the former acting comptroller of the currency. Whoever is named to take over the bureau will have wide latitude to reshape it, following the departure of former director Richard Cordray, who resigned in November to run for governor of Ohio.  It is unclear how soon Trump will announce his pick, but at least one source familiar with the situation said it could come early in January. Critics on the left have vigorously protested Trump’s decision to name Mick Mulvaney, director of the Office of Management and Budget and a vocal critic of the CFPB, as the agency’s acting chief.  McWatters would potentially offer the administration another way forward. He was confirmed to head the credit union agency over the summer, suggesting he’d be able to secure the necessary votes. And while he’s solicited the CFPB to roll back its oversight of credit unions in several cases, McWatters has not openly criticized the consumer agency — its operations or its structure — as others being considered have done.  “It would be a smart pick because you get all of the conservative policymaking without the ideological rhetoric,” Boltansky said.

 CFPB launches online tools for HMDA reporting - The Consumer Financial Protection Bureau on Wednesday launched a rate spread calculator and validation tool for financial companies reporting Home Mortgage Disclosure Act data starting Jan. 1. The CFPB said its rate spread calculator and validation tool, called HMDA Check Digit Tool, will be available to financial institutions throughout the 2018 collection period to support the calculation of data field values required for disclosure act reporting. The bureau also has a searchable portal with answers to frequently asked questions.  Financial institutions will be able to submit HMDA data to the CFPB through a new online platform in 2018. Mortgage lenders can use the platform to upload files, perform validation checks on their data and review edits to complete the disclosure act filing process, the bureau said.

What suspension of HELOC tax deduction means for banks - Many Americans who use their homes as ATMs are about to get hit with a sizable withdrawal fee. The tax law signed last week by President Trump suspends the deduction on interest for home equity loans and lines of credit, ending a longstanding perk of homeownership.Under the old law, homeowners who took out a second loan of up to $100,000 could deduct the interest from their taxes. That provided an incentive for consumers to use home equity products — instead of other types of loans — to finance everything from car purchases to higher education to the consolidation of credit card debt.The new law suspends that favorable tax treatment between 2018 and 2025. The change applies not only to homeowners who take out new home equity loans, but also those who already have them. Experts predict that the revised law will reduce the demand for home equity loans and lines of credit in certain customer segments — in particular, folks who itemize their deductions and have other borrowing options.  “I think at the margin it makes you less likely to do a home equity line of credit,” said Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute. What it means for lenders is less clear. Demand for home equity loans has declined sharply since peaking in 2009 and could slow even more now that the tax break has been suspended.  But some experts say that any decline in home equity balances could be offset by higher demand for auto, credit card and other consumer loans, experts say. The worry is that only borrowers with blemished credit will take out home equity loans, increasing the risk to banks.  Lawyers and industry trade groups are still analyzing the legislative language in an effort to understand its full implications. But some observers believe that the new law also suspends the deductibility of interest on equity that homeowners extract from their houses in so-called cash-out refinances.  Cash-out refinances have been a popular way for Americans to access their home equity during an era of low interest rates, allowing folks to refinance their existing debt at a cheaper rate and pocket the savings.  Meanwhile, home equity products have been expected to grow in popularity as interest rates rise, since they will enable home owners to retain a low interest rate on most of their mortgage debt.

Alteryx breach adds to mortgage fraud risks -- A breach at Alteryx that exposed sensitive information from more than 100 million U.S. households could add to fraud risks in housing finance. "The recent breach of data adds to the repository of compromised consumer and personal information targeted by fraudsters to create alternative identities," said Adam Chaudhary, president of FundingShield, a mortgage industry risk management firm. Individuals with an Amazon Web Services login could have had access to a third-party data set of consumer marketing information available from Experian earlier this year, according to Alteryx. The information from an Alteryx database contains data that ranges "from home addresses and contact information, to mortgage ownership and financial histories," according to cybersecurity firm UpGuard. The data exposed provides "some location information, contact information and other estimated information that is used for marketing purposes. It does not include names, credit card numbers, Social Security numbers, bank account information or passwords," according to an online statement by Alteryx CEO Dean Stoecker. The company has taken steps to ensure breaches don't recur, he said. Another credit reporting company that works with the mortgage industry, Equifax, experienced a breach similar in scale earlier this year. 

FHA faces uphill struggle to win lenders back — In many ways, Housing and Urban Development Secretary Ben Carson has spent his first year in office trying to convince lenders that they won’t be harshly penalized if loans guaranteed by the agency go bad.  Based on the industry’s outlook, however, he still has a long way to go.  Bankers are still stung by the hefty fines assessed by the Department of Justice for Federal Housing Administration loans that went bad during the financial crisis.  "There are lots of fixes that need to be made at HUD," said David Stevens, president and chief executive at the Mortgage Bankers Association "A lot of lenders have left the FHA program due to enforcement risk and the huge cost of servicing defaulted [FHA] mortgages.”

2018 Compliance & Regulation Outlook: 'Stars are aligned' for GSE reform — 2018 could be a breakout year for GSE reform. House Financial Services Committee chairman Jeb Hensarling, R-Texas, has finally bowed to reality and realized his GSE reform plan, called the PATH Act, was going nowhere.Until recently, there was a consensus among policymakers that Fannie Mae and Freddie Mac needed to be eliminated. That's changed. And Hensarling's shift moved the odds of reforming the two government-sponsored enterprises — Fannie Mae and Freddie Mae — from zero to nearly 50%, according to Edward Mills, a Washington policy analyst at Raymond James."We expect a lot of activity on GSE reform in both the House and Senate banking committees," said Scott Olson, executive director of the Community Home Lenders Association.But it will be challenging to get a bill across the finish line, "especially in an election year," said Olson, a former House Banking Committee staffer.David Stevens, president and chief executive of the Mortgage Bankers Associations, seems more optimistic. "The White House wants to do GSE reform and it seems the stars are aligned," Stevens said in an interview. "As I talk to policymakers working on GSE reform today, this is the most promising legislative effort I have seen since the GSEs were placed into conservatorship" in 2008, he added. "I am expecting they will have explicit language that outlaws preferred pricing or credit terms" for the larger lenders. This would ensure a level playing field so small and large lenders receive the same pricing for their mortgages. In the meantime, Treasury Secretary Steven Mnuchin and Federal Housing Finance Agency Director Mel Watt reached an agreement to let Fannie Mae and Freddie Mac each build a $3 billion capital buffer to avoid a potential crisis. The Senate is also expected to confirm Brian Montgomery to serve as Trump's Federal Housing Administration commissioner. But Montgomery's confirmation was delayed until Congress returns in January. Senate Democrats are insisting on a recorded vote by the full Senate. Montgomery previously served as FHA commissioner during the Bush administration from 2005-2009.

Freddie Mac: Mortgage Serious Delinquency rate up sharply in November -- Freddie Mac reported that the Single-Family serious delinquency rate in November was at 0.95%, up sharply from 0.86% in October.  Freddie's rate is down from 1.03% in November 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  This increase in the delinquency rate was due to the hurricanes - and we might see a further increase over the next month (These are serious delinquencies, so it takes three months late to be counted).After the hurricane bump, maybe the rate will decline another 0.2 to 0.4 percentage points or so to a cycle bottom, but this is pretty close to normal..

Fannie Mae: Mortgage Serious Delinquency rate increased in November due to Hurricanes - Fannie Mae reported that the Single-Family Serious Delinquency rate increased to 1.12% in November, up from 1.01% in October. The serious delinquency rate is down from 1.23% in November 2016. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. By vintage, for loans made in 2004 or earlier (4% of portfolio), 3.05% are seriously delinquent. For loans made in 2005 through 2008 (7% of portfolio), 6.26% are seriously delinquent, For recent loans, originated in 2009 through 2017 (89% of portfolio), only 0.42% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years. This increase in the delinquency rate was due to the hurricanes - and we might see a further increase over the next month (These are serious delinquencies, so it takes three months late to be counted). After the hurricane bump, maybe the rate will decline another 0.5 percentage points or so to a cycle bottom, but this is pretty close to normal.

Homeowners in High-Tax States Race to Beat Property Tax Cap -- Homeowners in states with the highest property taxes are looking to prepay 2018 bills ahead of a $10,000 cap on the deduction for state and local levies, including property taxes, in the GOP tax overhaul President Donald Trump just signed.In New York, residents are peppering local officials with questions about how to prepay their 2018 property tax bills in the current year in the hope of deducting them from 2017 taxes, the New York Times reports.In New Jersey, state Senate President Stephen Sweeney has asked Republican Governor Chris Christie to make it easier for residents to pay their entire 2018 property-tax bill by December 31. Jersey City Mayor Steve Fulop, a Democrat, also wants his community across the Hudson River from New York to allow homeowners to prepay their entire 2018 bills rather than just two quarters, according to the Star-Ledger of Newark.“The additional tax savings we can provide New Jerseyans by maximizing the deductibility of property tax prepayments does not take away from the unfairness of the red-state tax bill that sharply curtails the deductibility of state and local income taxes that has been a staple of the federal tax code since the enactment of the income tax in 1913,” Sweeney, a Democrat, said in a statement.In the Washington D.C. suburbs, WTOP found a line of hundreds snaked through a local government building in Fairfax, Virginia, looking to prepay their 2018 bills. Fairfax County officials, strained by the crowds, are telling people to wire the money instead. In nearby Arlington County, Chief Deputy Treasurer Kim Rucker told local television station Fox 5 that the increased pace of residents looking to cover 2018 tax bills ahead of the year has prompted hundreds of calls during the normally quiet Christmas period, and dozens of prepayments a day. The tax law, enacted just before Christmas, has prompted some local governments to revise their rules in a bid to facilitate the last-minute change in federal tax strategies. The Montgomery County Council in Maryland broke its winter recess to pass a bill allowing residents to prepay 2018 taxes, the Washington Post reported.

IRS says many who prepaid property taxes may still face cap on deductions - People across the United States rushed this week to pay their 2018 property taxes early, hoping to take advantage one last time of a federal deduction that will be scaled back under the tax-code overhaul signed by President Trump. On Wednesday, however, the ­Internal Revenue Service announced that those prepayments could be deducted only in limited circumstances, a decision that appeared to invalidate many taxpayers’ efforts and raised the prospect that local governments could come under pressure to refund millions of dollars. The announcement stoked confusion surrounding one of the most controversial elements of the tax law — a $10,000 cap on deductions for state and local taxes that will disproportionately affect higher-tax, Democratic-leaning states. It also offered a glimpse of the kind of hiccups that could arise in coming weeks as the IRS releases guidance on other facets of the bill, the largest overhaul of federal tax law in three decades. In affluent states with high taxes and property values, local officials have been besieged in recent days by people trying to pay their 2018 property taxes early so they can deduct those payments before the cap takes effect. However, the IRS said Wednesday that filers could only avoid the cap by paying property taxes that have been assessed in 2017. Many local governments, including most Washington-area jurisdictions, have not completed assessments for upcoming years. Critics said the last-minute confusion underscored the haste with which Republicans passed their tax bill, completed in record time for such a far-reaching piece of legislation. “This is not the way to do legislation that will massively impact the entire economy. It sets off a flurry of action from people trying to save money, and they act as rash as the legislators who pushed this thing through,” said Philip Hackney, a tax expert at Louisiana State University. That confusion was echoed among thousands of taxpayers in the Washington region and elsewhere — some following the advice of their accountants — who interrupted their holiday activities to line up in subfreezing temperatures at tax offices. 

South Florida’s Real Estate Reckoning Could Be Closer Than You Think -- Ross Hancock sold his four-bedroom house in Coral Gables, a city of pastel luxury at the edge of Miami, because he was worried that sea-level rise would eventually hurt his property’s value. He and his wife, Darlene, downsized to a small condo on Biscayne Bay, perched atop one of the highest coral ridges in the area. There, he presumed, they would be safer. Then Hurricane Irma hit.  The September storm pushed water onshore with such force that it penetrated the seams of Hancock’s building, defeating stormproof windows and damaging a third of the units. It knocked out the elevators, ruined the generator, and flooded the parking lot. Months later the park next door remains strewn with mangled yachts hurled from from the ocean. Hancock’s unit was spared, but he’s facing a potential $60,000 bill from the condo association for his share of what insurance won’t cover. Now, four years after leaving Coral Gables, he and his wife want to move again—this time, out of Florida. But more than two months after listing their property, they haven’t found a buyer.  Decisions by people such as Hancock to sell their homes demonstrate that one of the great mysteries of climate change isn’t scientific but psychological: When will the growing risks associated with rising seas and more severe storms begin to affect home values in otherwise desirable coastal markets? Nowhere is that question more pressing than South Florida, which has some of the country’s priciest properties—and some of the most vulnerable. A state built on real estate speculation, whose chief attribute was proximity to the water, now faces a whole new problem: There’s not enough land, high enough above the water, for its residents to pull back from the rising seas. By the end of the century, database company Zillow Group estimates, almost a half-million Miami homes could be—literally—underwater. That’s more than anywhere else in the country.

Mortgage rates rise to highest point in five months -- Mortgage rates rose to their highest level since the summer as predicted following Congress passing income tax reform, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.99% for the week ending Dec. 28, up from last week when it averaged 3.94%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.32%."As we expected, mortgage rates felt the effect of last week's surge in long-term interest rates in the final, shortened week of 2017. Although this week's survey rate represents a five-month high, 30-year fixed mortgage rates are still below the levels we saw at the end of last year and early part of 2017. Mortgage rates have remained relatively low all year," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release. The 15-year fixed-rate mortgage this week averaged 3.44%, up from last week when it averaged 3.38%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.55%.The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47% this week with an average 0.3 point, up from last week when it averaged 3.39%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.3%."Mortgage rates were flat during the holiday-shortened week, after rising early last week to their highest levels since late June," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on Wednesday. Zillow's tracker recorded the post-tax rate increase one week ago.

Case-Shiller: National House Price Index increased 6.2% year-over-year in October -- S&P/Case-Shiller released the monthly Home Price Indices for October ("October" is a 3 month average of August, September and October prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: October S&P CoreLogic Case-Shiller National Home Price NSA Index Continues Steady Gains in October  The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in October, up from 6.1% in the previous month. The 10-City Composite annual increase came in at 6.0%, up from 5.7% the previous month. The 20-City Composite posted a 6.4% year-over-year gain, up from 6.2% the previous month.  Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In October, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.2% increase, and San Diego with an 8.1% increase. Nine cities reported greater price increases in the year ending October 2017 versus the year ending September 2017 Before seasonal adjustment, the National Index, 10-City and 20-City Composites all posted a monthover-month gain of 0.2% in October. After seasonal adjustment, the National Index, 10-City and 20-City Composites all recorded a 0.7% month-over-month increase in October. Eleven of 20 cities reported increases in October before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment. “Home prices continue their climb supported by low inventories and increasing sales,” says David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices. “Nationally, home prices are up 6.2% in the 12 months to October, three times the rate of inflation. Sales of existing homes dropped 6.1% from March through September; they have since rebounded 8.4% in November. Inventories measured by months-supply of homes for sale dropped from the tight level of 4.2 months last summer to only 3.4 months in November.“Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth. Some of these favorable factors may shift in 2018. The Fed is widely expected to raise the Fed funds rate three more times to reach 2% by the end of the New Year. Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting. Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying.”   The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

Home Prices Rose 6.2% Year-over-Year in October - With today's release of the October S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.7% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 6.2% for the last two plus years. Today's S&P/Case-Shiller National Home Price Index (nominal) reached another new high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.7% from the previous month. The nonseasonally adjusted index was up 6.4% year-over-year.Investing.com had forecast a 0.7% MoM seasonally adjusted increase and 6.3% YoY nonseasonally adjusted for the 20-city series.Here is an excerpt of the analysis from today's Standard & Poor's press release.“Home prices continue their climb supported by low inventories and increasing sales,” says David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices. “Nationally, home prices are up 6.2% in the 12 months to October, three times the rate of inflation. Sales of existing homes dropped 6.1% from March through September; they have since rebounded 8.4% in November. Inventories measured by months-supply of homes for sale dropped from the tight level of 4.2 months last summer to only 3.4 months in November.” [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Home Prices In 80% Of US Cities Grow Twice Faster Than Wages... And Then There's Seattle - According to the latest BLS data, average hourly wages for all US workers in November rose at a stubbornly low 2.5% relative to the previous year, well below the Fed's "target" of 3.5-4.5%, as countless economists are unable to explain how 4.1% unemployment, and "no slack" in the economy fails to boost wage growth. Another problem with tepid wage growth, in addition to crush the Fed's credibility, is that it keeps a lid on how much general price levels can rise by. With record debt, it has been the Fed's imperative to boost inflation at any cost (or rather at a cost of $4.5 trillion) to inflate away the debt overhang, however weak wages have made this impossible.  Well, not really. Because a quick look at US housing shows that while wages may be growing at roughly 2.5%, according to the latest Case Shiller data, every single metro area in the US saw home prices grow at a higher rate, while 16 of 20 major U.S. cities experienced home price growth of 5% or higher: double the average wage growth, and something which even the NAR has been complaining about with its chief economist Larry Yun warning that as the disconnect between prices and wages become wider, homes become increasingly unaffordable. And while this should not come as a surprise - considering we have pointed it out on numerous occasions in the past - one look at the chart below suggests that something strange is taking place in Seattle, which has either become "Vancouver South" when it comes to Chinese hot money laundering, or there is an unprecedented mini housing bubble in the hipster capital of the world. Also worth keeping an eye on: price appreciation in Sin City has quietly surged in recent months, and in September home prices surged 10.2% Y/Y, the only other double digit price increase in the US after Seattle. Considering that Las Vegas was the epicenter of the last housing bubble when prices exploded higher only to crash, it may be a good idea to keep a close eye on price tendencies in this metro area.

The US Cities with the Biggest Housing Bubbles - Wolf Street - The S&P CoreLogic Case-Shiller National Home Price Index for October, released this morning, jumped 6.2% year-over-year (not-seasonally-adjusted), up from 6.1% in September. The index has now surpassed by 6.0% the crazy peak in July 2006 of Housing Bubble 1 and is up 46% from the trough of Housing Bust 1:  Real estate prices are subject to local dynamics but are impacted by national  and even global factors, such as the consequences of monetary policies, particularly in places where this liquidity washes ashore. This creates local housing bubbles. And they operate each on their schedules. When enough of these local bubbles occur simultaneously, it becomes a national housing bubble as depicted by the chart above.The Case-Shiller Index is based on a rolling-three month average; today’s release was for August, September, and October data. Instead of median prices, the index uses “home price sales pairs.” For instance, it takes sales data from a house that sold in 2011 and then again in 2017, incorporates other factors, and uses algorithms to adjust the price movement into an index data point. The index was set at 100 for January 2000. An index value of 200 means prices as figured by the algorithm have doubled since then.Here are the standouts among the housing bubbles in major metro areas:

• Boston: The index for the Boston metro area ticked down on a monthly basis, the first decline after 22 months in a row of increases. It’s still up 6.9% year-over-year, a slightly slower pace then the 7.2% year-over-year surge in the prior month. During Housing Bubble 1, it soared 82% from January 2000 to October 2005, before the plunge set in. Now, after six years of relentless price increases, the index exceeds the peak of Housing Bubble 1 by 12.7%:
• Seattle:The Case-Shiller home price index for the Seattle metro declined again by a tad on a month-to-month basis — first back-to-back declines since the end of 2014! However, the index is not seasonally adjusted, and a slight downturn this time of the year was not unusual before 2015. So this may be a sign that the housing market in Seattle is returning to some seasonal patterns, rather than just spiking no matter what. The index is up a breath-taking 12.7% year-over-year, 20% from the peak of Housing Bubble 1 (July 2007), and 79% from the trough of Housing Bust 1 in February 2011:

Real House Prices and Price-to-Rent Ratio in October -- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 5.7% above the previous bubble peak. However, in real terms, the National index (SA) is still about 12.2% below the bubble peak (and historically there has been an upward slope to real house prices). The year-over-year increase in prices is mostly moving sideways now around 6%. In October, the index was up 6.2% YoY. Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $280,400 today adjusted for inflation (40%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).  The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through August) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to January 2006 levels.  The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to September 2004 levels, and the Composite 20 index is back to April 2004. In real terms, house prices are back to 2004 levels.This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to December 2003 levels, and the Composite 20 index is back to September 2003 levels.

Zillow Case-Shiller Forecast: More Solid House Price Gains in November - The Case-Shiller house price indexes for October were released on Tuesday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.  From Svenja Gudell at Zillow: Case-Shiller October Results and November Forecast: Still Defying Gravity: The last few months of 2017 have clearly demonstrated the extent to which the housing market refuses to be knocked off its stride. Sales of existing homes have risen strongly and unexpectedly, despite a severe and worsening shortage of homes actually available to buy. To cope, buyers simply linger longer on the market, even into the slower winter months if needed.The Case-Shiller National Index of home prices for October climbed 6.2 percent year-over-year, while its gain from September was 0.7 percent.The 10-City Composite Index increased 6.0 percent year-over-year and 0.7 percent from September, while the 20-City Composite Index grew 6.4 percent year-over-year and 0.7 percent from September. Seattle, Las Vegas and San Diego continued to post the strongest annual gains among the 20 cities, with increases of 12.7 percent, 10.2 percent and 8.1 percent, respectively.Home builders have managed to start construction on more homes than at any point since prior to the recession, despite high and rising land, labor and materials costs. An economy that keeps adding jobs and wages that continue to grow both have consumers feeling confident. And they’re boosted by mortgage interest rates that remain near all-time lows, defying expectations and conventional wisdom alike that both say – and have been saying for years – that rates have to begin rising at some point. The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be smaller in November than in October.   Zillow is forecasting a larger year-over-year increase for the 10-city index, and a smaller increase for the 20-city index in November.

Reis: Apartment Vacancy Rate increased in Q4 to 4.5% -- Reis reported that the apartment vacancy rate was at 4.5% in Q4 2017, up from 4.4% in Q3, and up from 4.2% in Q4 2016.  This is the highest vacancy rate since Q4 2012 (although the increase has been small).  The vacancy rate peaked at 8.0% at the end of 2009, and bottomed at 4.1% in 2016.
From Reis: The apartment market continued to face pressure from added supply in the fourth quarter as the national vacancy rate increased 10 basis points to 4.5% in the quarter. Asking rents increased 0.4% in the fourth quarter, while effective rents grew 0.3%. Effective rents net out landlord concessions. Over the year, asking rents increased 3.9% while effective rents grew by 3.3%. These growth rates reflect a deceleration in apartment market fundamentals compared to recent years, due in part to the large amount of new supply coming online. New construction totaled 43,769 units in the fourth quarter, raising the year-end total to 213,802 units. The national apartment market has not seen new completions in excess of 200,000 since 1986.  At 4.5%, the national vacancy rate increased 10 basis points from 4.4% in the third quarter. This represents a 30 basis point increase in year-over-year vacancy (the year-end vacancy rate in 2016 was 4.2%); vacancies have more or less been on an upward march since the middle of 2016. The net change in occupied stock, or net absorption, was 31,554 units, lower than new supply. With supply growth outstripping demand, vacancies were pushed upwards this quarter.  At $1,364, the average asking rent grew 0.4% in the quarter. This is well below the 0.9% average quarterly growth rate for the prior six quarters. Effective rent growth was 0.3% in the quarter, also below the 0.8% average quarterly effective rent growth for the prior six quarters. Overall, these statistics reflect a distinct pullback in the national apartment market, especially when compared to 2015. However, the gap between asking rent growth and effective rent growth remained within a 10 basis point range. This suggests that landlords’ offers of free rent were less aggressive – implying that demand remains relatively robust.

The Rent Is Too Damn High: Record High 30% Of U.S. Adults Now Live With A Roommate -- A staggering new analysis from Zillow highlights perfectly the unintended consequences of central banking policies that drive massive asset bubbles but minimal job/wage growth.  According to the study, surging home prices and rising rents have now resulted in a record 30% of American adults, up from 21% in 2005, being forced take on roommates just to afford monthly rent payments.  As rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults—aged 23 to 65—live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990. We define a doubled-up household as one in which at least two working-age, unmarried or un-partnered adults live together. For example, a 25-year-old son living with his middle-aged parents would constitute a doubled-up household, as would two 23-year-old roommates who are not partnered to each other. A doubled-up household contains people who might choose to live apart under different circumstances, financial or otherwise. Not surprisingly, large metropolitan areas like New York, LA, Miami and San Francisco saw the highest percentage of their adult populations doubling up on housing.

NAR: Pending Home Sales Index Increased Slightly in November, Up 0.8% Year-over-year --From the NAR: Pending Home Sales Inch Up 0.2 Percent in November - Pending home sales were mostly unmoved in November, but did squeak out a minor gain both on a monthly and annualized basis, according to the National Association of Realtors®. Heading into 2018, existing-home sales and price growth are forecast to slow, primarily because of the altered tax benefits of homeownership affecting some high-cost areas.The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 0.2 percent to 109.5 in November from 109.3 in October. With last month’s modest increase, the index remains at its highest reading since June (110.0), and is now 0.8 percent above a year ago. The PHSI in the Northeast jumped 4.1 percent to 98.9 in November, and is now 1.1 percent above a year ago. In the Midwest the index rose 0.4 percent to 105.8 in November, and is now 0.8 percent higher than November 2016.Pending home sales in the South decreased 0.4 percent to an index of 123.1 in November but are still 2.5 percent higher than last November. The index in the West declined 1.8 percent in November to 100.4, and is now 2.3 percent below a year ago.This was above expectations of a 0.8% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in  December and January.

Hotel Occupancy Rate Increased Year-over-Year, 2017 will be Record Occupancy Year - From HotelNewsNow.com: STR: US hotel results for week ending 16 December - The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 10-16 December 2017, according to data from STR. In comparison with the week of 11-17 December 2016, the industry recorded the following:
• Occupancy: +4.5% to 56.4%
• Average daily rate (ADR): +3.5% to US$115.67
• Revenue per available room (RevPAR): +8.1% to US$65.24
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

E-commerce, rebuilding disaster areas could drive CRE lending - E-commerce is wreaking havoc on brick-and-mortar retail sales, and the declining foot traffic is hurting many shopping malls, strip centers and Main Streets across the country. The rise in empty storefronts is understandably troubling for commercial real estate owners and the banks that lend to them. But the great retail shakeout is presenting some new and interesting opportunities for commercial real estate lenders. One is in financing the conversion of all that vacant retail space into new uses — restaurants, health clubs, medical facilities, community colleges, movie theaters and office space.  Another opportunity is financing the acquisition or construction of industrial warehouses and distribution centers. While the surge in e-commerce sales — expected to top $450 billion in 2017 and reach close to $700 billion by 2022 — has been a downer for retail real estate, it has been a boon to the industrial sector, and banks are actively searching for opportunities tied to warehouse and distribution. “In the last 12 to 18 months, you’ve seen people come out of the ground with large, speculative warehouse space and, as fast as they can build it, it’s getting leased up,” said Patrick Ryan, the CEO of the $1.4 billion-asset First Bank in Hamilton, N.J. “We would love to continue to get our share of industrial loans.” E-commerce’s impact on the retail landscape is just one trend commercial real estate lenders will be monitoring closely in 2018.  They will also be on the lookout for opportunities in residential construction, as the housing market continues to tighten and areas hard hit by hurricanes and wildfires look to rebuild. At the same time, they can’t load up too much on commercial real estate loans or they risk running afoul of regulators; and they need to be mindful about maintaining pricing discipline in the face of rising competition from nonbank lenders, insurance companies and deep-pocketed institutional and foreign investors. Here’s what to watch for in commercial real estate lending in 2018.

 CFPB says credit card debt is back at pre-recession level - The Consumer Financial Protection Bureau on Wednesday reported that outstanding consumer credit card debt last year had surpassed the peak set during the recession.Credit card  debt hit $807 billion in the fourth quarter of 2016, according to the 352-page report released by the agency. Consumers held average credit card balances of more than $4,800 at the end of last year, the highest figure the CFPB found in its data, which runs through mid-2017. The report noted that large banks had a return on credit card assets last year that was three times the overall return on assets for commercial banks.  The CFPB said the credit card market is largely stable with one key exception: rising interest rates on variable-rate accounts. Though the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 generally prohibits credit card issuers from raising interest rates on existing balances, the law allows issuers to raise rates on many cards when an index rate increases. Many issuers have taken advantage of that loophole."Several increases in background interest rates have occurred, and issuers have generally increased interest rates on their customers’ accounts accordingly," the CFPB said in the report.Competition for credit cards with rewards has heated up. Annual rewards spending among the six largest credit card issuers more than doubled to $22.6 billion in 2016, from $10.6 billion in 2010, the CFPB said. The top six issuers spent $6.2 billion on rewards in the first quarter of 2017, a 22% jump from the $5.1 billion spent a year earlier.  "The sign-up incentive that one large issuer offered during the launch of a new premium card was so large that employees were reported to be 'questioning whether the card would make money and when,' " the CFPB said, referring to JPMorgan Chase's Sapphire Reserve credit cards. Annual spending on credit cards hit $3.1 trillion in the fourth quarter of 2016, triple the volume of $1.1 trillion in 2000. Meanwhile, total outstanding credit card debt on general- purpose cards hit $716 billion in the fourth quarter of 2016, just below the peak of $733 billion in the third quarter of 2008, the CFPB said.  Private label credit card debt hit $91 billion in the fourth quarter of 2016, a 20% jump from the fourth quarter of 2014, and a 52% increase from the fourth quarter of 2005. Combined, all credit card balances exceeded $800 billion in the fourth quarter of 2016 for the first time ever, the CFPB said.

Chasing rewards: Credit card use accelerates as debit debit slows -  Credit card use has been on the rise for several years, and new data from the Federal Reserve Board shows that the trend is accelerating. Last year, consumers used credit cards for 37.3 billion transactions, up 10.2% from 2015, according to Fed data released Thursday. That compares with 8.1% annual growth between 2012 and 2015. In contrast, growth in the use of debit cards slowed last year. The number of debit card transactions increased 6% last year from the year before, to 73.8 billion, compared with 7.2% growth between 2012 and 2015. The dollar volume of credit card purchases is growing at a faster clip as well. Total spending on credit cards increased 6.3% last year from the year before, to $3.27 trillion, while the volume of debit card payments rose slightly less at 5.3%, to $2.7 trillion.

Consumer Confidence Retreated in December - The latest Conference Board Consumer Confidence Index was released this morning based on data collected through December 15. The headline number of 122.1 was a decrease from the final reading of 128.6 for November, a downward revision from 129.5. Today's number was above the Investing.com consensus of 128.0. Here is an excerpt from the Conference Board press release.“Consumer confidence retreated in December after reaching a 17-year high in November,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The decline in confidence was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months. Consumers’ assessment of current conditions, however, improved moderately. Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018.”  The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Americans' Confidence Soars... Among Republicans - As 2017 comes to an end, Americans perspective on their 'comfort' - with the economy, finances, and the future - is at its most polarized since December 2007. The headline consumer comfort index showed a gain in confidence, the first in three weeks, signaling Americans are upbeat about the economy as stocks rally, unemployment lingers near a 17-year low and property values increase. The gauge of sentiment about the economy is now at its second-highest level since 2001. What’s more, Republican households were particularly optimistic about their financial situation following passage of the tax cut package. However, there is dramatic polarization. The spread between Democrat confidence (low) and Republican confidence (highest reading since May 2007) is at its most extreme in 10 years... Overall, Americans’ sentiment last week climbed to the strongest level since early September on more upbeat views about the economy and personal finances after passage of tax cut legislation, according to the Bloomberg Consumer Comfort Index released Thursday.

Shoppers are about to return $90 billion in unwanted gifts that likely can't be resold and will end up in the trash -- Every headline of a happy holiday result comes with a flip side: concerns about returns. Returns make up the bulk of every retailer's holiday hangover. An estimated $90 billion worth of unwanted items will be sent back to retailers, according to CNBC, which cited Optoro, a tech firm that helps retailers organize and manage their returned goods.   Making matters worse, only half of returned goods make it back to shelves immediately. The next quarter is given back to the manufacturer. The rest, most likely because they arrived in opened or damaged boxes, are sold to various third parties like discount retailers or liquidators.   In many instances, it's cheaper for the retailer to just chuck the unwanted item in the trash, rather than process a return. An estimated five million pounds of trash are generated from returned items every year, according to Optoro, as cited by CNN Money.  In many cases, retailers are swallowing the brunt of this cost, except in the case of online returns. When returns are sent back to online-only companies like Amazon, freight costs are usually borne by the customer. The item then goes through the same cycle as any other returned merchandise would.

Why are women losing retail jobs while men are gaining them? - WaPo - A surge of Americans got back to work this year, driving the jobless rate to a 17-year low — but the “roaring” economy, as President Trump calls it, appears to have disproportionately benefited men.A new analysis of government data from the Bureau of Labor Statistics reveals a surprising disparity: The retail industry, which shed the most jobs last year (54,300), seemed to push women out while offering more opportunities to men.Between October 2016 and October 2017, women who worked in the country’s stores lost 160,300 jobs, while 106,000 men found new work in the field, the analysis from the Institute for Women’s Policy Research found.“We’ve seen many news reports of the decline in retail jobs, but few have noted that the picture in retail is much different for women and men,” researchers at the Washington think tank wrote.Over the past year, they added, “women’s share of all retail trade jobs fell from 50.4 to 49.6 percent.”Economist Heidi Hartmann, president of the IWPR, said it’s too soon to tell what sparked this shift.Her theory: As hiring ramped up, so did spending on big-ticket items, including furniture and appliances — and men tend to dominate those sales roles, which have historically come with higher commission payments. They also offer more job security.“There’s basically sex segregation within the retail industry,” she said. “Women have tried very hard to get into jobs like that.”Hartmann pointed to a 1979 sex-discrimination lawsuit against Sears, in which the Equal Employment Opportunity Commission argued the retailer regularly overlooked women for similar high-commission jobs. Although 61 percent of applicants for such roles were female, just 35 percent of the jobs went to women, the government lawyers argued.The EEOC ultimately lost the case. (The judge ruled that employment data wasn’t enough to prove discrimination.) As of today, the BLS doesn’t break down employment in commission jobs by gender, and Sears declined to release its current workforce data.

A Cute Toy Just Brought a Hacker Into Your Home -- My Friend Cayla, a doll with nearly waist-length golden hair that talks and responds to children’s questions, was designed to bring delight to households. But there’s something else that Cayla might bring into homes as well: hackers and identity thieves. Earlier this year, Germany’s Federal Network Agency, the country’s regulatory office, labeled Cayla “an illegal espionage apparatus” and recommended that parents destroy it. Retailers there were told they could sell the doll only if they disconnected its ability to connect to the internet, the feature that also allows in hackers. And the Norwegian Consumer Council called Cayla a “failed toy.” The doll is not alone. As the holiday shopping season enters its frantic last days, many manufacturers are promoting “connected” toys to keep children engaged. There’s also a smart watch for kids, a droid from the recent “Star Wars” movies and a furry little Furby. These gadgets can all connect with the internet to interact — a Cayla doll can whisper to children in several languages that she’s great at keeping secrets, while a plush Furby Connect doll can smile back and laugh when tickled. But once anything is online, it is potentially exposed to hackers, who look for weaknesses to gain access to digitally connected devices. Then once hackers are in, they can use the toys’ cameras and microphones to potentially see and hear whatever the toy sees and hears. As a result, according to cybersecurity experts, the toys can be turned to spy on little ones or to track their location. “Parents need to be aware of what they are buying and bringing home to their children,” said Javvad Malik, a researcher with cybersecurity company AlienVault. “Many of these internet-connected devices have trivial ways to bypass security, so people have to be aware of what they’re buying and how secure it is.” 

Econoday Economic Report: International Trade in Goods - Net exports look to be holding back fourth-quarter GDP following a second month of deep deficit in cross-border goods trade, at $69.7 billion in November following a revised $68.1 billion deficit in October. The monthly average for the third-quarter was much lower, at $63.8 billion. But there is very good news in the report and that's exports which rose a very strong 3.0 percent in November in to $133.7 billion, led by strong improvement in the key category of capital goods at a 5.6 percent monthly increase, vehicles at a gain of 7.5 percent, and consumer goods which rose 4.0 percent. Imports, however, also rose, up 2.7 percent in the month to $203.4 billion with industrial supplies up 4.7 percent, consumer goods up 4.2 percent, and capital goods up 2.6 percent. This report also includes preliminary data on November inventories, up 0.7 percent at the wholesale level in a what will be a plus for fourth-quarter GDP that is neutralized in part by only a small 0.1 percent build for retail inventories. The gain in wholesale inventories is a plus but two months of a rising goods deficit will take some of the shine off fourth-quarter GDP. Still, the gain in exports is a very important positive while the gain in imports of capital goods, though a subtraction for GDP, does underscore improvement underway in domestic business investment. 

Richmond and Dallas Fed: Manufacturing Expansion Solid in December -- From the Richmond Fed: Fifth District Manufacturing Firms Reported Moderate Growth in December According to the latest survey by the Federal Reserve Bank of Richmond, Fifth District manufacturing firms saw moderate growth in December. The composite index moved down from its record high November reading of 30 to 20 but remained positive, indicating continued growth. The decrease in the composite index resulted from declines in the indexes for shipments and new orders; but the third component, employment, increased in December. Indicators of wages and inventories also rose. From the Dallas Fed: Texas Manufacturing Activity Shows Robust Growth  Texas factory activity expanded strongly in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, spiked 18 points to 32.8, reaching its highest level in more than 11 years. Other measures of manufacturing activity also pointed to more rapid growth in December. The new orders index jumped 10 points to 30.1, another 11-year high, and the growth rate of orders index moved up to 21.4. The capacity utilization index increased nine points to 26.3, and the shipments index rose from 16.7 to 21.5 this month. Perceptions of broader business conditions were markedly more positive in December. The general business activity index and the company outlook index posted double-digit increases, coming in at 29.7 and 31.5, respectively. Both represent highs last seen in 2006. Labor market measures suggested more rapid employment growth and longer workweeks this month. The employment index came in at 20.4, up 14 points from November. More than 30 percent of firms noted net hiring, compared with 11 percent noting net layoffs. The hours worked index shot up to 23.3, a 12-year high.  These were the last of the regional Fed surveys for December. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: December Average Highest in 13 Years - Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated."Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for November is 22.4, up from the previous month's 22.2 and its highest in over 13 years.

Chicago PMI Rose in December - The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.  The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose in December to a value of 67.6 from 63.9 in November. Investing.com forecast 62.0. Here is an excerpt from the press release:“Sentiment among businesses started 2017 in good shape and only impressed more as the year progressed. December’s result secured the MNI Chicago Business Barometer’s first full year of expansion since 2014 and with New Orders ending the quarter in fine shape there is every chance this form could be carried over into 2018,” said Jamie Satchi, Economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.

Chicago PMI Soars To Highest Since 2011 - Chicago Purchasing Managers Index shot higher in December, printing 67.6 - the highest since March 2011...This is above the range of 29 economists surveyed (58-65.4) and 4 standard deviations above the expected print of 62.0. Under the hood, everything looks rosy...

• Prices paid rose at a slower pace, signaling expansion
• New orders rose at a faster pace, signaling expansion
• Employment rose at a slower pace, signaling expansion
• Inventories rose at a faster pace, signaling expansion
• Supplier deliveries rose at a slower pace, signaling expansion
• Production rose at a faster pace, signaling expansion
• Order backlogs rose at a faster pace, signaling expansion
• Business activity has been positive for 12 months over the past year.
• Number of components rising vs last month: 4

Weekly Initial Unemployment Claims unchanged at 245,000  The DOL reported: In the week ending December 23, the advance figure for seasonally adjusted initial claims was 245,000, unchanged from the previous week's unrevised level of 245,000. The 4-week moving average was 237,750, an increase of 1,750 from the previous week's unrevised average of 236,000.  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.

Philly Fed: State Coincident Indexes increased in 35 states in November --- From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for November 2017. Over the past three months, the indexes increased in 43 states and decreased in seven, for a three-month diffusion index of 72. In the past month, the indexes increased in 35 states, decreased in 11, and remained stable in four, for a one-month diffusion index of 48. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed: The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and sal ary disbursements deflated by the consumer price index (U.S. city average).  Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and all or mostly green during most of the recent expansion. Recently several states have turned red

The Unemployment Conspiracy - Real unemployment in the U.S. today hovers around 8.3%, afflicting more than 17 million people. This is roughly equivalent to the combined populations of New York City, Los Angeles, Chicago and Houston. Over one third of the working age population has given up looking for work. On top of this, pundits project that many more jobs will be lost to automation in the near future, with computers and robots replacing as many as 49% of the jobs now done by humans. The mechanization of dirty, dangerous, repetitive, mind-numbing tasks should be a blessing. Instead, the future is described in apocalyptic terms. Why? The problem is rooted in the disingenuous narrative we are fed. Jobs, so the story goes, are mysterious, ephemeral things, whose comings and goings are largely beyond our control. The number of available jobs has to vary independently from the work that needs to be done and the number of people available to do it, or so we are told. There is plenty of work that needs to be done –converting our energy industry to renewables, repairing and enhancing infrastructure, building housing for all who need it, improving student-teacher ratios, increasing healthcare and eldercare staff, and so much more. And there are millions looking for useful work. The disconnect between people wanting to work, work that needs to be done and the number of jobs that happen to be available only occurs if the guiding principle for job availability is profit. But when the needs of society as a whole are prioritized over the needs of wealthy few at the top, then achieving permanent, full employment is a piece of cake.

 That was no typo: The median net worth of black Bostonians really is $8 - The $8 detail in the Globe’s Spotlight series on race in Boston is not a typo. The median net worth for non-immigrant African-American households in the Greater Boston region is $8, according to “The Color of Wealth in Boston,” a 2015 report by the Federal Reserve Bank of Boston, Duke University, and the New School. The Globe Spotlight Team analyzed data, launched surveys, and conducted hundreds of interviews. The Color of Wealth in Boston report, which is part of a five-city study looking at wealth disparities among communities of color, was one piece of information that Spotlight examined. Here are the whys and hows of the study, according to researchers and the report itself. Researchers conducted phone interviews about the financial status of households in Boston, Los Angeles, Miami, Tulsa, and Washington, D.C. The survey asked respondents about their assets, liabilities, financial resources, personal savings, and investment activities. The cities were selected because their diversity allowed researchers to disaggregate data among subgroups within broader racial categories. In Boston, the report said researchers focused on “multigenerational African Americans (referred here as US blacks), Caribbean blacks (including Haitians), Cape Verdeans (both black and white), Puerto Ricans, and Dominicans.” The household median net worth was $247,500 for whites; $8 for US blacks (the lowest of all five cities); $12,000 for Caribbean blacks; $3,020 for Puerto Ricans; and $0 for Dominicans (that’s not a typo either.) The sample size for Cape Verdeans was too small to calculate net worth, the report said. “A lot of people have the impression that the major way in which people amass wealth is through savings out of their income,” said William A. Darity Jr., a professor of public policy at Duke University who was one of the lead investigators of the study.That’s not the case. Net worth, the report said, is determined by “subtracting debts from assets.”

The New Poverty -- J.d. Alt - We define poverty, I suppose, as that living condition which is unable to acquire enough dollars to purchase some, or most, of the basic necessities of life. It also seems to be an accepted notion that a certain amount of “poverty” is a necessary condition of our modern market economy—that a certain segment of the population will always be “unemployable” by the profit-oriented business community, either because they lack skills or because the business community simply does not need their services in order to generate its profits. Nobody really knows what to do with these “unneeded” people. We talk about “retraining” them—but there is no guarantee the profit-seeking business community will need them even with their newly acquired skills. In the meantime, these “unneeded” people don’t know what do with themselves either.  The point is this: It is time to begin imagining specific, concrete solutions to what is becoming a fundamental dilemma of our time. Imagine, for example, that every American citizen over the age of 16 can choose to earn a living-wage in exchange for providing a useful service to their local or regional community. Imagine that every local community has a free health and pharmacy clinic (in conjunction with a free methadone and counseling center)—where some of the employees are the living-wage earners. Imagine further that every local community has a housing co-op system (built in part by some of the living-wage earners) that makes available—to every family that needs it—a basic dwelling unit that is warm, dry, well-ventilated, and which provides for cooking, bathing, sleeping, and family gathering. Imagine that every local community has at least one community garden and rookery (managed by some of the living-wage earners) which grows, harvests, and processes vegetables, fruits, eggs, cheese—and perhaps fish—for local consumption. Imagine that every local community has at least one pre-school day-care (manned at least in part by some of the living-wage earners) which provides, free of charge, a safe, early child-hood learning environment between the hours of 6 A.M. and 6 P.M. Imagine that every local community has a system of retirement co-housing villages (built and staffed, in part, by the living-wage earners). Imagine, in other words, replacing what we now define as “poverty” with another kind of living condition—we might call it “community subsistence.”

What We Discovered During a Year of Documenting Hate - There is a vast discrepancy between the hate crimes numbers gathered by the FBI from police jurisdictions around the country and the estimate of hate crime victims in annual surveys by the Bureau of Justice Statistics. The FBI counts 6,121 hate crimes in 2016, and the BJS estimates 250,000 hate crimes a year.We were told early on that while the law required the Department of Justice to report hate crime statistics, local and state police departments aren’t bound to report their numbers to the FBI — and many don't. Complicating matters further is that hate crime laws vary by state, with some including sexual orientation as a protected class of victims and some not. Five states have no hate crime statute at all.We decided to try collecting data ourselves, using a mix of social media newsgathering and asking readers to send in their personal stories. We assembled a coalition of more than 130 newsrooms to help us report on hate incidents by gathering and verifying tips, and worked on several lines of investigation in our own newsroom.Along the way, we’ve learned a lot about how hate crimes fall through the cracks:

• More than half of hate crime victims don't file reports to the police, according to a June BJS report.
• Many police officers get little to no training about how to handle hate crimes. Only 12 states have statutes requiring this type of instruction at police academies.
• At the local level, there are widespread discrepancies in what police consider a hate crime, as well as confusion about how and whether to track hate crimes as such.
• Last year, almost 90 percent of local law enforcement agencies reported having zero hate crimes in their communities.
• Even if hate crimes are investigated, they aren't always prosecuted. In Texas, 981 potentially bias-motivated crimes were reported to police from 2010 to 2015. Only eight cases ended in convictions.
• Like local police, federal agencies often fail to send their hate crime statistics to the FBI, too.
• Violence by white supremacist groups sometimes goes unchecked by police, as was the case in Charlottesville and with members of the so-called Rise Above Movement.

We’ve received thousands of tips so far through our embeddable incident reporting form. We’ve also added tips sent to us by civil rights groups such as the Southern Poverty Law Center.ProPublica is collecting accounts of hate crimes from victims and witnesses. Tell us your story. ProPublica and reporters in newsrooms around the country used those tips to tell the stories of people who’ve come forward as victims or witnesses. They’ve identified a number of patterns:

41 Million Americans Are Living In Poverty This Christmas - Even though the stock market continues to set new record high after new record high, poverty is exploding all over America.   It is being reported that 41 million people are living in poverty at this moment, and 9 million of them do not receive a single penny of income from anyone.  Once you have been unemployed for long enough, you don’t qualify for unemployment payments any longer, and once you are on the street there is nowhere for other governments programs to send a check to.  I have previously discussed the rising epidemic of homelessness in our nation, but most people don’t want to think about that sort of a thing these days.  Even though New York City has the most homeless since the Great Depression, and even though homelessness in Los Angeles is at an all-time record high, most people want to pretend that everything is just fine. Well, the truth is that everything is not just fine. A reporter from the Guardian recently traveled with a special UN envoy to some of the most impoverished areas of the United States.  His report is extremely eye-opening, and I wanted to share a short excerpt from his story.  This portion of his article is about a 41-year-old woman named Ressy Finley who is desperately trying to stay alive on the mean streets of Skid Row in Los Angeles…

U.N. Investigator On Extreme Poverty Issues A Grim Report — On The U.S. - Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, wanted to know: Just how bad is poverty in the United States?   Now, after two weeks of reporting, Alston has released his preliminary findings. And they present a bleak picture. The American dream, he says, is an "American illusion."   To gather information, he traveled to Washington, D.C.; Los Angeles; San Francisco; Alabama; Puerto Rico; and West Virginia. He talked to poverty experts, civil society organizations, government officials and regular people born or thrust into poverty.  In a statement released last week and in an interview for All Things Considered, he shared some of his conclusions.Just who are the poor? Alston says that many of them are children and women. And they are all races. "The face of poverty in America is not only black or Hispanic but also white, Asian and many other colors."He found that stereotypes serve to undermine the poor — and are used to justify not coming to their aid. "So the rich are industrious, entrepreneurial, patriotic and the drivers of economic success. The poor, on the other hand, are wasters, losers and scammers," Alston told NPR. As a result, he says, many people believe that "money spent on welfare is money down the drain. Money devoted to the rich is a sound investment." He spoke to politicians and political appointees who were "completely sold on the narrative of such scammers sitting on comfortable sofas, watching color TVs, while surfing on their smartphones, all paid for by welfare."  But Alston says he met people working full time at chain stores who needed food stamps because they couldn't survive on their wages.  And he was shocked by the type of poverty he witnessed: "I saw sewage-filled yards in states where governments don't consider sanitation facilities to be their responsibility." And "people who had lost all of their teeth" because dental care wasn't covered by their health insurance plans. And homeless people who were told to move by a police officer who had "no answer when asked where they could move to."

Shocking number of Homeless people- Downtown Los Angeles Christmas day - (video) Los Angeles has an estimated 20,000 homeless people living on the street mainly in Skid Row. Downtown LA.Many have erected tents and tarps to form shelter. The area is considered to be one of the most dangerous places in LA.Amongst the homeless are women and children.It's evident after a drive around that many have mental health problems.The area is home to a number of shelters and rescue missions providing shelter to the lucky few and food. The US is ranked as one of the wealthiest nations on Earth but also home to some of the poorest.

Kicking Away Tiny Tim’s Crutch Because His Father Voted for Trump - Today Corey Robin, whom I've begun following lately, posted this on Facebook, referring to this tweet from Eric Alterman.  (Doug Henwood also noticed the tweet.)  I'm glad I'm not the only person who's noticed the behavior he's talking about: I'm surprised when liberal writers and journalists say they're fine with Trump voters losing their jobs, health care, access to potable water, and so on, because they had it coming to them. Since jobs, health care, and clean water are critical to one's survival, such calls are essentially an endorsement of death on the installment plan for one-half the country. Imagine the reaction of these very same writers and journalists if the radical left were to call for—or endorse—the death of their domestic political enemies. Or if the radical right were to do so.  Recently my Right Wing Acquaintance Number One gleefully linked to an article about child malnutrition in Venezuela, sneering at that country as a "worker's paradise."  Of course, those children had voted for Chavez and Maduro, so they had brought their misery on themselves.  A day or so later RWA1 linked to a story about Roy Moore's attack on the gay son of his victorious opponent Doug Jones; RWA1 declared that Moore, like the late Fred Phelps, was of Satan.  I commented that RWA1 needs people like Moore and Phelps so that he can pretend to be a moderate while he does a happy dance at the plight of starving brown children.  I might also have pointed out that child malnutrition is a serious problem in the United States, thanks to the policies of both parties over the past few decades; but I doubt RWA1 cares about that either, since those children probably voted for the "aspiring Mussolini"  Barack Obama. Robin's post sparked some discussion, with a few people actually defending Alterman's remarks.  Later in the thread Robin added: I also think comments like the one I posted are not symptoms of populism; they're symptoms of tribalism. Party tribalism, where your team is the good guys and the other team is the bad guys. Even tribalism is too fancy: it's just groupiness and cliques. That again is why you see a lot of heated rhetoric from this quarter but no action. Unlike Corey Robin, I'm not all that surprised by Alterman's sentiment, since I've seen so much of it already -- just extremely pissed off.  But it also makes me feel a bit more hopeless, because it means that the people who are supposedly, nominally, on my side are really not, which means that there may be hardly anyone to make common cause with. In the US at least. As a result, I get called a nihilist, which is funny but stupid - and also depressing since it comes from people who are nominally on my side.  

U.S. Police Fatally Shoot 6-year-old, Unarmed Woman - Sheriff’s deputies in San Antonio, Texas fatally shot a woman being pursued for multiple alleged crimes Friday night. As she was attempting to break into a home, a stray bullet from the officers struck and a killed a 6-year-old boy who was home early from holiday break.“In my opinion it’s a tragic accident that led to the death of this young man,” Bexar County Sheriff Salazar said at a news conference. “We are looking into all of it. Internal Affairs is still investigating it. But again preliminarily it appears that policies and procedures (on use of force) were complied with.”The woman, Amanda Jones, was also fatally shot in the incident. Deputies had seen the woman brandishing what they thought was a handgun earlier in night, but no gun was found at the shooting scene. “At the time, we don’t believe she was armed. She was presenting to be armed at various times throughout this prolonged pursuit,” Salazar said earlier.

Call of Duty gaming community points to ‘swatting’ in deadly Wichita police shooting - Online gamers have said in multiple Twitter posts that the shooting of a man Thursday night by Wichita police was the result of a “swatting” hoax involving two gamers.   Swatting happened when someone makes a call to a police department with a false story of an ongoing crime – often with killing or hostages involved – in an attempt to draw a large number of police officers to a particular address.  Swatting has gained traction across the country with online gamers. Those who try to cause the swatting incident will use caller ID spoofing or other techniques to disguise their number as being local. Or they call local non-emergency numbers instead of 911, according to 911.gov.  Deputy Wichita Police Chief Troy Livingston said Thursday night that police were looking into whether the call that led to the shooting was a case of swatting.Livingston said the department received a call that someone had an argument with their mother, that the father had been shot in the head and the shooter was holding his mother, brother and sister hostage.“That was the information we were working off of,” he said.  Officers went to the 1000 block of McCormick, preparing for a hostage situation and they “got into position,” he said. “A male came to the front door,” Livingston said. “As he came to the front door, one of our officers discharged his weapon.” Livingston didn’t say if the man, who was 28, had a weapon when he came to the door, or what caused the officer to shoot the man. Police don’t think the man fired at officers, but the incident is still under investigation, he said. The man, who has not been identified by police, died at a local hospital.

U.S. Homicide Detective Killed the Day Before He Was to Testify -- The FBI has declined to take over the investigation into the unsolved fatal shooting of a Baltimore homicide detective who was killed the day before he was to testify before a federal grand jury in a police corruption case.Bureau officials told Police Commissioner Kevin Davis that there is no evidence that Sean Suiter’s death on Nov. 15 was related to his pending testimony. Davis has previously said the FBI told him that Suiter was not a target in the investigation.Earlier this month, Davis invited the FBI — which has had agents assisting in the case involving Suiter — to take over the investigation, citing the “extraordinary circumstances” of the shooting.He said he understood that there was mistrust and concern in the community and wanted to ensure an impartial, transparent investigation.Davis read the FBI’s rejection letter to reporters on Wednesday and added that had the agency “thought Detective Suiter’s death was related to an ongoing corruption investigation, they would not only have taken this case over, they would have come to Baltimore with unprecedented resources.”The FBI, through a spokesman at the Baltimore field office, declined to comment. Suiter, 43, was shot in the head with his own gun in a vacant lot while investigating a 2016 triple killing in West Baltimore’s Harlem Park neighborhood.

Death in an Amazon dumpster - The day before last year’s presidential election, a hungry homeless man named Jonathan Manley stopped at a dumpster outside a warehouse in San Francisco. Unmarked on the outside, the building was occupied by Amazon. For those able to tolerate the grime and the smell, and who have no other choice but to risk eating expired or rotting food, the large dumpsters stationed there can be bountiful. Visitors say they have found ice cream, bananas, strawberries, grapes and frozen pizzas, not to mention cans and packaging that can be sold for pennies at recycling centers. The lid was too high and too heavy for Manley to flip open from the sidewalk, so he climbed the side, pulled the lid back and dropped into the trash. It was full of things to eat.“That’s when I noticed him,” Manley said.  At the front, on all fours as if he was struggling to stand up, was a middle-aged man wearing a T-shirt, pants and boots. He had a graying mustache and beard, his hands were caked with dirt and there was blood around his nose. Manley tried to wake him but could not. He tried to lift him, but the man weighed too much and was too stiff. Poking his head out of the dumpster, Manley saw two passersby walking a dog across the street and yelled for them to call 911. When the paramedics arrived, they determined that the man was beyond resuscitation.   For about a week after stumbling on the body, Manley went through the encampments of south-eastern San Francisco, trying to find somebody who was missing someone. Thousands of homeless people die in American cities each year to little fanfare, and the Amazon incident barely made the news. Neither the man’s name nor the occupant of the warehouse appear to have ever been reported.  At an encampment underneath a highway, he came across a woman who had strung up dried flowers around her tent and cultivated succulents. Cheryl Iversen, 49, had riotous, flaming orange hair, a personality to match and, fittingly, went by the name of Tygrr, pronounced “Tiger”. Manley told her what he had discovered, and she felt the burden of not knowing what had happened to Frank Ryan lifted. “I said ‘thank you’,” she recalled. “He held me when I cried.”

California governor pardons immigrants facing deportation - Gov. Jerry Brown on Saturday announced pardons or sentence reductions for some 150 convicted criminals, including two Cambodian refugees facing deportation and a woman who has spent 33 years in prison despite a bungled plea deal that could have freed her decades ago. The pardons of Rottanak Kong of Davis and Mony Neth of Modesto could be seen as another poke at the Trump administration's hard-line policies on immigration. Both men came to the United States as children when their families fled the Khmer Rouge government that killed millions of its own people. They were recently detained as part of a federal immigration roundup, although a California-based federal judge has temporarily halted the deportation of hundreds of Cambodian refugees. Kong was sentenced to a year in Stanislaus County jail in 2003 for joyriding. He served seven months. Neth was convicted in 1995, also in Stanislaus County, on weapons and receiving stolen property charges. He also served his sentence. Brown's pardons said both men had become law-abiding citizens and paid their debts to society. Neth, 42, was pardoned on Dec. 6 and unexpectedly released from a detention facility on Friday.

San Diego border crossings overwhelmed by asylum seekers: 'We can’t give up' -  So many people fleeing persecution in their home countries have asked for help in San Ysidro in recent weeks that federal officials have not been able to process all of them, leaving some stranded and running out of money while they wait in Tijuana. U.S. border officials are trying to work through the backlog, but they can go only as fast as migrants can be processed and moved from temporary holding cells to immigration detention. An official with U.S. Customs and Border Protection said the agency remains committed to meeting the care and safety needs of people in custody, and is working actively with partners, including Immigration and Customs Enforcement, to resolve the backup. “There are potentially a number of reasons causing the San Diego area ports of entry to reach capacity; we do not have a definitive reason to offer at this time,” the official added.Because of the backlog, close to 100 migrants lined up last week in the plaza outside the walkway that leads to PedWest, the pedestrian border crossing that opened earlier this year, Tijuana media outlets reported. Migrants slept in line, afraid of losing their places and having to wait longer for CBP to process them. Then, Mexican officials told them they couldn’t stay in the plaza. On Monday of last week, about 25 migrants were jailed overnight for waiting in the plaza outside the port, according to several Eritrean migrants. In the days since, some found refuge in Tijuana’s migrant shelters, particularly the Casa del Migrante. Each morning, they return to the port to ask if there is room in CBP’s processing area. When they’re turned away, they walk over to a nearby plaza and wait until shelters open for the night. 

California in Recession? -  Menzie Chinn - That’s what Ironman asks at Political Calculations, and he answers his question thusly:Going by these [household survey based labor market] measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis.Here’s my assessment. First, it is in my mind hazardous to infer too much from the household survey based labor market series, because the sample is usually relatively small, so that there is substantial measurement error. (Ironman focuses on the decline in the 12 month moving average Labor Force Participation Rate, LFPR) As I documented in this post, even for a state as large as California, revisions to the household series are particularly large (while corresponding revisions to the establishment series are usually fairly small).  In any case, the latest vintages of both household and establishment based employment data point to continued expansion.  (California’s LFPR has increased 0.2 ppts over the last year through October.)  Second, establishment data suggest California continues to outpace the US (as well as Wisconsin; no need to plot Kansas as you’ll know the answer there). In fact, the one sector that Dan Walters/Mercury News highlights (and Ironman quotes) relates to manufacturing lagging. On this, Wells Fargo observes:California’s manufacturing employment growth will also likely be revised higher in March. The CES estimated California lost 8,100 manufacturing jobs over the year in June, but the QCEW showed California actually gained 3,400 jobs.  Third, GDP in California year-on-year outpaces that of the Nation as a whole. California GDP growth in 2017H1 was an annualized 1.35% (log terms), compared to the overall Nation’s 2.12%. While slower, California GDP growth was not negative. Over the last year through Q2, California grew 2.61% vs. the Nation’s 2.18%. Fourth, the same pattern is true of personal income, which extends through 2017Q3.  Now, just because current and forward looking indicators do not suggest recession, I won’t Pull an Ed Lazear and declare no recession (even when several key indicators were going down as of May 2008, when he made that declaration). All these indicators get revised. But I just don’t see an obvious case for a California recession in the data through November 2017.  Question: Why is Breitbart so fixated on a California recession? Could it be a bit of Schadenfreude?

In San Jose district, identifying schools to close a gut-wrenching prospect - A San Jose school district is preparing to mothball up to a third of its elementary schools, making it among the hardest hit among Bay Area urban districts that are consolidating as they grapple with slowing revenue growth, soaring personnel costs and shrinking enrollments. Oak Grove School District’s consolidation is spawning a desperate competition as a committee prepares next month to recommend which of its 15 elementary campuses to close. “It’s akin to being told your close relative has a terminal illness,” said Margarita Mendoza, mother of a second-grader at Baldwin Elementary, which is on the potential closure list. In the breadth of school closures, Oak Grove stands out in the region, but gut-wrenching cuts will be coming soon to schools throughout the state, brought on by the same culprits forcing  Oak Grove’s hand:

• Huge increases in payments to teacher and support-staff pensions. Oak Grove’s went from $5.06 million in 2013-’14 to $10 million this school year — or 10 percent of the general-fund budget. The increases are mandated by the state in an effort to trim unfunded pension obligations.
• State support for education is still lagging at the level it was before the Great Recession, when the state cut education funding for several years.
• Post-recession pay raises granted to employee unions asking for sizable increases.
• Declining enrollment, as the region’s high housing costs send families with young children fleeing to more affordable areas. Oak Grove has lost 1,800 students since a high in 1996-’97, a 15 percent drop.

Voucher Schools Championed By Betsy DeVos Can Teach Whatever They Want. Turns Out They Teach Lies. -- Growing up in private evangelical Christian schools, Ashley Bishop saw the world in extremes, good and evil, heaven and hell. She was taught that to dance was to sin, that gay people were child molesters and that mental illness was a function of satanic influence. Teachers at her schools talked about slavery as black immigration, and instructors called environmentalists “hippie witches.”   So when Bishop left school in 2003 and entered the real world at 17, she felt like she was an alien landing on Planet Earth for the first time. Having been cut off from mainstream society, she felt unequipped to handle the job market and develop secular friendships. Lacking shared cultural and historical references, she spent most of her 20s holed up in her bedroom, suffering from crippling social anxiety.  Years later, some of the schools Bishop attended are largely the same, but some have changed in a significant way: Unlike when Bishop was a student, parents are not the only ones paying tuition for these fundamentalist religious schools – so are taxpayers.  These schools are among thousands in the United States that participate in private school choice programs, which most often come in the form of state-level voucher or tax credit scholarships. Voucher programs offer publicly funded financial aid to parents for private schools.  President Donald Trump and Education Secretary Betsy DeVos have openly championed such programs and have encouraged states to embrace school choice, arguing that voucher programs give parents an alternative to low-performing public schools.  Many of the private schools that participate in these state-led programs are run by evangelical Christian churches. They are sometimes unaccredited and can teach a curriculum similar to the one Bishop studied ― all with the help of taxpayer dollars.    The textbooks used at all of Bishop’s schools were published by three of the most popular, and most ideologically extreme, Christian textbook companies: Abeka, Bob Jones University Press and Accelerated Christian Education. The ideas in these textbooks often flout widely accepted science and historical fact.  That means there are thousands of kids receiving an extremist and ultraconservative education at the expense of taxpayers.

This Tax Loophole For Wealthy Donors Just Got Bigger -- Reporters and researchers are just starting to comb through the huge, rushed-to-passage tax package to figure out the implications. One of the changes, according to the Institute on Taxation & Economic Policy, which advocates for a "fair and sustainable" tax system, allows far more wealthy donors in 10 states to turn a profit through "donations" to private school scholarships. Yes, you read that right. If your income is high enough, you can actually make money by giving away money to support scholarships to private schools. The states affected by this provision are Alabama, Arizona, Georgia, Kansas, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina and Virginia. The mechanism at play is something called a "tax credit scholarship" or a "neovoucher." Regular old vouchers direct state tax dollars to help people pay for private schools. The problem was that this money often couldn't be used to support religious schools because of constitutional church-and-state issues. And most private schools in the United States have religious affiliations. So, some states created special scholarship funds separate from state coffers. People who put money into those funds wouldn't just get a state tax deduction, which is usual for charitable contributions. They would get a state tax credit. For 65, 70, even 100 cents on the dollar. If it's 100 percent, that means every dollar you put into these scholarship funds is taken off your state tax bill.  A multimillionaire living in South Carolina could give $1 million to a scholarship funding organization, which in that state goes to pay for private school scholarships exclusively for students with special needs. As a result, she would get that $1 million taken off her state tax bill. But here is where things get interesting. According to ITEP, she, and donors in 10 states that have similar rules, could then turn around and claim a federal charitable tax exemption on the same donation. The new top federal income tax bracket is 37 percent. That means, in total, the South Carolina donor could get back $1.37 million in exchange for $1 million, ITEP calculates. That is a better risk-free return on investment than you're likely to find anywhere.

Embezzlement and Basketball at North Carolina’s Biggest Voucher School -- When a coach at one of Fayetteville’s top private school basketball programs—a school that also happens to be the state’s top recipient of private school vouchers—pleaded guilty last summer in a Wake County courthouse to embezzling hundreds of thousands of tax withholding dollars he collected over eight years from the school’s employees, he received what some might consider an odd sentence. Among the punishments handed down by the court for Heath Vandevender’s embezzlement activity at Trinity Christian School was 90 days in jail. He’s completing that sentence this fall by spending his weekends at the Cumberland County Detention Center.But the sentence also allowed Vandevender to keep his job, despite having embezzled significant sums of money while employed by Trinity Christian—a school that has received more than $1.7 million in publicly-funded vouchers since 2014. In between his weekend stints in jail, county and school officials say Vandevender continues coaching basketball and teaching journalism to high school students at Trinity Christian during the week.

Heartland's Plan for Privatization -  It will come as no surprise that fifteen years ago the Heartland Institute was laying out the program by which vouchers could be used to privatize education. Hat tip to Jennifer Berkshire, who turned up this article from Heartland's website for February of 2002. As always, it's interesting to see what some reformsters used to say back when they were just spitballing and not trying to spin. Joseph Bast, then-CEO of THI, thought that 2002 would be a "turning point in the decades-long battle to restore parental rights and a competitive education industry in the US." This did not turn out to be particularly prescient, but many of his thoughts about the shape of the battle are a bit more disturbing and, fifteen years later, familiar. Bast hoped that the Cleveland decision by the Supreme Court would open the voucher floodgates, and to some extent, that has been true in Ohio. What he failed to anticipate was that the floodgates were somewhat self-limiting, as many Ohio charter schools turned out to suck, lessening enthusiasm among customers. But mostly Bast was clear and blunt about the goals of voucher advocates. The second section of the article kicks off under the heading "The Privatization Opportunity.' Elementary and secondary schooling in the U.S. is the country’s last remaining socialist enterprise. Other major industries have moved from the government sector to the private sector in recent years, including airports, hospitals, ports and harbors, railroads, water works, and even (as Berkowitz noted) the administration of welfare programs.  Bast expresses a childlike faith in the magic of the marketplace. "Privatization is so effective it typically costs a private firm half as much as the government to produce a product or service of similar (often superior) quality." It's a cute notion, for which he offers zero evidence. What was clear even in 2002, but what Bast never acknowledges, is that privatization allows private operators to hoover up a big pile of tax dollars that would otherwise have gone to the public sector. But Bast belonged to the Cult of Competition, believing that competing schools would reward schools that please parents, stimulate parent involvement, be more efficient, and penalize failure. None of these things are related to the goal of providing a high quality education for every single child in America, but then, that's not his goal.

Tally for shifting CT pension costs from state to teachers: $20M - Legislators decided this fall that teachers would contribute tens of millions of dollars more annually toward their pensions — and state payments would drop by matching amounts. But according to state Treasurer Denise L. Nappier, that cost shift still came at a price to the state — and the bill is just over $20 million. While that cost might seem small, given that Connecticut will pay it off over the better part of two decades, Nappier warned any increase in the state's massive retirement benefit debt sends a dangerous message as Connecticut tries to reverse decades of neglect in this area. "It is a slippery slope," Nappier wrote in a recent memo on changes to the teachers' pension fund. "Any increase in the unfunded liability, however small, is a step in the wrong direction." Connecticut has more than $70 billion in long-term, unfunded liabilities, including about $50 billion related to retirement benefits. The treasurer also questioned how Wall Street would view the $20 million increase in teacher pension fund liabilities. Connecticut borrowed $2 billion to shore up the cash-starved pension fund in 2008. And it promised in its contractual covenant with bond investors not to reduce state contributions into the fund over the 25-year life of that $2 billion loan. Is it OK to reduce state contributions by almost $60 million over two years and replace them with a matching amount from teachers, even if it increases the pension debt by $20 million? "The changes may meet the letter of the law regarding the bond covenant," Nappier wrote, "… but they certainly violate the spirit."  

Science Teachers Respond to Climate Materials Sent by Heartland Institute -- Since at least the 1950s, fossil fuel organizations such as the American Petroleum Institute have targeted U.S. classrooms as they sought to shape future opinions of their industry, documents show. In just Oklahoma, whose budget is heavily reliant on oil, 14,000 educators teach math and science using a curriculum developed by industry. The conservative Heartland Institute, in particular, has targeted climate science in its recent outreach to schools, and it has ramped up its campaign. Heartland drew attention early this year when it mailed 350,000 copies of its publication "Why Scientists Disagree About Global Warming" to middle, high school and college science teachers around the country, out of concern that "the upcoming generation learn the truth," said Jim Lakely, a spokesman. The booklet and DVD try to challenge the scientific consensus that carbon dioxide from burning fossil fuels is dangerously heating the planet.  This fall, as we traced the fossil fuel industry's campaign of misinformation about climate change and analyzed its impact on public and political opinion, we reached out to middle and high school teachers to ask if and how they use the Heartland materials. Ninety teachers from across the United States responded to questions posed on social media and through educators' groups. Many told us they rejected Heartland's mailings as misinformation. A few said they found it useful to teach "all sides" of the climate issue. Lakely said negative feedback that had appeared on social media was "unscientific" and "close-minded." Here is a selection of what the teachers had to say. (Some teachers requested that InsideClimate News withhold personal information, such as name or school name, because the teaching of climate science is controversial in their communities.)

Highly motivated kids have a greater advantage in life than kids with a high IQ - Gavin Ovsak is one of those guys who never seems to slow down. On top of his classwork at Harvard medical school, he’s got a side hustle—writing an original software program to help doctors make better decisions.  He admits he sometimes lets eating and cleaning slide when he’s really engaged in one of his projects. There’s a term for people like Ovsak—the kind of go-getter who would actually choose to take on a complicated programming challenge on top of a heavy load of demanding schoolwork. Educational psychologists Adele and Allen Gottfried call people who are standouts when it comes to effort and determination “motivationally gifted.” According to the Gottfrieds, our culture has vastly underestimated just how essential motivation is to ensuring success later in life. If society learns to value this quality in the same way that it regards intelligence or leadership skills, it could be an enormous boon for children—particularly because motivation, unlike many other talents, is a quality that’s accessible to us all. The Gottfrieds have plenty of research to back up their theories on motivation—quite literally, enough to fill a lifetime. Over four decades, the Gottfrieds and several colleagues collected a staggering trove of data on the study participants, yielding important insights into working parents, temperament, and other topics. Researchers collected information about participants from parents, teachers and transcripts, tested their IQ and motivation levels,and even visited their homes. In all, the Fullerton Longitudinal Study has amassed an estimated 18,000 pieces of information on each of the remaining 107 participants. “It’s our life’s work,” says Allen cheerfully. “We’ll take it to our grave.” The Gottfrieds believe one of the study’s most significant findings centers on motivation. Kids who scored higher on measures of academic intrinsic motivation at a young age—meaning that they enjoyed learning for its own sake—performed better in school, took more challenging courses, and earned more advanced degrees than their peers. They were more likely to be leaders and more self-confident about schoolwork. Teachers saw them as learning more and working harder. As young adults, they continued to seek out challenges and leadership opportunities. If there’s a secret sauce to winning at life, the motivational kids seemed to have found it.

 Evergreen: So Much Stranger than That --Peter Dorman - I’m a professor at Evergreen State College, currently on leave.  Last year I lived through the events that were captured on videotape and brought the college a lot of unwanted publicity.  As a social scientist, long interested in organization theory and social movements, I found the experience grimly fascinating, an extraordinary case study.  In my writing on it, I try to focus on understanding how such things could occur, rather than apportioning blame to specific individuals, which, from what I can see, has been the main sport.  Today I read another post mortem by Bret Weinstein and Heather Heying, published in the right wing Washington Examiner.  Disclosure: I know both of them, and I had a positive experience co-teaching for a quarter with Heather several years ago in Evergreen’s environmental masters program.  I’m not socially connected to either of them, and I haven’t had political discussions with them either.  I agree with some of what they say in their latest missive, and disagree with other parts.  Readers of this blog, who are far from the scene and wonder who and what to believe, might find my reactions interesting. There is an obvious, fundamental point on which the three of us see eye to eye: Evergreen descended into an atmosphere of intimidation, in which the right to speak, no matter how civilly, was openly attacked.  There was a group solidarity logic at work: if you affiliated with one group on campus, you could speak your mind in public and be immune from any scrutiny regarding the tone or logic of your utterances; if you didn’t you were expected to remain silent.  This pressure was felt by faculty and students alike.  It was in this context that disruptive actions by students escalated over many months until they paralyzed the college.  It’s remarkable that it even needs to be said that this situation is intolerable for an institution of higher education.

The GOP Just Handed a Gift to the Fast-Growing K-12 Student Loan Industry - The GOP tax bill’s inclusion of 529 plans for K-12 private tuition has been widely criticized as yet one more provision that aids the wealthy. That’s because only wealthy families have enough money on hand to sock away $10,000 a year toward each child's K-12 private school tuition. There’s been little mention of what these plans could mean for middle and lower-income families. By discouraging them from using 529 accounts for long-term college savings, these families are being set up for a future of indebtedness. Here’s the problem. These savings accounts were meant to offer tax advantages to families in order to help them to put money away for college. Expanding the use of 529 accounts to cover K-12 expenses encourages families to spend money on private schools now. When it's time for those families to pay for college, their 529s or other college savings will be less— or nonexistent. Worse, GOP policy makers are providing just the “nudge" to convince these families to enroll in or justify staying in private schools they really can't afford (even with vouchers), and make up the gap with private loans. The 529 provision in the tax bill is more than anything else a boon to the growing K-12 private school loan industry.Unlike higher education, where a student borrower’s financial relationship with colleges and lenders is well defined by federal and state laws, K-12 private education is a largely unprotected landscape. Take Indiana, for instance, home of the largest private school voucher program in the nation. Despite paying out $146 million last year in publicly funded tuition vouchers for private schools, the Indiana Department of Education doesn't even have the right to see the enrollment contracts or student handbooks that govern the payment policies on that money, let alone provide any consumer protections to students who attend those schools. Unlike colleges, private schools at the K-12 level are almost completely free to impose whatever enrollment and financial policies they please. Lenders for K-12 also face far fewer restrictions than lenders for higher education.

Student Debt Slavery: Bankrolling Financiers on the Backs of the Young - The advantages of slavery by debt over “chattel” slavery—ownership of humans as a property right—were set out in an infamous document called the Hazard Circular, reportedly circulated by British banking interests among their American banking counterparts during the American Civil War. It read in part:  Slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages. Slaves had to be housed, fed and cared for. “Free” men housed and fed themselves. For the more dangerous jobs, such as mining, Irish immigrants were used rather than black slaves, because the Irish were expendable. Free men could be kept enslaved by debt, by paying wages insufficient to meet their costs of living.  The government, too, had to be enslaved by debt. It could not be allowed to simply issue the money it needed to meet its budget, as Abraham Lincoln’s government did with its greenbacks (government-issued U.S. notes). The greenback program was terminated after the war, forcing the government to borrow from banks—banks that created the money themselves, just as the government had been doing. . Banks issued money and lent it, at interest. More had to be paid back than was lent, keeping the supply of money tight and keeping both workers and the government in debt. Slavery by debt has continued to this day, and it is particularly evident in the plight of students. Graduates leave college with a diploma and a massive debt on their backs, averaging more than $37,000 in 2016. The government’s student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category, behind only mortgage debt. Student debt has risen nearly 164 percent in 25 years, while median wages have increased only 1.6 percent.

800,000 Washington residents owe student-loan money — to the tune of $24B - One of every seven adults in Washington owes money they borrowed to pay for college or career training, and taken all together, those borrowers owe more than $24 billion in student loans.A report detailing student-loan indebtedness, released Thursday, forms the backdrop of a push by state Attorney General Bob Ferguson for legislation that would give college borrowers greater safeguards against deceptive loan practices. The bill, which died in the Senate after he requested it last year, would set new standards for student- loan servicers and give the state the authority to license and regulate those servicers.About 800,000 Washington borrowers owe money on student loans, a number that has increased by about 35 percent in the last decade, according to the report by Ferguson’s office. Over that time period, public and private college and university tuition skyrocketed, and many more students attended a growing number of for-profit colleges. “The numbers are staggering,” Ferguson said. “We have a big problem, and it’s getting worse, at the highest level … the impact could be profound for our state and our country if this trend continues.”  Ferguson said one of the most troubling figures in the report is the number of borrowers age 60 and over. They have increased by more than 35 percent in the last five years in Washington, and hold student-loan debt of $2.1 billion.

Let’s allow our kids to use some of their future Social Security earnings to pay off their student loans FOX – Rep. Tom Garrett - I’m one of about 45 million Americans collectively paying back more than $1.4 trillion in college student loan debt. The average student borrower owes more than $31,000 and some owe a lot more – a huge burden for young people just starting their careers or going on to graduate school, where their debt will only increase. Unfortunately, Congress – where I am privileged to serve – has shown very little urgency to address this growing problem, which has reached crisis proportions. If Congress fails to take substantive steps to change course by offering actionable solutions to disentangle millions of Americans from the crushing burden of student loan debt, the consequences to our nation will be severe. As a member of the House of Representatives I’m in position to do try to do something to help my constituents and all Americans deal with growing student debt. That’s why I’ve introduced legislation called the Student Security Act.   My legislation would allow young people to choose – on a strictly voluntary basis – to get student loan forgiveness in exchange for agreeing to raise their own qualifying age for Social Security benefits many decades in the future. The completely voluntary Student Security Act would not in any way alter the benefits earned by current or prior recipients of Social Security. In fact, it would not even change the benefits structure for those currently burdened with student debt, unless they chose to take advantage of this proposed program.  For every $550 in student loan forgiveness – or roughly the average cost for one credit hour at a public university – a Student Security participant would agree to raise his or her full-retirement age for Social Security benefits by one month. A student could get a maximum of $40,150 in debt relief. To get that, the person would delay the starting age for collecting Social Security benefits by 6 years and 1 month.

These charts show who you’ll spend your time with across your lifetime - Time with friends, colleagues, siblings, and children diminishes over the course of a lifetime. The older we get, the person we spend the most time with is the one we see in the mirror.That’s the conclusion of a recent, fascinating analysis of data from the American Time Use Survey, an annual census by the US Bureau of Labor Statistics of how Americans spend their hours. Data scientist Henrik Lindberg combed through results from 2003 to 2015 to determine how much of that time is spent in the company of others. The data do not count sleep, or time with people who wouldn’t be categorized in any of the relationships shown. Time can also be counted twice: a party you attended with friends and your spouse would count for both categories.Some of the relationships Lindberg found are intuitive. Time with friends drops off abruptly in the mid-30s, just as time spent with children peaks. Around the age of 60—nearing and then entering retirement, for many—people stop hanging out with co-workers as much, and start spending more time with partners.Others are more surprising. Hours spent in the company of children, friends, and extended family members all plateau by our mid-50s. And from the age of 40 until death, we spend an ever-increasing amount of time alone. Those findings are consistent with research showing that the number of friends we have peaks around age 25, and plateaus between the ages of 45 and 55. Simply having fewer social connections doesn’t necessarily equal loneliness. The Stanford University psychologist Laura Carstensen has found that emotional regulation improves with age, so that people derive more satisfaction from the relationships they have, whatever the number. Older people also report less stress and more happiness than younger people.

How Opaque Healthcare Pricing Mechanisms Rip Off Consumers - According to a report submitted to Congress by the Physicians Advocacy Institute (Medicare Payment Differentials Across Outpatient Settings of Care), hospital outpatient services cost considerably more than other settings without any evidence of added benefit. Whether it’s a colonoscopy, cardiac imaging, or just an office visit, costs are higher in a hospital outpatient setting. “Medicare is paying hospitals more for the same services because (the federal healthcare program) thinks it costs (physicians) more to provide the same service due to higher overheads,” said Bhagwan Satiani, MD, professor of clinical surgery at Ohio State University’s College of Medicine, cited by Physicians News Network. I’m not sure why Physicians New Network added “(physicians)” to the statement by Dr. Satiani. The physicians are not being paid the facility fee. The hospital gets the fee. Actually, if I do a procedure at the hospital, my professional fee is cut because I don’t have overhead. Think about that for a moment. Let’s say I get $250 for the procedure in the office. If I do it at the hospital I get $125, so CMS must think my overhead is $125. But CMS thinks that the hospital’s overhead is perhaps $800. Why are they subsidizing the less cost-efficient location? Doctors working in such settings seem to have an incentive to do more medical procedures, Bhagwan Satiani said, according to PNN.

How Hospitals Are Failing Black Mothers -  It’s been long-established that black women like Fleurimond fare worse in pregnancy and childbirth, dying at a rate more than triple that of white mothers. And while part of the disparity can be attributed to factors like poverty and inadequate access to health care, there is growing evidence that points to the quality of care at hospitals where a disproportionate number of black women deliver, which are often in neighborhoods disadvantaged by segregation.Researchers have found that women who deliver at these so-called “black-serving” hospitals are more likely to have serious complications — from infections to birth-related embolisms to emergency hysterectomies — than mothers who deliver at institutions that serve fewer black women.Still, it’s difficult to tell from studies alone how this pattern plays out in real life. The hospitals are never named. The women behind the numbers are faceless, the specific ways their hospitals may have failed them unknown.ProPublica did its own analysis, using two years of hospital inpatient discharge data from New York, Illinois and Florida to look in-depth at how well different facilities treat women who experience one particular problem — hemorrhages — while giving birth.We, too, found the same broad pattern identified in previous studies — that women who hemorrhage at disproportionately black-serving hospitals are far more likely to wind up with severe complications, from hysterectomies, which are more directly related to hemorrhage, to pulmonary embolisms, which can be indirectly related. When we looked at data for only the most healthy women, and for white women at black-serving hospitals, the pattern persisted. Beyond this bird’s-eye view, our analysis allowed us to identify individual hospitals with higher complication rates, to look at what kinds of protocols they have and to examine what went wrong in specific cases.

How Nutrition “Science” Made the US and Other Countries Fatter -- Yves Smith - In November, many major news outlets published stories describing how the sugar industry buried research from 1967 that showed a that higher consumption of sugar led to increased incidence of heart disease.  This effort to depict the sugar industry as using the same playbook that the tobacco industry did to hide mounting evidence of the damage done by its products. But this image lets the group most responsible for the fattening of America off the hook: so-called nutrition scientists. Reader Nicholas D flagged a must-read article by Ian Leslie from 2016: The Sugar Conspiracy. It’s a compelling account of how the now-discredited idea, that saturated fats cause of heart disease, became established. Leslie also seeks to draw lessons about the shortcomings of science, that it is a far more human and social enterprise than any practitioners want to admit. While I agree with his overarching concern, I think he misses an important issue in his extremely important report: that nutrition “science” was ripe for malpractice because it was eager to wrap itself in the mantle of “science” when it would be well-nigh impossible to reach that standard.  I strongly urge you to read this important piece in full; it has lots of detail about important studies, the cherry-picking of samples and failures to test alternative hypothesis, and most important, about how protecting the reputations of the incumbents has led them to vilify researchers and outsiders who have mustered evidence that counters their long-established “Fats are bad for you” thesis.

Trump administration fires all members of HIV/AIDS advisory council -- The remaining members of the Presidential Advisory Council on HIV/AIDS were fired en masse this week. Months after a half-dozen members resigned in protest of the Trump administration’s position on health policies, the White House dismissed the rest through a form letter. The notice “thanked me for my past service and said that my appointment was terminated, effective immediately,” said Patrick Sullivan, an epidemiologist at Emory University who works on HIV testing programs. He was appointed to a four-year term in May 2016. The council, known by the acronym PACHA, has advised the White House on HIV/AIDS policies since its founding in 1995. Members, who are not paid, offer recommendations on the National HIV/AIDS Strategy, a five-year plan responding to the epidemic.  

 Scientists Discovered What Causes Dementia - Scientists discovered a major cause of dementia which can help in the diagnosis and treatment of the illness. The researchers point to toxic levels of urea in the brain as being responsible for the brain damage that leads to dementia, an incurable neurodegenerative disease that causes an impairment of memory and thinking abilities. Urea is a byproduct of protein metabolism, produced by the liver to remove ammonia from the body. If you’re wondering - yes, urea is what’s excreted from the body in urine after being filtered by the kidneys.The paper published by collaborating scientists from the UK, Australia, New Zealand the U.S. shows that Huntington’s Disease, one of seven major kinds of dementia that’s related to aging, has a direct relationship to urea levels in the brain as well as metabolic processes. A 2016 study by the same group also linked urea to Alzheimer’s. This proves, according to Professor Garth Cooper, who led the team from the University of Manchester in the U.K, that their discovery relates to different type of dementias. The observation that high urea levels set in before the onset of dementia can help doctors to one day diagnose and treat the disease.

Legal levels of air pollution are killing the elderly - Scientists are just beginning to understand that there is no safe level of air pollution exposure. Breathing polluted air has lasting, insidious effects, including asthma, allergies, cognitive delays, developmental disorders, and premature births. All of these can contribute to shorter life spans, and in some cases can abruptly end a life. Countries, including the US, have air-quality standards to presumably prevent the worst of these health effects, but a new body of emerging research shows that people are dying prematurely from breathing the air even in places where air pollution levels were deemed “safe” by the US. The latest of these studies was published Dec. 26 in the Journal of the American Medical Association (JAMA). It found that even one summer of Americans breathing air with pollution levels well below US national standards leads to a rise in premature deaths. The study looked at 22 million deaths of Medicare recipients (so, Americans over the age of 65) over a 13-year period from 2000 to 2012. It included air pollution data from the US Environmental Protection Agency, as well as other pollution data sets, processed through neural networks to predict air pollution concentrations “at each 1-km ×1-km grid in the continental United States, including locations with no monitoring sites.” “We found that the mortality rate increases almost linearly as air pollution increases,” Francesca Dominici, professor of biostatistics at Harvard’s school of public health, and a senior author on the paper, said in a statement. Though the study focuses on the US, its basic conclusion applies broadly: the “safe” levels laid out by national health agencies everywhere are inherently far from safe. “Any level of air pollution, no matter how low, is harmful to human health,” Dominici said.

Short-term exposure to low levels of air pollution linked with premature death among US seniors - Short-term exposures to fine particulate air pollution and ozone--even at levels well below current national safety standards--were linked to higher risk of premature death among the elderly in the U.S. according to a new study from Harvard T.H. Chan School of Public Health.The risk was even higher among elderly who were low-income, female, or Black.The study will be published December 26, 2017 in the Journal of the American Medical Association (JAMA)."This the most comprehensive study of short-term exposure to pollution and mortality to date," said Francesca Dominici, professor of biostatistics, co-director of the Harvard Data Science Initiative, and senior author of the study. "We found that the mortality rate increases almost linearly as air pollution increases. Any level of air pollution, no matter how low, is harmful to human health."Studies have shown that fine inhalable particles (PM2.5) and ozone--particularly 'warm-season ozone,' which occurs from April to September--are linked with increased mortality rates. Under the National Ambient Air Quality Standards (NAAQS) set by the U.S. Environmental Protection Agency (EPA), long-term exposures to PM2.5 are considered safe if they average 12 micrograms per cubic meter of air (12 μg/m3) or less per day over the course of a year. The 24-hour standard is 35 μg/m3. For warm-season ozone there is no annual standard; the 8-hour standard is 70 parts per billion (ppb). The researchers assessed daily air pollution exposures using prediction models that provided accurate estimates of PM2.5 and ozone for most of the U.S., including unmonitored areas. They then linked the air pollution data with mortality data from the entire U.S. Medicare population residing in 39,182 zip codes (93% of all the zip codes in the U.S.), over a 13-year period from 2000-2012.

Asbestos-Laced Makeup: Children’s Products Continue to Be Contaminated With Deadly Fiber  - The troubling news about the presence of asbestos in children's makeup is just the latest example of the deadly fiber contaminating imported products marketed toward children, said Environmental Working Group (EWG).  The national retail chain Claire's, which sells jewelry, makeup and other items targeted toward young girls and children, recently announced it was recalling a number of its makeup products after they tested positive for asbestos.  In 2015, EWG Action Fund (the 501 (c)(4) sister organization to EWG) found asbestos fibers in several brands of children's crayons and toy crime scene investigation kits. In 2007, tests commissioned by the Asbestos Disease Awareness Organization (ADAO) also found the lethal fiber in another toy fingerprint named after the television show CSI: Crime Scene Investigation.  In 2000, an investigation by journalists with the Seattle Post Intelligencer discovered asbestos in imported crayons made with talc.  Shortly after EWG Action Fund published the results of its 2015 report, it called on the U.S. Consumer Product Safety Commission to investigate asbestos contamination in children's crayons and toys.  "It seems every time someone looks for asbestos in imported children's products that include talc as an ingredient they find the deadly fiber,"  "There is no safe level of asbestos exposure so if a child inhales even the smallest amount it can lead to asbestos-triggered diseases, like mesothelioma, later in life."  All of the children's products where asbestos was detected were imported from China and included talc as an ingredient.  Geologically, talc and asbestos can be formed from the same parent rock. In many regions, talc deposits are contaminated with asbestos fibers.  Asbestos fibers lodged in the lungs or other organs can cause grave, often fatal, illnesses whose symptoms are not evident for decades after exposure. If children are exposed when young, there is more time for asbestos-related illness to develop later in life.

In New York City, the DEA Seized a Record 193 Kilos of Fentanyl in 2017 — Enough to Kill the City’s Population 11 Times Over - The powerful synthetic opioid fentanyl is now the deadliest drug in America, causing an estimated 19,000 fatal overdoses in 2016. The DEA says most of the illicit fentanyl comes from China, either shipped directly to U.S. consumers through the mail or mixed with heroin that is smuggled across the southern border by Mexican drug cartels. At New York City’s JFK airport, the point of entry for about 60 percent of the country’s international mail packages, seizures of fentanyl by Customs and Border Protection agents increased from 7 in 2016 to 84 in 2017. All of the packages came from China. Nationwide, fentanyl seizures by CBP increased from 459 pounds in 2016 to 1,296 pounds last year.  In New York City, the DEA seized a record 193 kilos of fentanyl in 2017 — enough to kill the city’s population 11 times over. James Hunt, special agent in charge of the DEA’s New York field division, said it’s virtually impossible to stop the flow of fentanyl. “The southwest border of the United States is porous,” Hunt said. “There’s thousands of miles of border. Thousands of trucks stop every day at the border. There’s millions and millions of parcels coming into the country every day, you can’t search them all. And traffickers know that.”In October, the Department of Justice announced the first-ever indictments of two Chinese nationals accused of shipping fentanyl to the United States. VICE News contacted the Chinese government to ask about the fentanyl cases and was granted a rare interview with an official from the National Narcotics Control Commission, the Chinese equivalent of the DEA.

US life expectancy declined again. How much does that matter? -- US life expectancy at birth declined for the second year in a row, by an estimated -0.1 years (-0.2 years for males, no change for females). When you use a small number to describe an event, it suggests that the consequences of the event are negligible. This is an illusion: the drop in life expectancy is a catastrophe. I’ll show this by translating that decrease into numbers that appropriately convey the magnitude of harm.  Life expectancy at birth is the number of years that a newborn should expect to live, assuming age-specific mortality rates remain at their current levels. There’s a lot packed into this definition. Age-specific death rates determine life expectancy. So if life expectancy changes it is because death rates changed. Death rates vary by age group: they are moderately high for infants, drop during childhood, and then rise as we age. The change in death rates by age group from 2015 to 2016, as a percentage of 2015 rates. (graph) Data are from the CDC. The blue bars show that for infants and the elderly, death rates fell. In fact, life expectancy improved for those 65 and older. But for everyone else death rates rose, and for young adults, they rose a lot. Moreover, the changes in age-specific death rates varied by race, gender, and (the CDC report doesn’t discuss this, but it’s true) the region of the US. The net effect of the changes in age-specific death rates across the lifespan and the population was a -0.1-year change in life expectancy at birth.*   The change of -0.1 years/life is a -0.13% decline from the 2015 US life expectancy at birth (78.7 years). This is how your individual life prospects changed if you are an infant who happened to be born in 2016 instead of 2015. And, yes, those prospects only diminished a little. But that’s not the only way to look at this: We should also look at the cumulative loss of life across the population.** Consider that for one birth cohort,  -0.1 years/infant × 4 million annual births = -400,000 years/cohort. How large was that loss? There were 4,424 US deaths in the Iraq war. These men and women were on average about 26 years old at the times of their death. Life expectancy at 25 is 55 years, so let’s say that that’s how much life they lost, on average. Hence 4,424 deaths in Iraq × -55 years/death ≈ -243,000 years lost in Iraq. Therefore the expected years of life lost for a single birth cohort due to the changes in death rates from 2015 to 2016 was larger than the years of life lost by Americans in the Iraq war.

American Decline & Declining Life Expectancy -- If America is such a great place, then why do so many Americans want to end their lives faster? The numbers don't lie: for a second consecutive year in 2016, US life expectancy has decreased. All this is happening in the face of medical advances and is due primarily to two things. First are  "unintentional injuries," a euphemism for the aforementioned high-risk drug abuse. Second are increased numbers of suicides. Yes, deaths of despair are real Stateside and are occurring at an an increased rate just as other countries are still experiences rises in life expectancy.  The United States has not seen two years of declining life expectancy since 1962 and 1963, when influenza caused an inordinate number of deaths. In 1993, there was a one-year drop during the worst of the AIDS epidemic.   “If you look at the other developed countries in the world, they’re not seeing this kind of thing. Life expectancy is going up.” The development is a dismal sign for the United States, which boasts some of the world’s highest spending on medical care, and more evidence of the toll the nation’s opioid crisis is exacting on younger and middle-aged Americans, experts said.  The truth is that life in America is such an unattractive proposition for so many that they'd rather end it all by suicide or largely risk the same result by abusing drugs. My question for all the USA # 1 cheerleaders, Trumpists, and assorted American exceptionalists is, how do you explain away these facts? For the US population as a whole, life is getting worse. We have the numbers to prove it since so many would rather not live. Nowhere else in the developed world are you seeing such declines.  It seems to me that the first requirement for having a "great" country is having people who are actually glad to live (in it). The United States circa year-end 2017 is obviously failing by this measure. Its declining life expectancy is due to the misery borne of living there by far too many. If your own people give up on life, then you have no business claiming to be the shining city on the hill and all that jazz.

‘I want to help humans genetically modify themselves’ - Josiah Zayner, 36, recently made headlines by becoming the first person to use the revolutionary gene-editing tool Crispr to try to change their own genes. Part way through a talk on genetic engineering, Zayner pulled out a syringe apparently containing DNA and other chemicals designed to trigger a genetic change in his cells associated with dramatically increased muscle mass. He injected the DIY gene therapy into his left arm, live-streaming the procedure on the internet. The former Nasa biochemist, based in California, has become a leading figure in the growing “biohacker” movement, which involves loose collectives of scientists, engineers, artists, designers, and activists experimenting with biotechnology outside of conventional institutions and laboratories. Despite warnings from the US Food and Drug Administration (FDA) that selling gene therapy products without regulatory approval is illegal, Zayner sells kits that allow anyone to get started with basic genetic engineering techniques, and has published a free guide for others who want to take it further and experiment on themselves. (interview transcript)

Higher Birth Weight, Lower Risk Of Premature Births After Coal Power Plant Shut Down - For decades, the Portland Generating Station, located in Pennsylvania close to the New Jersey border, spewed an average of 2,600 tons of sulfur dioxide each month into the atmosphere. Pennsylvania industry and residents got the benefit of Portland’s electricity. New Jersey residents got to choke on the pollution as it drifted eastward on the prevailing breeze. In 2009, it emitted 30,465 tons of sulfur dioxide — more than double the amount from all electricity generating facilities in New Jersey combined, according to the New Jersey Department of Environmental Protection.  A study published in April 2017 by Muzhe Yang, associate professor of economics and Shin-Yi Chou, chair of the Lehigh University department of economics, found the Portland facility had a measurable effect on pregnant women living up to 30 miles downwind. Based on data compiled between 1990 and 2006, the researchers determined that women within the plume of pollution from the Portland facility had a 6.5% greater risk of low birth weight and a 17.12% greater risk of very low birth weight.  As a result of litigation brought by the EPA, a court found it was the sole source of pollution in nearby New Jersey and ordered it closed. In June, 2014, the plant was shuttered. By December 2015, sulfur dioxide emissions in nearby New Jersey had dropped by over 99%. Yang and Chou repeated their study after the shutdown. Their findings, published this week online in the Journal of Environmental Economics and Management and reported by Lehigh University, show that shutting down the plant reduced the likelihood of a low birth weight baby by 0.89 percentage points or about 15% and reduced the likelihood of a preterm birth by 2.83 percentage points or about 28%. The findings are based on medical data from New Jersey zip codes within 60 miles of the plant.

Deadly flesh-eating illness has infected over 500 people in Japan -- Over 500 people were infected with a deadly flesh-eating disease in Japan this year, local media report. The virus ravages limbs and internal organs and can kill its victims in a matter of hours.  Some 525 patients – the highest number since records began in 1999 – have been afflicted with streptococcal toxic shock syndrome (STSS), the Asahi Shimbun newspaper reported, citing data from the National Institute of Infectious Diseases. Of these, 66 were in Tokyo followed by 40 in Kanagawa, 32 in Aichi, 31 in Fukuoka and 28 in Hyogo. Most of the victims were over the age of 30.   Streptococcal toxic shock syndrome, or toxic shock syndrome (TSS) for short, recently made headlines after former American model and athlete Lauren Wasser shared her story about suffering from the flesh-eating disease after leaving in her tampon too long. It led to her right leg being amputated. The disease typically spreads through contact with an infected wound and starts with a fever, swelling and pain in the hands and feet. As it spreads throughout the body via the bloodstream, the bacteria start eating away at the organs and flesh, leading to delirium, confusion and ultimately, death. The illness has a high mortality rate, with the US Center for Disease Control giving a survival rate of less than fifty percent. However, it can be treated early on through antibiotics or failing that, amputation.

Alarming link between fungicides and bee declines revealed  --  Common fungicides are the strongest factor linked to steep declines in bumblebees across the US, according to the first landscape-scale analysis.The surprising result has alarmed bee experts because fungicides are targeted at molds and mildews – not insects – but now appear to be a cause of major harm. How fungicides kill bees is now being studied, but is likely to be by making them more susceptible to the deadly nosema parasite or by exacerbating the toxicity of other pesticides.The widespread decline in bees and other pollinators is worrying because they fertilise about 75% of all food crops, with half of pollination being done by wild species. Pesticides, habitat destruction, disease and climate change have all been implicated in bee declines, but relatively little research has been done on the complex question of which factors cause the most damage.The new study, published in the journal Proceedings of the Royal Society B, used machine learning statistical methods to analyse the role of 24 different factors in explaining the decline of four bumblebee species, tracked at 284 sites across 40 US states. These included latitude, elevation, habitat type and damage, human population and pesticide use.“The ‘winners’ in predicting both nosema prevalence and range contraction were fungicides,” said Scott McArt, at Cornell University in the US and who led the new study. In particular, chlorothalonil, the most used fungicide in the US, was most strongly linked to nosema, while the total fungicide usage was the best predictor of losses of bumblebees. “I was definitely surprised,” he said. “Fungicides have been largely overlooked.”

Trump administration eases rule against killing birds - The Interior Department has quietly rolled back an Obama-era policy aimed at protecting migratory birds, stating in a solicitor’s opinion that it will no longer prosecute oil and gas, wind, and solar operators that accidentally kill birds.The new interpretation of the Migratory Bird Treaty Act (MBTA), which was issued Friday, marks a win for energy interests that described the federal government’s previous position as overreaching. On Jan. 10, before President Trump’s inauguration, Interior had issued an opinion declaring that operators could face legal liability for the incidental deaths of birds ensnared by uncovered oil-waste pits or unmarked transmission lines. The law in question, enacted in 1918, makes it illegal to “pursue, hunt, take, [or] capture” migratory birds without a permit, and the dispute centers largely on how to interpret “take.” In the new opinion, Interior’s principal deputy solicitor, Daniel Jorjani, wrote that applying the law “to incidental or accidental actions hangs the sword of Damocles over a host of otherwise lawful and productive actions, threatening up to six months in jail and a $15,000 fine for each and every bird injured or killed.”  Before joining the Trump administration, Jorjani worked as general counsel for Freedom Partners Chamber of Commerce, a project of the billionaire oil executives Charles G. and David H. Koch.   David O’Neill, chief conservation officer for the National Audubon Society, said in an interview Tuesday that the policy reversal could make it less likely that energy operators would invest in precautionary measures to prevent bird deaths. He said that the prospect of legal liability had fostered efforts such as developing bird-friendly guidelines for placing transmission lines.

Migratory Birds Lose Protection Against Industry in Latest Trump Action Against Environmental Regulations - Energy companies and other businesses are no longer liable for accidentally killing migratory birds, the Trump administration announced Friday in a decision hailed by industry insiders.   "Christmas came early for bird killers. By acting to end industries' responsibility to avoid millions of gruesome bird deaths per year, the White House is parting ways with more than 100 years of conservation legacy," David O'Neill, the chief conservation officer for the National Audubon Society , said in response to the decision. In a legal opinion, the Interior Department's principal deputy solicitor, Daniel Jorjani, described the federal government's application of the Migratory Bird Treaty Act—a 1918 law that officials have used to prosecute those who kill birds "incidentally"—as overreach . The law "applies only to direct and affirmative purposeful actions that reduce migratory birds, their eggs, or their nests, by killing or capturing, to human control," Jorjani said in the Interior Department's legal memo . Applying the law "to incidental or accidental actions hangs the sword of Damocles over a host of otherwise lawful and productive actions, threatening up to six months in jail and a $15,000 fine for each and every bird injured or killed," Jorjani wrote .  The National Ocean Industries Association (NOIA) and the American Petroleum Institute (API) praised the Interior Department's change of direction as a reasonable approach to the issue. 

Losing the wilderness: a 10th has gone since 1992 – and gone for good - The world’s last great wildernesses are shrinking at an alarming rate. In the past two decades, 10% of the earth’s wilderness has been lost due to human pressure, a mapping study by the University of Queensland has found. Over the course of human history, there has been a major degradation of 52% of the earth’s ecosystems, while the remaining 48% is being increasingly eroded. Since 1992, when the United Nations signed up to the Rio convention on biological diversity, three million square kilometres of wilderness have been lost.  According to the UQ professor and director of science at the Wildlife Conservation Society James Watson, senior author on the study, “If this rate continues, we will have lost all wilderness within the next 50 years.” This wilderness degradation is endangering biodiversity, as well as the water cycle, the nitrogen cycle and pollination. And, says Watson, once they have been damaged or cleared, the wildernesses are gone for good; there is no scientific evidence that degraded eco-systems could ever return to their original condition.  These pristine wild places exist in inhospitable locations: the deserts of Central Australia; the Amazon rainforest in South America; Africa; the Tibetan plateau in central Asia; and the boreal forests of Canada and Russia.   They are being encroached on by logging, oil and gas exploration, mining, roads and agriculture. “It is death by a thousand cuts” says PhD student James Allan, who also worked on the study. “The moment you put a road in, you get people moving in to farm, hunt, and [that] undermines the wilderness. The risk is that a lot of these systems could collapse. The Amazon is the best example of where you need the whole forest, or a huge portion of the forest, protected for the hydrological cycle to function.” One third of the Amazon wilderness region has been lost since 1992.

Some forests aren't growing back after wildfires, research finds - Bigger, hotter wildfires are ravaging forests and burning them to the ground more frequently as the climate gets hotter and drier. Now a new study shows that in some places in the U.S., those forests may never grow back.  That adds to evidence that amid climate change, some forest landscapes — including those in Canada — can change dramatically after being burned. The new U.S. study looked at 1,500 forest sites affected by 52 wildfires in five states in the U.S. Rockies between 1985 and 2015. It found overall decreases in the amount of tree regrowth since 2000 compared to before 2000 due to warmer, drier conditions. After 2000, no seedlings were growing back at about one third of sites, compared to 15 per cent of sites that burned before 2000, said Camille Stevens-Rumann, lead author of the study published today in the journal Ecology Letters.That complete lack of regrowth happened most frequently at lower-elevation sites that have become measurably warmer and drier in the past 30 years, said Stevens-Rumann, an assistant professor in the Department of Forest and Rangeland Stewardship at Colorado State University. Those areas may no longer have suitable conditions for the growth of tree species that were there before and may become other types of ecosystems, such as grasslands.  "We often think about climate change as something that we're going to feel the effects of in the future. The truth is wildfires are facilitating those changes happening sooner," Stevens-Rumann told CBC News. "And I think that was a really big surprise to all of us to see it even over just a 30 year period." And it's not just a matter of giving those forests a little more time to grow back. Stevens-Rumann said most seedlings sprout in the first three years after a fire, and that the number there after that time is a strong predictor of how dense the regrown forest will be. She said the findings of the study — funded by the U.S. government — suggest that, going forward, replacement trees may need to be planted at higher elevations than before. And at lower elevations? "We need to just start accepting that they're not going to become forests again, unfortunately," said Stevens-Rumann.

Loss of big animals reduces forests’ carbon-storing capacity - Over-hunting contributes to forest carbon loss, claims a study published this week in the AAAS journal Science Advances. After looking at data from 31 sites from the Atlantic Forest — found along the southeast coast of Brazil — the researchers conclude that the over-hunting of large animals in those forests will eventually result in the widespread loss of the larger tree species responsible for storing the most carbon.The team of Brazilian and European researchers, led by Carolina Bello from Universidade Estadual Paulista, looked at seed dispersal by frugivores as well as the relationship between seed size and a tree’s carbon storage potential, and discovered a disturbing trend.  Hunters in the region tend to harvest larger species of birds and mammals at unsustainable rates. These animals are often the species that eat, carry, and disperse large fruits and seeds. The tree species that produce largest animal-dispersed seeds tend to be taller and have higher wood density. Therefore, as these animals disappear, the trees with the greatest carbon storage capacity are less likely reproduce. Gradually, these tree species are replaced by smaller and less dense trees, and the total carbon storage capacity of the forest is reduced. “We found a positive correlation between seed diameter and wood density … as well as maximum tree height,” the authors write, and those correlations were especially pronounced in species with animal-dispersed seeds.

Forest Activists Celebrate Collapse of WTO and EU-Mercosur Negotiations -- The Global Forest Coalition (GFC) [1] celebrated the failure of two key trade negotiations, the World Trade Organization (WTO), and EU-Mercosur free trade agreement, to reach a successful conclusion during negotiations in Argentina [2]. Both were projected to have detrimental impacts on forests, food sovereignty, and rights of local communities, issues that GFC defends.The WTO collapsed because of disagreements between the US and developing country’s like India, China, Brazil and others over public food stockholding [3], while the EU Mercosur Free Trade agreement was delayed to next year because of disagreements over ethanol and beef import quotas.“The frequent failure of the WTO talks shows that we have moved to a different moment in the process of globalization where the main conflicts are moving from those between developed versus developing countries to between the biggest economies of the world.” said Mary Louise Malig, Campaigns Coordinator of Global Forest Coalition. Malig added that “The United States refusal to let developing countries have public food stocks and subsidies to guarantee their national food security shows that the WTO threatens peoples right to food. This is why social movements have always asked for the WTO to get out of agriculture.”Mercosur countries Brazil, Argentina, Paraguay and Uruguay want the EU to improve its current offer of tariff free imports of meat from 70,000 tonnes and ethanol from 600,000 tonnes a year as they are lower than what the EU offered in 2004. “The EU-Mercosur agreement will lead to serious deforestation in South America because of increasing exports of beef, ethanol and soy- all commodities which raze our forests. Combined with climate change and droughts, impacts will be catastrophic [4],”

Plastic Film Covering 12% of China’s Farmland Pollutes Soil - China will expand its agricultural use of environment-damaging plastic film to boost crop production even as authorities try to curb soil pollution, a government scientist said.Some 1.45 million metric tons of polyethylene are spread in razor-thin sheets across 20 million hectares (49 million acres) — an area about half the size of California — of farmland in China. Use of the translucent material may exceed 2 million tons by 2024 and cover 22 million hectares, according to Yan Changrong, a researcher with the Chinese Academy of Agricultural Sciences in Beijing. The plastic sheets, used as mulch over 12 percent of China’s farmland, are growing in popularity because they trap moisture and heat, and prevent weeds and pests. Those features can bolster cotton, maize and wheat yields, while enabling crops to be grown across a wider area.“The technology can boost yields by 30 percent, so you can image how much extra production we can get — it can solve the problems of producing sufficient food and fiber,” Yan said in an interview at his office at the academy’s Institute of Environment and Sustainable Development in Agriculture. The downside is that polypropylene film isn’t biodegradable and often not recycled. Potentially cancer-causing toxins can be released into the soil from the plastic residue, known locally as “white pollution,” which is present at levels of 60-to-300 kilograms (132-to-661 pounds) per hectare in some provinces.

$180bn investment in plastic factories feeds global packaging binge - The global plastic binge which is already causing widespread damage to oceans, habitats and food chains, is set to increase dramatically over the next 10 years after multibillion dollar investments in a new generation of plastics plants in the US. Fossil fuel companies are among those who have ploughed more than $180bn since 2010 into new “cracking” facilities that will produce the raw material for everyday plastics from packaging to bottles, trays and cartons. The new facilities – being built by corporations like Exxon Mobile Chemical and Shell Chemical – will help fuel a 40% rise in plastic production in the next decade, according to experts, exacerbating the plastic pollution crisis that scientist warn already risks “near permanent pollution of the earth.” “We could be locking in decades of expanded plastics production at precisely the time the world is realising we should use far less of it,” said Carroll Muffett, president of the US Center for International Environmental Law, which has analysed the plastic industry.  “Around 99% of the feedstock for plastics is fossil fuels, so we are looking at the same companies, like Exxon and Shell, that have helped create the climate crisis. There is a deep and pervasive relationship between oil and gas companies and plastics.” Greenpeace UK’s senior oceans campaigner Louise Edge said any increase in the amount of plastic ending up in the oceans would have a disastrous impact. “We are already producing more disposable plastic than we can deal with, more in the last decade than in the entire twentieth century, and millions of tonnes of it are ending up in our oceans.”  The huge investment in plastic production has been driven by the shale gas boom in the US. This has resulted in one of the raw materials used to produce plastic resin – natural gas liquids – dropping dramatically in price. The American Chemistry Council says that since 2010 this has led to $186bn dollars being invested in 318 new projects. Almost half of them are already under construction or have been completed. The rest are at the planning stage. “I can summarise [the boom in plastics facilities] in two words,” Kevin Swift, chief economist at the ACC, told the Guardian. “Shale gas.”

Oil Giants Invest $180B in Plastics, Propelling Oceans Toward 'Near-Permanent' Pollution -  Scientists and environmental protection advocates are warning that a coming plastics boom could lead to a permanent state of pollution on the planet—and denouncing the fossil fuel industry for driving an increase in plastics production amid all that's known about the material polluting the world's oceans .   The Center for International Environmental Law (CEIL) has compiled several reports about the plastics industry since September. The American Chemistry Council, a trade organization, has acknowledged that fossil fuel companies including Exxon and Shell Chemical have poured more than $180 billion into the creation of plastics facilities that are expected to create a 40 percent rise in production of the material over the next decade.   The rise in shale gas exploration in recent years has caused the price of natural gas liquids, used to make plastic, to drop significantly, causing companies to begin more than 300 plastics production projects since 2010.  "Around 99 percent of the feedstock for plastics is fossil fuels, so we are looking at the same companies ... that have helped create the climate crisis," said Muffett. "There is a deep and pervasive relationship between oil and gas companies and plastics." The report follows the CEIL's recent study , released earlier this month, which showed that the plastics industry has known its products were polluting the world's oceans since the 1970s and has spent decades fighting regulations that aim to keep the crisis from getting worse. Another study by researchers at the University of California at Santa Barbara, published earlier this year, warned that excessive plastic production could lead to "near-permanent contamination" of the earth since the material is not biodegradable.

Northeast states sue EPA over air pollution from Midwest (Reuters) - Eight northeastern states said on Tuesday they sued the U.S. Environmental Protection Agency to force it to impose more stringent controls on a group of mostly Midwestern states whose air pollution they claim is being blown in their direction. In the latest development of a legal saga that began during Barack Obama’s presidency, the lawsuit by New York and seven other states challenges a Trump administration decision to allow nine upwind states to escape tighter smog pollution controls. “Millions of New Yorkers are breathing unhealthy air as smog pollution continues to pour in from other states,” said New York Attorney General Eric Schneiderman, who led the coalition of states that filed the lawsuit dated Friday. The coalition urged the U.S. Court of Appeals for the District of Columbia to overturn the EPA’s decision not to add the nine upwind states to the congressionally created “Ozone Transport Region,” which requires stricter pollution controls. Northeast and mid-Atlantic states have long contended that emissions from coal-fired power plants and other air pollution in the Midwest is carried eastward by prevailing air currents. In a statement, Scheiderman said the EPA was empowered to add states to the “Ozone Transport Region” if the EPA has reason to believe that their air pollution significantly causes states already in the region to exceed federal pollution standards. The lawsuit was filed by the attorneys general of Connecticut, Delaware, Maryland, Massachusetts, New York, Pennsylvania, Rhode Island and Vermont, which in late 2013 originally asked to have nine upwind states added to the “Ozone Transport Region.” That case resulted in a consent decree that forced the EPA to decide by the end of October 2017 whether to add Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, Virginia and West Virginia to the region. EPA chief Scott Pruitt declined to add the states. 

Rare Earths In North Dakota -- Brand New Study Released By USGS – 2017 ---The Minot Daily News is reporting: North Dakota Geological Survey has just published a report on rare earths, a two-year study.

• the study is the most comprehensive study of rare earths in coal ever done in western North Dakota and discovered that North Dakota lignites contain some of the highest concentrations of rare earth elements in the nation
• North Dakota samples rank in the top 20 of coal samples nationwide for concentrations of rare earths, with one sample being the fifth highest concentration recorded at 603 ppm, twice the U.S. Department of Energy’s potential economic threshold
• the US Department of the Interior state that the U.S. is 100 percent reliant on 20 minerals, and rare earth minerals are produced almost exclusively in China
• coal and organic-rich rock samples were collected from 64 sites in McKenzie, Billings, Golden Valley, Slope and Bowman counties and an additional site in Morton County,” said Survey Geologist Ned Kruger
• a total of 352 rock samples were analyzed for rare earths, of which 277 lignite samples averaging 120 parts per million total rare earth elements, twice the published average for U.S. coals.

To access a free PDF copy of this report: click on this site, click on RI-117, and a PDF will download on your desktop.

Parched for a price: Karachi’s water crisis - Karachi’s roughly 20 million residents regularly face water shortages, with working class neighbourhoods the worst hit by a failing distribution and supply system. Areas such as Orangi, Baldia and Gadap, some of the most densely populated in the city, receive less than 40 percent of the water allotted to them, according to data collected by the Orangi Pilot Project (OPP), an NGO that works on civic infrastructure and citizens’ rights in the area.  On average, residents in these areas use about 67.76 litres of water per day, according to data collected by Al Jazeera. That includes the water they use for drinking, cooking, cleaning, washing clothes, bathing and sanitary uses. So what is going on here? How is it possible that in one of the largest cities in the world, there simply isn’t enough water being supplied? Is it because the reservoirs and water sources supplying Karachi just aren’t large enough for this rapidly expanding megacity? The answer to these questions is somewhat surprising. Karachi draws its water mainly from the Keenjhar Lake, a man-made reservoir about 150km from the city, which, in turn, gets the water from what’s left of the Indus River after it completes its winding 3,200km journey through Pakistan. Through a network of canals and conduits, 550 million gallons of water a day (MGD) is fed into the city’s main pumping station at Dhabeji. That 550MGD, however, never reaches those who need it. Of that water, a staggering 42 percent – or 235 MGD – is either lost or stolen before it ever reaches consumers, according to the Karachi Water and Sewerage Board (KWSB), the city’s water utility.  The bulk of Karachi’s ‘lost’ water is being stolen and sold right back to the people it was meant for in the first place.

Worst Wildfire in California History Threatens State's Climate Goals -  As predicted , the Thomas Fire in Southern California was officially declared the largest wildfire in state history, surpassing the 2003 Cedar Fire which burned 273,246 acres and killed 15 people.  The vast blaze, now 89 percent contained, has burned through 281,620 acres, according to CalFire . More than 1,000 structures have been destroyed or damaged and two people were killed. But the other devastating aspect? A future of even more fires due to climate change . The world's rising temperatures caused by greenhouse gases makes fires more likely to occur not just in California, but across the planet. And in a vicious cycle, the Golden State's recent string of fires has caused a sharp increase in unhealthy air and carbon dioxide emissions, which drives global climate change. So even if you don't live in California, its fires also affect you and our future generations. “The kinds of fires we're seeing now generate millions of tons of GHG emissions. This is significant," Dave Clegern, a spokesman for the state Air Resources Board, a regulatory body, told KQED Science . While the amount of emissions from the December fires have yet to be calculated, October's wine country blazes alone released as much pollution as motorists in the state normally emit in a year. Additionally, burning trees not only release a powerful pollutant known as black carbon, but the loss of a forest also hampers CO2 sequestration, Jim Branham, executive officer at the Sierra Nevada Conservancy , noted to KQED.  The immense scale of the emissions could also undermine California's climate change goal of cutting greenhouse gas emissions 40 percent by 2030.

Acres Burned, through 29 December - Menzie Chinn  (graph) Figure 1: Acres burned (blue, left scale) and total Federal firefighting expenditure in 2016 dollars (orange, right scale). 2017 observation is for acres burned through 29 December. Source: NIFC1, NFIC2, and author’s calculations.  But remember: “Global warming is a total, and very expensive, hoax!”!!!

New Grand Staircase-Escalante Proposal Would Further Harm the Region -- Just a day after President Donald Trump significantly diminished the boundaries of Grand Staircase-Escalante National Monument, Rep. Chris Stewart (R-UT) introduced legislation that would reduce the protections on this unique landscape even further.  The Grand Staircase-Escalante Enhancement Act (H.R. 4558) mirrors President Trump's proclamation by creating three smaller national monuments and one national park that together would preserve roughly 60 percent of the landscape that has been safeguarded by the Grand Staircase-Escalante National Monument since its inception in 1996. All major management decisions about the park and the monument would not be made by the National Park Service or other professional federal land managers. Instead, the management plans for each would be developed and implemented by a newly created "management council" of seven people, including four local county commissioners and one Utah state representative.  The two-decades-old Grand Staircase-Escalante National Monument was supported by local business owners, science communities, sportsmen and Utahans across the state. According to a bipartisan 2016 poll , residents believe—by a margin larger than 2-to-1—that Grand Staircase-Escalante National Monument was good for their state. During the Trump administration's national monument review, 99 percent of the nearly 3 million comments submitted expressed support for maintaining or expanding national monuments, including Grand Staircase-Escalante. Cutting the size of Grand Staircase-Escalante by roughly 40 percent will be a significant loss for science . Last month, 146 scientists, researchers, and academic organizations expressed concern over fragmenting this "important living laboratory," where significant research and discovery has happened, sending a letter to the president asking him to leave this monument unaltered.

 Inside Puerto Rico's Power Struggle -- It’s been three months since Hurricane Maria changed everything in Puerto Rico. FEMA has declared it’s transitioning from disaster response to recovery, but humanitarian issues continue to mount. The territorial government has vastly undercounted deaths from the storm and its aftermath, with the true tally likely topping 1,000. The threat of disease looms, exacerbated by the island’s crumbling health infrastructure. Puerto Rico is drowning in millions of cubic yards of trash, and facing combined housing, tax, and credit problems. The island is losing waves of people to the mainland. And above all, the longest and most devastating blackout in American history is still affecting a third or more of all Puerto Ricans, perhaps even as many as half. For many, darkness has become a new way of life. If, as The Washington Post recently reported, Army Corps of Engineers estimates that full power won’t be restored until May are correct, it will mean that at least some of the island will have been without power for seven months. But there are few signs indicating that even that conservative estimate—revised downward multiple times and conflicting with Governor Ricardo Rosselló’s recent prediction of a completion date of February 2018—will likely come to pass. To complicate matters, a battle for control over the grid, politics, and the future of Puerto Rico’s energy profile has consumed the recovery process, and its resolution will probably dictate the energy future of Puerto Rico. That battle began long before two devastating hurricanes hit the island last year, and the seeds of disaster had been sown long before as well. Puerto Rico’s state-owned power company, the Puerto Rico Electric Power Authority (PREPA) has been in crisis for years, and its crumbling electricity grid—with a fragile transmission scheme, little basic maintenance, extraordinary pollution, and out-of-date infrastructure—made the threat of power shortages and blackouts even for critical infrastructure a common one for millions of Puerto Ricans for years as a humanitarian crisis brewed.

Puerto Ricans wait in darkness and desperation without power  - Three days before Christmas, Doris Martinez and daughter Miriam Narvaez joined their neighbors in a line outside city hall in Morovis, a town of 30,000 people still living without electricity in the mountains of central Puerto Rico more than three months after Hurricane Maria battered the U.S. island. They waited two hours under the searing sun for their twice-a-week handout — 24 bottles of water and a cardboard box filled with basic foods such as tortillas, canned vegetables and cereal.  Martinez, a 73-year-old cancer survivor, balanced the water atop the food and picked her way up a steep hill to the home where she lives alone, washing and wringing out her clothes by hand and locking herself in at night, afraid of robbers. Her 53-year-old daughter loaded her food and water into her car and drove off to the public housing complex where she would then have to wait with dozens of other neighbors in another line to cook on one of six gas burners in the administrator's office.This is life in Puerto Rico more than three months after Maria destroyed the island's electrical grid. Gov. Ricardo Rossello promised in mid-October to restore 95 percent of electricity delivery by Dec. 15, but normality remains far off. Puerto Rico's Electric Power Authority says its system is generating at 70 percent of normal but it has no way of knowing how widely electricity is being distributed because the system that measures that isn't working. A study conducted Dec. 11 by a group of local engineers estimated roughly 50 percent of the island's 3.3 million people remained without power. The U.S. Army Corps of Engineers has said it likely won't be until May that all of Puerto Rico is electrified.

One-Third of Puerto Rico Won’t Have Christmas Tree Lights Because They Still Don’t Have Power - Periodically, we’ve looked at the situation in Puerto Rico after Hurricane Maria: Roads, power, water, and money, PROMESA (the Obama plan that imposed an austerity regime on the island), and vulture capitalists squabbling over Puerto Rico’s body. In this post, I want to return to Puerto Rico’s electrical power situation: Lieutenant General Todd Semonite, commanding general and chief engineer for the Corps, said in an interview Wednesday that he expects Puerto Rico’s electric grid to reach 75 percent of customers by the end of January. That should rise to 95 percent by the end of February, and 100 percent by the end of May, he said, more than eight months after Hurricane Maria hit. The slow pace of restoring electricity following Hurricane Maria has become a symbol of the U.S. government’s uneven response. Just 61 percent of electricity had been restored as of Wednesday [December 13] according to data on a website run by the island’s government. That government website now lists power restoration at 66.2%. Why so long? The answer, it seems — the story is thinly sourced, with no reporting from the ground — is logistics: Power poles and cable take time to manufacture and ship, for example. There’s also a scarcity of transformers and fittings.[1] In this post, I’ll go into how power restoration is distributed (unequally, as you might think) and then look at ripple effects of power problems for water, hospitals and mortality. I’ll conclude with some words on the policy coming out of Washington. New York Magazine has an excellent report from the ground, from which I’ve pulled out this material on power. The stats use the classic method of concealing problems with averages: José E. Sánchez, who is leading efforts by the Army Corps of Engineers to restore the island’s electricity, noted that some of the most important repairs can be done only by helicopter. … Sánchez told me that status.pr, a government website, was giving an overly optimistic view of the grid’s recovery. The site measures progress in terms of megawatt capacity, which was then over 60 percent. It neglected to mention that the recovery has been concentrated around cities and industrial sites, leaving more than half of PREPA’s customers in the dark. ‘People on the mainland might take a look at that site and think things are going well,’ Sánchez said. ‘They’re not.’

93 Days Later, Puerto Rico Can’t Get Supplies to Turn on the Power —The loud buzzing of portable gasoline electric generators has become the norm in this central mountainous region of the battered territory.It’s been that way for more than three months, ever since Hurricane Maria knocked out 100 percent of electricity on the island of 3.4 million people. Today almost half the island is without power. It’s the longest blackout in American history and will not be over soon because of a shortage of supplies to fix the electrical grid. “The materials are arriving but at a really slow pace. Sadly, we are hardly working,” said a lineman who preferred not to be identified. “In the meantime, we try to reuse whatever materials that can be found onsite which are rusty and unreliable.  The lineman is one of about 27,000 other workers who were brought in from the mainland to help restore the power grid. Without supplies though, repair brigades are seen roaming the streets without much to do.“I can count with one hand the times we’ve seen brigades work in our streets,” said Carmen Maldonado, mayor of Morovis, a municipality of 33,000 people. “The economy has plummeted, our elders are in need of medical care, and schools are barely operating.”The U.S. Army Corps of Engineers is in charge of restoring electricity, but it claims it is hampered by a lack of supplies. “Puerto Rico is competing for supplies with Texas and Florida, whose electrical grids were similarly ravaged by hurricanes,” said Army Corps spokesman Luciano Riviera.Only 9,100 transmission posts out of the 52,000 needed have arrived so far, Rivera said. The most recent shipment came last week, he said, adding that 8,100 posts are scheduled to arrive every two weeks starting next week.   That means all the necessary supplies to restore power won’t arrive until March.

  The Water Will Come: A Must-Read Book on Sea Level Rise - The Water Will Come: Rising Seas, Sinking Cities, and the Remaking of the Civilized World—the title of Jeff Goodell’s new must-read book on sea level rise—says volumes. Goodell, a contributing editor at Rolling Stone, argues that there is little we can do to stop the inexorable rise of the world’s oceans due to human-caused global warming--though we may be able to slow the rate of sea level rise later in the century. As one of the experts he interviews puts it, “Sea-level rise is like aging. You can’t stop it. You can only do it better or worse.”  Goodell argues that if we want to minimize the impact of sea level rise in the next century, we need to stop burning fossil fuels and move to higher ground. Strong immediate action to implement the Paris Climate Accord of 2015--and to go well beyond those targets, so that we eliminate all burning of coal, oil and natural gas by 2050--might limit sea level rise by 2100 to 2 – 3 feet, instead of 6 – 8 feet. “We would will need to retreat from the low-lying coastlines, but instead of a stampede, it could be a leisurely stroll,” he writes. Goodell is an excellent journalist, and his treatment of a highly technical subject like sea level rise is both highly readable and informative. He relies on story-telling and interviews with a wide range of scientists, developers, civic leaders and politicians involved in the sea level rise issue. He spent several years researching the book, and relates stories from the extensive time he spent in many areas of the world highly vulnerable to sea level rise, including Miami, New York City, New Jersey, Norfolk, Alaska, the Netherlands, Venice (Italy), and Lagos (Nigeria.) He also describes fascinating stories from his trip to the source of about 25% of current global sea level rise—the Greenland Ice Sheet—as well his trip to the Paris Climate Accord.

Trump Is Building His Controversial Border Wall ... In Ireland - President Donald Trump finally got approval to build a controversial border wall, but it won’t be along the U.S.-Mexico border—it’ll be at one of his golf resorts in Ireland to combat rising sea levels from global warming, which the president has claimed to be a Chinese hoax. The Clare County Council in Ireland approved Trump’s 2016 request to build a sea wall around Trump International Golf Links & Hotel Ireland—a Trump application that had explicitly cited global warming, United Kingdom-based publication The Express reports. In a statement approving Trump's application, the council cited the need for "coastal erosion management." Trump’s Ireland wall, proposed to span nearly two miles, has been as hotly contested as the one he’s promised to build along the U.S.-Mexico border. "The proposed work at Doonbeg Golf course project hasn’t really changed and still involves beach-destroying seawalls,” a group of environmental experts said after Trump allegedly scaled down the barrier after public outcry, according to The Express. The Irish Green Party is considering appealing against the decision, according to The Express. Beyond a legal appeal, environmentalists will no doubt highlight the irony of Trump's proposal. The permit application itself "explicitly cites global warming and its consequences—increased erosion due to rising sea levels and extreme weather this century—as a chief justification for building the structure,” Newsweek previously reported.

November 2017 was the third warmest November on record - November 2017 was the third warmest November in 137 years of modern record-keeping, according to a monthly analysis of global temperatures by scientists at NASA's Goddard Institute for Space Studies (GISS) in New York.  Last month was +0.87 degrees Celsius warmer than the mean November temperature from 1951-1980, an insignificant 0.03°C cooler than November 2016 (+0.90°C). The warmest month of November according to the analysis happened in 2015 (+1.03°C) due to a strong El Niño. The last three Novembers — 2015, 2016, and 2017 — are the three warmest in the entire modern record. The past meteorological year (December 2016 through November 2017) is the second warmest such period, only surpassed by the El Niño enhanced December 2015 through November 2016 period.The monthly analysis by the GISS team is assembled from publicly available data acquired by about 6,300 meteorological stations around the world, ship- and buoy-based instruments measuring sea surface temperature, and Antarctic research stations.The modern global temperature record begins around 1880 because previous observations didn't cover enough of the planet. Monthly analyses are sometimes updated when additional data becomes available, and the results are subject to change.

Arctic Cold Outbreak Could Bring Record Lows to the Plains, Midwest and East Into the New Year -- Arctic air will keep the Midwest, East and South shivering into the start of 2018, with temperatures approaching record-cold levels at times.  Flint, Michigan, set an all-time December record-low temperature of 17 degrees below zero Thursday morning. Records in that location date back to 1921.Watertown, New York, fell to minus 32 Thursday morning, which shattered its daily record for Dec. 28 of minus 23. Daily record lows for Dec. 28 were also tied Thursday morning in Toledo, Ohio (minus 8), and Paducah, Kentucky (10 degrees). Wednesday morning, International Falls, Minnesota, set a new daily record low when temperatures plummeted to minus 36; the previous record was minus 32. It was even colder in Embarrass, Minnesota, and Cotton, Minnesota, where morning lows were 40 below zero and minus 41, respectively.  Additional daily record lows were set in Lincoln, Nebraska (17 below zero), and Norfolk, Nebraska (minus 15). A fresh batch of bitterly cold air will drop into the Midwest and spread toward the Northeast over New Year's weekend. This frigid blast could set some daily record lows in parts of those regions. Subzero low temperatures will likely engulf the northern Plains, upper Midwest, Great Lakes, upstate New York and New England as we close in on the New Year. Teens, 20s and 30s below zero will grip locations near the Canadian border in those regions. The South will also continue to shiver with lows 20s, teens and even a few single-digits New Year's weekend from Oklahoma and northern Texas to the Tennessee Valley, southern Appalachians and the Carolinas. Daytime high temperatures through the holiday weekend will be in the single-digits above and below zero from the northern Plains and upper Midwest into the Great Lakes and northern New England. The southward dip in the jet stream allowing this cold weather pattern to grip the central and eastern states will likely persist through the first week of 2018. NOAA's 6- to 10-day temperature outlook features a high probability of below-average temperatures in the East Jan. 3-7, 2018.

Scientists predict ‘mini ice age’ could hit UK by 2030 -- A mini ice age that would freeze major rivers could hit Britain in less than two decades, according to research from universities in the UK and Russia. A mathematical model of the Sun’s magnetic activity suggests temperatures could start dropping from 2021, with the potential for winter skating on the River Thames by 2030. A team led by maths professor Valentina Zharkova at Northumbria University built on work from Moscow to predict the movements of two magnetic waves produced by the Sun. It predicts rapidly decreasing magnetic waves for three solar cycles beginning in 2021 and lasting 33 years. Very low magnetic activity on the Sun correspond with historically documented cold periods on Earth. Professor Zharkova claims 97% accuracy for the model which dovetails with previous mini ice ages, including the Maunder Minimum period from 1645 to 1715 when frost fairs were held on the frozen Thames. But she cautions that her mathematical research cannot be used as proof that there will be a mini ice age this time around, not least because of global warming.

US government climate report looks at how the oceans are buffering climate change  - In the recently released US Global Change Research Program Report, one of the chapters I was most interested in was about the changes we’ve observed in the world’s oceans. The oceans are really the key to the climate change issue, whether that be in quantifying how fast it’s happening or how much will happen in the future. As humans emit greenhouse gases (particularly carbon dioxide), we see some major changes that cannot be explained naturally.  The oceans are important because they act as a buffer; that is, they absorb much of the effects of greenhouse gases. In fact, the oceans absorb a lot of human carbon pollution. This is a big help for us because without the oceans, the climate would change much faster.   But in a certain way, the oceans are hurting us too. Since the oceans absorb so much of our carbon pollution and the resulting heat (93% of the extra heat), they turn a short-term problem into a long-term problem. Just like a fly wheel can be used to store rotating energy in a machine, the oceans store heat energy and chemical energy that can later manifest itself. The oceans also impact our psychology. The pollution we emit today will have effects for many years (partly because of the oceans). We cannot just stop emitting pollution and think this problem will immediately go away. We have to plan ahead. And, importantly, we have to stop emitting before most of the effects are evident. I like to think of the Earth’s climate like a heavy train. A train cannot stop quickly; the brakes have to be applied far ahead of an obstacle. The ocean is our “climate train.” There were four key findings the authors cited. First, as I mentioned, they report that the oceans are absorbing almost all the heat from greenhouse gases. Over the past six decades, the amount of heat at all levels of the ocean has increased. This heating will continue into the future with approximately 5°F warming by the year 2100. This may not sound like much, but it is really enormous heating for water. When oceans warm, sea levels rise (warming water expands). Warm water also evaporates much faster to the air so that the atmosphere becomes more humid, resulting in more heavy rainfalls and flooding.  The figure below shows the changes in ocean heat (OHC) measured in Joules (a unit of energy).

Algae, thrilled about a warming climate, is making Greenland melt faster   - Arctic algae are one life form for whom climate change is great news. They thrive in warmer temperatures, and are flourishing beyond old boundaries as more of the icy far north becomes climatically hospitable.  But as algae grows over ice, it reduces how much light the ice can reflect. Like wearing black clothes in the summertime, the darkened ice absorbs more energy from the sun, heating more easily and melting more severely. New research published this week in Geophysical Research Letters finds that this algae-ice melt feedback loop is a bigger deal than scientists previously realized: On the Greenland ice sheet, the second-largest in the world, “algal darkening” is responsible for 5% to 10% of the total ice-sheet melt each summer.  Scientists have long tracked the migration of black soot—produced by burning fossil fuels in lower latitudes—to the Arctic. The soot settles on the ice, darkening it and intensifying melting. But the new research concludes that algae is a greater contributor to ice melt than soot. As climate change progresses, algae is projected to flourish more and more. Ice science is always evolving, with scientists finding new mechanisms that contribute to the complicated dance of melting and freezing. This algae discovery is a perfect example. The study stopped short of projecting how much more ice this could melt in the future, but the researchers note that algae growth ought to be incorporated into models to more accurately predict future sea level rise.

Russian Shippers Place Massive Order For 60 Ice-Class Ships In Arctic Expansion - Expected to reach full capacity by 2024, Zveda is to be one of the world's largest shipyards in the world. Situated on Bolshoy Kamen Bay, it was originally constructed during the Soviet era, but is now being revamped from the ground up. Plans are already underway for the construction of over 60 new vessels, including tankers and world-class ice breakers. The Russian shipbuilding industry is intensely supported by these efforts, which also aim to make the Northern Sea Route a viable path for nautical traffic year-round with Russian vessels holding exclusive rights thereto. The following clip is taken from Russian TV News. Full transcript below.

What Will It Really Take to Avoid Collapse? -- For a moment, the most important news in the entire world flashed across the media like a shooting star in the night sky. Then it was gone. Last month, more than 15,000 scientists from 184 countries issued a dire warning to humanity. Because of our overconsumption of the world's resources, they declared, we are facing "widespread misery and catastrophic biodiversity loss." They warned that time is running out: "Soon it will be too late to shift course away from our failing trajectory." This is not the first such notice. Twenty-five years ago, in 1992, 1,700 scientists (including the majority of living Nobel laureates) sent a similarly worded warning to governmental leaders around the world. In ringing tones, they called for a recognition of the Earth's fragility and a new ethic arising from the realization that "we all have but one lifeboat."  This second warning contains a series of charts showing how utterly the world's leaders ignored what they were told 25 years earlier. Whether it's CO2 emissions, temperature change, ocean dead zones, freshwater resources, vertebrate species or total forest cover, the grim charts virtually all point in the same dismal direction, indicating continued momentum toward doomsday . The chart for marine catch shows something even scarier: In 1996, the catch peaked at 130 million tonnes and in spite of massively increased industrial fishing, it's been declining ever since—a harbinger of the kind of overshoot that unsustainable exploitation threatens across the board.

The Republican Tax Bill Will Devastate Science -- The Republican tax bill passed by Congress this week is estimated to cost our country, at best, $1.5 trillion over the next ten years, and other estimates put that closer to $2.3 trillion. Trillion—that’s a figure with twelve zeros (000,000,000,000)—which are more zeros than most of us can comprehend. I’ve been doing a lot of math over the last couple weeks, and it turns out that amount of debt means $4,600 - $7,100 on the credit card for every man, woman and child in this country. It means we’re adding at least $1.5 trillion to our country’s debt rather than investing in our infrastructure, education system, environmental protection, climate change, new technologies or human space exploration, among other things. To further underscore the math, the national lab system is the heart of scientific R&D, the envy of the world, and the catalyst behind many innovations and new technologies. My district is home to the National Renewable Energy Lab (NREL) in Golden, the world’s premier lab for renewable energy and energy efficiency which celebrated its 40^thanniversary this year.  NREL had an annual budget last year of about $458 million. For $1.5 trillion, NREL could continue discovering new materials and new technologies to improve the way we power our nation for another 3,275 years.  We can also calculate some numbers for the principle funder of NREL—the Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE).  EERE is charged with developing a clean and resilient energy economy and had a budget of about $2 billion this year. President Trump’s Budget Request for next year only included $636 million for EERE, a dramatic 70% cut. One can only imagine how much next year’s budget will propose with at least $1.5 trillion less planned for our coffers.  Rather than giving tax cuts to corporations and the wealthy, we could secure our investment in clean energy at this year’s levels for the next 750 years. For $1.5 trillion, we could even increase our investment at EERE and NREL to speed up innovation and development to reduce our dependence on fossil fuels and generate thousands of jobs in the process.

What Does U.S. Withdrawal From UNESCO Mean for the Environment? -- The U.S. is quitting UNESCO, the United Nations organization that coordinates international efforts to foster peace and sustainable development, and to eradicate poverty. The Trump administration made the announcement on Oct. 12. The withdrawal takes effect Dec. 31, 2018, and the U.S. will remain a full member until then. "This decision was not taken lightly, and reflects U.S. concerns with mounting arrears at UNESCO, the need for fundamental reform in the organization, and continuing anti-Israel bias at UNESCO," said Heather Nauert, a U.S. State Department spokesperson in a press statement . The U.S. does, however, say it will seek to stay engaged with the organization as a non-member observer state in order to "contribute U.S. views, perspectives and expertise on some of the important issues undertaken by the organization," including the protection of World Heritage Sites and the promotion of scientific collaboration. Trump isn't the first U.S. president to have antagonism toward the organization. Although America has played an important role in UNESCO since its creation after World War II, Trump's predecessors have been quarreling with it since the 1970s.  “We were in arrears to the tune of $550 million or so, and so the question is, do we want to pay that money?" Nauert said at a news briefing , making clear that "with this anti-Israel bias that's long documented on the part of UNESCO, that [U.S. relationship] needs to come to an end."  But what does the Trump administration's withdrawal mean for UNESCO environmental programs worldwide? And will the loss of U.S. money matter?

 Men Resist Green Behavior as Un-Manly -- Women have long surpassed men in the arena of environmental action; across age groups and countries, females tend to live a more eco-friendly lifestyle. Compared to men, women litter less, recycle more, and leave a smaller carbon footprint. Some researchers have suggested that personality differences, such as women’s prioritization of altruism, may help to explain this gender gap in green behavior.Our own research suggests an additional possibility: men may shun eco-friendly behavior because of what it conveys about their masculinity. It’s not that men don’t care about the environment. But they also tend to want to feel macho, and they worry that eco-friendly behaviors might brand them as feminine.The research, conducted with three other colleagues, consisted of seven experiments involving more than 2,000 American and Chinese participants. We showed that there is a psychological link between eco-friendliness and perceptions of femininity. Due to this “green-feminine stereotype,” both men and women judged eco-friendly products, behaviors, and consumers as more feminine than their non-green counterparts.  In one experiment, participants of both sexes described an individual who brought a reusable canvas bag to the grocery store as more feminine than someone who used a plastic bag—regardless of whether the shopper was a male or female.  In another experiment, participants perceived themselves to be more feminine after recalling a time when they did something good versus bad for the environment.  Men may eschew green products and behaviors to avoid feeling feminine.  In one study, we threatened the masculinity of male participants by showing them a pink gift card with a floral design and asking them to imagine using the card to purchase three products (lamp, backpack, and batteries).  Compared to men shown a standard gift card, threatened men were more likely to choose the non-green rather than green version of each item.  The idea that emasculated men try to reassert their masculinity through non-environmentally-friendly choices suggests that in addition to littering, wasting water, or using too much electricity, one could harm the environment merely by making men feel feminine.

Photos show renewable energy took a beating in Puerto Rico - Environmentalists say renewable energy should play a role in rebuilding Puerto Rico’s trashed electric grid, but recent photos of the island obtained by the Washington Examiner show that its utility-scale solar arrays are in tatters, and its wind turbine blades are shredded or missing in the wake of Hurricanes Irma and Maria.Fifty-percent of Puerto Rican households were out of power for two months, making it the longest sustained electrical outage in the history of the United States.The Rocky Mountain Institute issued a report recently that showed Puerto Rico's renewable resources have remained relatively small, but there is enormous opportunity to build out a renewable grid.The report, which the wind industry has recently latched onto, primarily looked to beat back myths about the cost of renewables and reliability problems.The report focused on costs being competitive with conventional power plants, and concerns about reliability being overcome by pairing wind turbines with large batteries. But the study and the industry failed to consider the fragility of renewable resources in their ability to survive a record-breaking hurricane."Puerto Rico’s largest renewable facility today is Santa Isabel, a 101.1 megawatt Pattern Energy-developed wind farm built in 2012 on the south side of the island," explained Peter Kelley, vice president for public affairs at the American Wind Energy Association, in a blog post last week. "Its turbines and substations made it through the hurricanes intact," he said, while explaining that the "eastern tip, where Maria made landfall, another developer’s 26-MW Punta Lima did suffer damage."

Electric Trucks Begin Reporting for Duty, Quietly and Without All the Fumes - From Vancouver to New York, from Paris to Tokyo, that delivery truck outside your home—the rumbling motor, the belching fumes—may soon become much quieter and cleaner.  Electric trucks are driving out of factories and into service, and multiple vehicle companies are gearing up to make them. The result could be a significant reduction in greenhouse gas emissions—especially if the deliveries turn out to be cheaper than old-fashioned diesel engines.In the United States, more than 6 percent of greenhouse gas emissions emitted in 2015 were from medium- and heavy-duty trucking. Transportation, including trucking, was responsible for 14 percent of emissions globally in 2010. Because trucks need so much hauling power, they have eluded electrification until recently; a battery that could pull significant weight would itself be too hefty and too expensive. But now, improvements in battery technology are paying off, bringing down both size and cost.Already buoying passenger car sales, the trend is now boosting the EV truck market, says Lisa Jerram, a principal research analyst for Navigant Research. Electric technology for big, heavy vehicles has also gotten a boost from smog-savvy city governments' investments in electric buses.According to a recent report by Jerram, the number of hybrid-electric and electric trucks is set to grow almost 25 percent annually, from 1 percent of the market in 2017 to 7 percent in 2027, a jump from about 40,000 electric trucks worldwide this year to 371,000. In recent weeks, announcements of pending leases by United Parcel Service and advance orders for a newly introduced model from Tesla have signaled that big players are stepping into the market.

Shutdown of coal-fired power plant results in significant fetal health improvement in downwind areas - As the U.S. Environmental Protection Agency (EPA) moves to dismantle the Clean Power Plan touting a return to "cooperative federalism," the results of a new study focused on the downwind impact on fetal health of emissions from a coal-fired power plant, which is located on the border between two states, highlight policy gaps engendered by state-level regulation of air pollution.The reason? Wind does not recognize state borders.  The Portland Generating Station, a coal-fired power plant in Pennsylvania located right on the New Jersey border, was shut down in June 2014 as a result of a landmark EPA ruling identifying the plant as a sole pollution source damaging the air quality in the downwind state New Jersey--the first-ever federal level regulation under the Clean Air Act to have overridden state-level regulations on a single pollution source. In a recent study, two Lehigh University faculty members Muzhe Yang, Associate Professor of Economics and Shin-Yi Chou, Professor and Chair of the Economics Department--compared birth outcomes of fetuses conceived after the power plant's shutdown with the birth outcomes of fetuses conceived before the shutdown to infer the health impacts of closing the plant. Yang and Chou found that shutting down the plant reduced the likelihood of having a low birth weight baby by 0.89 percentage points or about 15 percent, and reduced the likelihood of a preterm birth by 2.83 percentage points or about 28 percent, in areas downwind of the power plant. These effects are largely seen in babies conceived in New Jersey zip codes located within 60 miles of the plant. Their analysis examined the power plant's emission data from the year and half immediately after the plant shutdown, June 2014 to December 2015, a period during which sulfur dioxide emissions were nearly zero. They compared them to the emission data from a year and a half period before the shutdown at the time when sulfur dioxide emissions remained consistently high at 2,596.648 tons per month, from June 2008 to December 2009. After the plant shut down, sulfur dioxide emissions dropped by 99.9988 percent.

Growth in global coal demand subdued over next five years - Global coal demand will be subdued over the next five years, growing at just 0.5 percent a year, marginally higher than current levels, due to lower consumption in China, the International Energy Agency (IEA) said on Monday. Coal consumption fell last year by 1.9 percent to 5.357 billion tonnes from a year earlier as lower gas prices, a surge in renewables and efficiency improvements dampened demand, the IEA said in its annual coal market report. Global coal demand is expected to rise by an average rate of 0.5 percent a year to 5.534 billion tonnes by 2022, “only marginally higher than current levels and meaning that coal use all but stagnates for around a decade,” the agency said. Coal use will decline in Europe, Canada, the United States and China – the world’s largest coal consumer – but rise in southeast Asia, India, Pakistan and Bangladesh.

France a net power importer in November - Reuters reported that France was a net electricity importer in November as power generation from its nuclear reactors fell, while consumption rose due to cold weather. France, which depends on its 58 nuclear reactors for more than 75 percent of its electricity needs, is usually a net power exporter in Europe. RTE said in its monthly report that Total electricity consumption during November rose 1.1% to 44,789 gigawatt-hour compared with the same month a year ago. It added that France imported 826 GWh of electricity on a net basis during the month, mostly from Britain and Spain, becoming a net importer for the first time since January. French nuclear power production fell by 2.6% compared with November 2016, due to a high number of nuclear reactor outages for maintenance and safety checks demanded by the ASN French nuclear regulator.

Tepco plans to restart world’s biggest nuclear plant - This week, Japan’s nuclear regulation authority gave its formal approval for Tepco to restart the Kashiwazaki-kariwa’s No. 6 and 7 reactors – the same type of boiling-water reactors that suffered meltdowns at Fukushima Daiichi. Just over 1,000 Tepco staff and 5,000-6,000 contract workers provide the manpower behind a post-Fukushima safety retrofit that is projected to cost 680 billion yen ($6.1bn). They have built a 15-metre-high seawall that, according to Tepco, can withstand the biggest tsunami waves. In the event of a meltdown, special vents would keep 99.9% of released radioactive particles out of the atmosphere, and corium shields would block molten fuel from breaching the reactors’ primary containment vessels. Autocatalytic recombiners have been installed to prevent a repeat of the hydrogen explosions that rocked four of Fukushima Daiichi’s reactors.

Planned injection wells raise concerns among residents: Dana Basse, a resident of the Wyngate Manor community, is among concerned Brookfield residents who oppose the two injection wells permitted to be drilled nearby and the three injection wells that have pending permits at the same site. Highland Field Services, a subsidiary of Seneca Resources, applied for the injection-well permits from the Ohio Department of Natural Resources. Basse, who has lived in the community for more than 50 years, said she is concerned about potential earthquakes. “Our homes are built on concrete blocks,” Basse said. “My home will not survive an earthquake.” What adds to her concern is there are abandoned mine shafts below parts of Brookfield, and she believes an earthquake could trigger a collapse. A statement from Highland Services said its site is about 1.5 miles away from the nearest mine shaft, based on a map on the ODNR website, but well opponents worry tremors still could reach the mines. ODNR said the two permitted Class II wells and three pending applications for wells must meet 18 construction conditions to ensure safety, including required seismic monitoring. Class II injection wells are used to store wastewater from drilling and hydraulic fracturing. The wastewater is too toxic to be stored in landfills.

Group says fracking caused Youngstown earthquake 6 years ago -  (WKBN) – It’s been six years since an earthquake shook the city of Youngstown. Thursday, a group got together to remember the natural disaster and protest what they say caused it.Supporters of Frackfree America National Coalition attended a prayer service in Brookfield.It was lead by Reverend Monica Beasley-Martin, who says fracking waste injection wells caused the 2011 earthquake.The group protested the five additional proposed injection wells coming to Brookfield.“Why do we keep doing the same thing over and over and expect a different result?” Beasley-Martin said. “Now we’ve got five of them coming here. So I’m really concerned about that.”Beasley-Martin says the Ohio Department of Natural Resources is working for the oil and gas industry — not the people.

Fracker Sues DEC Over Non Existence Gas Reserves  – An East Rochester lawyer waging a years-long battle over New York’s hydraulic fracturing ban is taking a new approach, filing a lawsuit last week attempting to force the state to compensate him for the oil-and-gas rights on his land. David Morabito and his wife, Colette, are suing the state Department of Environmental Conservation in federal court, arguing that the state essentially took their property rights by preventing them from allowing high-volume fracking on their land. The Morabitos own land in Allegany County within the gas-rich Marcellus Shale formation, which was once targeted by natural-gas drillers looking to pay landowners for their mineral rights until Gov. Andrew Cuomo’s administration banned high-volume fracking in late 2014. Allegany County? It’s not “gas rich” according to Acton/Brock/Allstadt/Northrup.It’s less than 4,000’ft deep there and less than 150’ft thick. Too shallow, too thin. That’s a double whammy according to Jerry Acton’s model”: TinyURL.com/NYShaleGasPotential Morabito’s suit does not specify how much compensation he’s looking for, instead saying that would be worked out at trial. He reserved the right to open it up to a class action.The attorney, who is representing himself, first challenged the ban in state court in May 2015, arguing that it didn’t have legal merit in part because the DEC had regulated vertical fracking for more than two decades.His suit was ultimately dismissed when a state Supreme Court justice ruled he didn’t have standing to sue because he never formally applied for a drilling permit, a decision that was upheld by the Appellate Division earlier this year. At the time, Morabito said the decision would allow him to pursue his claim in federal court, which he is now doing.

CNX Gas gets $433K in DEP penalties for Greene County wells - CNX Gas will pay $433,500 in civil penalties for what the Department of Environmental Protection called drilling violations at well sites in Greene County. CNX (NYSE: CNX) was cited for impacts to watersheds and surface waters including Jacobs Run and a tributary in 2015 and 2016 at four well sites. The citations included unauthorized discharge of industrial waste into water, failure to minimize erosion and sedimentation, and failure to maintain containment during drilling and hydraulic fracturing. "If incidents occur, it is incumbent on the operator to promptly address the cause, remediate the site, and prevent a reoccurrence," said DEP Secretary Patrick McDonnell in a statement. "DEP inspectors and investigators work diligently to ensure that safeguards are in place and operators are held accountable if they fail." The DEP said cleanup and remediation were completed at the sites. 

In Bad Trade Off, New England Forsakes Natural Gas For Petroleum - In New England, an overall concern for the environment and safety has actually led to further risks to the environment. New England has been at the forefront of converting its fossil fuel power plants to use cleaner burning natural gas. In fact, the region’s electricity generation is over 50% reliant on natural gas. In addition, many New Englanders have gas lines in their homes and use natural gas for heating and cooking. However, natural gas prices in New England are also the most expensive in the nation, because state and local governments have fought to keep out the pipelines needed to transport it into and around the region. Natural gas prices across the United States dropped with the advent of fracking, and it would be easy and cheap to supply New England with natural gas from the nearby Marcellus shale region. Several companies have tried to build pipelines to bring this gas to New England, but they were stymied by hostile local governments and ultimately by a 2016 ruling from the Supreme Judicial Court of Massachusetts that forbade utility companies from entering into long term natural gas deals with the intent of passing on charges to customers. After the legal case was decided in Massachusetts, Kinder Morgan withdrew plans for a new pipeline.  Now, a polar vortex has hit the northeast and frigid temperatures are causing demand for natural gas to skyrocket . Natural gas prices in New Englandtripled in just one day and are currently some of the highest in the nation. Now New England has turned to petroleum, a source of great pollution and even greater expense, for electricity generation. Over the course of one day, December 27, 2017,petroleum use grew from less than 500MW to nearly 4,000MW. Petroleum accounted for 22% of the electricity generation, just behind nuclear at 35% and natural gas at 24%.  Ironically, a region known for its protests against fossil fuels now has an electricity generation plan to be ashamed of .

FERC, Which Rejected 2 Gas Pipelines Out of 400 Since 1999, to Review Approval Policy - By Steve Horn --  The new chairman for the U.S. Federal Energy Regulatory Commission (FERC), Kevin McIntyre, says the agency plans to review its permitting process and procedures for natural gas pipelines .   FERC has come under fire for serving as a " rubber stamp " for these pipelines, which these days mostly carry gas obtained via the horizontal drilling and injection technique known as hydraulic fracturing or " fracking ." The agency has rejected only two out of the approximately 400 pipeline applications received since 1999, when it last updated its gas pipeline review process . That's according to a report published in November by Susan Tierney , currently employed by economic consulting firm Analysis Group and former member of the Obama-era Department of Energy's Natural Gas Subcommittee.  "1999 was quite a while ago, particularly in the natural gas pipeline area. So much has changed in our entire industry, of course, since then," McIntyre told reporters at a Dec. 21 FERC meeting, according to The Hill. Indeed, beginning in the 2000s and booming after the Energy Policy Act of 2005 , fracking has opened up massive industry demand for interstate pipelines.  And before those lines are built, they must receive a permit from FERC.  Tierney's report, commissioned by the Natural Resources Defense Council (NRDC), emphasizes the role fracking has played in the spike of FERC pipeline approvals.  "From 2007 through 2016 alone, FERC approved 234 gas pipeline projects, more than half the number approved since the Policy Statement was issued in 1999," reads the report. "These projects amounted to 121 [billion cubic feet per day] in total incremental capacity approvals, with 10,250 miles of pipe estimated to cost approximately $51.2 billion."  In particular, the report zeroes in on the role of Pennsylvania's Marcellus Shale basin, which saw a total of nine interstate pipelines approved in 2016 alone. According to U.S. Energy Information Administration (EIA) data from 2015, the Marcellus and its neighboring Utica Shale basin in Ohio are responsible for 85 percent of U.S. shale gas production since 2012.

With Tribal Blessing, Louisiana Activist Buys Land in Path of Proposed Bayou Bridge Pipeline - On December 16 anti-pipeline activists calling themselves water protectors gathered in Rayne, Louisiana, on land located along the proposed route of the Bayou Bridge pipeline. The gathering occurred two days after the U.S. Army Corps of Engineers and the Louisiana Department of Environmental Quality granted Energy Transfer Partners (ETP) the last permit needed to build the pipeline. The proposed pipeline would transport crude oil obtained via hydraulic fracturing (fracking) from St. Charles to St. James, Louisiana, and cross the Atchafalaya Basin, a national heritage area that is America’s largest natural swamp. About 35 people took part in a ceremony on land that Cherri Foytlin, director of Bold Louisiana, recently bought for Louisiana Rise, an advocacy group she founded that focuses on renewable energy and a just transition. During the ceremony Foytlin requested and was granted a blessing and permission from the Atakapa-Ishak Nation to use the land that once belonged to the tribe. At the gathering the water protectors strengthened their resolve to stop the pipeline, which would be the final leg of ETP’s Dakota Access pipeline carrying oil fracked in North Dakota to Louisiana.Louisiana Governor John Bel Edwards and the U.S. Army Corps of Engineers rejected calls by a coalition of concerned citizens to conduct a full Environmental Impact Statement before granting the permit. The diverse coalition included the Louisiana Crawfish Producers Association – West and environment groups such as the Louisiana Bucket Brigade, Bold Louisiana, 350 New Orleans, Atchafalaya Basinkeeper, L’eau Est La Vie Camp, and Gulf Restoration Network. The coalition’s common goal is to protect from further damage the Atchafalaya Basin, which is already plagued with environmental issues stemming from hundreds of pipelines that already cross the basin and thousands of abandoned wells.

Trump To Rollback Deepwater Horizon Regulations - The Trump administration is hoping to slash regulations on offshore oil drilling that were implemented after the 2010 Deepwater Horizon disaster that killed nearly a dozen people and led to an oil leak that spewed for months.According to the Wall Street Journal, the Bureau of Safety and Environmental Enforcement (BSEE), which is the agency housed in the Interior Department that regulates offshore oil drilling, is proposing a rollback of a series of changes made after the 2010 disaster.BSEE says that the cuts will save the oil industry $900 million over ten years. The proposal has not been made public, but the WSJ reports that some of the changes include easing rules that require the streaming of real-time data of oil production operations to facilities onshore, which allows regulators to see what is going on. Another rule that would be removed requires third-party inspectors of equipment, such as the blowout preventer, to receive certification by BSEE.Another example includes alterations to the “well-control rule,” one of the signature regulations that was implemented by the Obama administration after years of review following BP’s oil spill. The well-control rule required the use of certain safety equipment and operations intended to reduce the risk of another disaster.  But the Trump administration, in a nod to the oil industry, has proposed deleting the word “safe” from a section of the rule, the WSJ reports, which would restrict BSEE’s ability to withhold permits. “Based on BSEE experience during the implementation of the original [well control rule], BSEE has concluded that the term ‘safe’ creates ambiguity in that it could be read to suggest that additional unspecified standards, beyond those expressly stated, may be imposed in the approval of proposed drilling margins,” BSEE wrote in a justification of the rule change, according to the WSJ.

In Bid to Save Big Oil $900M, Trump Moves to Scrap Offshore Drilling Safety Rules - The oil and gas industry is poised to save hundreds of millions of dollars over the next decade thanks to a rollback of offshore drilling safety regulations that have been proposed by the Trump administration —including the elimination of the word "safe" from one rule. The rules in question were put in place following the Deepwater Horizon explosion in 2010, which killed 11 people, injured 16 and caused the worst oil spill in U.S. history. Siding with the fossil fuel industry , which has complained safety regulations are overly broad, the Bureau of Safety and Environmental Enforcement (BSEE) has proposed scrapping or changing some major requirements, according to the Wall Street Journal . The rules to be changed include one that orders companies to take steps to prevent oil-well blowouts, part of what caused British Petroleum's (BP) Deepwater Horizon disaster. The BSEE argued that the word "safe" should be taken out of the rule, to stop regulators from "interpreting the term in a way to withhold certain drilling permits." The bureau also proposed eliminating a rule that requires a third party to inspect drilling equipment, like the blowout preventor which failed just before the BP explosion. The rollback "is literally going back to business as usual," a former federal official told the Journal , which obtained the BSEE's proposal.  The oil and gas industry is expected to save about $900 million over the next decade if the proposal is adopted. Fossil fuel companies rake in more than $100 billion in revenue per year, making the annual savings comparatively minor—but as critics and politicians pointed out on social media, the elimination of the Obama-era safety regulations could cost lives as the BP disaster did.

Higher oil prices needed to sharply boost US drilling: Dallas Fed - (Reuters) - Oil prices will need to rise further for energy companies to significantly expand drilling activities, according to a survey released on Thursday by the Federal Reserve Bank of Dallas. U.S. energy companies have added rigs and boosted production to near record levels, as oil prices have more than doubled from a low of about $26 per barrel touched in early 2016. But prices above $60 a barrel are needed to see a significant uptick in activity, according to the survey, which questioned 134 firms headquartered in Texas, southern New Mexico and northern Louisiana. West Texas Intermediate (WTI) crude was trading at about $59.50 on Thursday, down slightly from a 2-1/2-year high of $60.01 earlier this week. The jump in prices, coupled with technological improvements that make drilling cheaper, has pushed the U.S. rig count to 931, up about 43 percent from last year, according to data from General Electric Co’s oil services arm Baker Hughes. Slightly more than half the survey’s respondents expect the rig count to continue to climb six months from now but nearly all said oil prices need to be above $60 a barrel for a substantial increase. Of the firms surveyed, nearly 48 percent reported an increase in spending from the previous quarter and roughly 64 percent reported an increase from a year ago. About 8 percent reported a decrease over the previous quarter, and nearly 10 percent reported a decrease from a year ago. Services firm Keane Group in December said it had placed orders for three additional hydraulic fracturing fleets, a signal that it expects demand for production-related services to grow. U.S. oil and gas production has climbed for five consecutive quarters, the survey found, as a deal among major global producers to cut output has helped lift prices. Total domestic production is at 9.75 million barrels per day (bpd), according to the latest figures from the U.S. Energy Information Administration, and is expected to climb to more than 10 million bpd next year. Of the service firms surveyed, 52 percent said they are receiving higher prices for services from a year ago, while 40 percent reported no change. The survey’s respondents included 77 companies focused on exploration and production activities and 57 that operate in the oilfield service sector.

Permian Basin oil production crushes 1973 records - Houston Chronicle: Operators have pumped more barrels of oil out of West Texas’ prolific Permian Basin than ever before. Permian production hit 815 million barrels in 2017, blowing past the previous record of 790 million barrels set in 1973, business research firm IHS Markit said on Tuesday. “The magnitude of the rebound in Permian Basin liquids production is unprecedented,” analyst Reed Olmstead said in a report. “Not so long ago, many in the industry were saying the Permian was dead.”In 1973, operators pumped an average of 2.16 million barrels of oil and gas liquids per day. Permian volumes this year will average 2.75 million barrels per day, IHS said, a rise of more than 25 percent or almost 600,000 barrels per day. By the end of 2018, the Permian surge should push total U.S. liquids production to a new all-time high, 10.5 million barrels per day, Olmstead said. “The implications for U.S. energy security are significant,” Olmstead said, “since we have become, in a relatively short period of time, more self-sufficient in terms of energy supply and are less reliant on imports.” Operators began producing out of the Permian in the 1920s and have since pumped more than 39 billion barrels of oil there. Conventional oil production — vertical wells drilled into traditional reservoirs — declined steadily during the 1970s, ’80s, ’90s and early 2000s, before horizontal drilling and hydraulic fracturing remade the U.S. oil industry.

Permian Beats Own Oil Production Record - The Permian Basin pumped an estimated 815 million barrels of crude this year, beating its previous record of 790 million barrels, achieved back in 1973, IHS Markit reported. The figures once again reinforce the Permian’s status as the star of the U.S. shale patch and the main threat to OPEC’s efforts to reduce global oil production in a bid to prop up prices. With so many reports about the Permian’s recent glory it’s easy to forget that the play is actually a mature one and in the past it has been written off as depleted. Instead, it has become the main driver of the overall oil production increase in the United States that has turned it into the main challenger to OPEC’s global oil industry dominance. Over the past decade, IHS Markit figures show, the Permian has added almost 2 million barrels to daily production and by the end of this year it will be producing 2.75 million barrels daily, IHS market estimates suggest. This will boost total U.S. oil production to more than 10.5 million barrels by the end of next year, IHS’ director of energy research and analysis, Reed Olmstead, said. This would be an all-time high for the world’s top consumer of the commodity. The Houston Chronicle recalls that the Permian’s star first rose in the 1920s and since then, total production has reached more than 39 billion barrels of crude. Yet for decades, drillers only developed conventional oil fields in the area, and production from these started declining steadily in the 1970s as demand boomed. It was only thanks to fracking that the Permian went back on the map of promising oil-producing areas and, according to IHS, it still contains some 70 billion barrels of technically recoverable oil. This amount could actually increase as fracking technology advances further, enabling drillers to tap previously unrecoverable reserves of crude oil.

The Dark Bounty of Texas Oil - For more than a century, the economic fortunes of Texas have depended on oil. The image of mighty geysers spewing depreciable assets out of the ground is forever linked to the state. In the popular imagination, a rich Texan is invariably an oil baron. The Austin Chalk, the Barnett Shale, the Wolfcamp: these layers of subterranean Texas have yielded up so much black gold that their names are recognized by oilmen and everyday citizens alike. In large part because of high oil prices, a disproportionate share of America’s economic growth over the past decade has come from Texas. The gross domestic product of the state is $1.6 trillion; if it were an independent country, its economy would settle in around tenth place, eclipsing those of Canada and Australia. California, with forty per cent more residents, has a G.D.P. of $2.6 trillion, but since 2000 job growth in both Dallas and Houston has expanded by about thirty per cent—three times the rate of Los Angeles. Texas’s vigorous growth had a rope thrown around it when oil prices, which had climbed to a hundred and forty-five dollars a barrel in 2008, slumped in 2014, ultimately falling below thirty dollars. In 2016, for the first time in twelve years, the state’s job growth lagged behind that of the nation as a whole. Five thousand energy-industry companies make their home in Houston, the world’s oil-and-gas capital, and the crash in oil prices was evident in the emptying of office buildings and the slowdown in home sales. Even the traffic on the freeways got lighter. Between January, 2015, and December, 2016, more than a hundred U.S. oil and gas producers declared bankruptcy, nearly half of them in Texas. This figure doesn’t count the financial impact on the pipeline, storage, servicing, and shipping companies that depend on the energy business, or the seventy-four billion dollars’ worth of debt that these bankruptcies left behind.

EIA 914 - Massive Growth From Lower 48 - Let's start off by saying that the EIA 914 report blew everyone's expectations out of the water. Although on the surface it shows October U.S. oil production growing by 167k b/d to 9.637 million b/d from 9.470 million b/d, you have to factor in that the Gulf of Mexico saw production decline by ~200k b/d. That would put the ex-hurricane U.S. oil production at 9.837 million b/d - an increase of 367k b/d in one month. Two weeks ago, we published an article detailing our thoughts on U.S. oil production and what we expect. We said that we thought the U.S. would average 9.952 million b/d in 2018 or about 70k b/d lower than EIA's STEO. That's now looking way too low given the latest figures. Let's dig into the meat of this report. This is what production looks like with monthly vs. weekly now:  Where did the growth come from?

• Alaska: +25k b/d m-o-m
• New Mexico: +24k b/d m-o-m
• North Dakota: +83k b/d m-o-m
• Oklahoma: +24k b/d m-o-m
• Texas: +206k b/d m-o-m

Declines came mostly in the Gulf of Mexico, which resulted from Hurricane Nate, which saw production decline by ~200k b/d. Here's what we see from the EIA's DUC report, which details how many wells were completed and how this all corresponds to the monthly report just released:Since June, we saw Permian and Eagle Ford well completions increase from 408 wells per month to 524 wells per month. That's an increase of about 28.4%. Here's another look at the pace of the well completions between the Permian and Eagle Ford:  As you can see in the chart above, the increase in well completions in the Texas region has come entirely from the Permian, so this leads us to believe that the recent increase in Texas is entirely from the ramp-up we saw in well completions from June 2017 to November 2017. But as you can also see from the chart, the pace of the increase in well completions has stalled and, as a result, U.S. oil production growth in November and December won't see the same level of production increases we saw in October.

Trump administration rescinding rules for oil, gas drilling - Akron Beacon Journal -— President Donald Trump's administration is rescinding proposed rules for hydraulic fracturing and other oil- and gas-drilling practices on government lands, government officials announced Thursday. The rules developed under President Barack Obama would have applied mainly in the West, where most federal lands are located. Companies would have had to disclose the chemicals used in fracking, which pumps pressurized water underground to break open hydrocarbon deposits. The rules to be rescinded Friday were supposed to take effect in 2015 but a federal judge in Wyoming blocked them at the last minute. In September, the 10th U.S. Circuit Court of Appeals in Denver declined to rule in that case because the Trump administration intended to rescind the rules. The long-awaited change drew praise from industry groups including the Washington, D.C.-based Independent Petroleum Association of America and Denver-based Western Energy Alliance, which sued to block the rules. They claimed the federal rules would have duplicated state rules, putting unnecessary and expensive burdens on petroleum developers.  In many areas, it would be rare nowadays for a gas or oil well to not be fracked. The process requires several million gallons of water each time. Environmentalists say the potential risks to groundwater require regulation. "Fracking is a toxic business, and that's why states and countries have banned it. Trump's reckless decision to repeal these common-sense protections will have serious consequences," Brett Hartl, government affairs director at the Center for Biological Diversity, said in an email.Ohio is the nation’s sixth-largest natural gas producer, according to the Energy Information Administration.  Most of the state’s gas comes from the Utica and Marcellus shale formations, where companies use horizontal drilling and fracking.

Trump Administration Repeals Obama Rule Designed to Make Fracking Safer - The Trump administration is rescinding Obama-era rules designed to increase the safety of fracking . “We believe it imposes administrative burdens and compliance costs that are not justified," the Interior Department 's Bureau of Land Management (BLM) wrote in a notice published Friday in the Federal Register. The 2015 rule required companies drilling for natural gas and oil on public lands to comply with federal safety standards in the construction of fracking wells, to disclose the chemicals used during the fracking process, and required companies to cover surface ponds that store fracking wastewater. The regulation, however, never took effect after a Wyoming federal judge struck it down last year. Fossil fuel groups, which sued to block the Obama regulation, unsurprisingly cheered the decision. "Western Energy Alliance appreciates that BLM under Interior Secretary Ryan Zinke understands this rule was duplicative and has rescinded it," Western Energy Alliance President Kathleen Sgamma said in a release. "States have an exemplary safety record regulating fracking, and that environmental protection will continue as before." But environmentalists and public health advocates have long warned that fracking—which involves pumping large volumes of water, sand and chemicals underground to extract oil and gas—causes groundwater contamination , puts human health at risk and releases the potent greenhouse gas methane. "The Trump administration is endangering public health and wildlife by allowing the fracking industry to run roughshod over public lands," Brett Hartl, government affairs director at the Center for Biological Diversity , said. "Fracking is a toxic business, and that's why states and countries have banned it. Trump's reckless decision to repeal these common-sense protections will have serious consequences."

Fracking and oil exploration on Nevada’s public lands endangers water, wildlife -- It is clear that your editorial board feels strongly about the Center for Biological Diversity’s campaign to protect the waters and wildlife of Nevada from oil drilling and fracking (Dec. 17 editorial). I appreciate your interest in this important topic for Nevada’s future, even if you’ve got the facts wrong.President Barack Obama oversaw the largest expansion of oil and gas leasing in Nevada’s history, putting 3.2 million acres of public lands up for auction for drilling and fracking from 2009-2016. While the Trump administration has dramatically accelerated this process, it’s clear that the fossil fuel industry has sunk its talons into both parties.As of 2016, more than 1.1 million acres of Nevada is under active lease to oil companies. If drilled out, development at this scale significantly threatens our waters and wildlife. If you need proof of these dangers, speak to folks in Sublette County, Wyo., where mule deer herds have fallen more than 40 percent due to widespread habitat loss from oil drilling. In North Dakota, frequent spills of fracking fluids have contaminated groundwater. Or head over to the Uintah Basin of Utah, a rural area where the air quality is now worse than Los Angeles due to toxic emissions from oil and gas production.

Oil and gas companies eyeing Boulder County open space for drilling operations - The Denver Channel - – Boulder County’s moratorium on drilling applications was lifted earlier this year. Crestone Peak and 8 North, LLC didn't waste any time and have targeted open space in the region for drilling operations.“We aren't going to support a single well in Boulder County, and we're going to act like our lives depend on it because they actually do,” Cliff Willmeng, with East Boulder County United, told Denver7.  He and other Boulder County voters have spent millions of dollars to protect open space from development. County laws stopped traditional commercial and residential development on open space, but none were planned to protect what lies beneath. “Unfortunately for us, we don't own the mineral rights of the property. So, we have no control or say about what goes under our house, what goes under the elementary school that's two blocks up, what goes underneath the Rec. Center where hundreds of people visit every single day,” Meredith McTigue said. The proposed drilling site sits about a mile from Escuela Bilingue Pioneer Elementary in Lafayette. “This drilling activity would literally go right underneath the school,” Cliff Willmeng said.If the state and county approve projects, the activity would reach that and more in just 18 months.“The idea that this industry would have total domination over communities is -- when you're used to dealing with the issue -- a fact of life,” Willmeng added. Already, roughly 16,000 acres of open space have been targeted for drilling. The county’s planning department said it’s currently reviewing the COGCC process.

No fracking on conservation and open space land – Denver Post Editorial - It would seem common sense that Colorado’s oil and gas operators should not be permitted to drill wells on land that’s been intentionally placed under conservation easement or purchased for open space. The whole point of setting aside open space, after all, is to protect it from new development. Yet, as The Daily Camera’s Jerd Smith recently reported, three oil and gas operators are targeting tracts of land in eastern Boulder County that are either under conservation easement or have been purchased by the county and set aside as open space.We shake our heads in dismay. If the public chose to set aside land to prohibit other types of development like housing subdivisions and strip malls, surely the expectation was and remains that such easements should also preclude heavy industrial use, regardless of who owns the mineral rights beneath the surface.But that is not the case.In Colorado’s split-estate laws, a mineral rights holder is guaranteed below-ground access to those resources, regardless of who owns the surface land or even if a conservation easement has been placed on that property. Because of the state’s so-called forced pooling law, which allows a company to extract oil and gas owned by others nearby, the problem is compounded.  In contrast to Boulder County’s approach, the Colorado Oil and Gas Commission won’t fund conservation projects where there is even a “minimal chance” of oil and gas development, according to Smith’s reporting. However, in this case, even if Boulder County had such a policy, adjacent land privately owned would still allow this problem to arise.

Enbridge Dealt New Setback After Judge Pushes Back Decision on Line 3 Pipeline -- Environmentalists are cheering after an administrative law judge delayed approval of Enbridge Energy 's controversial Line 3 replacement pipeline in northern Minnesota.  The decision from Judge Ann O'Reilly comes after state regulators deemed the environmental impact statement for the proposed multibillion-dollar project as “ inadequate " and directed revisions on the document.  Minnesota Public Radio reported that O'Reilly is weighing whether a new Line 3 is needed in the state, and if so, what the pipeline route should be.  Enbridge wants to replace its aging Line 3 pipeline with a new pipeline along a different route across northern Minnesota. The Canadian energy company said the new Line 3 will "provide much needed incremental capacity to support Canadian crude oil production growth, and U.S. and Canadian refinery demand." If approved, the $7.5 billion Line 3 would be the largest project in Enbridge's history, which would carry nearly 32 million gallons of oil every day.    Line 3 is facing a growing Dakota Access like opposition , with protests against the project on the rise. Line 3 critics, including environmentalists and several Native American tribes, worry that the major tar sands project could cause a devastating spill across important waterways, wetlands and sacred lands, and worsen climate change . Honor the Earth , a Native-led organization protesting the project, said : "The proposed new route endangers the Great Lakes, home to one fifth of the world's fresh water, and some of the most delicate soils, aquifers and pristine lakes in northern Minnesota, It also threatens critical resources on Ojibwe treaty lands, where tribal members retain the rights to hunt, fish, gather, hold ceremony, and travel."

Professional Protesters Threaten Energy Infrastructure - The irony has played out over and over again.  Protestors of the Noble Discoverer, Shell’s Arctic drilling vessel, bobbed up and down in plastic kayaks off the coast of Seattle in May 2015 holding bright plastic signs in opposition to the industry. In 2016, thousands of protestors traveled in cars and planes for long distances to fight construction of the Dakota Access Pipeline in North Dakota.   Not only were 95 percent of the environmentalists arrested in the protests not residents of North Dakota, they left behind nearly 5 million pounds of trash for the local community to clean up.  Yet just about everything protesters own — from blue jeans and cell phones to watercraft and picket signs — is made from petroleum products. And everywhere they travel, they rely on fossil fuels.  But, they vehemently oppose fossil fuels and want the world’s oil and gas lifeline to shut down.This desire held by extremists is so strong that protesting industry-related projects is becoming an industry in itself — with a bullseye now set on pipelines. Groups such as Greenpeace, the Sierra Club and Food & Water Watch are harnessing the power of fear tactics and social media to spread falsehoods and misinformation in order to rally large groups of citizens to join their forces and put money in their coffers.  And, they are becoming increasingly successful.

Bakken Wells Turned Off When Prices Drop; Turned Back On When Prices Rise -- December 27, 2017 -- It's too tedious and too time-consuming to do much more than listing file numbers and a few notes, but going through older wells (permits with 16XXX) I've noticed a fair number of wells that went to inactive (IA) status back in 2015 that are now coming back on line. Many of the MRO wells that went off-line during the Saudi Surge were re-fracked. Some have been off-line for almost two years. File numbers as examples (it is not a full listing of all such 16XXX wells):

ND oil leaders credit Dakota Access Pipeline for 2017 production rebound | Grand Forks Herald: — North Dakota oil production returned to near-record levels in 2017, which one industry leader credited in part to the Dakota Access Pipeline. "It has been a game-changer," said Ron Ness, president of the North Dakota Petroleum Council. The pipeline system connecting North Dakota with Gulf Coast markets has lowered transportation costs, making the price for Bakken crude more competitive. Justin Kringstad, director of the North Dakota Pipeline Authority, said before Dakota Access began service in June, the price for a Bakken barrel was about $7 to $8 lower than the West Texas Intermediate price. From June through October, the most recent data available, the average discount was $5 a barrel, Kringstad said."That means getting more and more revenue out of each barrel," said Ryan Rauschenberger, North Dakota tax commissioner. State tax revenues have increased about $43.5 million for the first five months that Dakota Access operated, according to Kringstad's analysis. That does not include the impact of increased revenue for oil producers and royalty owners. Dakota Access, developed by Energy Transfer Partners, can transport up to 470,000 barrels a day from the Bakken to Patoka, Ill., with the ability to expand to 570,000 barrels a day. From Patoka, oil is transported on the Energy Transfer Crude Oil Pipeline to Nederland, Texas.

In Victory for Standing Rock Sioux Tribe, Court Finds That Approval of Dakota Access Pipeline Violated the Law. - The Standing Rock Sioux Tribe won a significant victory today in its fight to protect the Tribe’s drinking water and ancestral lands from the Dakota Access pipeline. A federal judge ruled that the federal permits authorizing the pipeline to cross the Missouri River just upstream of the Standing Rock reservation, which were hastily issued by the Trump administration just days after the inauguration, violated the law in certain critical respects. In a 91-page decision, Judge James Boasberg wrote, “the Court agrees that [the Corps] did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.” The Court did not determine whether pipeline operations should be shut off and has requested additional briefing on the subject and a status conference next week. “This is a major victory for the Tribe and we commend the courts for upholding the law and doing the right thing,” said Standing Rock Sioux Chairman Dave Archambault II in a recent statement. “The previous administration painstakingly considered the impacts of this pipeline, and President Trump hastily dismissed these careful environmental considerations in favor of political and personal interests. We applaud the courts for protecting our laws and regulations from undue political influence and will ask the Court to shut down pipeline operations immediately.” “This decision marks an important turning point. Until now, the rights of the Standing Rock Sioux Tribe have been disregarded by the builders of the Dakota Access Pipeline and the Trump administration—prompting a well-deserved global outcry,” said Earthjustice attorney Jan Hasselman. “The federal courts have stepped in where our political systems have failed to protect the rights of Native communities.”

Scientists Question Safety of Using Waste Water From Oil Fields on Food - NBC -  Produced water comes from the Kern River Oil Fields a few miles to the east. It’s a byproduct of extracting oil. To extract one barrel of crude out of the earth, oil companies use between 10 and 100 barrels of water. That water is then filtered through tanks that contain crushed walnut shells, which adhere to the oil. The water then travels into ponds where it is skimmed to remove oil from the surface. If necessary, the water returns once again to the filtering process before being blended with fresh water.  It then travels down canals where it is delivered to about 90 farms in the Bakersfield area. Farmers in the area are using more than 20 million gallons of this water each day. Oil companies and the Cawelo Water District have tested the water and assured the farmers that the water is safe. Those farmers sell their produce to the Bay Area and throughout the country, sometimes as organic products. While there are regulations that require companies involved in fracking to reveal the chemicals in their operations, no such rules exist for traditional oil extraction. Last year, the Central Valley Water Board ordered the oil companies to reveal the chemicals they are using. The companies responded with a list of 173 chemicals. Sixty-six of those chemicals are proprietary “trade secrets.”  “From a food safety perspective, the thing we’re most concerned about,” says Seth Shonkoff, “is whether these chemicals are going to migrate from the water into the plant, and particularly into the edible portion of the plant.” Shonkoff and a team of scientists from UC Berkeley, Lawrence Berkeley Labs and PSE, an Energy Science Institute – have recently completed a report that identifies the chemicals and their toxicities. While they couldn’t analyze the chemicals classified as trade secrets, with respect to the rest of them, Shonkoff says, “Forty percent of those rise to the ‘chemicals of concern’ category. A total of 10 chemicals from the list were classified as either carcinogenic or possibly carcinogenic in humans by IARC, the International Agency for Research on Cancer.

THE U.S. SHALE OIL INDUSTRY: Swindling & Stealing Energy To Stay Alive -- While the U.S. Shale Energy Industry continues to borrow money to produce uneconomical oil and gas, there is another important phenomenon that is not understood by the analyst community.  The critical factor overlooked by the media is the fact that the U.S. shale industry is swindling and stealing energy from other areas to stay alive.  Let me explain. First, let's take a look at some interesting graphs done by the Bloomberg Gadfly.  The first chart below shows how the U.S. shale industry continues to burn through investor cash regardless of $100 or $50 oil prices: The chart above shows the negative free cash flow for 33 shale-weighted E&P companies. Even at $100 oil prices in 2012 and 2013, these companies spent more money producing shale energy in the top four U.S. shale fields than they made from operations.  While costs to produce shale oil and gas came down in 2015 and 2016 (due to lower energy input prices), these companies still spent more money than they made.  As we can see, the Permian basin (in black) gets the first place award for losing the most money in the group. Now, burning through investor money to produce low-quality, subpar oil is only part of the story.  The shale energy companies utilized another tactic to bring in additional funds from the POOR SLOBS in the retail investment community... it's called equity issuance.  This next chart reveals the annual equity issuance by the U.S. E&P companies:  According to the information in the chart, the U.S. E&P companies will have raised over $100 billion between 2012 and 2017 by issuing new stock to investors.  If we add up the funds borrowed by the U.S. E&P companies (negative free cash flow), plus the stock issuance, we have the following chart: Thus, the U.S. E&P companies tapped into an additional $212 billion worth of funding over the last six years to produce uneconomical shale oil and gas.  Now, this chart is an approximation based on the negative free cash flow (RED color) from the four top U.S. shale fields and the shale equity issuance (OLIVE color).  So, how much money would these U.S. E&P companies need to make to pay back these funds? Good question.  If we assume that the U.S. shale oil companies will be able to produce another 10 billion barrels of oil, they would need to make $21 a barrel profit to pay back that $212 billion.  However, they haven't made any profits in at least the past six years, so why would they make any profits in the next six years?

Don’t panic! Oil price outlook improves as US shale fracking after headwinds in 2018 -  Arab News has been told that 2018 is unlikely to see a massive ramp-up in US shale production that could potentially wreck attempts by Russia, Saudi Arabia and other producers to stabilize oil prices and shrink surplus inventories. Speaking from Denver, Colorado, senior Wood Mackenzie energy analyst Ryan Duman said there were “headwinds” for the US shale industry which would hold back production next year, reducing the danger that the oil price would head south again.Duman said: “US shale operators who don’t have rigs or crews under contract are going to have to pay dearly because the oil services industry is overstretched right now.”That’s because it pared back considerably during the slump — building it up again is going to take time, he said.There were plenty of wells, but the big question was how quickly can they come on line.“One of the things we are looking for in 2018 is the rate of completions, whether they start to catch up to the rate of drilling. And then, how fast can the oil get to market.”He added: “What we need to see is a massive rehiring to make up for the labor that was let go during the bad times, and operators need more equipment, such as pressure pumping and other assets, in order to push forward with hydraulic fracturing — in other words, the completion stage — which comes after the rigs have dug the wells.” There were also infrastructure challenges in terms of transporting shale oil to refiners, some of which don’t process that type of crude. Asked if he thought the US could overtake Saudi Arabia to become the world’s second-largest producer after Russia, Duman thought this was years away, “although I am not saying it won’t happen.” The way he saw it, the obstacles for US shale currently were the following: Not having ample takeaway capacity — that is, pipelines and other equipment, essential to get crude to market; and a dearth of workers, both skilled and unskilled who were laid off three years ago.  “We have seen rigs added back quickly this year, but operators can’t get the crude to customers fast enough — which has implications for costs.”

As Oil Rises, Shale Drillers With Few or No Hedges Stand to Gain - As the price of oil rises, heavily-hedged shale drillers may find it harder to meet investor demands for payback, boosting the value of producers that haven’t locked in returns for future production.When West Texas Intermediate breached $60 a barrel, it was good news generally for U.S. shale producers. But the higher the price, the less gain will come to companies that hedged their production as crude held below $55 for 10 months of the year.At least 60 percent of next year’s crude output has been hedged, more than in previous years, according to RBC Capital Markets LLC. The result: Rising crude prices will boost the profile of companies with fewer hedges, according to a report by Cowen & Co. Among the winners:  EOG Resources Inc., Anadarko Petroleum Corp.,  and Continental Resources Inc., the note said. “If crude were to move higher, we would expect to see more E&Ps lag as collar ceilings are reached,” Cowen analysts led by Charles Robertson wrote.U.S. shale producers often choose to hedge a portion of their production due to their capital constraints and short life cycles of their wells. With WTI up 34 percent in the last six months, many have increased their hedging to protect their cash flows against a downturn. Hedged volumes more than doubled in the third quarter, according to a study by Bloomberg New Energy Finance. “It’s a directional bet on the future of the market," “Some of them believe, based on the fundamentals, that oil is still going to go higher." Representatives for EOG and Anadarko declined to comment. Kristin Thomas, a spokeswoman for Continental, did not immediately return phone and email messages seeking comment. But executives at the companies have taken a bullish tone in recent months. “We think U.S. production hasn’t been growing quite as prolifically as what others have originally estimated," Lance Terveen, a senior vice-president at Houston-based EOG, told analysts on an earnings call last month when asked about hedging. “We’ve been disciplined since 2015, and we’ve been waiting for this turn. So we’re going to continue to watch here going into 2018."

The Biggest Factors In Future Oil Production -  This assessment is based on the data in the 2017 BP Statistical Review of World Energy available here.

• Figure 1: World Oil Production 1990 – 2017 (Click to enlarge) This analysis was prompted by a chart by Ovi showing that Non-OPEC production less Russia, Canada and the United States has been in decline since 2004. That decline rate is 0.25 million barrels/day/annum. It had previously risen strongly from 1990.
• Figure 2: Production Rate Change 2007 – 2016 (Click to enlarge) The United States LTO patch is widely credited with having caused the oil price collapse of 2014. American production had risen by six million barrels per day since 2007. The United States was not alone with four other countries totaling six million barrels per day of production increase. Iraq and Saudi Arabia contributed two million barrels per day each with Russia and Canada contributing one million barrels per day each.
• Figure 3: World Oil Consumption 1990 – 2016 (Click to enlarge) OECD consumption has been flat even as OECD countries have had an increase in GDP.
• Figure 4: Where the Oil Went (Click to enlarge) The fall of non-OECD consumption from 1990 to 1996 was due to the dissolution of the Soviet Union. Since then consumption growth has been steady at about 835,000 barrels/day/annum. Chinese consumption growth was 240,000 barrels/day/annum up to 2002 and then steepened to 512,000 barrels/day/annum since. OECD consumption growth was strong up to 2007 and then demand contracted due to higher oil prices. From here it looks like OECD consumption has plateaued.
• Figure 5: World Oil Production from 1990 with a Projection to 2025 (Click to enlarge) This projection is based on U.S. conventional production resuming long term decline and U.S. LTO production continuing to climb, driven by the Permian Basin. Russian production is in a long plateau. Canadian production continues its slow, capital-intensive climb. Other non-OPEC production continues its established decline of 0.25 million barrels/day/year. Iraqi production rises by 2.0 million barrels/day to 2025.

The projection shows a gap of about eight million barrels per day by 2025 relative to the established growth rate indicated by the dashed line. This could largely be filled if Permian Basin production ramps up faster than projected and Iraqi production growth ramps up faster than projected now that their civil war is over. In summary, the market is likely to remain in balance and sustained price excursions are unlikely.

Fracking to begin in earnest in 2018 after tough year for industry - British shale gas companies have said domestic fracking will finally begin in earnest in 2018, after another year passed without serious progress amid strong opposition. Industry figures said next year would be crucial for the sector, as companies start the process of hydraulic fracturing to extract gas trapped underground in shale rock. The past 12 months have not been kind to the embryonic industry.  Scotland has banned fracking, while public opposition in the UK hit record highs and protests made headlines. The companies at the vanguard of Britain’s fracking push said this will change in 2018. “We will see results next year. None of us can say with certainty what the results will be, of course,” said Francis Egan, the chief executive of Cuadrilla. According to the British Geological Survey, Britain is sitting on shale gas deposits that could supply the UK for 25 years. A report in 2013 suggested an area stretching from Lancashire to Yorkshire and Lincolnshire could hold at least 1,300tn cubic feet of gas.  Fracking map Cuadrilla in Lancashire and Third Energy in North Yorkshire are vying to be the first company since 2011 to frack in the UK. Early in the new year, both are expected to begin pumping water underground at high pressure to fracture rocks and test how much gas flows out.  By mid February, Third Energy, whose plans have been delayed due to a legal loophole, hopes to collect enough data to know whether the well is commercially viable. Commercial development and production is still up to three years away and would require more wells to be drilled and fracked, he said.

Oil discoveries at lowest point since the 1940s - RT - 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 eight 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.

 A New Era For Oil And Gas Majors - Two and a half years ago, analysts asked when Italy’s Eni would be able to start producing gas from the giant Zohr field offshore Egypt. The overwhelming majority said this would happen no earlier than 2019, and most likely after 2021. But first gas from Zohr flowed earlier this month, in the latest sign that the future of the oil and gas industry will be very different from its past.Big Oil has traditionally taken its time with new projects, especially offshore ones. They require a lot of exploration, a lot of planning, and a lot of equipment once the final investment decision has been made. But no longer: the 2014 crisis really changed the setting, forcing the mammoths of the industry to at least try to become more nimble and flexible.The Italian major is not the only one speeding things up, but it is to date the most glowing example of what Bloomberg’s Chiara Albanese and Javier Blas called a seismic shift. To grasp the full significance of the Zohr feat, here’s a little history.Zohr was first auctioned back in 2012, but the discovery of the huge deposit of gas was only made in 2015: the Mediterranean is not the most productive place when it comes to oil and gas discoveries, so Zohr really shook things up with reserves that Eni has estimated at 850 billion cubic meters of natural gas, or about 30 trillion cubic feet. From the discovery onwards, Eni took advantage of cutting-edge tech to actually work in parallel on the further exploration of the field and its initial development. It did 3D modeling of the deposit at the same time as the design of the engineering tech needed to develop these reserves and procurement. The goal was to save time and money, of course, and many believed this was mission impossible.  The feat will go down in history as yet one more mission considered impossible and made possible by a number of factors, including technology, a new emphasis on cost savings, and the awareness that in a world turning increasingly to natural gas from oil every day is precious and should not be wasted if you want to position your company ahead of the competition.

UK North Sea Forties oil pipeline pumps at half capacity: source (Reuters) - Flows through Britain’s most important oil pipeline, Forties, have recovered to around half the normal rate, a trading source said on Wednesday, suggesting a steady return to normal operations after a rare unplanned shutdown. The closure since Dec. 11 of the pipeline, which normally pumps about 450,000 barrels per day, and supply disruptions in Libya have helped push oil prices above $67 a barrel, their highest since mid-2015. [O/R] Ineos, the pipeline’s operator, restarted the flow earlier in the week and has pledged to resume full volumes in early January. On Wednesday, Ineos could not immediately comment on current flow rates. “It’s a slow ramp up, but it’s about half the normal rate,” the trade source familiar with the operations said. Forties plays an important role in the global market as it is the biggest of the five North Sea crude streams underpinning Brent, a benchmark used for oil trading in Europe, the Middle East, Africa and Asia. The system, which also carries a third of Britain’s offshore natural gas output, was shut down after a crack was found. Oil companies that pump into the pipeline, including Royal Dutch Shell, were restarting oilfields that had to be shut during the repairs. Buzzard, Britain’s largest oilfield, was producing over half its normal level, a trade source said. Ineos was forced to declare force majeure on deliveries of Forties crude oil, natural gas and condensate, suspending its contractual obligations to customers by citing circumstances beyond its control. This is believed to be the first force majeure on a major North Sea production stream in decades. Ineos didn’t say when it expected to lift the force majeure. In a sign of normality returning, an export schedule of Forties crude oil cargoes in February was sent out to cargo owners on Wednesday, although the number of shipments is much lower than normal. Just six Forties cargoes of 600,000 barrels each are listed in February’s export schedule, down from 20 originally planned in January, trade sources said on Wednesday.

 Venezuela Will Back Its Cryptocurrency With 5 Billion Barrels Of Oil, Gold Deposits - Four months ago, in a not entirely surprising move meant to circumvent US economic sanctions on Venezuela, president Nicolas Maduro announced that his nation would stop accepting dollars  as payment for oil imports, followed just days later by the announcement that in a dramatic shift away from the Petrodollar and toward Beijing, Venezuela would begin publishing its oil basket price in Chinese yuan. The strategic shift away from the USD did not work quite as expect, because a little over two months later, both Venezuela and its state-owned energy company, PDVSA were declared in default on their debt obligations by ISDA, which triggered the respective CDS contracts as the country's long-expected insolvency became fact. Then, in early December, clearly fascinated and captivated by the global crypto craze, Maduro shocked the world by announcing the creation of the "Petro", Venezuela's official cryptocurrency "to advance in the matter of monetary sovereignty, to make financial transactions and to overcome the financial blockade". "The objective is to advance in the Venezuelan economy and overcome the financial blockade, this allows us to continue in the economic and social development supported by Venezuelan riches," said the president, explaining that his government will make a cryptocurrency issue "backed by reserves of Venezuelan gold, oil, gas and diamond wealth." Still, as we said when he first commented  on Venezuela's bizarre foray into digital currencies, "it was not exactly clear how this PetroCoin would be backed by various natural resources when the whole point of cryptos is that they are not backed by anything, and as such it appears that what Maduro is trying to do is admit that the hyperinflating Bolivar has failed as a sovereign reserve, and the country is hoping to confuse its global trading partners enough into believing that it somehow had a new "bitcoin" on its hands, which like the real thing would then proceed to appreciate in value in the near future.

Russia Bets on Shale Oil to Defend Its Spot as Top Producer of Crude  -- This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale. The future of the Russian oil industry could lie in the vast Bazhenov shale formation, the largest in the world. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to pump. Only Americans have really gotten shale right so far, but the Kremlin is taking the first steps to unlock Russia’s potential. Companies like PAO Gazprom Neft are leading Moscow’s drive to replicate the U.S. shale boom, experimenting with a uniquely Russian state-controlled approach to fracking that contrasts with the free-for-all among independent producers in Texas and North Dakota. “The Bazhenov is a huge prize,” says Alexei Vashkevich, Gazprom Neft’s exploration director.

Russian bans foreign shipments of oil, natural gas and coal along Northern Sea Route - The amendment in the federal shipping code comes after Putin in mid-November announced that all shipments of oil and natural gas along the Northern Sea Route would be nationalised. A law from the State Duma, the lower house in the country’s legislative assembly, came only four weeks later. On the 20th December, the legislators adopted the amendments, which ban foreign petroleum shipments along the Russian Arctic route, information from the Duma shows.In addition to oil products and liquified natural gas, the legislation also includes coal. The amended law comes into force on 1 February 2018. The bill reads that shipping of oil, natural gas (including LNG), gas condensate and coal, which is extracted on Russian territory, including on the Russian shelf, and loaded on board vessels along the Northern Sea Route, must proceed under Russian flag. However, there is a loophole in the new law, which enables several key stakeholders to continue their already ongoing shipping operations with foreign-registered vessels. The law states that the companies which before 1 February 2018 have entered into contract agreements over the use of foreign-flag vessels will be allowed to continue operations.

Putin says Russia should ditch petrol in favor of natural gas - Russia should follow the lead of Gazprom and have more cars running on natural gas instead of traditional gasoline, according to President Vladimir Putin. It is cheaper and more eco-friendly, he said.  “Gas fuel is, of course, more environmentally friendly. And we have great competitive advantages in this because we have enough of this fuel. More oil and petroleum products can be sold on the foreign market, as it is more profitable than gas sales,” Putin said on Thursday, speaking at a meeting dedicated to the development of Russia's regions. Putin also pointed at Gazprom as an example of how gas fuel saves money. When the company switched to gas fuel, many of its drivers retired because they no longer had an opportunity to steal gasoline.The president was referring to drivers working for state companies who commonly fill up using corporate credit cards, then siphoned and resold the petrol to other drivers.“And what about the army? What is happening in the Ministry of Defense and in other departments? I think comments are needless,” said the Russian president, apparently hinting at the same practice.“Natural gas fuel will have a huge positive economic effect and will create competitive advantages for the whole economy. Therefore, it is necessary to continue, of course, to support its development, both at the governmental level and at the regional,” Putin added. Gazprom sells two types of natural gas fuel: compressed natural gas (CNG) and liquefied natural gas (LNG). CNG is used for passenger and light cargo vans, motor cars, and municipal vehicles. LNG is for big trucks, railway and water transport, quarry machinery and agricultural equipment.

Kuwait Signs LNG Import Deal With Shell, Has Gas Need - Kuwait Petroleum Corp. signed a 15-year liquefied natural gas import deal with Royal Dutch Shell Plc to help the oil exporting nation meet growing domestic energy demand. The sales purchasing agreement with Shell International Trading Middle East Ltd. will start in 2020, the companies said Sunday in an emailed statement. Shell has supplied Kuwait with the super-cooled fuel since 2010 and declined to say how much gas is covered under the new contract. While KPC is working to boost local natural gas production, Kuwait has a “pressing requirement” to secure natural gas supplies in the meantime, they said. LNG could help meet Kuwait’s domestic demand for power to run air conditioners during hot summer months and cut the amount of crude oil burned instead of exported for profit. The contract will cover 2 million to 3 million metric tons of LNG a year, priced at 11 percent below a Brent benchmark, a person familiar said, asking not to be identified because terms of the deal are private. “The big issue for Kuwait is they burn a lot of oil, most of their power generated is from oil, and so importing LNG for them is cheaper and frees up oil for export,” Robin Mills, chief executive officer of Dubai-based Qamar Energy, said by phone. Kuwait wants cleaner burning energy sources such as natural gas to reduce emissions and improve air quality, according to the Shell and KPC statement.

Oil Holds Steady Through Holidays - Oil was steady, but elevated in light holiday trading this week. Brent and WTI hovered near multiyear highs.  OPEC’s resolve looks stronger than ever. In the run up to the late-November decision to extend the production cuts through the end of 2018, the group posted its best compliance rate with the agreed upon production cuts yet. OPEC reported a 122-percent compliance rate in November, a figure that bodes well as the group seeks to keep those curbs in place for another year.   In another bit of news that bolsters the OPEC deal, Russian energy minister Alexander Novak said that Russia supports a gradual exit from the production cuts, reducing the risk of a messy conclusion and return to full production.   Iraq’s oil minister Jabar al-Luaibi said that he was optimistic that the oil market would reach a balance in the first quarter of 2018, which will be accompanied by higher oil prices. His comments are some of the most bullish out there among OPEC members, most of which see such an event unfolding in the second half of the year.  While Iraq’s oil minister voiced optimism, a group of energy analysts told CNBC that there is more risk to oil on the downside as we head into the New Year because of rising U.S. production at a time when speculative moves in the futures market have become a little too bullish. "While we could easily see an escalation of tensions in the Middle East, in the absence of that, optimism is probably misplaced for up to six months,” Harry Colvin, director and senior economist at Longview Economics, told CNBC. “Everybody seems to be facing the same way over oil at the minute and it's when this happens that you need to be especially careful.”

Oil Prices Could Soon Drop 50% -- Oil has had a spectacular run the past two years. From $29.42 per barrel on January 15, 2016, oil has risen to $57.36 per barrel as of last Friday, a 95% gain in less than 23 months. Much of this gain reflects the determination of the world’s two largest oil exporters – Saudi Arabia and Russia – to limit output in order to firm up prices. The duopoly of Saudi Arabia and Russia has proved much more effective than OPEC at maintaining the discipline needed to control oil prices.OPEC members such as Iran and Iraq are notorious for cheating on OPEC quotas. The duopoly is more disciplined.  Yet, this kind of manipulation is a two-edged sword.  Saudi Arabia and Russia have as much interest in not letting prices get too high as they do in not letting them get too low. Right now oil prices are at the high end of the range the duopoly consider acceptable. Oil prices have nowhere to go but down once Saudi Arabia and Russia do some cheating of their own. Investors who move now stand to reap huge gains as the duopoly drive prices lower in order to protect their market share, and once again shut-in the capacity of their competitors in the fracking industry.  This infographic neatly illustrates the market dominance of two oil producers: Saudi Arabia and Russia. Together they produce 21 million barrels of oil per day, over 25% of global output. That’s more than the next six major oil exporters combined, and those others have nowhere near the degree of coordination as the duopoly. Equally important is that Saudi Arabia has the lowest production costs of any major producer, about $4.00 per barrel. It’s certainly the case that Saudi Arabia likes higher oil prices, but oil could sink to $10 per barrel, and Saudi Arabia would still make money while most other exporters would lose money or cease production.  On the other hand, high prices have two perils… The first is that high prices encourage competition in the form of marginal output that can take market share. The second is that high prices can produce a recession in developed economies that reduces oil consumption across the board. Obviously the duopoly would like higher prices, but this just encourages output from marginal producers especially those using hydraulic fracturing technology (“fracking”) in places like the Permian Basin in Texas.

Cyberattack Targets Safety System at Saudi Aramco - Malicious software attacked a safety system in August at Saudi Aramco, the world’s largest oil company, in what is the first-ever example of malware targeting the computer systems designed to prevent a disaster at an industrial facility.The attack was first described by the computer security firm FireEye in a blog post last week, which did not name the victim of the attack. But a confidential report obtained by Foreign Policy and authored by Area 1 Security, a computer security firm founded by veterans of the U.S. National Security Agency, identifies Aramco as the victim of the attack.In a statement, Aramco, Saudi Arabia’s national oil company and a pillar of its economy, denied the attack took place: “Saudi Aramco corporate and plants networks were not part of any cyber security attack or breach.”FireEye declined to comment on its clients or the details of an investigation.The revelation that Aramco was targeted by malicious hackers comes as the company prepares for what will likely be the largest initial public offering of all time. Saudi Crown Prince Mohammed bin Salman has staked the company’s IPO as the centerpiece of a sweeping reform plan, which seeks to diversify the economy and use the windfall from the sale to underwrite an ambitious modernization effort. Area 1’s assessment of the attack on Aramco identifies Iran as the likely perpetrator, but other computer security experts who have examined the incident caution against prematurely assigning responsibility. “This is probably one of the most difficult attribution cases that I’ve ever looked at,” said one former American intelligence official familiar with the incident.The Area 1 report, which paints a complex picture of the malware dubbed Triton, does not contain hard evidence to implicate Iran in the attack on Aramco. Though the first of its kind to directly attack the safety systems at a critical infrastructure facility, the Triton malware was ultimately a failure. According to FireEye, Triton attacked a safety system known as Triconex, which is manufactured by the German firm Schneider Electric. Triconex is used all over the world, and provides an emergency shutdown function. Though the attack on Aramco ultimately failed, it provides a portrait of conflicts to come. Targeting critical infrastructure with malware represents the bleeding edge of nation-state hacking activity, and taking out safety systems is one way to inflict damage on an opponent’s critical industry.

Brent Jumps After Explosion At Major Oil Pipeline In Libya --After a quiet overnight session, the price of Brent Crude spiked following news of an explosion at a Libyan crude oil pipeline that feeds the Es Sider sea terminal - home of the largest oil depot in Libya - a source from the Libyan National Army told The Libya Times Tuesday. The blast happened near 30km northwest of Marada, the source said.#Breaking: #LNA sources accuse islamist militants from ‘the #Benghazi Defense Brigades’ of blast targeting the main pipeline linking the Sidrah terminal and #oilfields belonging to al-Waha company. The attack took place about 30km northwest of Maradah. #Libya pic.twitter.com/DjDqj0qQHk— The Libya Times (@thelibyatimes) December 26, 2017  At the same time, the source accused militants from the Benghazi Defense Brigades of the blast. While the reasons for the explosions haven't been determined yet, media reports are suggesting that it was possibly a terrorist attack.Another photo showing smoke billowing from the targeted pipeline (see previous tweet): #Libya, #oilhttps://t.co/v0oldgVOq0 pic.twitter.com/F8H8jCJXTH— The Libya Times (@thelibyatimes) December 26, 2017Meanwhile, the Akhbar Libya news outlet reported that the gas pipeline belonged to the al-Waha oil company. The group's press service claimed that the explosion could have been caused by a terrorist attack, adding that the communication with an engineering crew working on the scene had been lost.The media outlet added that the group had sent its forces to the explosion site, located between Es Sider port and an oil field. While there is still no official update on what impact the explosion could have on Libyan oil output, Brent is higher about 40 cents on the news... ...with Bloomberg reporting that Libya's Waha output is said to drop 60-70kbpd after the explosion.

US crude hits $60 a barrel for the first time since June 2015 - Oil prices surged to more than 2½-year highs Tuesday on reports that a pipeline explosion in Libya has disrupted a big chunk of the country's crude supply. International benchmark Brent crude rose $1.81, or 2.8 percent, to $67.06, after hitting an intraday peak of $67.10, its highest level since May 2015. Meanwhile, U.S. West Texas Intermediate crude futures jumped $1.50, or 2.6 percent, to $59.97, having traded as high as $60, the best level since June 25, 2015. U.S. WTI crude intraday, source: FactSet The oil price spike occurred during thin trading between the Christmas and New Year's holidays. An explosion hit a pipeline that feeds Libya's Es Sider terminal, causing the country to lose 70,000 to 100,000 barrels a day of production, Reuters reported, citing Libya's National Oil Corporation and sources. Libya produced 973,000 barrels a day in November, according to OPEC's latest monthly report. Supply to Es Sider has been disrupted in the past due to an ongoing conflict between rival factions in Libya. A military source told Reuters that armed men had blown up the pipeline. Libya is one of two OPEC members, along with Nigeria, that were exempt from a deal to cap production this year. Both countries have suffered oil supply outages related to internal conflicts. The 14-member cartel, Russia and nine other exporting nations recently extended an agreement to keep 1.8 million barrels a day off the market to help shrink brimming stockpiles of crude around the world. That deal has helped to balance a glutted market, so supply disruptions are more likely to push up crude prices.

Oil Jumps to Highest Since Mid-2015 on Libya Blast, Saudi Budget - A pipeline blast in Libya and a bullish budget forecast in Saudi Arabia boosted crude prices to levels not seen since mid-2015. West Texas Intermediate crude neared $60 a barrel as futures in New York and London reached the highest in more than two years. A pipeline run by Waha Oil that carries crude to Libya’s biggest export terminal exploded Tuesday, dropping the country’s output by 70,000-100,000 barrels a day. Meanwhile, Saudi Arabia is said to expect oil revenue to rise 80 percent by 2023. The blast is “certainly something of a set-back because Libya had been very steadily staying online,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “It’s just a reminder of the geopolitical risk premium that’s going to haunt this market all of next year.” Waha output fell by 60,000-70,000 barrels a day from 260,000 a day, according to a person familiar with the situation. The explosion “is a big thing” that could push prices higher still amid a tighter supply picture, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. At the same time, Saudi Arabia is said to expect its first budget surplus in a decade, according to people with knowledge of the matter. Under a six-year program to balance the budget, officials predict rising prices and expanded output will push income from oil sales to 801.4 billion riyals ($214 billion) from 440 billion riyals this year, the people said.Oil is poised for a fourth straight monthly advance as the Organization of Petroleum Exporting Countries and its partners including Russia cut output and promise to continue doing so through the end of next year. In the U.S., a rising rig count has slowed. Oil rigs are holding at 747 with no rigs added last week, according to Baker Hughes data Friday. WTI for February delivery advanced $1.50 to settle at $59.97 a barrel on the New York Mercantile Exchange, the highest level since June 2015. Total volume traded was about 50 percent below the 100-day average. Brent for February settlement climbed $1.77 to end the session at $67.02 a barrel on the London-based ICE Futures Europe exchange, the highest level since May 2015. The global benchmark crude traded at a premium of $7.05 to WTI.

WTI/RBOB Shrug At Bigger Than Expected Crude Draw --WTI/RBOB faded back from yesterday's Libya pipeline headline-driven exuberance ahead of tonight's API inventory data. A bigger than expected crude draw held WTI prices steady but RBOB faded very modestly after API showed a notable gasoline (and distillates) build. API:

• Crude -6mm (-3.75mm exp)
• Cushing -1.3mm (-590k exp)
• Gasoline +3.1mm
• Distillates +2.8mm

Heading into tonight's data, DOE had showed 5 weeks in a row of crude draws and gasoline builds. WTI/RBOB prices barely reacted to the API data, with RBOB modestly lower... “The Forties pipeline is coming closer to being back online, so that’s capping some of the price optimism that you might have otherwise seen from the Libya supply outage,” Michael Bokoff, an investment analyst at Manulife Asset Management in Boston, said by telephone.The market is “probably reassured now,” Ashley Petersen, lead oil analyst at Stratas Advisors in New York, said. “I don’t think it’s going to take a very long time to fix” the Libya pipeline. At the same time, she said, “you have a few people wrapping up their books” at the end of the year.

Oil falls from 2015 highs as rally falters (Reuters) - Oil prices dipped on Wednesday, as a rally ran out of momentum a session after crude hit a near 2-1/2-year high on supply outages in Libya and the North Sea. Brent crude futures settled at $66.44 a barrel, down 0.9 percent, or 58 cents. U.S. West Texas Intermediate (WTI) crude futures settled at $59.64 a barrel, down 33 cents, or 0.6 percent. The previous day, Brent broke through $67 for the first time since June 2015 and WTI rose above $60 a barrel for the first time since May 2015. “The market continues to gravitate towards bullish news but today we are seeing a little bit of profit-taking,” Prices briefly pared losses in post-settlement trade after industry group American Petroleum Institute said U.S. crude stocks fell more than expected last week. [API/S] On Tuesday, Libya lost around 90,000 barrels per day (bpd) of crude oil supplies after a pipeline feeding Es Sider port was blown up. Repairs could take a week but will not have a major impact on exports, the head of Libyan state oil firm NOC told Reuters on Wednesday. Other supply disruptions of recent weeks included closure of Britain’s largest Forties pipeline. On Wednesday, Forties was pumping at half its normal capacity. Its operator was pledging to resume full flows in early January. The Forties and Libyan outages together amount to around 500,000 bpd, relatively small in a global market of about 100 million bpd.  Oil markets have tightened due to supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Russia. Data from the U.S. Energy Information Administration (EIA) shows global oil markets gradually came into balance by 2016 and started to show a slight supply deficit this year. The data implied a shortfall of 180,000 bpd for the first quarter of 2018. Limiting OPEC and Russian efforts to prop up prices, U.S. oil production has soared more than 16 percent since mid-2016 and is approaching 10 million bpd. 

WTI Algos Confused As Crude Production Drops For First Time In 2 Months - WTI/RBOB had roundtripped off initial API gains into the DOE data this morning which confirmed the sixth weekly crude draw, gasoline build in a row. Production dropped for the first time in 2 months, but WTI limped lower after the data. Bloomberg Intelligence Energy Analyst Vince Piazza notes that attention turns to 2018 after a relatively quiet holiday season. Concerns for production growth with stout hedging likely places a ceiling on WTI in the $60 range. Domestic storage remains elevated heading into a benign 1Q, even with the tailwind of crude exports. It's difficult to appreciate how it gets much better for global crude with the OPEC/Russia accord in the rear view and North Sea and Canadian pipeline issues largely transitory curtailments. Regime intrigue in Saudi Arabia and broader geopolitical concerns in the region aid uncertainty and boost risk premiums, but the WTI benchmark is likely to be range bound next year on higher domestic upstream production. DOE:

• Crude -4.61mm (-3.75mm exp)
• Cushing -1.584mm (-590k exp)
• Gasoline  +591k
• Distillates +1.09mm

Smaller DOE crude draw than API and smaller gasoline build but the trend remains in tact... The distillates build was much more bearish than the market expected.

Re-Balancing Now Down To 28 Weeks. The Weekly Petroleum Report -- December 28, 2017 ---Data points:

• US crude oil inventories decreased by 4.6 million bbls (elsewhere it was said that this was more than expected) -- now in the middle of the average range for this time of the year -- this is the first time this comment has been made in quite some time
• refinery operating capacity: a nice jump -- nearing 96% (reported: 95.7%)
• gasoline production increased, now at 10.2 million bopd
• distillate fuel production also increased, now at 5.5 million bopd
• gasoline inventories actually decreased, but distillate inventories increased
• here's the "gasoline demand" graphic --

Oil prices stay near high on strong US refinery runs, China data - (Reuters) - Oil prices edged up on Thursday, remaining near 2-1/2-year highs after data showed strong demand for crude imports in China and on increased U.S. refining activity that drew more crude from inventories. Trading was typically thin at year end, with many traders on vacation. The U.S. Energy Department said crude stocks fell 4.6 million barrels in the latest week. Inventories excluding the nation’s strategic reserve have declined more than 11 percent in the last year. U.S. refining runs increased, pushing capacity use to 95.7 percent, the highest in December dating to 1998. Refiners have profited in recent months as the spread widened between U.S. crude and Brent futures prices. “In the week past, strong demand for refined products, especially distillates, continued to incent refiners to process crude oil at increasing rates,” U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 20 cents to $59.84 a barrel. Brent crude futures LCOc1 settled up 28 cents at $66.72 a barrel. This week, WTI broke above $60 a barrel for the first time since June 2015, while Brent breached $67 for the first time since May 2015. [O/POLL] Oil markets have tightened after a year of production cuts led by Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia. OPEC cuts kicked off last January and are scheduled to continue throughout 2018. Countering those cutbacks, U.S. oil production has soared more than 16 percent since mid-2016 and is approaching 10 million barrels per day, trailing only OPEC kingpin Saudi Arabia and Russia. In the most recent week, U.S. production dipped modestly to 9.75 million bpd from 9.79 mln bpd the previous week. Prices were supported in early trade by China’s release of strong import quotas for 2018. China’s crude inventories in November hit a seven-year low of 26.15 million tonnes, Xinhua data showed. Pipeline outages in Libya and the North Sea have also supported prices. Libyan oil supplies were disrupted by an attack on a pipeline this week and flows towards the port of Es Sider were cut by about 70,000 bpd on Thursday. In the North Sea, the 450,000 bpd capacity Forties pipeline system was shut this month after a crack was found. Both pipelines are expected to return to normal operations by early January.

 US oil prices hit highest since mid-2015 on surprise output drop - (Reuters) - U.S. oil prices hit their highest since mid-2015 on the final trading day of the year as an unexpected fall in American output and a fall in commercial crude inventories stoked buying. In international markets, Brent crude oil futures also rose, supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China. U.S. West Texas Intermediate (WTI) crude futures were at $60.07 a barrel at 1150 GMT, up 23 cents or 0.4 percent from their last close, after hitting a June 2015 high of $60.32. Brent crude futures - the international benchmark - were also up, rising 23 cents to $66.39 a barrel. Brent broke through $67 earlier this week for the first time since May 2015. Since the start of the year, Brent and WTI have risen by 17 and 12 percent, respectively, although the price rises from mid-2017 are much stronger, at nearly 50 percent. Friday’s WTI price rises were driven by a surprise drop in U.S. oil production, which last week dipped to 9.754 million barrels per day (bpd), down from 9.789 million bpd the previous week, according to data from the Energy Information Administration (EIA) released late on Thursday. U.S. output is still up by almost 16 percent since mid-2016, but most analysts had expected production to break through 10 million bpd by the end of this year - a level only surpassed by top exporter Saudi Arabia and top producer Russia. WTI prices were further boosted by a fall in U.S. commercial crude storage levels, which dropped by 4.6 million barrels in the week to Dec. 22 to 431.9 million barrels, according to the EIA. Inventories are now down by almost 20 percent from their historic highs last March, and well below this time last year or in 2015.

U.S. Rig Count Falls Slightly As Canada's Rig Count Tanks - The number of active oil and gas rigs dipped this week, according to Baker Hughes data, decreasing by 2 rigs, bringing the total rigs to 929 rigs, which is an addition of 271 rigs for the 2017 calendar year.The number of oil rigs in the US stayed the same for the second week in a row, while the number of gas rigs decreased by 2. The number of oil rigs stands at 747 versus 525 a year ago. The number of gas rigs in the US now stands at 182, up from 132 a year ago. At 10:04pm EST, the price of a WTI barrel was down $0.20 (+0.33%) to $60.04—a 2.5-year high, while the Brent barrel was trading up $0.18 (+0.27%) to $66.34, largely on the back of weeks of falling US crude oil inventory, and a surprise decrease in US crude oil production.US crude oil production has been on a steady upward trajectory for nearly a quarter, which has previous limited price spikes that came on the back of the Forties shutdown and a pipeline bombing in Libya. But US crude oil production for the week ending December 22 came in at 9.754 million barrels per day—a hair off the previous week’s high, and breaking a nine-week production increase in the US. While the 9.754-million-barrel-per-day production level is still the second highest, the fact that production didn’t increase for a tenth week bolstered confidence.The most alarming news this week is Canada's rig count, which saw a decrease of 58 oil rigs and 16 gas rigs.The Permian basin rig count stayed flat this week, but stands at 134 rigs above this same week last year. Williston and Haynesville basins lost rigs this week, with DJ-Niobrara gained 3. At 1:09pm EST, WTI was trading at $60.36 (+$0.52) with Brent trading at $66.82 (+$0.66).

Oil up at year end, U.S. crude hits highest since mid-2015 | Fox Business: (Reuters) - U.S. oil prices rose above $60 a barrel on the final trading day of the year, touching their highest since mid-2015, as an unexpected fall in American output and a decline in commercial crude inventories stoked buying in generally thin trading. International benchmark Brent crude futures also rose, supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China. Oil prices are set to close 2017 with strong gains on signs the global glut that has dogged the market since 2014 is shrinking. Brent is up 17 percent since the beginning of the year and U.S. West Texas Intermediate is 12 percent higher. U.S. West Texas Intermediate (WTI) crude futures hit $60.32, the highest since June 2015. At 1641 GMT, they were up 32 cents at $60.16 a barrel. Brent crude futures rose 41 cents to $66.57 a barrel. Brent broke through $67 this week for the first time since May 2015. WTI prices were supported by data from the U.S. Energy Information Administration late on Thursday showing domestic oil production declined last week to 9.75 million barrels per day (bpd) from 9.79 million bpd the previous week. Earlier this year, oil prices slumped on concerns that rising crude production from Nigeria, Libya and elsewhere would undermine output cuts led by the Organization of the Petroleum Exporting Countries and Russia. Prices have rallied nearly 50 percent since the middle of the year on robust demand and strong compliance with the production limits.

OilPrice Intelligence Report: What Does 2018 Hold For Oil Markets? -- Oil prices look to be ending the year on a high with WTI breaking $60 on Friday morning and Brent climbing towards the $67 mark. Analysts are now looking towards the new year, with opinion divided on whether oil markets can maintain this upwards momentum. Oil prices are set to close out the year up more than 11 percent, hitting their highest level since 2015. However, the road to higher prices was rocky. In the first half of the year, the OPEC cuts appeared to have little effect, and oil prices gyrated. But the cuts started to take a large bite out of inventories in the third quarter and the price rally ensued. Other notable developments included the return of geopolitics as a market mover, with outages in Libya, Iraq, the North Sea and Canada all contributing to higher prices. U.S. shale also came roaring back in 2017, and those production gains are expected to continue into next year. Looking forward, there is disagreement among market analysts about where prices go from here. Some view oil as overpriced, with a price correction looming (see more below). Others see oil prices grinding higher as 2018 wears on due to falling inventories.  The EIA reported a drop in U.S. oil production, with last week’s output falling by 35,000 bpd. Also, crude inventories fell by a robust 4.6 million barrels for the week ending on December 22, although gasoline inventories ticked up again. The dip in oil production could very well be a one-off anomaly, but the report added some bullish momentum to oil on the final trading day of the year. WTI hovered at the $60-per-barrel mark with a few hours left in 2017.   Barclay’s analysts argue that oil prices are due for a correction, citing several reasons that point to a coming downturn. Investors are overstretched with bullish bets on oil futures, exposing the market to a snap back in the other direction. Also, China’s economy is expected to slow in 2018, raising the risk of weaker-than-expected demand. Plus, oil supply is rising in the U.S., Brazil and Canada, among other countries. Inventories could start to build again in 2018, slowing the rate of rebalancing. Barclays notes that there are plenty of reasons why their forecast could be wrong, but they predict lower prices in the near-term.

 Saudi Royal Reportedly Tortured To Death After Refusing To Fork Over His Fortune -- Rumors that Saudi Crown Prince Mohammad bin Salman has hired mercenaries to torture recalcitrant royals sleeping in the ballroom of the Ritz Carlton in Riyadh have been circulating since shortly after last month’s “corruption crackdown” naked cash grab. Now, Middle East Eye reports that one of MbS’s guests has reportedly died under torture rather than fork over his money and assets to his domineering relative. He was reportedly beaten and tortured so bad his family members had difficulty recognizing his body.Major general Ali Alqahtani, who was detained in early November as part of an alleged anti-corruption drive, had been working in the royal guard forces.He was the manager of the private office of Prince Turki Bin Abdullah, the son of former king Abdullah Bin Abdulaziz, according to the newspaper.Alqahtani died on 12 December after being tortured with electric shocks, and his family struggled to recognise him after receiving his body, according to sources, the newspaper reported.  We know this might come as a shock to some – Tom Friedman and the New York Times said MbS was such a nice guy! But that doesn’t change the fact that he is effectively extorting members of his own family to help plug a gaping hole in the Saudi government’s budget, willfully employing violence when necessary in a fashion that would make Tony Soprano proud. Case in point: Yesterday, we noted that the Saudi government had reportedly made Prince Alwaleed bin Talal – one of the world’s richest men - an offer he cannot refuse: Eitherfork over $6 billion to the Treasury, or spend the rest of his life being strung upside down and tortured by foreign mercenaries.

Saudi Squeeze on Alwaleed Has More at Stake Than Money -- Almost two months into it, Saudi Arabia's crackdown on corruption is yielding at least some of the $100 billion the kingdom is targeting. Dozens of former officials and businessmen have exchanged part of their wealth for freedom. But in the increasingly drawn-out case of Prince Alwaleed bin Talal, the public face of the Saudi royal family to many foreign executives and investors, there's more at stake than taking over his global business empire and talks on a settlement have hit an impasse. The Saudi crown prince, Mohammed bin Salman, is about to enter a crucial few months that will show his true motives and the scope of his power. How the case unfolds will help investors and diplomats answer a question puzzling them since the nightly raids of Nov. 4: Whether the purge is an effort to root out graft before selling shares in the country's oil giant, or simply a shakedown to boost state coffers while he asserts himself at home and abroad. People with knowledge of the matter say Alwaleed is balking at demands that could see him relinquish control of Kingdom Holding Co. He also is resisting any suggestion of wrongdoing because of the impact it would have on his reputation, they said. The prince owns the vast majority of the $9 billion conglomerate, which has stakes in household names from Citigroup Inc. to Twitter. “The Alwaleed case will define the crackdown to western investors,” said Emily Hawthorne, Middle East and North Africa analyst at Texas-based advisory firm Stratfor. The longer Alwaleed remains behind closed doors, the more the government “appears the unreasonable actor,” she said.

Exclusive: Apple and Amazon in talks to set up in Saudi Arabia – sources (Reuters) - Apple and Amazon are in licensing discussions with Riyadh on investing in Saudi Arabia, two sources told Reuters, part of Crown Prince Mohammed bin Salman’s push to give the conservative kingdom a high-tech look. A third source confirmed that Apple was in talks with SAGIA, Saudi Arabia’s foreign investment authority. Both companies already sell products in Saudi Arabia via third parties but they and other global tech giants have yet to establish a direct presence. Amazon’s discussions are being led by cloud computing division Amazon Web Services (AWS), which would introduce stiff competition in a market currently dominated by smaller local providers like STC and Mobily. Riyadh has been easing regulatory impediments for the past two years, including limits on foreign ownership which had long kept investors away, since falling crude prices highlighted the need to diversify its oil-dependent economy. Luring Apple and Amazon would further Prince Mohammed’s reform plans and raise the companies’ profile in a young and relatively affluent market, which already boasts some of the highest internet and smartphone use in the world. About 70 percent of the Saudi population is under 30 and frequently glued to social media. A licensing agreement for Apple stores with SAGIA is expected by February, with an initial retail store targeted for 2019, said two sources familiar with the discussions. Amazon’s talks are in earlier stages and no specific date has been set for investment plans, they said. Apple already holds second place in the Saudi mobile phone market behind Samsung, according to market researcher Euromonitor. Amazon acquired Dubai-based online retailer Souq.com earlier in 2017, opening access for Amazon retail goods to be sold in the kingdom.

 Saudi Airstrikes Kill 48 Yemeni Civilians In 24 Hours -- At least 48 Yemeni civilians have been killed by the Saudi Coalition in the last 24 hours, the Saba News Agency reported. "A total of 48 civilians, including women and children, were killed and wounded in 51 airstrikes launched by US-backed Saudi-led aggression coalition using internationally banned weapons on several Yemeni provinces over the past few hours, military and security officials told Saba on Sunday," the news agency reported. The Saudi airstrikes were primarily concentrated on the northern part of the country, where the Houthis currently control several provinces. In addition to northern Yemen, the Saudi airstrikes were also targeted the western part of the country, including the Hodeidah Port that was finally reopened after being blockaded for several weeks. The death toll from airstrikes included the deaths four civilians reportedly attending a demonstration inside the Yemeni capital - the attack followed a large number of air raids conducted above Sana’a. According to Saba News Agency, the Saudi Coalition airstrikes not only killed four civilians, but also wounded dozens of others, including many women and children. The report added that the airstrikes were conducted during a solidarity vigil that was held in support of Palestine.

More Than a Thousand Days of War in Yemen - For more than 1,000 days now, Yemen has been torn by a ferocious war pitting rebels, known as Houthis (supported by Iran), and forces fighting for former President Ali Abdullah Saleh (who was killed in December) against fighters loyal to exiled President Abed Rabbo Mansour Hadi (supported by Saudi Arabia). Multiple Yemeni tribal militias have aligned with the Hadi government, or the Houthis, or have struck out on their own, seeking independence—and Al Qaeda and ISIS are both attempting to hold or seize territory. A thousand days of airstrikes, civil war, suicide attacks, cholera outbreaks, and near-famine conditions have taken enormous tolls on Yemenis. The nation’s already-fragile infrastructure is under intense pressure as the lack of security and supplies affects every individual and institution. While Saudi Arabia recently agreed to a temporary lifting of its blockade to allow humanitarian relief, on Sunday the Houthi-run Saba news agency reported that 71 civilians were killed in 51 airstrikes carried out by the Saudi-led coalition across the country in just 48 hours. (photo essay)

Special Report: In a hospital ward in Yemen, the collapse of a nation (Reuters) - Nahla Arishi, chief pediatrician at the al-Sadaqa hospital in this Yemeni port city, had not seen diphtheria in her 20-year career. Then, late last month, a three-year-old girl with high fever was rushed to Arishi’s ward. Her neck was swollen, and she gasped for air through a lump of tissue in her throat. Eight days later, she died. Soon after, a 10-month-old boy with similar symptoms died less than 24 hours after arriving at the hospital. Two five-year-old cousins were admitted; only one survived. A 45-day-old boy, his neck swollen and bruised, lasted a few hours. His last breath was through an oxygen mask. One morning in early December, 16-month-old Sameh arrived at the hospital carried by his aunt and delirious with fever. Arishi immediately recognized a new case of diphtheria. “Put on your mask,” she ordered the aunt. Sameh’s father, a fighter in Yemen’s three-year war, rushed in, grabbed his son, yanked off the baby’s shoes and threw them on the floor. “Sameh is the light of the house,” he wailed, feeling the boy’s feverish brow and body. This is the emergency ward to a nation. After three years of warfare, cholera and hunger, Yemen faces a new battle: In the past four months, doctors across the country have recorded at least 380 cases of diphtheria, a bacterial disease that last appeared here in 1992. Arishi, like her country around her, is struggling to cope. Every month, she and her team drip-feed dozens of Yemen’s half a million severely malnourished children. Her ward has also treated hundreds of the one million people infected by cholera. Now, they are converting part of their makeshift cholera treatment center into a diphtheria ward, cordoning off isolation units by barring hallway doors. But with rusty oxygen tanks and only two functional ventilators in a different part of the hospital – and with the expectation that the cholera epidemic will worsen in coming months — her triage upon triage is no longer working. “We’re getting more patients but we can’t deal with them. We don’t have supplies. We don’t have money,” said Arishi, “This war has got to end.” 

Russia Establishes Two Permanent Bases In Syria To Host Nuclear Warships And Warplanes --Russia's defense ministry has announced it is now in the process of establishing two permanent military bases in war-torn Syria after President Putin authorized prior deals with the Syrian government to move forward. Though Russia maintains merely up to ten military bases on foreign soil, the installations in Tartus and Khmeimim will be the most strategically located, allowing for a growing and permanent Russian presence on the Mediterranean, something which has already raised eyebrows in the West. Though Putin formally announced the planned withdrawal of Russian forces from active operations in Syria in early December, there were parallel plans going back to at least early summer to maintain a smaller permanent presence based on an agreement with the Damascus government to host Russian forces for at least 49 more years, which includes the option of being prolonged further. Personnel and military hardware will be stationed at permanent Russian bases in Tartus and Khmeimim - both of which are on or near the Mediterranean.

Russian Foreign Minister: US Military Must Leave All Of Syria -- Russian Foreign Minister Sergey Lavrov stated on Thursday that US forces must leave all of Syria. Speaking to Interfax news agency, Lavrov stated that the UN Security Council has not approved the work of the United States and its coalition in Syria, nor has been invited by the legitimate Syrian government. Concerning a prior statement by US Defense Secretary James Matisse voicing the intent for US troops to stay in Syria until achieving progress in a political settlement, Lavrov pointed out that such statement is “surprising” because it means that Washington reserves the right to determine such progress and wants to maintain control over parts of Syrian territory in order to achieve the result it wants. The Russian minister affirmed that according to the UNSC No.2254, which the United States supported, the decision on the future of Syria can only be taken by the Syrian people and this is what Moscow will begin with as a starting point in its contacts with the Americans later. He also expressed his satisfaction that cooperation with the US in Syria is possible if the Americans’ goal is to fight terrorism. Meanwhile concerning Russian military developments in Syria, a missile attack against Russia’s Hmeymim base by terrorists could be a staged provocation aimed at derailing the Syrian National Dialogue Congress to be held in Sochi, Foreign Ministry Spokeswoman Maria Zakharova told reporters at a press briefing. “On December 27, militants fired several missiles from the Bdama inhabited community at Latakia International Airport and the Russian Aerospace Forces’ deployment site in Hmeymim. Two of them were intercepted by Russia’s Pantsir air defense system, while the third one, deviating from the trajectory, landed in the outskirts of the city of Jebla,” she said. “We see yesterday’s attempt to attack the Russian military at the Hmeymim base as another link in the chain of ongoing and, perhaps, staged provocations involving terrorists and extremists from the Syrian opposition aimed at disrupting the positive trends in the development of the situation in Syria and, in particular, at creating obstacles to convening and holding the Syrian National Dialogue Congress in Sochi on January 29-30,” she said.

Iran votes to declare Jerusalem 'capital of Palestine' | TheHill: Iran declared Jerusalem the "capital of Palestine" on Wednesday following a parliamentary vote, according to the country's semi-official Fars news agency. Iran's announcement to recognize the holy city as the “Palestinian capital forever” comes in direct response to President TrumpDonald John TrumpHouse Democrat slams Donald Trump Jr. for ‘serious case of amnesia’ after testimony Skier Lindsey Vonn: I don’t want to represent Trump at Olympics Poll: 4 in 10 Republicans think senior Trump advisers had improper dealings with Russia MORE's decision to recognize Jerusalem as the capital of Israel. “It comes in response to the recent U.S. decision to recognize Jerusalem as Israel’s capital in hopes of dealing a blow to Muslims,” said Parliament Speaker Ali Larijani, according to Turkey's Anadolu news agency.The bill reportedly passed easily, with 207 "yes" votes from the 290-member Parliament. Iran has long been a fierce proponent of a future Palestinian state. Iran cut relations with Israel, which unified the city under its control after capturing east Jerusalem in the 1967 Six-Day War. Trump broke precedent on Dec. 6 when he announced that the U.S. would recognize Jerusalem as the capital of Israel and begin the process of moving its embassy there from Tel Aviv to Jerusalem. While the White House said that the move doesn't specify the boundaries of the Israeli capital, the decision appeared to take sides in a fight in which both Israelis and Palestinians lay claim to the eastern side of the city. The announcement, which largely pleased Israel’s leadership, ignited protests across the Muslim world, as well as widespread backlash among other countries, including close allies like the United Kingdom. Last week, an overwhelming majority of countries voted against the U.S. in passing a nonbinding resolution at the United Nations that declared Trump's Jerusalem decision “null and void.”

US And Israel Reach "Secret Plan" To Counter Iran - Axios reports U.S. and Israeli officials said joint understandings were reached in "a secret meeting" between senior Israeli and U.S. delegations at the White House on December 12th. Speaking to Axios, a senior U.S. official said that after two days of talks the U.S. and Israel "reached at a joint document which included understandings on countering Iranian actions in the region." The U.S. official said the document goal's was to translate President Trump's Iran speech to joint U.S.-Israeli strategic goals regarding Iran and to set up a joint work plan. On the Israeli side, the team was headed by national security adviser Meir Ben-Shabbat and included senior representatives of the Israeli military, including the Ministry of Defense, Foreign Ministry and intelligence community. The U.S. side was headed by national security adviser H.R. McMaster and included senior representatives from the National Security Council, State Department, Department of Defense and the intelligence community. After the (not so) "secret" meetings, senior Israeli officials confirmed the U.S. and Israel have arrived at strategic understandings regarding Iran that would strengthen the cooperation in countering regional challenges. The Israeli official added that "[T]he U.S. and Israel see eye to eye the different developments in the region and especially those that are connected to Iran. We reached at understandings regarding the strategy and the policy needed to counter Iran. Our understandings deal with the overall strategy but also with concrete goals, way of action and the means which need to be used to get obtain those goals." Meanwhile, apparently unconcerned by the Saudi-Israeli-US axis that has formed to contain his nation, Iranian Supreme Leader Ayatollah Ali Khamenei said on Wednesday that US President Donald Trump would fail in his hardened stance towards Iran, saying Tehran is stronger than during the time of Ronald Reagan.

Iranian cities hit by anti-government protests - BBC News: Anti-government demonstrations that began in Iran on Thursday have now spread to several major cities. Large numbers reportedly turned out in Rasht, in the north, and Kermanshah, in the west, with smaller protests in Isfahan, Hamadan and elsewhere. The protests began against rising prices but have spiralled into a general outcry against clerical rule and government policies. A small number of people have been arrested in Tehran, the capital. They were among a group of 50 people who gathered in a city square, Tehran's deputy governor-general for security affairs told the Iranian Labour News Agency. The US State Department condemned the arrests and urged "all nations to publicly support the Iranian people and their demands for basic rights and an end to corruption".  The demonstrations began in the north-eastern city of Mashhad - the country's second most-populous - on Thursday.People there took to the streets to express anger at the government over high prices, and vented their fury against President Hassan Rouhani. Fifty-two people were arrested for chanting "harsh slogans".  The protests spread to other cities in the north-east, and and some developed into broader anti-government demonstrations, calling for the release of political prisoners and an end to police beatings. On Friday, despite warnings from authorities, the demonstrations spread further to some of the biggest cities in the country.

Why China Sold Qatar The SY-400 Ballistic Missile System -- On Qatar National Day, the Qatar Armed Forces showcased their newly acquired Chinese SY-400 short-range ballistic missile system with a range of 400 kilometers. China’s sale of the SY-400 missile system to Qatar underscores how the Doha-Beijing defense relationship has reached its strongest point since these two countries officially established diplomatic relations in 1988.  Despite China’s close security partnerships with the Anti-Terror Quartet (ATQ) members—Bahrain, Egypt, Saudi Arabia, and the United Arab Emirates (UAE)—Beijing is investing in good relations with all states in the Persian Gulf and balancing both sides of the Gulf Cooperation Council’s (GCC) diplomatic row to China’s geopolitical and strategic advantage. China’s sale of the SY-400 system—which is both offensive and defensive—to Qatar enables Doha to assert greater clout as its geographically larger neighbors continue their siege. Beijing’s decision to sell Doha the SY-400 system amid the Qatar crisis was driven by numerous factors. Since China participated in the 2014 Doha International Maritime Defense Exhibition, Beijing has sought to export its military technology to Qatar. Doha’s plans to purchase this ballistic missile system from China date back to 2014, the year of the GCC diplomatic spat in which the GCC’s ATQ members withdrew their ambassadors from Qatar for eight months. As the Arabian emirate is China’s second-largest provider of liquefied natural gas (LNG), such defense sales serve Beijing’s interests by further balancing bilateral trade. Odds are also good that Qatar came under a degree of pressure from Beijing to take steps toward deepening Sino-Qatari relations amid growing competition from America as a rival LNG exporter to China. China’s sale of the SY-400 system to Qatar must be interpreted within the context of Beijing’s grander objectives in the Middle East pertaining to the ambitious One Belt, One Road (OBOR) initiative. Both Qatar and countries within the Saudi/UAE-led bloc play important roles in China’s vision for a multicontinental trade corridor that positions Beijing at the center of the 21st century global economy. Beijing recognizes Qatar, which is a member of the Asian Infrastructure Investment Bank, as one of the countries that supported OBOR early on.

What really happened in Security Council: China REJECTED oil embargo on North Korea - It is now clear that ever since North Korea carried out its Hwasong 15 ICBM launch complex three party negotiations between the US, China and Russia have been underway in great secrecy in order to agree a further sanctions resolution in the UN Security Council against North Korea.  Almost certainly the two recent telephone conversations between US President Trump and Russian President Putin have touched on this. The unusual secrecy in which the negotiations were conducted meant that when the sanctions resolution was finally agreed and was voted for unanimously by the UN Security Council it came as something of a surprise. In the run up to the vote the US had however been making fully clear what sort of pressure it wanted the UN Security Council and China specifically to impose on North Korea: a total embargo on all supplies of oil to North Korea along with a naval blockade and an effective cessation of all trade between North Korea and the outside world. The important point to take away from the UN Security Council meeting is that China again rejected these demands.  Here it is important to make a number of points about China’s deliveries of crude oil to North Korea. Firstly, crude oil is about the only product North Korea needs to import in order to keep its economy going which it cannot produce itself.  I say this though it is known that North Korea has been stockpiling crude oil in anticipation of a possible future embargo of crude oil deliveries to itself and would probably be able to keep its economy going for some time albeit at a reduced rate if crude oil were indeed cut off. Secondly, all crude oil which North Korea imports comes from China. Thirdly, it appears that China does not actually require payment from North Korea for this crude oil, which is provided essentially as a gift. The text of the latest sanctions resolution voted for unanimously by the UN Security Council is provided at the end of this article.

North Korean Soldier Had 'Anthrax Antibodies,' Raising Concerns Over Pyongyang's Biological Weapons Plans -- Anthrax antibodies were found in the blood of a North Korean soldier who defected to the South, intelligence sources told Seoul’s media, increasing concerns about the country’s biological weapons production. The unidentified intelligence official who spoke to South Korea’s Channel A network did not specify which soldier it was referring to; at least four North Korean soldiers have defected in the past seven months. “Anthrax antibodies have been found in the North Korean defector who has escaped this year,” the official was quoted as saying in the news report, which aired Tuesday. North Korea is thought to be vaccinating top officials against anthrax, while the defectors held lower ranks. Seoul’s intelligence agency is investigating what kind of vaccine stockpiles the country has developed, the report said. Senior defense analyst Shin Jong Woo of the Korea Defense Security Forum (KODEF) told Channel A the vaccine is likely to have been given to soldiers who handle the bacteria for military purposes, as unconfirmed reports last week indicated Pyongyang was looking to load anthrax on its intercontinental ballistic missiles (ICBMs). Anthrax can infect human beings through either ingestion, inhalation or skin exposure, and it affects the normal functioning of the body’s immune-system cells. While ingestion or skin exposure to anthrax can sometimes be treated, inhalation is highly fatal, with a mortality rate of at least 80 percent, according to the FDA.According to 2015 documents from the South Korean Defense Ministry, North Korea possesses 13 types of bacteria and viruses that cause disease, known as pathogens. These include anthrax, botulism, cholera, Korean hemorrhagic fever, plague, smallpox, typhoid fever, yellow fever, dysentery, brucellosis, staph, typhus fever and alimentary toxic aleukia. Seoul estimated Pyongyang could “cultivate and weaponize [the pathogens] within 10 days,” and would prioritize anthrax because it is highly deadly and smallpox because it is highly contagious—and its soldiers are thought to be vaccinated against them.

U.S. sanctions North Korean missile experts, Russia offers to mediate (Reuters) - The United States announced sanctions on two of North Korea’s most prominent officials behind its ballistic missile program on Tuesday, while Russia reiterated an offer to mediate to ease tension between Washington and Pyongyang. The new U.S. steps were the latest in a campaign aimed at forcing North Korea - which has defied years of multilateral and bilateral sanctions - to abandon a weapons program aimed at developing nuclear-tipped missiles capable of hitting the United States. ”Treasury is targeting leaders of North Korea’s ballistic missile programs, as part of our maximum pressure campaign to isolate (North Korea) and achieve a fully denuclearized Korean Peninsula,” Treasury Secretary Steven Mnuchin said in a statement. The move followed new United Nations sanctions announced last Friday in response to North Korea’s Nov. 29 test of an ICBM that Pyongyang said put all of the U.S. mainland within range of its nuclear weapons. Those sanctions sought to further limit North Korea’s access to refined petroleum products and crude oil and its earnings from workers abroad. North Korea declared the U.N. steps to be an act of war and tantamount to a complete economic blockade. The standoff between the United States and North Korea has raised fears of a new conflict on the Korean peninsula, which has remained in a technical state of war since the 1950-53 Korean War ended in an armistice, not a peace treaty. The United States has said that all options, including military ones, are on the table in dealing with North Korea. It says it prefers a diplomatic solution, but that North Korea has given no indication it is willing to discuss denuclearization. The U.S. Treasury named the targeted officials as Kim Jong Sik and Ri Pyong Chol. It said Kim was reportedly a major figure in North Korea’s efforts to switch its missile program from liquid to solid fuel, while Ri was reported to be a key official in its intercontinental ballistic missile (ICBM) development. The largely symbolic steps block any property or interests the two might have within U.S. jurisdiction and prohibit any dealings by U.S. citizens with them. 

Russian tankers fueled North Korea via transfers at sea -- Russian tankers have supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, according to two senior Western European security sources, providing an economic lifeline to the secretive Communist state. The sales of oil or oil products from Russia, the world's second biggest oil exporter and a veto-wielding member of the United Nations Security Council, breach U.N. sanctions, the security sources said. The transfers in October and November indicate that smuggling from Russia to North Korea has evolved to loading cargoes at sea since Reuters reported in September that North Korean ships were sailing directly from Russia to their homeland. "Russian vessels have made ship-to-ship transfers of petrochemicals to North Korean vessels on several occasions this year in breach of sanctions," the first security source, who spoke on condition of anonymity, told Reuters. A second source, who independently confirmed the existence of the Russian ship-to-ship fuel trade with North Korea, said there was no evidence of Russian state involvement in the latest transfers. "There is no evidence that this is backed by the Russian state, but these Russian vessels are giving a lifeline to the North Koreans," the second European security source said. The two security sources cited naval intelligence and satellite imagery of the vessels operating out of Russian Far Eastern ports on the Pacific but declined to disclose further details to Reuters, saying it was classified. Russia's Foreign Ministry and the Russian Customs Service both declined to comment when asked on Wednesday if Russian ships had supplied fuel to North Korean vessels. The owner of one ship accused of smuggling oil to North Korea denied any such activity.

Sanctions against North Korea take their toll on smugglers operating along Chinese border - South China Morning Post - The small-time smugglers who long helped secretly knit North Korea to the outside world have seen their work plunge since ruler Kim Jong-un came to power, as a handful of large, well-connected Chinese businesses have taken over the trade along the Chinese border.  As Kim has ramped up his country’s nuclear and missile programmes, the increasingly tight international sanctions have favoured more sophisticated players, throwing the world of small-time smugglers into turmoil. One former smuggler, a rail-thin man in his 50s who chain-smokes cheap North Korean cigarettes, worked the border’s secret trails and quiet river crossings until last year, when he left North Korea to move in with relatives in China.“I could bring in 10 televisions at once, the same thing for refrigerators,” he says. But no more.The underground community’s troubles reflect the immense role that the border plays in North Korea’s economy, and offer a window into a world that outsiders almost never see. In rare detailed interviews, nearly a dozen people tied to smuggling networks, most either former smugglers or black market traders, discussed how life has changed since Kim came to power in late 2011.In North Korea, a nation shaped by repression and isolation, smuggling is far more than a crime. Smugglers brought in food during a famine, and eventually carried everything from car parts to South Korean TV shows. They ferried in TVs and ferried out escaping families. Smuggling became a respected profession, offering a road to the emerging middle class.  The 1,400km border is the linchpin of North Korea’s economy, with China accounting for about 90 per cent of its trade. While North Korea has faced international trade sanctions for over a decade, Beijing only began significantly ratcheting up enforcement over the past year, amid Pyongyang’s surging weapons tests. Trade has declined, but analysts say a range of products still flow across the frontier, their path smoothed by bribes and politicians in both countries.As sanctions have tightened, the trade machine has simply grown more complex.

US Spy Satellites Catch Chinese Ships Illegally Selling Oil To North Korea - According to South Korea's Chosun Ilbo, U.S. recon satellites have photographed around 30 illegal transactions involving Chinese vessels selling oil to North Korea on the West Sea in October. The images allegedly showed large Chinese and North Korean ships transacting in oil in a part of the West Sea closer to China than South Korea. The satellite pictures even showed the names of the ships. A government source said, “We need to focus on the fact that the illicit trade started after a UN Security Council resolution in September drastically capped North Korea’s imports of refined petroleum products.”  Meanwhile, on paper, China’s trade with North has recently collapsed after U.S. President Donald Trump unleashed a barrage of sanctions in September targeting North Korea’s imports of refined petroleum products.Back in November, the US. Treasury Department sanctioned an additional six North Korean shipping and trading companies and 20 of their ships after the satellite pictures surfaced. In the above picture, the North Korean ship named Ryesonggang 1, was easily identified and connected to the illegal sale of oil from China.According to Chosun Media, "the department noted that the two ships appeared to be illegally trading in oil from ship to ship to bypass sanctions." Ship-to-ship trade with North Korea on the high seas is forbidden in UNSC Resolution 2375 adopted in September, but such violations are nearly impossible to detect unless China aggressively cracks down on smuggling.  

Hong Kong Ship Seized After Transferring Oil To North Korea - Just days after we showed satellite images  which indicated that Chinese ships were trading oil with North Korean ships in a blatant violation of UN Security Council sanctions, South Korea said Friday that it was holding a Hong Kong flagged ship suspected of doing just that. The Lighthouse Winmore is believed to have "secretly transferred" about 600 tons of refined petroleum products to the North Korean ship, the Sam Jong 2, in international waters in the East China Sea on Oct. 19, according to Bloomberg and the Associated Press. The Hong Kong vessel had previously visited Yeosu port on Oct. 11 to load up on Japanese oil products and departed the port while claiming its destination was Taiwan. Instead, it transferred the oil to the Sam Jong 2 and three other non-North Korean vessels in international watersThe vessel was chartered by Taiwanese company Billions Bunker Group, which is incorporated in the Marshall Islands. According to Bloomberg, Taiwanese investigators are looking into whether any Taiwanese nationals have ties to the ship that was seized on Friday, Taiwan’s Maritime and Port Bureau says in statement on its website.  Photos from US recon satellites released earlier this week showed at least 30 illegal transactions involving Chinese vessels selling oil to North Korea on the West Sea in October. The images allegedly showed large Chinese and North Korean ships transacting in oil in a part of the West Sea closer to China than South Korea. The satellite pictures were so clear, they even showed the names of the ships.

China Resists US Push To Blacklist Ships Caught Trading With North Korea -  After the US Treasury Department released satellite images purporting to show Chinese ships transferring oil to a North Korea-flagged vessel in blatant violation of UN Security Council sanctions, the US is pressing for 10 ships, several of them Chinese, to be added to the list of entities banned by the UN. But there’s one problem: China, which like the US holds a permanent veto over UN Security Council decisions, is pushing back. It says it will only accept sanctions on four ships, according to the Wall Street Journal. While there’s some skepticism about how well these rules are enforced, UN sanctions would require members to bar blacklisted ships from their ports. A Security Council resolution passed last week gives member states more authority to seize the ships that have breached international sanctions and ban them from their ports. And the satellite images mentioned above have shown just how easily North Korea has managed to circumvent sanctions managed to restrict energy flowing into the country while also choking off its exports of North Korean coal.  Earlier today, we reported that South Korean officials seized one of the ships shown in the US satellite photographs. The ship, the Hong Kong-flagged Lighthouse Winmore, was being held for inspection by South Korea. Its crewmembers will reportedly be allowed to return to their home countries once the inspection is finished.That ship was caught transferring oil to North Korea-flagged Sam Jong 2. Both the Winmore and Sam Jong are on the US’s list of 10 ships deserving of sanctions. But neither ships are included on China’s revised list of four.

China steeling for full-blown crisis on Korean Peninsula - China may be committed to resolving the North Korean nuclear issue through dialogue, but it is taking no chances. Sources say Chinese authorities are actively bracing for a possible clash between the North and the U.S., including plans for vast refugee camps near the border. The government in the middle of this year instructed northeastern provinces, including Jilin and Liaoning, to start preparing to open camps that could absorb an expected influx of displaced North Koreans, according to Chinese Communist Party insiders. The sources said multiple planned facilities would have an estimated capacity of up to 500,000 people. Stockpiling of food and tents has apparently begun. A purported internal file from state telecom operator China Mobile seems to support these claims. The document, which leaked online in early December, says five refugee camps are planned for Changbai County in Jilin, and that the company ran communications tests there on Dec. 2. The file has not been authenticated, but diplomatic sources suspect it is genuine, as it became inaccessible several days after its release. Experts familiar with the China-North Korean border region also say barracks are under construction in a military-administered area of Jilin. These are low-rise buildings with communal showers for personnel. Officially, the construction is meant to counter a growing number of thefts by North Koreans who slip across the frozen border river during the winter. But the authorities may have a real crisis in mind.

China has an irrational fear of a “black invasion” bringing drugs, crime, and interracial marriage   - In March, amid the pomp of China’s annual rubber-stamp parliament meetings in Beijing, a politician proudly shared with reporters his proposal on how to “solve the problem of the black population in Guangdong.” The province is widely known in China to have many African migrants.“Africans bring many security risks,” Pan Qinglin told local media (link in Chinese). As a member of the Chinese People’s Political Consultative Conference, the nation’s top political advisory body, he urged the government to “strictly control the African people living in Guangdong and other places.”   Pan, who lives in Tianjin near Beijing—and nowhere near Guangdong—held his proposal aloft for reporters to see. It read in part (links in Chinese): “Black brothers often travel in droves; they are out at night out on the streets, nightclubs, and remote areas. They engage in drug trafficking, harassment of women, and fighting, which seriously disturbs law and order in Guangzhou… Africans have a high rate of AIDS and the Ebola virus that can be transmitted via body fluids… If their population [keeps growing], China will change from a nation-state to an immigration country, from a yellow country to a black-and-yellow country.” On social media, the Chinese response has been overwhelmingly supportive, with many commenters echoing Pan’s fears. In a forum dedicated to discussions about black people in Guangdong on Baidu Tieba—an online community focused on internet search results—many participants agreed that China was facing a “black invasion.” One commenter called on Chinese people (link in Chinese) not to let “thousands of years of Chinese blood become polluted.”   The  infamous Chinese TV ad for Qiaobi laundry detergent, which went viral last year, featured a Asian woman stuffing a black man into a washing machine to turn him into a pale-skinned Asian man.

One Target in Beijing’s Migrant Crackdown: Schoolchildren - Beijing is in the midst of one of the most aggressive campaigns in recent history to drive out rural migrants, evicting thousands from their homes and leveling neighborhoods in scenes that evoke the devastation of war. The crackdown has also increasingly taken aim at dozens of schools that have sprung up to serve migrant families, advocates say, targeting children who already live on the margins of society. These schools exist in an educational gray zone, often operating without licenses and with teachers who — like the families of their students — do not have official permission to live and work in Beijing. Educators say that more than a dozen schools have been shut down or demolished this year, often with just a few days’ notice, cutting off access to education for as many as 15,000 children. Many of these children are under 12. The campaign has pitted migrant workers’ dreams of better lives against an authoritarian vision of an orderly, regimented society embraced by the ruling Communist Party. “My Chinese dream is for my family to live a happy and healthy life, without having to worry about whether my children can attend school,” said Mr. Ding, whose family has been evicted from homes twice in the past month. “The government simply doesn’t want us here anymore.”

China Quietly Builds The World's Largest DNA Database - From kindergartens to high schools, from prisons to anyone who's simply lost their ID, China is conducting the world's most aggressive campaign to collect DNA from its population - with or without permission, in what it is calling a "high-tech security blanket" used to better monitor its 1.4 billion citizens, the WSJ reports Schoolchildren in a bucolic region in western China famed for steam trains and jasmine flowers thought little of it when police interrupted classes and asked all the boys to spit into small plastic boxes. Chinese authorities are already pointing to the collection techniques as a success - highlighting a case in Qianwei County, in which the murder of two shopkeepers from nearly a decade ago was solved using genetic samples collected from the murderer. The goal, according to a WSJ's examination of police documents from across China, is to double China's current DNA repository to 100 million records by 2020 - which will require that they step up their efforts and collect nearly as many records each year as the United States has in its entire national database built over two years. The data collection has been aggressive according to the WSJ, as many of the methods used by Chinese police would be illegal in the U.S. - such as taking saliva swabs or blood samples from people detained for violations such as forgetting to carry their ID, or writing blogs critical of the state. 

The Battle of the Breadbaskets Is Coming to a Head  - The United States has long been the breadbasket of the world, as large swathes of fertile farmland and cutting-edge agricultural innovations have enabled it to both feed its own people and populations across the globe. However, America’s agricultural leadership now faces a serious test from China. China has been making aggressive moves to boost its own agriculture sector in order to feed its population and become a major player in the global agricultural industry. With the world’s population expected to reach nearly 10 billion by 2050, requiring a 70-percent increase in food production, the agriculture industry will play a critical role in the global economy. Given that trajectory, the U.S. agricultural industry must maintain its competitive edge in the face of a strong Chinese challenge for agricultural dominance. Chinese leaders, many of whom witnessed the worst famines and largest population explosions in history, have agricultural modernization as one of their top goals. For the 14th year in a row, the Communist Part of China’s “No. 1 Central Document” focused on the agricultural sector. With 19 percent of the world’s population and only 7 percent of its cultivated land, China needs to boost the quantity and quality of its agricultural production to feed itself, and compete with the U.S. in feeding others. Achieving that goal requires advanced farming technology. Lacking the capacity to develop this technology domestically, China instead has pursued an aggressive investment strategy abroad, spending nearly $100 billion in the last decade to purchase foreign intellectual property involving agricultural production and technologies.

China, Flush With Cash, Sets Sights on Shipping - China poured $20 billion into ship financing this year, reflecting the country's ambition to become the world's dominant maritime player as European banks have scaled back their investments. That is 33% more than Chinese banks invested in 2016, according to the leasing arm of Industrial & Commercial Bank of China Ltd. It dwarfs China's financing as recently as 2008, when its lessors lent just a few million to shipowners that built their vessels in the country's shipyards. ICBC's numbers only include leasing deals, China's preferred financing method. Bilateral loans, ship mortgages and private placements aren't reported, but research firm Marine Money estimates that Chinese financiers such as ICBC, China Minsheng Banking Corp., Bank of Communications Co. and China Merchants Bank Co. account for as much as one-quarter of a ship-financing sector it values at $200 billion a year. European banks like Norway's DNB ASA, Sweden's Nordea and France's BNP Paribas still hold some of the world's biggest shipping portfolios, but China's growth has drawn notice. "It's an unprecedented shift in ship financing," Three of China's biggest leasing firms, ICBC Financial Leasing Co., Minsheng Financial Leasing Co. and Bank of Communications Financial Leasing Co., own more than 800 vessels, valued at $23.6 billion. ICBC's shipping portfolio has grown to $10 billion this year from around $600 million in 2009, while Minsheng Financial Leasing has doubled its shipping assets in the past three years to $6 billion, or more than 300 ships, Chief Executive Jerry Yang said. In contrast, European financiers that were once heavyweights in the industry, including Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC, have withdrawn from shipping. Others, like Germany's HSH Nordbank AG and Nord/LB Group, are looking to divest themselves of part or all of their shipping portfolios. 

China’s New Lenders Collect Invasive Data and Offer Billions. Beijing Is Worried. - Bai Shichao has a debt problem that is bigger than his paycheck — and that’s a problem for the rest of China, too. Mr. Bai, a 30-year-old Beijing deliveryman, has borrowed heavily from China’s growing ranks of online cash lenders. In a country that lacks reliable ways to tell who might be a good borrower, these lenders use artificial intelligence and oddly personal data — like tracking how fast prospective borrowers type on their phones — to determine who will pay them back. With Mr. Bai, they have failed.  With more than $100 billion worth of loans and rising worries among Chinese consumers about privacy, Beijing is moving to rein in a freewheeling, well-funded boom in online personal loans. In November, the People’s Bank of China, the country’s central bank, stopped companies and people from starting new online cash lending platforms. In early December, the China Banking Regulatory Commission said it would crack down on unlicensed cash loan companies and put a lid on high-interest loans. China’s small loans are piling up. More than 8,600 companies offer some form of small loan, and about $145 billion of those debts remain unpaid, according to the People’s Bank of China. Other estimates run as high as $392 billion, according to the Boston Consulting Group. The government does not track default rates among online lenders, which disclose little on their own. “We are worried that in an environment where there is no effective credit system, people tend to overborrow, especially when capital comes in,” These lenders originally emerged as a solution to that problem: how to lend to people with no credit history.  Today, thousands of Chinese apps offer cash or financing, often within seconds, based on a wide array of sometimes deeply personal information. China’s biggest internet companies and financial names are funding the effort. Two years ago the central bank asked China’s most successful internet companies — including affiliates of the sophisticated online giants Tencent Holdings and the Alibaba Group — to create their own credit ratings systems. Since then, it has declined to issue licenses that would formalize those systems, and officials have indicated in local news reports that the plan has fallen short of expectations.

China needs to continue reducing financial leverage: central bank deputy governor  (Reuters) - China must proactively but gradually reduce debt in the economy to prevent the buildup of financial risks, state news agency Xinhua quoted China’s central bank’s deputy governor as saying on Saturday. Yi Gang made the comments at a meeting about China’s economy in Beijing, Xinhua said. “We have to resolutely fight the battle to prevent risks and first have to control overall leverage by proactively, safely and steadily deleveraging,” he said. China’s state planner in September said that the growth of China’s overall leverage ratio has clearly been slowing and is now stabilizing. However, ratings agency S&P Global Ratings has said that China’s attempts to reduce debt risks so far this year were not working as quickly as expected. A separate report on Saturday by Xinhua on how the country’s 2016 central government budget was spent illustrates the scale of the issue Beijing faces. Hu Zejun, head of the National Audit Office, said in the report a government-organized team had terminated or amended 25.35 billion yuan ($3.86 billion) worth of illegal local authority debts and was working on a program to resolve a further 28.37 billion yuan worth of debts. The country has launched policies aimed at reducing debt and leverage amid fears that such problems could derail the world’s second-largest economy if not handled properly. 

China will soon be world’s top economic power - Lavrov to RT -- Backed by BRICS partners Russia and India, China will soon take the top spot from the United States as the world's biggest economy, Russian Foreign Minister Sergey Lavrov told RT. Lavrov pointed out that the growing influence of BRICS in the global economy and the G20 will lead to a multi-polar world.“I believe that our Western counterparts in the G20 realize more and more they need to bargain, they need to agree,” Lavrov said in an exclusive interview with RT.“BRICS is not alone - it has allies, including Saudi Arabia, Mexico, Argentina, and Indonesia. I think half of the G20 group seek to take part in the decision-making process,” he said.Talking about China, the minister said it has economic resources and interests in Latin America and wants to “invest in this part of the world because they don’t have many mineral resources.”According to Lavrov, Latin America is very interesting not only for China, but for Russian companies as well. “As our companies and Chinese companies get deeper into Latin America I strongly believe that there will be more projects,” Lavrov said, adding that BRICS and the New Development Bank (which was set up as part of BRICS) will also join this work.

Why China's Consumers Are Hottest Global Economic Force - It’s way past time to stop calling China the world’s factory. The country is increasingly the world’s consumer. Forget the old investment and export-focused growth model. Even more important is the changing nature of consumption, which no longer revolve around staples: Increasing sums are being plowed into movies, tourism and health care. Investors ignore this seismic shift at their peril. According to the latest official data, China’s final consumption accounted for 63.4 percent of gross domestic product (Chart 2). Household consumption experienced exponential growth and climbed to $4.5 trillion (Chart 3). Retails sales have been growing at healthy pace of about 10 percent. Spending on Singles’ Day this year (Nov. 11), is impressive, registering $25 billion, almost double U.S. Black Friday online sales of $14 billion (Chart 4). The details are revealing. Chinese consumers are becoming older and richer, generating an upgrade in the products they purchase. First, there has already been a shift from necessities to choice goods. Apparel and staple foods are declining as a share of consumption, while health and green foods, smartphones and tablets, sporting goods and equipment, trendy and personalized household products, vehicles, and beauty products account for increasing shares of the pie. Second, low-end mass products are out and high-end premium brands are in. Chinese favor foreign brands, due to a lack of trust in domestic products that are prone to counterfeiting or knockoffs. They regard expensive foreign brands as a symbol of wealth and social status. And third, consumers will spend less on a relative basis on physical goods and more on experiences and services, including health care, box office, education, concerts, gyms, financial planning and tourism (both domestic and overseas). Chinese are traveling abroad more often, benefiting not only many peripheral Asian countries, but developed countries like Australia, the U.S., Canada, New Zealand and European Union members. All of this will increasingly take place via omni-channel shopping, including mobile, online and offline shopping.

World's Wealthiest Became $1 Trillion Richer in 2017 - The richest people on earth became $1 trillion richer in 2017, more than four times last year’s gain, as stock markets shrugged off economic, social and political divisions to reach record highs. The 23 percent increase on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people, compares with an almost 20 percent increase for both the MSCI World Index and Standard & Poor’s 500 Index. Amazon.com Inc. founder Jeff Bezos added the most in 2017, a $34.2 billion gain that knocked Microsoft Corp. co-founder Bill Gates out of his spot as the world’s richest person in October. Gates, 62, had held the spot since May 2013, and has been donating much of his fortune to charity, including a $4.6 billion pledge he made to the Bill & Melinda Gates Foundation in August. Bezos, whose net worth topped $100 billion at the end of November, currently has a net worth of $99.6 billion compared with $91.3 billion for Gates.  George Soros also gave away a substantial part of his fortune, revealing in October that his family office had given $18 billion to his Open Society Foundations over the past several years, dropping the billionaire investor to No. 195 on the Bloomberg ranking, with a net worth of $8 billion. By the end of trading Tuesday, Dec. 26, the 500 billionaires controlled $5.3 trillion, up from $4.4 trillion on Dec. 27, 2016. Winners:

• The 38 Chinese billionaires on the Bloomberg index added $177 billion in 2017, a 65 percent gain that was the biggest of the 49 countries represented.
• Hui Ka Yan, founder of developer China Evergrande Group, added $25.9 billion, a 350 percent jump from last year, and the second-biggest U.S. dollar gain on the index, after Bezos.
• Technology billionaire Ma Huateng, co-founder of messaging service Tencent Holdings, became Asia’s second-richest person when his fortune nearly doubled to $41 billion.
• The number of Asian billionaires surpassed the U.S. for the first time, according to a UBS Group AG and PricewaterhouseCoopers report.  

Youth in Taiwan embrace Taiwanese language and independent mind-set -- At a recent concert in the southern Taiwan city of Kaohsiung by the popular rock band Fire EX, hundreds of fans sang along with the group, "Dawn is about to break, and we are no longer afraid."The song -- titled "Island Sunrise" -- was written in Taiwanese, a language once widely spoken on the island before Mandarin Chinese became the dominant tongue.The song has more than 6 million views on YouTube, a surprisingly large number for one with Taiwanese lyrics on an island with a population of 23 million.  "I don't speak [Taiwanese] well," said Lin Pei-wen, a 21-year-old university student in Taipei, but added that he likes it because it is "my original language."  In daily life, Ling speaks Mandarin, whose pronunciation is vastly different from Taiwanese.Young people of the so-called "tian ran du" or "natural independence" generation -- those in their 30s or younger who regard themselves as Taiwanese rather than Chinese -- are showing a strong interest in the Taiwanese language.It mixes a variant of the Hokkien dialect spoken in China's Fujian Province.The Kuomintang (KMT), or Nationalist Party of China, which fled to Taiwan in 1949 after its defeat by the Communist Party in the civil war, made Mandarin the official language on the island. Using Taiwanese in the media and in schools was banned. As a result, "the number of people who speak Taiwanese fell sharply," said Yin C. Chuang, an associate professor at National Taiwan Normal University in Taipei. "I was even worried that the Taiwanese language would be gone in the future, as it is difficult to hand over to the youth," Chuang said. Restrictions on Taiwanese relaxed considerably after martial law was lifted in the late 1980s. Now, people of the tian ran du generation have revived the language.

Japan says ties at risk if South Korea messes with 2015 ‘comfort women’ deal (Reuters) - Japan said on Wednesday any attempt by South Korea to revise a 2015 deal meant to have resolved a row over “comfort women” forced to work in Japan’s wartime brothels would make relations “unmanageable” after Seoul said the agreement had failed. Oh Tai-Kyu, head of a special task force for investigating the 2015 South Korea-Japan agreement over South Korea's "comfort women" issue, speaks during a briefing on his investigation at the Foreign Ministry in Seoul, South Korea December 27, 2017. REUTERS/Jung Yeon-Je/PoolThe two U.S. allies, which share a bitter history including Japanese colonisation, are key to international efforts to rein in North Korea’s nuclear and missile programmes that it pursues in defiance of U.N. Security Council resolutions. South Korean Foreign Minister Kang Kyung-wha apologised for the controversial deal on Wednesday, as a panel investigating the negotiations leading up to the agreement unveiled its results. The investigation concluded that the dispute over the comfort women, a Japanese euphemism for the thousands of girls and women, many of them Korean, forced to work in wartime brothels, could not be “fundamentally resolved” because the victims’ demand for legal compensation had not been met.  South Korea wants Japan to take legal responsibility and provide due compensation.

Japan Births Plunge To Lowest Level Ever Recorded As "Celibacy Syndrome" Takes Its Toll -- Back in 2013 we asked "Why Have Young People In Japan Stopped Having Sex?" And while that might sound like nothing more than a clever headline intended for The Onion, it was prompted by a very serious survey conducted by the Japan Family Planning Associationwhich found that 45% of Japanese women aged 16-24 and 25% of men were "not interested in or despise sexual contact"...a growing trend that has revealed itself via the nation's persistently declining birth rates.  In fact, "celibacy syndrome" has become of such great concern for the Japanese government that it is considered a bit of a looming national catastrophe....a catastrophe that seems to be getting worse at an accelerating rate. According to data released today by Japan's Ministry of Health, Labor and Welfare, child births in Japan will drop to just 941,000 in 2017, the lowest since data first started being recorded in 1899, and nearly 65% below the peak birth rate from the late 1940's.As the Financial Times notes today, the persistent declines in Japanese birth rates come despite the best efforts of central planners to encourage population growth via a litany of government entitlement programs aimed at helping young families cover the cost of childrearing... The government of Shinzo Abe, prime minister, has made raising Japan’s birth rate a priority. On Friday it approved a budget that takes the first steps towards providing free pre-school, private high school and university education in an effort to reverse the trend.

Pakistan Opens Fire Along Border Killing Indian Troops, Warns "Nuclear War Cannot Be Ruled Out" -- With most of the Western hemisphere on holiday, another crisis appears to be developing on the India–Pakistan border known as the Line of Control (LoC). The incident started on Saturday, where at least four Indian soldiers were killed, in an exchange of fire with the Pakistani Army on the Line of Control (LoC) dividing Kashmir, ABC News reported.  The two sides reportedly exchanged heavy fire in the Keri sector of the Rajouri district, about 222 km southwest of Srinagar city, the summer capital of the Indian state of Jammu and Kashmir.The skirmish started when Pakistani troops used automatic weapons, small arms, and mortars to attack Indian positions in Shahpur area of J&K’s Poonch district. The Indian army said Pakistani soldiers violated the 2003 cease-fire, calling the attack an “unprovoked cease-fire violation.” Indian media is admitting that Pakistan conducted a surgical strike (Not like their bollywood one) in #Rajouri Occupied Kashmir in retaliation to bombardment of villages of Azad Kashmir on LOC by Indian army. pic.twitter.com/MvVEcYso99

Venezuelans Abandon Bolivar - Merchants Insist On Being Paid In Dollars --Venezuelans are struggling to carry out basic transactions like purchasing food as the value of their currency, the bolivar, has plunged against the dollar amid the country’s worsening economic collapse. According to Reuters, over the past year, Venezuela’s currency weakened 97.5% against the greenback: Put another way, $1,000 of local currency purchased in early January would be worth just $25 now. The annual inflation rate in 2017 could reach $2,000. Though at least one other estimate puts the real rate of inflation closer to 2,800%.Of course, President Maduro has blamed websites like DolarToday – which publishes the closest thing to an official black-market rate by surveying clandestine exchanges in Caracas and other cities – for the spread of black-market activity, part of a conspiracy organized by Washington and his local political opponents to force him from power. One of the unintended consequences of the bolivar’s collapse has been a social experiment of sorts in the use of digital currencies: As we noted back in October, as many as 100,000 people are now mining digital currencies in Venezuela, defying a government crackdown that’s seen many of them thrown in prison.But for those who can’t or haven’t resorted to transacting in bitcoin, an increasingly scarce supply of dollars is creating intractable problems for millions of Venezuelans, Reuters reported. For many, simple purchases like a new tire for their car are simply out of reach.

Venezuela expels top Brazil and Canada diplomats - BBC News: Venezuela has expelled the Brazilian ambassador to Caracas, Ruy Pereira, and Canadian charge d'affaires Craib Kowalik. The move was announced by the head of Venezuela's powerful Constituent Assembly, Delcy Rodriguez. Ms Rodriguez accused Brazil of violating the rule of law and Canada of interfering in Venezuela's internal affairs. Both countries have strongly criticised the move. The decision to expel Ambassador Pereira may have been triggered by Brazil's recent complaint that President Nicolás Maduro was "constantly harassing the opposition". Canada imposed sanctions on senior Venezuelan officials a few months ago. Venezuela's diplomatic relations with Brazil have deteriorated since Brazil's centre-right President, Michel Temer, replaced left-wing leader Dilma Rousseff. Her impeachment was described by Mr Maduro as a "right-wing coup"."Diplomatic relations with Brazil will not be restored until the government reinstates the constitutional order it has effectively broken," said Ms Rodriguez at a news conference on Saturday. 

Moscow: U.S. arms may spur use of force by Kiev in eastern Ukraine -- (Reuters) - The U.S. decision to supply weapons to Ukraine is dangerous as it will encourage Kiev to use force in eastern Ukraine, Russian officials said on Saturday. The U.S. State Department said on Friday the United States would provide Ukraine with “enhanced defensive capabilities” as Kiev battles Russian-backed separatists in the eastern part of the country. U.S. officials, speaking on the condition of anonymity, said the weapons included Javelin anti-tank missiles. Washington has argued in the past that such weapons would help stabilize the situation and cannot effectively be used to take territory. Ukrainian President Petro Poroshenko said on Facebook on Saturday the weapons would be used to protect Ukrainian soldiers and civilians. Supplies of any weapons now encourage those who support the conflict in Ukraine to use the “force scenario,” Russia’s RIA state news agency cited Deputy Foreign Minister Grigory Karasin as saying on Saturday. Franz Klintsevich, a member of the upper house of the Russian parliament’s security committee, said Kiev would consider arms supplies as support of its actions, Interfax news agency reported. A woman cleans up debris near her house damaged by recent shelling in the rebel-held town of Yasynuvata, Ukraine December 21, 2017. REUTERS/Alexander Ermochenko “Americans, in fact, directly push Ukrainian forces to war,” Klintsevich said. 

"The US Has Crossed The Line": Russia Warns Trump Decision To Arm Ukraine Will "Lead To Bloodshed" - Russia has reacted fiercely to the end of week breaking news that President Trump plans to approve the legal sale of US antitank missiles and possibly other advanced systems to the Ukrainian government in a move that could change the battlefield calculus of the war between Ukrainian and Russian-aligned forces in the Donbass region along the Russian border. ABC News described the "total defense package of $47 million includes the sale of 210 anti-tank missiles and 35 launchers" which will be sure to harm Trump's longtime stated goal of improving relations with Moscow. Though Kiev has long had limited access to US lethal arms through private contracts with American and international arms producers, this represents a significant escalation involving the likelihood that advanced US systems would be used directly on Russian-aligned militias in the eastern Donbass region and potentially Russian forces along the border. Up until now, the White House has been reluctant to escalate the war so openly, as it did when it supplied anti-Assad fighters in Syria with sophisticated TOW anti-tank missiles. While the US State Department claims the move is "defensive" in nature, Russian deputy foreign minister Sergei Ryabkov charged the US with deliberately "crossing the line" and pushing the Ukrainian authorities "towards new bloodshed," adding that "American weapons can lead to new victims".

Spain’s king uses Christmas Eve speech to address Catalonia’s new leaders — King Felipe VI used his traditional Christmas Eve address Sunday night to call on Catalonia's newly elected parliament to renounce further moves toward secession from Spain.  "The way forward cannot once again lead to confrontation or exclusion that, as we now know, only generates discord, uncertainty, anguish," the Spanish monarch said in a televised speech.  The king gave the address four days after regional parliamentary elections resulted in separatist parties being voted back into power. Spain's prime minister, Mariano Rajoy, had dissolved the previous parliament after it voted in October to declare Catalonia an independent republic, but saw his hopes dashed that separatists would not regain a majority of seats.  "2017 for Spain has been, without a doubt, a difficult year for our commonwealth, a year marked, above all, by the situation in Catalonia," Felipe said. "(Catalonia's) leaders must face the problems that affect all Catalans, respecting their diversity and thinking responsibly in the common good."  The king's last televised address was on Oct. 3, two days after Catalonia's regional government disobeyed a court injunction and held a referendum on secession. The king harshly criticized the Catalan government as disloyal.   His tone was more conciliatory on Sunday, when he recognized that while Spain had grown into a fully integrated member of the European Union, "not everything was a success" in recent decades.  He insisted on recovering the "harmonious coexistence at the heart of Catalan society, in all its diversity, so that ideas don't divide or separate families and friends."

Trump Tax Cuts – The Spark That Burns Down The EU -  For most of this year I’ve been wondering what would the spark that would set off a banking panic in the European Union.  I’ve chronicled the political breakdown of the EU, from Brexit to Catalonia to Germany’s bitch-slapping Angela Merkel at the ballot box.  All of these things have been open rebukes of EU leadership and it’s insane neoliberal push towards the destruction of national sovereignty and identity.And what has propped up this slow train-wreck to this point has been the world’s financial markets inherent need to believe in the relative infallibility of its central bankers.Because without competent people operating the levers of monetary policy, this whole thing loses confidence faster than you can say, “Bank run.”The confluence of these things with the big changes happening politically here at home with President Trump are creating the environment for big trend changes to begin unfolding. And, as always, you have to look to the sovereign bond and credit markets to see what’s coming. There are a couple of articles on Zerohedge this morning that paint a picture that comes into focus quite clearly.  The first is the results of this morning’s 5 year Treasury Auction, which follow yesterday’s terrible 2 year bond auction.The auction printed at a high yield of 2.245% – the highest since March 2011 – and well above last month’s 2.066% largely thank to the recent Fed rate hike. More troubling is that the auction tailed the When Issued 2.228% by a whopping 1.7bps, the biggest tail going back at least 2 years.The term ‘tail’ is really simple, it means that the bonds were auctioned off at a higher yield (lower price) than when they were first offered. So, two rotten treasury auctions in a row. This is indicative of foreign central banks no longer propping up the U.S. Treasury market to keep their currencies from appreciating too much versus the dollar and crushing their exports. The second article is more complicated but it effectively shows that the credit markets are seeing huge hedging costs for Japanese Yen and Euro-based investments.

Iceland's most trusted politician is a feminist environmentalist who is the 'antiTrump' - Iceland's new prime minister is a feminist and environmentalist who is among the youngest leaders in the world. She has a degree in literature with a special interest in Icelandic crime novels. She appeared in a music video 20 years ago with an Icelandic band, Bang Gang. And she's considered Iceland's most trusted politician by numerous polls. Her name is Katrín Jakobsdóttir, 41, and she's a mother of three boys and comes from a family of poets and professors. Her new coalition government took power at the end of November, and it spans the political spectrum in Iceland from her Left-Green Movement to the Independence Party to the Progressive Party. Jakobsdóttir talks with The World's host Marco Werman about everything from what it's like to lead a coalition that straddles the left-right political divide to commuting by bicycle. (podcast interview and transcript)

Scotland Is Starting a Universal Basic Income Experiment in 2018 -- People living in the Scottish cities of Glasgow, Edinburgh, Fife, and North Ayrshire may soon receive an unconditional monthly sum as part of a series of universal basic income pilots currently being explored with support from the local government. Although still in its infancy and rife with controversy, the idea has already attracted £250,000 (nearly US$334,500) of public funding in the form of a grant to develop feasibility studies. The cities involved have until late March 2018 to submit their bids. In a world where jobs are being increasingly taken over by machines, leaders have started to recognise that the welfare safety net will need to change.Advocates of universal basic income believe that the unconditional offer of a regular, though tiny, sum of money could help many get back on their feet, and even encourage them to invest in new business ideas.In Scotland, some have criticised involvement of the government, which doesn't have the powers over tax and benefits necessary to pilot a full basic income.However people from both sides of the political aisle have engaged with the proposal, which would cost money upfront but could deliver important savings by replacing unemployment benefits.Speaking at a conference of economists, Scotland's First Minister Nicola Sturgeon said: "It might turn out not to be the answer, it might turn out not to be feasible."But as work changes as rapidly as it is doing, I think its really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy." Scotland is not the first country to consider universal basic income. 2017 saw a number of experiments being rolled out all over the world - in Kenya, Finland, Canada, and California, among others.

‘It won’t work!’ EU rejects UK’s finance plans as a ploy to ‘make Europe be nice’ - The Bank of England (BoE) and Government have proposed new incentives that could persuade European institutions to remain in the City of London when the UK leaves.  BoE governor Mark Carney said this week the continent’s big banks could continue operating in the UK under existing rules and not face extra regulatory burdens after Brexit.  but he warned the move was dependent on Britain getting a good final deal with the bloc. Now EU officials have complained what the UK has offered is no better than the current European Commission guidelines. Under EU rules, banks can operate within the bloc if the regulations in their home country are equivalent to the bloc’s own rules.But officials say this would not be the case with Britain’s offer and are concerned the arrangements could be withdrawn at any time.Belgian Green MEP Philippe Lamberts claimed the proposals were meant as an olive branch but were not a big enough concession.He told the Financial Times: “I take these gestures as a way to entice the Europeans to be nice to them. But I don’t think that will work.” Speaking this week, Mr Carney stressed keeping Britain open to foreign banks after Brexit was key for economic growth at home and beyond.And he pledged big European banks operating in Britain would face little change, as long as their supervisors in the European Union cooperated with London after Brexit. However, the finance chief warned: “We retain all our options and if that is not forthcoming there will be consequences for those institutions.”

Brexit studies were ‘being prepared’ a year before Davis said they didn’t exist - David Davis’s department said last year that it was preparing “an assessment of the impact of exit on over fifty sectors of the economy”, undermining his recent claim that the Brexit impact studies do not exist. The comment was made in a Freedom of Information response from November 2016, suggesting that work was underway on the documents more than a year before the government backtracked on acknowledging their existence. In addition, the Guardian has found at least 12 references in Hansard, the official record of parliament, to ministers talking about the work to “assess the impact” or “assess the economic impact” of Brexit over the last year. Sector-by-sector Brexit impact forecasts do not exist, says David Davis Read more The findings are likely to fuel suspicions that the Department for Exiting the European Union does have documentary evidence of the impact of Brexit on the economy. Parliament asked for 58 impact assessments to be handed over to the select committee on exiting the EU last month, so they could examine how Brexit would affect different sectors. But MPs who were allowed to view the 800-pages of documents ridiculed the analyses for simply setting out the current situation for businesses, explaining how the EU operates and then providing a section on what stakeholders think. Davis and other ministers claimed they had never said any “impact assessments” existed, and the committee, which is dominated by Conservatives, ruled that he was not in contempt of parliament for failing to release such documents. However, campaigners believe the government does still hold relevant information setting out the official view of how Brexit could affect the economy and businesses.

Philip Hammond urged to publish Treasury’s Brexit impact studies -- Philip Hammond has come under pressure to publish another set of hidden documents relating to how a series of possible Brexit outcomes, including no deal, will impact on the economy. Twenty-five Labour MPs have written to the chancellor demanding that he release the studies, which have so far been kept confidential, after he told a select committee that the work had been done.“The public have a right to know what the impact of Brexit will be for them and for their families,” the politicians, who all support the Open Britain campaign, claimed.The move comes after a similar suggestion by David Davis that his Brexit department had carried out 58 sectoral analyses resulted in immense pressure to publish the findings. The Brexit secretary was heavily criticised after putting out documents that he admitted had been stripped of commercially sensitive material and anything considered detrimental to the UK’s negotiating position.  Davis avoided being charged with contempt of parliament over the controversy by persuading MPs that 58 separate impact assessments had never existed in that particular form.

Labour voters could abandon party over Brexit stance, poll finds - Labour is coming under pressure from leading pro-remain campaigners to clarify its stance on Brexit, after polling showed that a quarter of its current voters could switch party by the next election and more than half would oppose Labour backing Brexit.The poll of people planning to vote Labour – conducted by YouGov for the Best of Britain campaign group – found 24% said they may change their minds before the next election, and two-thirds of those who voted remain would be disappointed or angry if Labour says it will proceed with Brexit. The poll also found many Labour voters have opposing perceptions about the party’s current stance on Brexit. It found 32% of Labour remain voters believe Labour is “completely against Brexit” and a further 31% of Labour leave voters believe Labour is “completely in favour of Brexit”.  “This data shows, clearly, that many more remainers are likely to abandon Labour over its Brexit line than leavers. Labour did so well in the election off the back of pro-European voters tactically voting for them. All that could be at risk if this policy, a calculated policy of ambiguity, continues.”Seventy Labour councillors from south London have called on Jeremy Corbyn to be open to giving voters another say on Brexit.In an open letter, the councillors from Lewisham, Southwark and Lambeth wrote: “The contradictions inherent in the Brexit project itself should concern the Labour party far more than has been the case up to now. We should be prepared to offer the electorate the opportunity to say whether leaving the EU is really in the best interests of the country.”They said Labour should be open on the mechanism by which voters have their say but urged the party to be “clear that the electorate’s role in this process did not end on 23 June 2016”.  “On the biggest issue facing our country since the second world war, Labour should be committed to providing the opportunity for people to change their mind. Doing so would demonstrate bravery, maturity and the principled leadership the country so desperately needs. Labour needs to move from ambiguity in 2017 over Brexit to clarity in 2018,” they said.

Civil Servants Are Deliberately Destroying Documents From The UK's National Archive --In yet another galling example of historical revisionism put into practice, the Guardian reported Tuesday that thousands of documents from the National Archives have gone missing in recent years – and some may have been deliberately destroyed by civil servants hoping to purge unflattering details about the UK's abuses of power from the historical record. Per the Guardian:Thousands of government papers detailing some of the most controversial episodes in 20th-century British history have vanished after civil servants removed them from the country’s National Archives and then reported them as lost.Documents concerning the Falklands war, Northern Ireland’s Troubles and the infamous Zinoviev letter – in which MI6 officers plotted to bring about the downfall of the first Labour government - are all said to have been misplaced.Other missing files concern the British colonial administration in Palestine, tests on polio vaccines and long-running territorial disputes between the UK and Argentina.Almost 1,000 files, each thought to contain dozens of papers, are affected. In most instances the entire file is said to have been mislaid after being removed from public view at the archives and taken back to Whitehall.The controversy echos another incident from 2013 when a Guardian investigation found that the Foreign Office was storing documents that shed light on the brutality of colonialism from the in a secret bunker, where they would be safe from the public’s prying eyes. According to public records, many of the files that have gone missing this time around were “loaned out” to employees of the Foreign Office, which was responsible for the 2013 incident. Many others were taken by representatives of the Home Office.