Fed Balance Sheet Shrinks By $2.5 Billion (Starts Resembling a 30-year Mortgage) -- The New York Federal Reserve has released their weekly SOMA (System Open Market Account) report. And as of December 6, 2017, SOMA has declined by $2.5 billion. To $4.2 TRILLION. How big is $2.5 billion unwind? It is so big that you can barely see it! At this rate, it will take around 30 years to fully unwind the balance sheet. About the same length as a 30 year mortgage. As in 1,685 weeks at this rate. All this as the Treasury curve keeps flattening towards zero.
Senate panel approves Powell as Fed chair — A Senate panel on Tuesday morning approved Federal Reserve Gov. Jerome Powell’s nomination to chair the Fed beginning early next year, putting President Trump’s pick one step closer to assuming one of the nation’s most important executive offices. The Senate Banking Committee approved Powell’s nomination by a vote of 23-1, with Sen. Elizabeth Warren, D-Mass., casting the lone dissenting vote. Powell’s nomination will go to the full Senate for confirmation, which could come by year’s end. The Senate Banking Committee approved Jerome Powell’s nomination by a vote of 23-1, with Sen. Elizabeth Warren, D-Mass., casting the lone dissenting vote. Bloomberg News Warren said she was voting against Powell’s nomination because of his views on bank regulation, which she said needs to be strengthened rather than loosened. The problem of large banks being "too big to fail" remains unsolved, she said, despite Powell’s indications to the contrary in his confirmation hearing. “Banks of all sizes made record profits last year — giant banks are wallowing in profits — and yet an army of bank lobbyists and executives have managed to convince Gov. Powell that financial rules are strangling banks and need to be rolled back,” Warren said. “There is no evidence to support this claim. Our financial rules for big banks need to be stronger, not weaker, and I have no faith that Gov. Powell will move the Fed in that direction.” Sen. John Kennedy, R-La., also said he had reservations about Powell’s nomination owing to “some of the issues” Kennedy raised during Powell’s confirmation hearing, though he did not specify. During that hearing, Kennedy accused Powell of participating in passing rules that regulated community banks “half to death” and pressed him on whether banks are still too big to fail. “Before his vote comes to the floor, I look forward to discussing with him further some of the issues that I raised with him in our confirmation hearing,” Kennedy said. “I do not want my vote today to indicate that I will be an automatic ‘yes’ on the floor. I’m not suggesting I’ll be an automatic ‘no’ either, but some serious issues were raised ... and I look forward to exploring those further.”
Monetary policy must address 'frothy' financial markets, warns BIS - Investors should be more concerned about an overheating financial market at a time when consumer debts are rising to unsustainable levels, according to the global body for central banks.In its quarterly financial review, the Bank for International Settlements (BIS) said investors were choosing to bask in the "light and warmth" of improving global growth, muted inflation and soaring stock markets. However, record high debt levels and the scale of this year's rally in asset prices are both reminiscent of the pre-2008 financial crisis era, according to the BIS."The vulnerabilities that have built around the globe during the long period of unusually low interest rates have not gone away. High debt levels, in both domestic and foreign currency, are still there. And so are frothy valuations," Claudio Borio, head of the BIS's monetary and economic department, said in the report published Sunday. In September, the Federal Reserve announced plans to start unwinding its massive balance sheet while the European Central Bank (ECB) is also poised to heavily cut its stimulus.An improving global growth outlook and signals from both the Fed and ECB that they will look to adopt a cautious approach going forward was likely the explanation for stubbornly low yields, the BIS said, though it did also trigger a "deeper question.""Can a tightening be considered effective if financial conditions unambiguously ease? And, if the answer is 'no', what should central banks do?" Borio said. The BIS, known as the central bankers' bank, has 60 members and aims to help central banks pursue monetary and financial stability. It was one of the few organizations to warn investors about the unstable levels of bank lending on risky assets, such as U.S. subprime mortgages, that eventually led to the global financial crisis.
Warning: Trump's Federal Reserve Pick Hates Gold and Cash - In case of emergency, you should always have a solid chunk of cash on hand. These days, that isn’t much riskier than keeping your money in a bank. There are stories of banks and governments suspending accounts for no legitimate reason. Furthermore, the interest rates at banks hardly give you much incentive to store your money there.But as with anything that gives individuals more control over their lives, the government doesn’t like it. They want the ultimate control to cut you off from your economic power.It’s bad enough that inflation robs you of the value of your money.But Trump’s newest pick for the Federal Reserve board of governors wants to go even further. Marvin Goodfriend thinks there should be a robust negative interest rate placed on cash.For example, if there was a -10% interest rate on cash, your $10 bill would actually be worth only $9. It is basically a penalty for using cash.The excuse is that this will stabilize the economy by keeping more capital in the banks. It means banks, and by extension, the Federal Reserve, have more control over your money.The Federal Reserve controls interest rates. Goodfriend claims that sticking to positive interest rates is an unnecessary limitation on their power to affect “interest rate policy to stabilize employment and inflation over the business cycle.”So he wants to remove this encumbrance of positive interest rates in order “to free the price level from the destabilizing influence of a relative price over which monetary policy has little control.”
New York Fed Inflation Gauge is Bad News for Bulls -- U.S. financial markets have in the last 20 years experienced three unprecedented booms in asset prices and two busts. During this span, the market value of real and financial assets held by households has increased more than $70 trillion, an astounding amount on its own, but even more so when one considers the huge losses following the dot-com and housing bubbles. What’s behind the huge asset gains and losses? What role, if any, has monetary policy played in the asset cycles? Given that the prior two asset cycles ended with huge losses, will the current cycle end the same way? The answer to that last question may lie in a novel new inflation gauge devised by the Federal Reserve Bank of New York. A new underlying inflation gauge, or UIG, created by the staff of the New York Fed may finally provide the answer. Its broad-based measure of inflation includes consumer and producer prices, commodity prices and real and financial asset prices. The New York Fed staff concluded that the new inflation gauge detects cyclical turning points in underlying inflation and has a better track record than the consumer price series. The latest reading shows inflation of almost 3 percent for the past 12 months, compared with 1.8 percent for the consumer price index and 1.8 percent for core consumer prices, which exclude food and energy. Since the broad-based UIG is advancing 100 basis points above CPI, it indicates that asset prices are large, persistent and reflect too easy monetary policy.
Treasury 10yr-2yr Yield Spread Continues To Slide - The gap between the 10-year and 2-year Treasury yields fell to 57 basis points on Monday (Dec. 4), according to Treasury.gov’s daily data. The dip marks yet another post-recession low for this widely monitored spread. The flattening of the yield curve implies that the economy is facing stronger headwinds, based on the spread’s history vis-à-vis the US business cycle. But the macro trend remains solid at the moment, suggesting that the 10-year/2-year yield gap has shed its value, at least temporarily, as an early warning of US recession risk. Whatever the outlook for the economy, the source of the sliding 10-year/2-year spread is clear. The rate for the shorter maturity has been consistently rising since September, driven by growing confidence that the Federal Reserve will continue to raise interest rates. The 2-year rate ticked up on Monday to 1.80%, the highest since the recession ended in mid-2009. Meanwhile, the benchmark 10-year yield has been more or less flat in recent months, holding in a range of roughly 2.20% to 2.40% — below this year’s 2.62% peak in May. Meanwhile, the week’s Fed meeting is expected to deliver another round of tighter monetary policy. The futures market for Feds funds is currently projecting an implied 90% probability that the central bank will announce a rate hike on Dec. 13, according to CME data. If the forecast is right, the Fed funds target rate will rise 25 basis points to a 1.25%-1.50% range, the highest since 2008. The general flattening of the Treasury yield curve is conspicuous this year for all maturities up through the five-year rate. History suggests that a narrowing yield spread is a warning sign for the economy, particularly if the curve inverts (short rates above long rates). The 10-year/2-year spread is still positive, but with less than 60 basis points to go before inversion this spread could go negative in the near term if current trend persists.
"One Day Soon, The Sun Will Not Rise" -- When the Q4 US resident population data is released, something that has not happened in the post WWII era will take place. The population of adults aged 15-64 years old will decline. This was not supposed to happen and will put an end to seven plus decades of continuous population growth which has meant a growing workforce, a growing consumer base, and growing tax base. A growing core US population, something considered as sacrosanct as the sun rising, will not happen. On a year over year basis, where there once were up to 3 million more homebuyers than the previous year, 3 million more car buyers than the year before, 3 million more potential customers...there will be likely be thousands fewer. Many will assume this is a demographic issue of boomers exiting the working age population... but actually demographics is simply the early onset of a disease that will only progressively worsen. This is truly a population growth issue, not simply a demographic distribution problem.The economic system the US and world have adopted are dependent on perpetual growth on a quarter over quarter and year over year basis. Two negative quarters (or even zero growth) and a recession is called and all the Federal Reserve's and federal governments tools are employed. Given the importance of growth, the most important factor in growing the economy is the rising demand represented by a growing population. But the US fertility rate has been negative for 45 years (chart below) meaning the native population (plus immigrants) have continually failed to replace themselves. This means US population growth has simply been a story of immigration.
"For The First Time In Modern History" US Government Debt Will Surpass Household Debt -- Last week, rating agency DBRS raised a red flag when it calculated that in the past decade average US wages have risen by only 5.7%, while consumer debt over the same period rose 60% more, or 9.3%. However, while the US household's reliance on debt to fill in the income gaps is hardly news, on Monday JPMorgan found another, even more concerning debt inflection point: household debt, fast as it may be rising, is about to be eclipsed for the first time ever by the even faster rising federal government debt.As JPM writes in its weekly market recap, prior to the Financial Crisis, household debt relative to federal government debt hit a high of 3 to 1 times. Since then, a combination of bank credit tightness and consumer prudence has sharply limited the growth in household debt, with liabilities increasing just 4% since 3Q 2008. However, JPM adds, "the same cannot be said of the federal government, with liabilities increasing almost 150% over the same period and nearly reaching household debt levels for the first time in modern history." JPM continues:On top of that, the CBO projects that, even excluding the impact of tax cuts,government debt levels will continue to march upward over the course of the next 10 years, ultimately hitting $25.5 trillion by the end of 2027.While this does not point to an impending crisis, it does mean that, should another downturn occur, the government would be far less able to come to the rescue as it did in 2008. It also means that while tax cuts may take place today, it becomes all the more probable that they will become tax increases or spending cuts in the future, with tax increases likely to hit higher income households and elderly households being more vulnerable to spending cuts.Finally, "this means that while consumers have taken steps on their own account to ensure a smaller debt burden, older and wealthier households should be particularly wary of the potential impact of rising government debt on their finances" especially once the next government - far more likely to be of the "wealth redistribution persuasion" - decides to do just that..
Congress faces frantic week with possible shutdown, taxes, Russia -- Congress faces another frantic week as GOP leaders and President Donald Trump wrestle with a possible government shutdown; immigration, tax and gun policies; multiple allegations of sexual harassment against lawmakers; and the probe into Russia's meddling in the 2016 election. Funding for federal agencies is set to run out on Friday, but lawmakers don't really think there will be a shutdown — at least not yet. Still, a pile-up of contentious policy fights coupled with frequent distractions as Trump's frustration grows with the Russia investigation has many Republicans anxious about the next few weeks. House GOP leaders have proposed a two-week “continuing resolution” to keep the government open until Dec. 22, arguing they need the funding extension to make progress in bipartisan talks to boost both defense and non-defense spending. They expect they’ll need a second two-week funding bill in late December to get past the holidays, though the odds of a shutdown would drastically increase during that time if a budget deal isn’t close. Right now, Speaker Paul Ryan (R-Wis.) is short of the GOP votes he needs to pass a CR, though top Republicans believe they will get there by week's end. But Senate Democrats, who can block any funding bill, could be key to keeping the government open. Both House and Senate Democrats are demanding that Trump, Ryan and Senate Majority Leader Mitch McConnell (R-Ky.) reach an agreement to protect hundreds of thousands of young undocumented people known as Dreamers who will lose work permits and deportation protections starting early next year unless an Obama-era program that gave them some security is revived in some form. So far, Trump and Republican leaders don’t want to tie a legislative fix for the Deferred Action for Childhood Arrivals program to a budget deal. This deadlock raises the possibility of a potential shutdown, although the likelihood is low that it happens on Friday, according to multiple House and Senate sources.
Trump is talking about a potential US government shutdown, this is what that means - If the US Congress does not agree on a funding bill and send it to President Donald Trump to sign by December 8, the US government will enter a shutdown. The reason for this is twofold. US funding bills usually have an expiration date, which in this case, is December 8, and the bills also usually are linked to a debt ceiling, as is the current bill. The debt ceiling caps the amount of money the US government can borrow, a limit it is nearly always bumping up against. So without passing a new funding law, and raising the debt ceiling higher than the current $19.8 trillion, the government won't have any allocated funds to spend, or the ability to increase its loans. As a result, the government shuts down. To avoid this scenario in the past, funding bills have simply been extended for another fiscal year. But in 2011, Congress introduced capped spending for each each fiscal year, so 2018's spending levels must be lower than in 2017. That means the Trump administration needs to pass a funding bill with 60 votes in the Senate. As Republicans only hold 52 seats, the bill will require bipartisan support. The US debt ceiling — currently at $19.8 trillion — was implemented during World War I so the Treasury wouldn't need Congress' permission every time it wanted to increase spending. But its uncommon for countries to have a debt ceiling that it hits so regularly. A bill to repeal the debt ceiling, and thus avoid government shutdowns, has been proposed but has not received much traction. The result is essentially a partial government shutdown, with hundreds of thousands of government employees not permitted to work or receive pay. Most nonessential services would come to a halt, while critical bodies like the Department of Homeland Security and the FBI would continue to function. The TSA, the US Post Office, federal prison staff, emergency workers, and doctors would also continue to work. Members of the US armed services would serve but would not be compensated. National parks and monuments would be closed, including the Grand Canyon National Park and the Statue of Liberty National Monument in New York Harbor.
DACA Clash Hangs Over Year-End Budget Talks - The likelihood of a government shutdown before year’s end is increasing after Senate negotiations stalled over plans to provide deportation protection for 800,000 young undocumented immigrants. John Cornyn of Texas, the Senate’s No. 2 Republican leader, said Monday that talks with Senate Democrats over combining new border security measures and deportation protections are at an impasse. Cornyn said he sees little chance for resolution before the year is over, pushing the matter into early 2018. He also told reporters that “no way” would he back combining such a package with a must-pass year-end spending deal designed to keep the government open, a key demand of Democrats to get their needed support to move it through the Senate. Republicans are angling for a two-week stop-gap measure to get past a Dec. 8 deadline when agency spending authority lapses, with the potential for a second such measure later in the month that extends into January. Democrats haven’t agreed to those terms. Senator Richard Durbin of Illinois, the No. 2 Democratic leader, said later that he continues to insist that Congress act this year to address the needs of the young immigrants, brought to the U.S. by their parents when they were children. Their deportation protections were put in place by President Barack Obama and temporarily extended by Trump until early March. Ending them will affect 1,000 young people each day over two years if the deadline is reached, Durbin said. Republican Senator Jeff Flake of Arizona, who supports extending the protections, said it still may be possible to strike a deal before the end of the year. But he said he was unsure about whether it could be tied to the funding measure.
Right scrambles GOP budget strategy – TheHill - House GOP leaders’ strategy to avert a government shutdown was thrown into uncertainty Tuesday amid growing demands from conservative hard-liners and defense hawks. While no final decisions had been made as of late Tuesday, one option gaining traction would be for lawmakers to pass a two-week continuing resolution (CR) to keep the government funded through Dec. 22. Under that scenario, the House then would pass a longer-term defense spending bill before the end of the year. The measure would move in tandem with another short-term patch to fund the government through late January. But leaders of the conservative House Freedom Caucus, who threatened to derail a procedural tax vote on Monday night to gain more leverage in the spending talks, have been pushing for an initial CR that lasts through Dec. 30, warning that lawmakers would face far greater pressure to accept a bad spending deal right before Christmas. The Freedom Caucus will meet Wednesday morning to determine how to respond to the various options. Conservatives said the annual White House holiday party for lawmakers and their spouses prevented them from meeting Tuesday evening. Meadows and his predecessor as Freedom Caucus chairman, Jordan, were among the key negotiators who huddled with Speaker Paul Ryan(R-Wis.) in his second-floor suite on Tuesday afternoon to hash out a last-minute deal to avert a shutdown.
Conservatives Balk at Christmas Shutdown Deadline - The holidays are a joyous time of year just about anywhere except in the halls of the United States Capitol. That’s when deals get cut; legislators cave; taxpayer money goes out the door by the billions; and, more often than not, conservatives lose. “From a conservative standpoint, nothing good comes just a few days before Christmas,” Representative Mark Meadows of North Carolina, the chairman of the House Freedom Caucus, reminded reporters last week. The latest mission for the hard-liners in the Freedom Caucus is making sure Republican leaders don’t agree to set the next crucial federal-funding deadline for December 22, which they fear would leave Democrats with an armful of policy presents and stick conservatives with the legislative equivalent of a lump of coal. Yet in waging this fight over the next deadline, the Freedom Caucus could cause Congress to miss the one staring it in the face: this coming Friday, when the House and Senate must pass a stopgap spending bill or else the government shuts down. Congressional leaders in both parties are now engaged in a legislative three-step, with the end goal being an omnibus spending bill to cover the remaining nine months of fiscal year 2018. With Republicans consumed by their tax bill, however, they ran out of time to deal with the budget. So the first step is for lawmakers to approve a two-week funding bill—known as a continuing resolution—by Friday to keep the government open through December 22 and buy time for more substantive negotiations. The next piece would be a second stopgap spending bill alongside a bipartisan budget agreement that would set the parameters for the much larger appropriations bill, which Congress would try to pass in January. What conservatives fear most is not higher spending per se, but the pieces of unrelated legislation that party leaders might try to tack onto the bills that pass right before Christmas. Democrats and some prominent Republicans are pushing Congress to adopt—among other priorities—a bipartisan fix for the Affordable Care Act, a reauthorization of the Children’s Health Insurance Program, and legislation offering permanent protection from deportation for immigrants who were brought into the country illegally by their parents. Specifically, the Freedom Caucus is worried that if the next deadline is right before Christmas, lawmakers will cave at the last minute in the rush to get out of Washington and home to their families.
Congress averts shutdown, sends Trump stopgap spending bill (AP) — Congress on Thursday passed a stopgap spending bill to prevent a government shutdown this weekend and buy time for challenging talks on a wide range of unfinished business on Capitol Hill. The shutdown reprieve came as all sides issued optimistic takes on an afternoon White House meeting between top congressional leaders and President Donald Trump. The measure passed the House 235-193, mostly along party lines, and breezed through the Senate on a sweeping 81-14 tally barely an hour later. It would keep the government running through Dec. 22, when another, and more difficult, shutdown problem awaits. The bill now heads to Trump for his signature. Topics at the White House session included relief from a budget freeze on the Pentagon and domestic agencies, extending a key children’s health program and aid to hurricane-slammed Puerto Rico, Texas and Florida. The trickiest topic, and a top priority for Democrats, involves protections for immigrants brought to the country illegally as children. These “Dreamer” immigrants are viewed sympathetically by the public and most lawmakers but face deportation in a few months because Trump reversed administrative protections provided to them by former President Barack Obama. In back-to-back statements, both Democratic and GOP leaders declared the meeting “productive.” The White House called it “constructive.” Privately, congressional aides said little progress had been made.
Pentagon To Deploy THAAD Anti-Missile Systems On West Coast To Protect Against North Korean ICBM Attack - Days after North Korea launched its most advanced ICBM which reportedly can hit a target anywhere in the United States with its 8,000+ mile range, Pyongyang said the U.S. is "begging" for a nuclear war by planning the "largest-ever" joint aerial drill with South Korea,according to Bloomberg. “Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.As we previously reported, the statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named "Vigilant Ace 18" scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media, some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind.Meanwhile, in addition to Lindsey Graham's warning that US civilians in South Korea should evacuate ahead of "military conflict", in response to North Korea's recently enhanced capabilities, the United States is beefing up security on the West Coast.Last week the New York Times reported that Hawaii was bringing back its Cold War-era early missile warning system designed to warn residents of an impending nuclear attack. The Attack Warning Tone, described as a “wailing tone,” will be heard for about 50 seconds on the first business day of every month, beginning on Dec. 1. It will sound after the regular monthly test of the sirens that warn residents of hurricanes or tsunamis, the Emergency Management Agency said. Now, according to Congressmen Mike Rogers who sits on the House Armed Services Committee along with Democrat Adam Smith, we learn that the Pentagon is also exploring locations on the West Coast for anti-missile hardware. Rogers and Smith said the Pentagon is looking to distribute the THAAD anti-missile system made by Lockheed Martin Corp at west coast sites.
North Korea is ready to open direct talks with US, says Russia’s Sergei Lavrov - North Korea is open to direct talks with the US over their nuclear standoff, according to the Russian foreign minister, Sergei Lavrov, who said he passed that message to his counterpart, Rex Tillerson, when the two diplomats met in Vienna on Thursday. There was no immediate response from Tillerson but the official position of the state department is that North Korea would have to show itself to be serious about giving up its nuclear arsenal as part of a comprehensive agreement before a dialogue could begin. Lavrov conveyed the apparent offer on the day a top UN official, Jeffrey Feltman, met the North Korean foreign minister, Ri Yong-ho, in Pyongyang, during the first high-level UN visit to the country for six years. Feltman is an American and a former US diplomat, but the state department stressed he was not in North Korea with any message from Washington. “We know that North Korea wants above all to talk to the United States about guarantees for its security. We are ready to support that, we are ready to take part in facilitating such negotiations,” Lavrov said at an international conference in Vienna, according to the Interfax news agency. “Our American colleagues, [including] Rex Tillerson, have heard this.” The diplomatic moves come amid an increased sense of urgency to find a way of defusing the tensions over North Korea’s increasingly ambitious nuclear and missile tests. The standoff reached a new peak on 29 November, when North Korea tested a new intercontinental ballistic missile (ICBM), the Hwasong-15, capable of reaching Washington, New York and the rest of the continental United States. The missile launch followed the test of what was apparently a hydrogen bomb in September.
Former U.S. Defense Secretary Explains Why Nuclear Holocaust Is Now Likely - The Stanford mathematician William J. Perry was a strategic nuclear advisor to U.S. President John Fitzgerald Kennedy during the Cuban Missile Crisis in 1962, and then he became U.S. Secretary of Defense under President Bill Clinton.He stated in a speech on November 28th at the National Cathedral in Washington DC, that“inexplicably to me, we’re recreating the geopolitical hostility of the Cold War, and we’re rebuilding the nuclear dangers,” and he went so far as to make clear why "I believe that the likelihood of some sort of a nuclear catastrophe today is actually greater than it was during the Cold War."He explained why the increase in tensions between the U.S. and Russia isn’t merely restoring those dangers, but is now exceeding them, despite the elimination of what were supposed to have been the threats that gave rise to the Cold War: the ideological threat of communism, and the threat of the monolithic Soviet bloc which ended in 1991 with the break-up of the Soviet Union, and the threat of the Soviets’ military alliance, the Soviet Union’s equivalent of America’s NATO military alliance, the Warsaw Pact — all of whose alliance-members are now, or are on the way to becoming, members of America’s NATO alliance, targeting against the now lone nation of Russia.
Daniel Ellsberg: U.S. Military Planned Nuclear First Strike On Every City In Russia and China … and Gave Many Low-Level Field Commanders the Power to Push the Button - I was given the job of improving the Eisenhower plans, which was not a very high bar, actually, at that time, because they were, on their face, the worst plans in the history of warfare. A number of people who saw them, but very few civilians ever got a look at them. In fact, the joint chiefs couldn’t really get the targets out of General LeMay at the Strategic Air Command.And there was a good reason for that: They were insane. They called for first-strike plans, which was by order of President Eisenhower. He didn’t want any plan for limited war of any kind with the Soviet Union, under any circumstances, because that would enable the Army to ask for enormous numbers of divisions or even tactical nuclear weapons to deal with the Soviets. So he required that the only plan for fighting Soviets, under any circumstances, such as an encounter in the Berlin corridor, the access to West Berlin, or over Iran, which was already a flashpoint at that point, or Yugoslavia, if they had gone in—however the war started—with an uprising in East Germany, for example—however it got started, Eisenhower’s directed plan was for all-out war, in a first initiation of nuclear war, assuming the Soviets had not used nuclear weapons. And that plan called, in our first strike, for hitting every city—actually, every town over 25,000—in the USSR and every city in China. [Ellsberg isn’t the first to discuss U.S. plans for a nuclear first strike. In the 1986 book To Win a Nuclear War: The Pentagon’s Secret War Plans, one of the world’s leading physicists – Michio Kaku – revealed declassified plans for the U.S. to launch a first-strike nuclear war against Russia. The forward was written by former U.S. Attorney General Ramsey Clarke.] A war with Russia would inevitably involve immediate attacks on every city in China. In the course of doing this—pardon me—there were no reserves. Everything was to be thrown as soon as it was available—it was a vast trucking operation of thermonuclear weapons—over to the USSR, but not only the USSR. The captive nations, the East Europe satellites in the Warsaw Pact, were to be hit in their air defenses, which were all near cities, their transport points, their communications of any kind. So they were to be annihilated, as well.
Arab world warns US not to recognize Jerusalem as Israeli capital - The Arab League, Turkey, Jordan and Palestinian officials have warned the US against moving its embassy to Jerusalem, saying such a move would set back any future peace negotiations and could spark a new wave of violence in the strife-torn region. The warnings come as US President Donald Trump considers moving the US embassy from Tel Aviv to Jerusalem, effectively recognizing the ancient city as Israel's capital despite Palestinian claims to East Jerusalem. Monday was the deadline for a decision on the move, but the White House said Monday evening that Trump had delayed his choice by several days. Israeli Defense Minister Avigdor Lieberman on Monday urged Trump to take the "historic opportunity" to recognize Jerusalem as Israel's capital, saying he hopes to "see an American embassy here in Jerusalem next week or next month." The status of Jerusalem has been a key stumbling block during previous peace negotiations between Israelis and Palestinians, in particular regarding the question of how to divide sovereignty and oversee holy sites. Another major issue is illegal Israeli settlements in the West Bank. The international community has never recognized Jerusalem as Israel's capital or its unilateral annexation of territory around the city's eastern sector, which it captured during the 1967 Six-Day War.
Erdogan, Saudis Warn That Recognizing Jerusalem As Capital Would Be A "Red Line", Have "Catastrophic Consequences" Two weeks ago, Turkish President Recep Tayyip Erdogan won an important concession from President Donald Trump when, in a phone call, Erdogan coaxed a promise from his American partner to stop arming US-backed Kurdish resistance fighters in Syria. But that gesture of goodwill could be swiftly forgotten if Trump follows through with a plan to officially declare Jerusalem the capital of Israel – an act that Erdogan and many other Muslim leaders have said would be a “red line” that could force Turkey and several other Muslim states to break off diplomatic relations with Israel. In a speech, Erdogan said the recognition of Jerusalem by the US would force Turkey to call an Organization of Islamic Cooperation summit and consider severing ties with Israel. "Jerusalem is the red line for Muslims. Such a decision will be a heavy blow for all mankind. We will not leave it. We will fight to the end. We may even reach a severance of diplomatic relations with Israel. I once again warn the United States not to take steps that will further deepen the crisis in the region," Erdogan said. Israel has long claimed Jerusalem as its capital. The city hosts much of the infrastructure of the Israeli government. But the ancient city – which contains the venerated Al-Aqsa mosque, the third holiest site in Islam – is also viewed as the logical capital of a Palestinian state. Palestinians claim East Jerusalem as their rightful capital, while Israeli’s claim the whole city, according to the Telegraph.
Trump’s Costly Jerusalem Blunder -- Trump confirmed his intention to recognize Jerusalem as Israel’s capital this week in a series of calls with regional leaders: President Trump told Israeli and Arab leaders on Tuesday that he plans to recognize Jerusalem as the capital of Israel, a symbolically fraught move that would upend decades of American policy and upset efforts to broker peace between Israel and the Palestinians. Mr. Trump is expected to announce his decision on Wednesday, two days after the expiration of a deadline for him to decide whether to keep the American Embassy in Tel Aviv. If Trump goes through with this, it will be a terrible blunder that could have dire consequences for all concerned. I have listed some of those possible consequences in my recent posts on the subject, and I fear that the reactions to this decision could be much worse than most of us expect. Doing this would destroy any remaining illusions that the U.S. could be a responsible mediator in this conflict. The U.S. has never been an “honest broker” between the two sides, and this would do away with that pretense once and for all. This decision would impose significant diplomatic costs on the U.S. that will make it harder to advance American interests in many parts of the world, and American diplomats will be at higher risk of attack because of it. I may have some suggestions for why Trump wants to do this. Trump is a “pro-Israel” hawk surrounded by pro-settler hard-liners, so his instinct is to indulge Israel at the expense of its neighbors. This decision would do that and more. Despite his talk about wanting to make a deal between Israelis and Palestinians, Trump has obvious contempt for successful diplomacy that requires compromise, so telling him that recognizing Jerusalem as Israel’s capital would destroy the chances of a peace agreement doesn’t mean anything to him. He is a fan of taking unilateral action, and he thinks that he can pressure others into making concessions by breaking existing U.S. commitments. On foreign policy, Trump has often made a point of doing the opposite of whatever Obama did, and insofar as Obama was perceived as being too “tough” on Israel Trump wants to go as far in the other direction as he possibly can. In the end, it is probably the desire for praise and flattery that matters most to him. There is no benefit for the U.S. to be had in any of this, but Trump is doing it just so that hard-liners will congratulate him for being an extremely “pro-Israel” president.
President Trump: US recognizes Jerusalem as Israel's capital and will move the embassy to the disputed city -- President Donald Trump announced Wednesday that the U.S. recognizes Jerusalem as Israel's capital and that the American Embassy will be moved there, risking a huge backlash from across the Muslim world. "That city is Israel's capital," Trump said at the White House. "It is time to officially recognize Jerusalem as the capital of Israel." Trump said the U.S. will build an American embassy in Jerusalem, where it currently maintains a consulate. The current U.S. embassy is in Tel Aviv, where most other countries' embassies are maintained. "This is nothing more or less than a recognition of reality," Trump said. "It is also the right thing to do. It's something that has to be done." Trump acknowledged that his decision was driven by a political campaign pledge, saying that "while previous presidents have made this a major campaign promise, they failed to deliver. Today, I am delivering." The president went on to say that his decision "is not intended in any way" to hamper a lasting peace agreement between Israel and the Palestinians. He said the United States would "support a two-state solution if agreed to by both sides." While welcomed by Israel, Trump's decision has already angered leaders across the Arab world, who warned the president that his decision would effectively doom any future peace negotiations and could further destabilize the entire Middle East.
Palestinians call 'days of rage' over US Jerusalem move - Protests broke out in the Gaza Strip in response to US President Donald Trump's decision to recognise Jerusalem as Israel's capital, as Palestinian leaders called for three days of rage against the move. Hundreds of Palestinians took to the streets in Gaza City on Wednesday, carrying banners denouncing Trump, hours ahead of his declaration that will also see the US embassy move from Tel Aviv to Jerusalem. The declaration comes amid global condemnation of the decision. Speaking to Al Jazeera from Gaza, Hamas leader Ismail Haniya described Trump's decision as a "flagrant aggression"."This decision is an uncalculated gamble that will know no limit to the Palestinian, Arab and Muslim reaction," he said."We call for stopping this decision fully because this will usher in the beginning of a time of terrible transformations, not just on the Palestinian level but on the region as a whole. This decision means the official announcement of the end of the peace process."
Hamas Leader Calls For Third Intifada Following Trump's "Declaration Of War" -- Yesterday, President Trump officially announced his “new approach” to the Israel-Palestine conflict that, which instead of bringing peace to the region like he repeatedly promised during the campaign, appears poised to trigger the most destructive periods of Israeli vs Palestinian violence since 2005. Early Thursday, the Palestinian Islamist group Hamas, which recently relinquished absolute administrative control of Gaza but remains incredibly popular in what some have described as “the world’s largest open-air prison”, called for a third intifada – or uprising - against the Israelis to protest Trump’s violation of the “Status Quo”. For nearly three centuries, the three major Abrahamic religions had an understanding that the nine Holy Sites in and around Jerusalem are subject to a policy of de facto neutrality. But by recognizing Jerusalem as Israel’s capital – and promising to legitimize that declaration by moving the US embassy – Trump has upset this order. The Israelis have long claimed all of Jerusalem as their capital, while Palestinians hope to claim East Jerusalem as the capital of a future Palestinian state. Speaking in Gaza on Thursday, Hamas' leader Ismail Haniyeh said, "We should call for and we should work on launching an intifada in the face of the Zionist enemy." He also said, "We want the uprising to last and continue to let Trump and the occupation regret this decision,” according to DW, Germany’s public broadcaster. Hamas also took to Twitter to decry Trump’s decision as a declaration of war. In a stream of Tweets, the party – which is considered a terrorist organization by the US – shared photos of young Palestinians, who have been the main participants in the last two intifadas, protesting the US decision. It also urges Palestinians to rise up.
Arabs, Europe, U.N. reject Trump's recognition of Jerusalem as Israeli capital (Reuters) - Arabs and Muslims across the Middle East on Wednesday condemned the U.S. recognition of Jerusalem as Israel’s capital as an incendiary move in a volatile region and Palestinians said Washington was abandoning its leading role as a peace mediator. The European Union and United Nations also voiced alarm at U.S. President Donald Trump’s decision to move the U.S. Embassy in Israel to Jerusalem and its repercussions for any chances of reviving Israeli-Palestinian peacemaking. Major U.S. allies came out against Trump’s reversal of decades of U.S. and broad international policy on Jerusalem. France rejected the “unilateral” decision while appealing for calm in the region. Britain said the move would not help peace efforts and Jerusalem should ultimately be shared by Israel and a future Palestinian state. Germany said Jerusalem’s status could only be resolved on the basis of a two-state solution. Israel, by contrast, applauded Trump’s move. Prime Minister Benjamin Netanyahu said in a pre-recorded video message that it was “an important step towards peace” and it was “our goal from Israel’s first day”. He added that any peace accord with the Palestinians would have to include Jerusalem as Israel’s capital and he urged other countries to follow Trump’s example.
Trump Jerusalem move sparks Israeli-Palestinian clashes - BBC News: At least 31 Palestinians have been wounded in clashes in the Gaza Strip and across the occupied West Bank, during protests against US President Donald Trump's recognition of Jerusalem as Israel's capital. One person is in a critical condition. Mr Trump's announcement - met with worldwide dismay - reversed decades of US policy on the sensitive issue. Israel deployed hundreds of extra troops in the West Bank as Palestinians went on strike and took to the streets. Protesters set tyres alight and threw stones, and Israeli troops fired tear gas, rubber bullets and live bullets. One rocket fired from the Gaza Strip exploded inside southern Israel while others fell short, Israel's army said. In response, an Israeli tank and an aircraft targeted "two terror posts" in Gaza, the army said without giving further details. Many of Washington's closest allies have said they disagree with the move, and both the UN Security Council and the Arab League will meet in the coming days to decide their response. There are fears the announcement could lead to a renewed outbreak of violence. The Palestinian Islamist group Hamas has already called for a new intifada, or uprising. Mr Trump announced the move on Wednesday. The US president said: "I've judged this course of action to be in the best interests of the United States of America and the pursuit of peace between Israel and the Palestinians." He said he was directing the US state department to begin preparations to move the US embassy from Tel Aviv to Jerusalem.
Tillerson, Mattis Warned Trump Against Embassy Move - Donald Trump’s announcement that the U.S. now recognizes Jerusalem as the capital of Israel, and will eventually move its embassy there, might well be the most predictable decision of an otherwise unpredictable presidency. The Jerusalem initiative has been in the works since the day he took office, was coordinated with Israeli Prime Minister Benjamin Netanyahu, and is supported by influential voices in the administration—including Vice President Mike Pence, son-in-law Jared Kushner, Middle East envoy (and former Trump Organization lawyer) Jason Greenblatt, and CIA Director Mike Pompeo. The decision was all but finalized, The American Conservative has learned, during a late November meeting of Trump’s foreign policy advisors at the White House. The November confab was well underway when Trump arrived to press his case. While the president was only expected to stay in the meeting for 15 to 20 minutes, he ended up staying for a full hour. Trump, TAC was told by a senior Pentagon officer with knowledge of the meeting, was adamant about keeping his campaign pledge, but was brought up short by warnings issued by Defense Secretary James Mattis and Secretary of State Rex Tillerson. Both officials argued that the move would endanger American diplomats serving in the region, undermine the administration’s efforts to revive the Israeli-Palestinian peace process, and result in condemnations from both Arab countries and America’s most important allies in Europe. Trump could expect almost no support in the international community, they said. America would “have to go it alone.” Trump listened closely to the warnings over the next hour (“it was a very intense exchange,” TAC was told by the senior Pentagon official, “but it certainly wasn’t heated”). But at the end of the discussion the president said that he would go ahead with his decision despite the difficulties it might cause. He also acknowledged concerns about possible threats to U.S. diplomats, and said that he would dampen them by repeating U.S. assurances that it was committed to a two-state solution. Moreso, he argued, the U.S. did not need to move its embassy from Tel Aviv to Jerusalem immediately—which would serve as a further reassurance.
Trump’s Biggest Donor Pushed for Jerusalem Embassy Move - The move goes toward fulfilling his campaign promise, during a speech to the American Israel Public Affairs Committee (AIPAC), to move the embassy to Jerusalem. His biggest campaign contributor, billionaire casino magnate Sheldon Adelson, is showing growing impatience with Trump’s slowness in moving the embassy, which would be a provocation to Palestinians who claim Jerusalem as the capital of a future Palestinian state. For this reason, past presidents have refused to move the embassy on grounds that it would upset potential talks between Israeli and Palestinian negotiators. Before Trump was even sworn in as president, Jared Kushner, Trump’s son-in-law, showed a remarkable willingness to follow directions from Israel’s far-right prime minister, Benjamin Netanyahu. The transition team appears to have worked at the request of Netanyahu to defeat a UN resolution criticizing Israel’s ongoing settlement construction. Reporting on Friday advanced the story, revealing that Kushner told former National Security Advisor Michael Flynn to call members of the Security Council in an effort to stop the vote, a potential violation of the Logan Act, which criminalizes negotiations by unauthorized persons with foreign governments having a dispute with the U.S. When the Trump White House hasn’t been quick enough to back Netanyahu or Adelson’s proposals, Adelson, who was reportedly in close contact with Kushner during the campaign, has been quick to express his displeasure. Adelson, who once accused Palestinians of existing “to destroy Israel,” was reportedly “furious” with Secretary of State Rex Tillerson in May for suggesting in a Meet The Press interview that moving the embassy should be contingent on the peace process. Axios reported:
Trump's Jerusalem Tit-For-Tat: Orders Saudis To ‘Immediately’ End Yemen Blockade --In a brief statement issued Wednesday afternoon, President Trump called on Saudi leadership to completely lift the years long Saudi military blockade on war-torn Yemen. The unexpected announcement came on the same day President Trump delivered an extremely controversial televised address wherein he gave official US recognition of Jerusalem as the capital of Israel. “I have directed officials in my administration to call the leadership of the Kingdom of Saudi Arabia to request that they completely allow food, fuel, water and medicine to reach the Yemeni people who desperately need it,” Trump said through a White House press release. “This must be done for humanitarian reasons immediately.” Though it's unclear exactly why the directive was suddenly issued after years of humanitarian catastrophe in Yemen, it is likely connected with the widespread shock and condemnation from world leaders which immediately followed in the wake of Trump's speech formally recognizing Jerusalem as the Israeli capital. The Yemen directive was published by the Office of the Press Secretary only a matter of two hours later. And while Trump cites "humanitarian reasons" for the urgent directive requesting the lifting of the siege, Saudi Arabia has enforced a military blockade on deeply impoverished Yemen since it began bombing the country in 2015. Furthermore, media and human rights groups began reporting on the de facto naval blockade of Yemen's ports - which quickly left over 20 million Yemeni civilians facing a dire humanitarian crisis - soon after the war began in March of 2015. This occurred as the US and UK stationed military and intelligence officers in Saudi command and control centers in order to assist in targeting Yemeni Houthi rebel locations.
Kushner bets he can have it both ways on Jerusalem move - Jared Kushner is betting the house on a risky strategy Middle East experts worry will derail any future Israeli-Palestinian peace deal – as well as what remains of the powerful son-in-law’s shrinking West Wing portfolio. He privately encouraged Trump’s announcement Wednesday that “Jerusalem is Israel’s capital,” which was seen by some experts in the region as a setback for peace efforts led by Kushner and his small team. The group has made dozens of trips to the region and spent hours on listening tours, working to gain the trust of the Palestinians and the broader Arab world.“It is very, very hard to imagine how that peace effort can be continued,” said Ghaith al-Omari, who served as an adviser to the Palestinian Authority’s negotiating team from 1999 to 2002. “All the Arab leaders who have been cultivating relations with the new administration will be forced to come out very strongly against this.” But a person close to Kushner said he was forceful in his backing of the move. “Encouraging would be an understatement,” the person said. “It was him.” Kushner has been hemmed in since the arrival of chief of staff John Kelly, losing his free-floating “first among equals” status in the White House, while wrestling with increased scrutiny from special counsel Robert Mueller. These days, close associates said, Kushner is primarily driven by one goal: to prove himself by delivering a Middle East peace deal many skeptics doubt he can close. He is banking on the hope that the opposition is just a facade — and that privately, after a “cooling off” period, Arab allies will continue to work with him on a peace plan he still expects to announce at some point in the early months of 2018..
Kushner Is Leaving Tillerson in the Dark on Middle East Talks, Sources Say - Secretary of State Rex Tillerson is increasingly alarmed by what he sees as secret talks between Jared Kushner, President Donald Trump’s son-in-law and senior adviser, and Saudi Arabian Crown Prince Mohammed bin Salman -- fearful that the discussions could backfire and tip the region into chaos, according to three people familiar with Tillerson’s concerns. The central goal of the negotiations, as described by two people with knowledge of the talks, is for an historic agreement featuring the creation of a Palestinian state or territory backed financially by a number of countries including Saudi Arabia, which could put tens of billions of dollars toward the effort.A lasting Middle East peace treaty has been a U.S. goal for decades, and at the start of his administration Trump assigned the 36-year-old Kushner to head up the effort to make it happen.Tillerson believes Kushner hasn’t done enough to share details of the talks with the State Department, according to the people, leaving senior U.S. diplomats in the dark on the full extent of the highly sensitive negotiations.“The problem is, the senior presidential adviser does not consult with the State Department -- and it’s unclear the level of consultation that goes on with the NSC,” one of the people familiar with Tillerson’s concerns said, referring to the National Security Council. “And that’s a problem for both the NSC and the State Department and it’s not something we can easily solve.” Kushner is scheduled to speak publicly for the first time about the Trump administration’s approach to the Middle East on Sunday. He’ll appear at the Saban Forum in Washington, an annual conference organized by the Center for Middle East Policy at the Brookings Institution that’s focused on U.S.-Israel relations.The State Department’s concerns about Kushner’s approach predate reports this week that Trump may move to oust Tillerson by the end of the year. The president rejected the reports, which Tillerson’s team believes are being stoked by Kushner allies, one person said. An administration official said Kushner had nothing to do with the reports.
Private War: Erik Prince Has His Eye On Afghanistan’s Rare Metals - Controversial private security tycoon Erik Prince has famously pitched an audacious plan to the Trump administration: Hire him to privatize the war in Afghanistan using squads of "security contractors." Now, for the first time, Buzzfeed News is publishing that pitch, a presentation that lays out how Prince wanted to take over the war from the US military — and how he envisioned mining some of the most war-torn provinces in Afghanistan to help fund security operations and obtain strategic mineral resources for the US.Prince, who founded the Blackwater security firm and testified last week to the House Intelligence Committee for its Russia investigation, has deep connections into the current White House: He’s friends with former presidential adviser Stephen Bannon, and he’s the brother of Betsy DeVos, the education secretary. Prince briefed top Trump administration officials directly, talked up his plan publicly on the DC circuit, and published op-eds about it. He patterned the strategy he's pitching on the historical model of the old British East India Company, which had its own army and colonized much of Britain's empire in India. "An East India Company approach," he wrote in the Wall Street Journal, "would use cheaper private solutions to fill the gaps that plague the Afghan security forces, including reliable logistics and aviation support."But the details have never been made public. Here is the never-before-published slide presentation for his pitch, which a source familiar with the matter said was prepared for the Trump administration. One surprising element is the commercial promise Prince envisions: that the US will get access to Afghanistan’s rich deposits of minerals such as lithium, used in batteries; uranium; magnesite; and "rare earth elements," critical metals used in high technology from defense to electronics. One slide estimates the value of mineral deposits in Helmand province alone at $1 trillion.
Our Perpetual, Illegal War in Syria - The Pentagon confirmed that U.S. forces will be staying in Syria forever:The US military plans to stay in Syria as long as necessary to ensure the Islamic State group does not return, a Pentagon official told AFP on Tuesday.“We are going to maintain our commitment on the ground as long as we need to, to support our partners and prevent the return of terrorist groups,” Pentagon spokesman Eric Pahon said.If “supporting partners” and “preventing” terrorist groups from returning are the reasons for keeping U.S. forces in Syria, there will never be a time when those forces won’t be “needed.” There will always be some group that the U.S. can identify as a “partner” that we must not “abandon,” and there will always be the possibility that a terrorist gro up could enter Syria at some point in the future. Thanks to the Trump administration’s policy, the U.S. is going to be policing some part of Syria with no end in sight. It is mission creep of the mindless sort, and sooner or later it is going to cost the lives of Americans that should never have been there. It would be one thing if “our commitment” in Syria had been made by Congress and was in any way related to U.S. security, but it wasn’t and it isn’t. U.S. forces have been operating illegally inside Syria for three years. Congress never authorized any of this, and there was certainly never any approval of an open-ended deployment in another country’s territory without their government’s permission. Every day that U.S. forces operate inside Syria without their government’s approval, the U.S. is flagrantly violating international law. Every day that U.S. forces stay in Syria is another day when they are in danger of clashing with the Syrian military and the forces of Syria’s patrons. Their presence needlessly exposes them to danger in a country where the U.S. has little at stake, and it runs the risk of sparking a larger conflict as long as they remain there.
On the Eve of Congressional Hearings, New Evidence About Alleged U.S. Massacre in Somalia -- New evidence in The Daily Beast investigation of a U.S.-led ground operation in Somalia last August further implicates U.S. Special Operations Forces directly in the death of 10 civilians. Among the new elements is an interview with a Somali National Army soldier who says he saw the Americans firing on unarmed victims. The Pentagon has said all those killed were “armed enemy combatants.” The operation was one of three major incidents involving U.S. forces in Africa this year that have raised questions surrounding U.S. military engagement across the continent and prompted the House Committee on Foreign Affairs to hold a hearing, scheduled for Thursday morning, to discuss U.S. counterterrorism efforts in Africa. According to the Somali National Army (SNA) soldier who was with the American special operators during the incident, the team approached the farm where the incident occurred with eight U.S. soldiers in front of the 20 Somali National Army soldiers and four U.S. operators behind them. The Americans in the lead then fired on two unarmed people who were preparing tea, after which Somali National Army soldiers rushed forward and fired on three farmers in a nearby shed. The U.S. soldiers began firing at others in the farming village who came out of their homes. The account by the SNA soldier, who spoke on condition that his name not be used, corroborated earlier Daily Beast reporting and contradicts a U.S. Africa Command press release issued 30 minutes after The Daily Beast published its months-long investigation into the incident. The Daily Beast had chronicled in considerable detail the way in which a team of U.S. Special Operations fighters carried out a ground operation acting on human intelligence that came from local rivals of those killed on the farm, and against the advice of the commander of the African Union Peacekeeping contingent in this region in Somalia
White House May Share Nuclear Power Technology With Saudi Arabia --The Trump administration is holding talks on providing nuclear technology to Saudi Arabia — a move that critics say could upend decades of U.S. policy and lead to an arms race in the Middle East. The Saudi government wants nuclear power to free up more oil for export, but current and former American officials suspect the country’s leaders also want to keep up with the enrichment capabilities of their rival, Iran. Saudi Arabia needs approval from the U.S. in order to receive sensitive American technology. Past negotiations broke down because the Saudi government wouldn’t commit to certain safeguards against eventually using the technology for weapons. Now the Trump administration has reopened those talks and might not insist on the same precautions. At a Senate hearing on Nov. 28, Christopher Ford, the National Security Council’s senior director for weapons of mass destruction and counterproliferation, disclosed that the U.S. is discussing the issue with the Saudi government. He called the safeguards a “desired outcome” but didn’t commit to them. Abandoning the safeguards would set up a showdown with powerful skeptics in Congress. “It could be a hell of a fight,” one senior Democratic congressional aide said.
Chinese ambassador warns against trade war -- As the Trump administration considers possible unilateral trade action against China over policies and practices that pressure American companies to transfer technology, Chinese Ambassador to the U.S. Cui Tiankai is publicly warning about the cost of a trade war. “Naturally, China and the U.S. could have differences,” Cui said this week at an event with Sen. Steve Daines at the Chinese Embassy. “Yet some people in D.C. believe that economic and trade issues between our two countries should be resolved through a trade war. I want to tell them that economic and trade relations between China and the U.S. are mutually beneficial in nature.” “Cooperation will make both countries winners and confrontation will make everybody loser[s]. A trade war between China and the U.S. will do immediate and long-term damage to both economies. Moreover, it will certainly weaken people's confidence and darken the future prospects of global growth. As the two largest and leading economies in the world, China and the U.S. will definitely bear the brunt,” Cui said. “Therefore, we would never allow any trade warrior to undermine the interest of the Chinese and the U.S. economics, or any politician, in the pursuit of their political agenda for special interest groups, to harm the well-being of the hard-working Chinese or American people, including farmers and ranchers of Montana,” he added.
Hedge Fund CIO: "You Can No Longer Understand America Unless You Check Breitbart And Infowars Daily" -- “You see fat boy shot another missile over Japan?” asked my Uber driver, laughing. I joined right in. We were talking America, making it great again. His three kids are in active service - US Navy – he’s got every right to joke about the chubby Korean kid. “You see Trump toy around with Chucky and Nancy?” he asked, jolly. “It’s not even fair, he’s five times smarter than both of them put together. He knows how to press their buttons and they take the bait every single time.” Schumer and Pelosi had responded to a twitter taunt by cancelling their White House meeting. The Donald left their seats empty, let the cameras roll, antagonizing his enemies, advancing his agenda. “My wife can’t watch TV at work. She comes home every night dying to know what he did. And you know what?” he asked. I shrugged. “Every single day there’s something, usually lots of things, it’s constant entertainment.” I admitted to checking Breitbart daily. InfoWars too. You can no longer understand America unless you do. “You see the Indian thing?” The Donald awarded Navajo WWII veterans for their service. “Trump told them we have an Indian in the Senate, they call her Pocahontas!” he said, howling. “These liberal snowflake journalists asked the Indians if they were offended. They said hell no, they were ordered to yell Geronimo when they jumped outta airplanes!” he said, snorting, barely able to drive. “You can’t make this stuff up!” Indeed. “Democrats talk about impeaching. They’re literally so dumb. He’s going to win again in a landslide.” I laughed, why not? “And I can’t wait for this tax reform. I’m a trained economist you know, I know this stuff cold. It’s going to be like pouring gasoline on a fire,” he explained. “Trump promised us 5% GDP growth. Katie bar the door!”
Senate GOP Kills Dem Amendment To Delay Tax Vote Until Lawmakers Read Entire Bill - All 52 Senate Republicans voted against a Democratic amendment to delay consideration of the 479-page GOP tax bill until Monday so that lawmakers could have a chance to read the entire bill that had been released just hours before the expected vote. Senators voted 48-52 on the motion to adjourn. “Because the bill was given to lobbyists to read and change before senators saw it, and because the bill was given to us on a few hours’ notice and has not been read fully or considered fully by a single senator, I move we adjourn until Monday so we can first read and then clean up this awful piece of legislation,” Schumer said. The Hill notes: Democrats are blasting Republicans, arguing they are trying to rush the legislation through the Senate without giving lawmakers a chance to read it. Republicans publicly released the amended version of their plan late Friday night, hours before they are expected to pass the legislation. The move sparked an outcry from Democratic senators, several of whom tweeted out photos of the updated bill with scribbles and x’s through pages, as well as handwritten text in the sidelines of the legislation. “I was just handed a 479-page tax bill a few hours before the vote. One page literally has hand scribbled policy changes on it that can’t be read. This is Washington, D.
JCT appears to publish Senate GOP tax bill cost analysis after tax bill vote | TheHill: The Joint Committee on Taxation (JCT) appeared to publish its final analysis of the cost of the Senate GOP tax bill after the legislation had already passed the upper chamber. The JCT posted its analysis of the Tax Cuts and Jobs Act on its official Twitter account at 2:56 a.m. on Saturday, an hour after the bill was voted on in the Senate. Joint Committee estimates the revenue effects of a perfecting amendment to the “Tax Cuts and Jobs Act”, as reported by the Senate Committee on Finance.https://t.co/8MdIhoHRRE — JCT Congress (@jctgov) December 2, 2017 The analysis shows that the bill will cost $1.45 trillion over the next 10 years. The Senate passed the bill just before 2 a.m., voting 51-49 on the legislation to overhaul the tax code and capping days of GOP leaders frantically working to secure the necessary 50 votes to pass the bill. The bill was under revision until shortly before the vote. Just one Republican, Sen. Bob Corker (Tenn.), broke with his party and voted against the bill over concerns on the impact the bill would have on the deficit.
"Here's What's In It": Goldman Explains All You Need To Know About The Current State Of Tax Reform -- On Saturday morning the Senate passed the Republican Tax bill in a 51-49 vote, and with tax reform legislation now passing both chambers of Congress it looks very likely to become law by year-end, probably within the next two weeks according to Goldman Sachs which now ascribes a 90% probability of the legislation becomes law by year end. In it latest assessment of the state of tax reform, Goldman analysts Alex Phillips and Jan Hatzius write that while largely a done deal, some differences between the two versions still need to be ironed out: "We expect the final structure of the bill to reflect more of the Senate bill than the House bill, including a 20% corporate tax rate effective in 2019, the Senate’s more restrictive limit on net interest deductibility, and the Senate’s treatment of pass-through income. Both proposals now include a $10k cap on state and local property tax deductibility, rather than full repeal, eliminating the most important political difference between the bills before the conference negotiations start." Additionally, Goldman adds that while the corporate tax changes are likely to result in a net tax reduction in corporate tax liabilities, the size of the tax cut actually looks fairly small. Compared to current policy, the compromise legislation we expect to emerge from the conference committee would reduce the effective corporate tax rate by only a couple of percentage points.Perhaps the most surprising take home from the Goldman analysis is that while the bank has increased its estimate of the growth impact from tax reform slightly, to around 0.3% in 2018 and 2019 - "reflecting the slightly larger amount of tax cuts in the Senate plan following revisions, and our expectations regarding the eventual compromise" - it still expects a relatively modest boost to overall economic growth.That said, questions remains, most notably: "what's in the actual bill?"To answer, we publish the latest Goldman analysis for those still confused - which would be pretty much everyone - what is currently contained in the most sweeping tax overhaul in the US since the days of Ronald Reagan.
Tax Bill Offers Last-Minute Breaks for Developers, Banks and Oil Industry - The overhaul by Republican lawmakers of the nation’s tax laws percolated for weeks with virtually no public input, and by the end it turned into a chaotic mad dash with many last-minute changes on Friday night and Saturday morning, some handwritten in the margins of the nearly 500-page bill. Even hours after the Senate vote, tax experts were scratching their heads over precisely what had made it into the final version of the bill and the impact of some significant provisions. Still, it was clear that many changes expanded tax benefits for the wealthiest taxpayers, while other attempts to close loopholes fell by the wayside. The bill would add $1 trillion to deficits over the coming decade. Far from simplifying taxes, the bill opened up a whole range of tactics to lower the amount owed to the Internal Revenue Service. “Business owners or managers that plan well and pay for good advice will be able to achieve much more favorable rates,” said Adam Looney, a senior fellow at the Brookings Institution and a former Treasury Department official. “I’m not sure if that is a loophole or the intent of the legislation.” One of the bill’s biggest windfalls for the wealthy — cutting taxes on income received through so-called pass-through entities like partnerships, popular with real estate developers — got even more generous. The richest taxpayers will be taxed at a rate of about 29.6 percent on such income, a big cut from the current top federal income tax rate of 39.6. The ever-lengthening list of income that will be taxed at a cut-rate could be seen as “a Donald J. Trump loophole,” said Steven M. Rosenthal of the nonpartisan Tax Policy Center. A large amount of that kind of income is on Mr. Trump’s 2005 tax return, two pages of which became public in March, and on his 2017 financial disclosure forms, which show more than 500 pass-through entities, Mr. Rosenthal said. That expansion would cost the government $114 billion more than an earlier version of the proposal. The provision would lower rates for taxpayers simply if their businesses are organized as partnerships or other entities whose tax burdens flow to the individual. Half of that type of income goes to the top 1 percent of taxpayers, according to the Tax Policy Center. In total, that tax cut will cost the government about $476 billion over the coming decade.
Tax Havens Lobby To Keep Loopholes That Enrich Insurers, Hedge Fund Managers - Though the controversial Republican tax bill has been slammed as a giveaway to the wealthy, it currently includes some provisions to close loopholes that help corporations shift money to offshore tax havens. Those provisions, however, may not survive the final legislative wrangling. Justice Department documents reviewed by International Business Times show that lobbyists for the tax havens Bermuda and the Cayman Islands are pressing lawmakers to restore the loopholes that, critics say, enrich offshore insurance companies and American hedge fund moguls. Bermuda’s lobbying firm, theGroup, last week distributed talking points on Capitol Hill proposing language to preserve a lucrative Bermuda tax loophole, arguing that the shifts of money to reinsurers in Bermuda “do not represent a permanent move of capital offshore and should not be treated in the same manner” as other companies shifting money overseas. The lobbyists also promoted a letter from the trade organization Risk and Insurance Management Society to Republican Sen. Tim Scott, which argues that the congressional proposals could “serve to limit U.S. insurance capacity and drive up the cost of insurance.” At issue are Bermuda-based companies which ostensibly provide insurance to insurers. The current tax code allows U.S.-based insurance companies to shift money to offshore reinsurers, which can allow them to defer or avoid paying taxes on later investment gains. In recent years, the reinsurance maneuver has been used by hedge fund managers to effectively avoid income taxes on the investment fees they earn. Both Democratic lawmakers and conservative groups have decried the practice; a 2014 Joint Committee on Taxation report said “the establishment of offshore businesses that reinsure risks and that invest in U.S. hedge funds has been characterized as creating the potential for tax avoidance.”
Hours after Senate GOP passes tax bill, Trump says he’ll consider raising corporate rate - WaPo -- Hours after the pre-dawn passage of a $1.5 trillion tax cut, President Trump suggested for the first time Saturday that he would consider a higher corporate rate than the one Senate Republicans had just endorsed, in remarks that could complicate sensitive negotiations to pass a final bill. On his way to New York for three fundraisers, Trump told reporters that the corporate tax rate in the GOP plan might end up rising to 22 percent from 20 percent. Lawmakers in both the House and Senate had fought hard to keep the corporate rate low, with the Senate late Friday rejecting a Republican-backed proposal to push it up to 21 percent in exchange for more working-family tax breaks. The Senate passed the final version of its bill on a 51-to-49 vote just before 2 a.m. Saturday, with Sen. Bob Corker (Tenn.) as the lone Republican voting against it on concerns that it would drive up the federal deficit. Democrats howled that the bill was not released until hours before passage, with lobbyist-driven handwriting still present on the final version. Senate Republicans moved fast, in part, because they wanted to comply with Trump’s demand to send legislation for his signature by the end of the year. The House and Senate intend to take steps as soon as Monday to set up a conference committee to negotiate the significant differences between the Senate plan and the version passed by the House last month. But Trump’s statement Saturday threatened to introduce a complication.
Tax Deal Sends US Futures Soaring To New All Time High; Dollar, Yields, Global Stocks Follow -- The dollar jumped the most in two weeks, pushing Treasury yields as much as 6bps higher (before easing back) with US equity indexes primed for a another record-setting day after Senate Republicans approved a reduction in the corporate tax rate as part of a sweeping overhaul, giving a boost to President Donald Trump’s stimulus plans. The key market catalyst was the US Senate passing the tax reform bill through a vote of 51 vs 49 just before 2am on Saturday morning. This now pushes the bill to the next phase in which the House and Senate will have to reconcile their 2 bills, while the House is said to vote on Monday night for motion to go to conference on tax bill reconciliation. “With this tax deal, markets could pick up speed into the end of the year. It looks like the ingredients for a year-end rally are there,” said Angelo Meda, head of equities at asset manager Banor SIM in Milan, predicting equity gains of 3 to 4 percent. Tax cut hopes have been a significant tailwind this year for U.S. stocks, although the move is expected to add to the country’s $20 trillion national debt and increase the chances of more aggressive near-term rate rises in the world’s largest economy. Those expectations pushed the dollar up as much as 0.4% against a basket of currencies while Treasury yields rose across the curve. Two-year yields matched Friday’s nine-year high, indicating that bonds are already anticipating the debt increase according to Reuters.
GOP eyes post-tax-cut changes to welfare, Medicare and Social Security -- High-ranking Republicans are hinting that, after their tax overhaul, the party intends to look at cutting spending on welfare, entitlement programs such as Social Security and Medicare, and other parts of the social safety net. House Speaker Paul D. Ryan (R-Wis.) said recently that he wants Republicans to focus in 2018 on reducing spending on government programs. Last month, President Trump said welfare reform will “take place right after taxes, very soon, very shortly after taxes.” As Republicans advocate spending cuts, they have frequently cited a need to reduce the national deficit while growing the economy. “You also have to bring spending under control. And not discretionary spending. That isn't the driver of our debt. The driver of our debt is the structure of Social Security and Medicare for future beneficiaries,” Sen. Marco Rubio (R-Fla.) said this week. While whipping votes for a GOP tax bill on Thursday, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) attacked “liberal programs” for the poor and said Congress needed to stop wasting Americans' money. “We're spending ourselves into bankruptcy,” Hatch said. “Now, let's just be honest about it: We're in trouble. This country is in deep debt. You don't help the poor by not solving the problems of debt, and you don't help the poor by continually pushing more and more liberal programs through.” The GOP tax bill currently under consideration in the Senate would increase the federal deficit by nearly $1.5 trillion over a decade, according to Congress's official tax analysts and multiple other nonpartisan analysts. When economic growth the measure could create is included in the analysis, Congress's official tax scorekeeper predicted the bill would add $1 trillion to the deficit over 10 years.
Republicans Will Cut Social Security and Medicare After Tax Plan Passes, Says Marco Rubio: Florida Senator Marco Rubio admits that the Republican tax cut plan to aid corporations and the wealthy will require cuts to Social Security and Medicare to pay for it. Rubio told reporters this week that in order to address the federal deficit, which will grow by at least $1 trillion if the tax plan passes, Congress will need to cut entitlement programs such as Social Security. Advocates for the elderly and the poor have warned that entitlement programs would be on the chopping block, but this is the first time a prominent Republican has backed their claims. “We have to do two things. We have to generate economic growth which generates revenue, while reducing spending. That will mean instituting structural changes to Social Security and Medicare for the future,” Rubio told a crowd at a Politico conference. Rubio's talk of structural change is vague, but will likely include changing the rate and age of Social Security and Medicare payouts.Republicans have long said that the growth generated from slashing corporate tax rates from 35 percent to 20 percent would make their tax cuts "revenue neutral," but there's no evidence they're right. The Congressional Budget Office estimates that the Senate tax plan would increase the U.S. deficit by $1.4 trillion over the next decade, and the nonpartisan Joint Committee on Taxation has said the plan will only boost economic growth by 0.8 percent over the next decade, leaving $1 billion in cuts unpaid for.So where does that money come from?The simple answer is Social Security and Medicare, which together comprise 38 percent of the total federal budget, second only to military spending. “The driver of our debt is the structure of Social Security and Medicare for future beneficiaries,” said Rubio.
Tax Cuts, Wages and Salaries: Will Lower Taxes and Profit Repatriation Help Workers? - For several weeks, the guest experts on CNBC and Bloomberg News have been talking about the coming tax cut legislation (for corporations) that the Republicans finally seem to have in their grasp. The Bill, as it is currently proposed, will eliminate the insurance mandate for health care and may leave quite a lot of upper middle class salaried people, worse off, especially in high tax states. The sure winners will be the shareholders of multinational corporations and “pass through” enterprises, especially real estate partnerships. The “supply-side” cheerleaders for the plan, both in Congress and the White House (Mnuchin, Cohen, Mulvaney, et al) argue that economic growth be much faster, that it will pay for the cuts, and that wages and salaries will rise, thanks to a burst of new investment. By contrast, virtually all top economists say that the cuts won’t pay for themselves, that the deficit and the national debt will increase, and that growth will not accelerate. What both sides agree on is that there is around $2.5 trillion in profits sitting out there in overseas banks, mostly in tax havens, just to avoid paying US corporate taxes. Apple, alone, allegedly has $260 billion to bring home, if only Uncle Sam would kindly cut his share. The plan being discussed by the 112th (current) Congress would reduce the corporate tax rate on foreign corporate profits repatriated as dividends. A “tax holiday” to bring back profits being held overseas was tried by the second Bush administration in 2005 as part of The American Jobs Creation Act (PL 108-357). The tax rate for funds repatriated under the Act was set at 5.25% (a one-time 85% discount on the 35% top US corporate Income tax rate. The corporate promoters and their lobbyists said that 500,000 new jobs would be created in 2 years. Here is what actually happened in 2005[1]. During the next year $299 billion was repatriated by 843 companies (out of 9700 companies that were eligible).Of this amount, $99 billion was repatriated by pharmaceutical companies (32% of the total), $58 billion was repatriated by computers and electronic equipment firms (18%). That compares to around $60 billion per year (on average) of total repatriations of foreign earnings by all companies, during the previous 5 years. How many new jobs were created? The top 15 repatriating companies reduced their total US employment by 20,931 jobs (about 35%) between 2004 and 2007.
CEOs agree: Corporate tax cuts won't trickle down - Despite all evidence to the contrary, Republicans continue to tout their tax bills as “middle-class tax cuts.” In reality, the bills making their way through Congress are tax cuts for the rich and big corporations, at the expense of working families. Any crumbs thrown towards low- and middle-income families disappear at the end of 2025, and left in their place are some tax increases, not cuts. But the tax cuts for big corporations — both cutting the headline rate and giving them tax advantages to offshore profits and jobs — are permanent. Under the Senate bill, in 2027, households making under $75,000 will see their taxes rise on average according to the Joint Committee on Taxation. And according to the Tax Policy Center, 62 percent of the benefits of the tax plan in 2027 would go to the top 1 percent — households currently making income of $730,000 or more. The real damage to working families will come in the near future; Republicans have already signaled their plans to leverage the deficits that result from their tax plan to gut Medicaid, Medicare and Social Security. Left with no other way to claim that the middle class wins out in these bills, proponents are claiming that the benefits to corporate tax cuts will trickle down. The logic goes like this: Corporate tax cuts will increase after-tax profits, which will boost private savings. Higher profitability will spur firms’ incentive to invest and the new savings will make funds available to finance these new investments. These investments will in turn boost productivity which will boost workers’ wages. This is a long chain of events that has to happen, and most of its links are pretty weak when tested against real-world data. After-tax corporate profits are already near historically high, and interest rates incredibly low, and yet investment has been weak.
Why is Defense Waste Taboo in the Tax Debate? - For all the talk about the big Republican tax cut it’s really only about $150 billion per year—although proponents multiply it by 10 years, so that $1.5 trillion sounds like a lot. Arguments about how to pay for it may end up derailing or neutering it in the end. Which is ironic, since Trump wants to add $50 billion to the defense budget. But no one wants to talk about defense waste during these tax debates. Why is the Pentagon budget untouchable?The waste in defense today is incredible. It’s not that Americans don’t inherently care: My 2013 article, 16 Ways to Cut Defense is still at the top of the search engines after four years. Just to mention a few of the 16 ways: Cut some of the 4,000 military bases in the U.S. Most of them were set up in horse and buggy days before highways and helicopters brought them all closer together. Another, combine the Army and Navy hospital system. Furthermore, TRICARE costs another $50 billion to give mainly non-combat veterans free family health insurance for the rest of their lives.Here’s another suggestion: Test military weaponry before the Pentagon orders it. There is vast corruption in placing supply factories in key congressional districts to build a constituency for new weapons even before their design is tested. The biggest boondoggle from this is the $1.4 trillion F-35 fighter plane program. We should return to bidding out contracts for the lowest costs. As for personnel, cut the number of civilian Pentagon employees, which is now around 800,000 persons. There are too many officers—the Army and Navy have about one for every four to five enlisted men, some triple the number compared to World War II. Generals are equally super abundant and never get fired. In World War II, General Marshall fired dozens of them. And when every bomb now hits its target why do we need so many bombers? And let’s not forget the trillion-dollar nuclear weapons modernization program started by President Obama, and continued with President Trump, which will add new nuclear weapons to the arsenal.
Two top Republican tax writers reveal their prejudice and their strategy – Jared Bernstein - On Saturday, Sen. Charles E. Grassley, a Republican from Iowa and member of the Senate’s tax writing committee, said this about repealing the estate tax:“I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” A few days before that, the chair of the committee, Sen. Orrin G. Hatch (R-Utah), said this regarding Congress’s failure to reauthorize the Children’s Health Insurance Program, which provides Medicaid coverage to 9 million kids in low-income families: “The reason CHIP’s having trouble is because we don’t have money anymore, and to just add more and more spending and more and more spending, and you can look at the rest of the bill for the more and more spending.”
How Not to Debate the Tax Plan --The tax bill that just passed in the Senate was the brainchild of the Republican leadership. For decades the party has been pushing a plan to redistribute society’s resources into as few hands as possible. Senate Democrats — and the constituents who pressured them at home and on Capitol Hill — pulled off an impressive feat getting even their most conservative colleagues to fall in line with the party’s unanimous vote against a tax bill certain to reshape the economy to suit the 1 percent even better than it already does. But party leaders shouldn’t get off scot-free. It’s hard to say what congressional Democrats themselves could have done differently regarding this tax plan. Sweeping tax reform has been a longstanding priority for the modern GOP. With their egos bruised after several failed policy pushes on issues like health care and immigration, congressional Republicans came in to the tax battle hellbent on getting something passed — ideally with as many Easter eggs for the party’s wealthy donors as possible. Democrats’ failings in this fight were more cringeworthy than defeat-inducing. Senate Democrats’ social media arm put out memes and videos of Ronald Reagan passing tax reform in the mid-eighties as an apparent appeal to bipartisanism. Speaking against the bill, House minority leader Nancy Pelosi described the tax plan with the crying-face emoji in an apparent appeal to millennials.
Tax reform to unleash business lending? Not so fast - Over the past year, as business lending has remained stuck in the doldrums, bankers have largely pinned the blame on Washington lawmakers' failure to get things done, especially slashing taxes. So it stands to reason that, with Congress poised to permanently cut corporate tax rates in the weeks ahead, a surge in lending could be right around the corner. But CEOs at some of the nation’s biggest banks aren’t holding their breath. Speaking at an industry conference in New York, PNC Financial Services Group CEO Bill Demchak threw cold water on the idea that a tax overhaul will unleash a wave of pent-up loan demand. “I don’t know that there’s going to be a pickup in growth,” Demchak said. “I’d ... have to say that I think [gross domestic product] is going to be 5% next year, and I don’t think that’s going to be the case,” PNC CEO Bill Demchak says in explaining why he does not expect a tax overhaul to supercharge commercial lending. Provisions in the tax bill to enhance the deduction for capital expenditures would likely encourage companies to invest and borrow more, Demchak said, but it’s “wildly optimistic” to assume that companies are simply standing on the sidelines, waiting for Congress to act before they decide to do so. Throughout the conference, which was sponsored by Goldman Sachs, several big-bank executives — from JPMorgan Chase, Wells Fargo and other companies — said that the looming reduction in corporate rates would likely boost business confidence. Under the version of the tax bill passed by the Senate on Friday, the corporate rate would fall to 20% from 35% in 2018. Still, some executives acknowledged that it will take more than a tax cut to boost commercial lending. Wells CEO Tim Sloan, for instance, said that higher interest rates will have a bigger impact on loan growth, encouraging businesses to take out bank loans instead of refinancing debt in the capital markets.
Mike Kimel on tax cuts plan economics - Here are some statements which, working off memory, I have written posts about and which I think are supported by US macroeconomic data from the last 100 years:
- 1. A tax cut generally gooses the economy in the short run (one – two years). That story is a Republican story – it boosts consumption which leads companies to expand to meet supply, etc.
- 2. Beyond the short run, assuming marginal tax rates of about 70% or less, a reduction in tax rates is correlated with slower economic growth. The classic Democrat story (lower tax rates –> lower collections –> lower government expenditure –> less transfers to poorer people who have a higher marginal propensity to consume) is partly right. But the bigger issue is that when tax rates are high, people who have made successful investments have more of an incentive to continue those investments than they do to cash in their chips and do something else (e.g., increase consumption, or move their investments into other areas which will, on average, be less successful because the investor given it is outside the person’s area of expertise). The explain it to your grandma version: if you are considering selling your business to buy a yacht, you will have less of an incentive to do it when tax rates are at 70% than at 20%, since at 70% you’d be getting a much smaller yacht with what is left.
- 3. A Republican might note that there is some conflict between stories 1 and 2. After all, in 1 freed up money –> more consumption –> more business activity, but in 2, freed up money –> more consumption –> less business activity. I think the difference between 1 and 2 has to do with sustainability. Much of the spending in story 1 is from pent up demand, which is to say, its a one time thing. The businesses created to satiate that pent up demand sooner or later find themselves without customers and going under. But story 2 is based on continuing v. cashing out of existing successful businesses or economic activity.
- 4. Optimal (real economic growth maximizing) top marginal tax rates for the US economy in the last 100 years or so has been somewhere in the neighborhood of 55% – 70%.
- 5. Tax rates have been below the optimum since 1982. Often well below. Not coincidentally, this is the period of time which constitutes what Tyler Cowen calls the Great Stagnation.
Deficit Talk Is a Trap. Will Democrats Fall Into It? - Gaius Publius: Government can spend money on the many, on the few, or on no one (by running a budget surplus). Which is the better choice?A budget surplus on the government side is a budget deficit on the economy’s side. –A fact you’ll rarely hear spoken on big-donor-owned media Just a few simple points about the recent tax bill here, but points critical to understanding what will unfold in the coming months and years.
- 1. As they did in the 1980s, Republicans are laying a “deficit trap” for Democrats. As they did before, they’re blowing up the budget, then using deficit scares to force Democrats to “be responsible” about cutting social programs — “because deficits matter.”
- 2. Big Republican donors want to see social programs — Social Security, Medicare, Medicaid — cut to the bone. (Big Democratic donors want the same thing, by the way. It’s why Obama’s many Grand Bargain attempts didn’t cost him a dime in big donor campaign contributions. But Republican are in charge now, so the attack is coming from them, and quite an attack it is.)
In the 1980s Republicans ran up the deficit, then forced Democrats, via the Greenspan Commission’s Social Security “fix,” to raise taxes on the middle class to unnecessarily over-fund the Social Security Trust Fund. This converted SS from a mainly pay-as-you-go system that increased revenues as needed via adjustments to the salary cap, to a pay-in-advance system, the excess money from which was then loaned back to the government to appear to offset large deficits. Notice the use of deficit fear in the push for cuts to social programs.
Monetary Mental Illness - J.d. Alt - It is literally painful to watch our political leaders’ efforts to rethink and restructure how we are going levy taxes on ourselves as a collective society. It is like watching a family member struggling with mental illness: the demons being wrestled with are imaginary—yet they have the palpable force somehow of a granite wall. And as the struggle with this palpable monolith unfolds, even we—the clear observers of reality—forget that it is imaginary; when we do remember, the pain becomes excruciating for the simple reason that we know it is completely unnecessary. Why does our political system choose to believe and struggle with the imaginary constraint that taxes must pay for sovereign spending? How can we explain to ourselves, in the face of this rock-solid demon, that the simple logic of fiat money demonstrates that sovereign spending must occur first, with taxes collected after? How can we reassure our terrified and confused representatives in congress that if our sovereign government collects back fewer dollars than it issues and spends, the difference is not our collective “debt”—it is, in fact, our collective savings? But the demon will not allow us these explanations. As is the case with every mental illness, the cruelest aspect to observe is how vulnerable our delusion is to being manipulated and taken advantage of by those who are self-serving and greedy. We actually believe the rich fat-cat when he tells us that if we choose to make him richer we, the poor strugglers, will be better off! How, we are told, can the rich fat-cat give us a new job if he is not made richer and fatter? We cannot, after all, give ourselves jobs—can we? Our sovereign government—which we cannot seem to understand represents our collective selves—can (and must) issue and spend fiat-currency. True! But that currency (our demons are whispering) cannot be spent by our collective selves to pay our individual selves wages to accomplish useful things for our families and local communities. The currency, instead (whisper, whisper) must be spent to fatten the fat-cat so that he can pay us wages to accomplish useful things for him. The pain of this logic makes you numb.
Grassley Opposes Tax Cuts for Non-Wealthy People Who Would Just Spend It on ‘Booze or Women or Movies’ - Chuck Grassley has been in the U.S. Senate for 37 years. At the end of his current term, he will be 89 years old. So perhaps he’s beyond worrying about his popularity among Iowa voters, and is just saying things other Republicans think but generally don’t say out loud. During an interview with the Des Moines Register, Grassley was confronted with evidence that the usual “family farms” defense of an estate tax repeal is, well, not true. In a Nov. 29 interview, Grassley was adamant about the need for change, even if farmers and small business owners represent a tiny minority of estate tax payers. The reason, he said, is as much philosophical as practical … “I think not having the estate tax recognizes the people that are investing,” Grassley said, “as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” Since the current exemption on income subject to the estate tax is $5.49 million (and twice that for couples), that’s a whole lot of people who are spending their money on trivialities — like each other (the charitable interpretation of Grassley’s reference to spending on “women”). What Grassley is almost certainly reflecting is the age-old conservative belief that the investor class is responsible for all good things, with everyone and everything else — including labor and consumption — representing human fodder for the economic machine. Since those wasteful non-wealthy people outnumber the thrifty, productive investors quite a bit, it is impolitic to admit this prejudice. But Chuck Grassley just did. As Jared Bernstein notes, this attitude is fully reflected in the tax bill the Senate passed early Saturday morning: If your income derives from your stock portfolio or your rich parent, this plan loves you. Otherwise, tough luck.
A quick note on CHIP, block grants, and the tax cut -- Jared Bernstein --This piece from the WaPo makes an important point, which I’d like to embellish a bit. A few months ago, Congressional authorization for the CHIP program expired, and they still haven’t reauthorized the funding, which is a block grant to states in support of this health coverage program for 9 million low-income kids and pregnant women.On Friday, Utah posted a notice online saying it probably will run out of CHIP funding by the end of January. Earlier in the week, Colorado notified families that their coverage might end early next year. Arizona, California, Ohio, Minnesota and the District are also nearing the end of their funding, as is Oregon, whose Democratic governor, Kate Brown, has directed the state’s health authority to continue financing CHIP through April out of its reserves. Unlike Medicare, Medicaid, SNAP, and other programs that automatically expand and contract with need, block granted programs depend on Congressional re-authorization. Therein lies one of the problems (I’ll get to another below) and the article raises an important concern:…imagine this same situation, but applied to Medicaid, the program that covers far more Americans — around 70 million.The reason Congress must reauthorize funding for CHIP is because it’s a block grant program, meaning that states are provided with a set amount of federal dollars instead of an ongoing funding stream (as with Medicaid).Were Congress to convert Medicaid into block grants, as Republicans tried to do in multiple health-care bills this year, it’s feasible lawmakers might show the same delay in letting funding lapse, throwing states into uncertainty on an even larger scale.In other words, what’s going on with CHIP is a potent warning against block granting other safety net programs, like Medicaid or SNAP (moreover, we’ve written that the CHIP block grant is set up to work better than the ones proposed for Medicaid). This is a very well known problem, btw, to those of us who followed the block-granting of TANF (cash payments to poor families). Its funding froze and its anti-poverty and counter-cyclical effectiveness have been hugely diminished. Here’s a new problem in this space. If the Republican tax bill passes, as I suspect it will, and they significantly reduce the state-and-local tax deduction, those states that want to raise the revenues necessary to support block-granted programs will have a much harder time doing so, since their residents can no longer write off most or all of these tax payments against their federal liabilities.
The Senate GOP Accidentally Killed Some of Its Donors’ Favorite Tax Breaks - On Friday, Senate Republicans rewrote the American tax code over lunch — and passed their (partially handwritten) legislation around 2 a.m. the following morning. Mitch McConnell never subjected his blueprint for restructuring the world’s largest economy to a single hearing. His caucus never invited experts to offer insight into the bill’s implications for housing, health care, higher education, outsourcing, or tax evasion. This haste had an upside for the Senate GOP: It allowed the party to pass deeply unpopular changes to the tax code before the public had time to learn about them. But approaching major legislation like an Adderall-addled sophomore approaches an overdue term paper came with a minor drawback: It forced the party to pass a tax bill before they had time to read it. In hindsight, McConnell should have asked for an extension. While Republicans were manically outlining their plans to take from the poor to give to the Trumps, they also, accidentally, nullified all of their corporate donors’ favorite deductions. This screwup — like most of the tax plan’s oddest features — was born of a math problem. Due to arcane Senate rules, the Trump tax cuts can only add $1.5 trillion to the deficit over the next decade. Last Thursday, the Senate tax bill already cost about that sum, and then McConnell started making expensive promises to his few holdouts. Susan Collins wanted a $10,000 property tax deduction for Americans in high-tax states; Ron Johnson wanted a 23 percent business-income deduction for the company that his family owns. This left the Senate Majority Leader searching under the tax code’s couch cushions for new sources of revenue. Eventually, he came upon the corporate alternative minimum tax (AMT). At present, most corporations face a 35 percent (statutory) rate on their income. But by availing themselves of various tax credits and deductions, most companies can get their actual rates down far below that figure. To put a limit on just how far, the corporate AMT prevents companies from paying any less than 20 percent on their profits (or, more precisely, on the profits that they fail to hide overseas). The GOP had originally intended to abolish the AMT. But on Friday, with the clock running out — and money running short — Senate Republicans put the AMT back into their bill. Unfortunately for McConnell, they forgot to lower the AMT after doing so. With this blunder, Senate Republicans have achieved the unthinkable: They’ve written a giant corporate tax cut that many of their corporate donors do not like. As The Wall Street Journal reports:
Senate Bill ‘Bombshell’ Could Raise Taxes on Tech -- A last-minute change that U.S. senators made to their tax bill before passing it early Saturday morning would result in higher-than-intended taxes for technology firms and other corporations, tax experts said. In a shift now under scrutiny by corporate tax officials and lawmakers alike, Senate tax-writers made an unexpected decision to keep the existing 20 percent alternative minimum tax for corporations -- a move that imperils GOP promises of business growth and more hiring, tax lawyers and lobbyists said. Keeping the provision -- which had been set for repeal in an earlier version of the bill -- was “a very unpleasant surprise,” wrote Caroline L. Harris, chief tax counsel for the U.S. Chamber of Commerce, in an article titled “The Alternative Minimum Tax Bombshell.” The chamber and other groups are calling for repealing the AMT. Under current law, the corporate AMT serves as a kind of insurance policy designed to prevent companies from using various breaks to pay too little tax. But because the Senate bill would also cut the regular corporate income tax rate to the same 20 percent level, the AMT would hit virtually every U.S. company, according to experts. “The fact is, almost everyone who’s a corporate taxpayer is going to be an AMT taxpayer” As a consequence, planned tax breaks in the Senate bill related to intellectual property and to spending on new equipment -- along with the existing research and development tax credit -- would lose their effect.
In Dramatic Reversal, Top Senate Republicans Now Want To Repeal AMT They Passed Just Days Ago -- When we laid out the key highlights of the Senate tax plan passed just before 2am on Saturday morning, we made one thing clear: nobody had read the massive 479-page bill which had several pages with handwritten revisions in the margin. Now, three days after the bill's passage and with tech stocks slumping around the globe after at least a few tax experts noticed "The Alternative Minimum Tax Bombshell", or the retention of the controversial corporate AMT clause which "imperils GOP promises of business growth and more hiring," republicans appear to have finally figured out that rushing to pass the biggest tax overhaul since Ronald Reagan in the deep of the night wasn't the best idea, and according to Bloomberg, the chief Senate tax writer - the person who put together the bill that was passed 51-49 in the first place - wants AMT repealed.According to Bloomberg, in a stunning reversal, two influential GOP senators - Senator Rob Portman of Ohio, one of the chamber’s main tax writers, along with Senator Orrin Hatch, chairman of the tax-writing Senate Finance Committee - said their preference is to repeal the corporate AMT. “I’m not a big AMT fan,” said Portman, who also wants to repeal the individual AMT. “I’d like to end up there, but we’ve got to do the back and forth with the House.” Hatch added: “I’d like to get rid of it.” Well, it was your bill, and you added the AMT: how did that happen? We don't know - perhaps the Goldman Sachs ghostwriter of the tax bill was unaware of that one small detail and left it in. As previously discussed, in a last-minute change, the Senate bill preserved the corporate AMT at its current 20 percent rate, along with a modified version of the individual AMT. The House legislation repeals both levies. The result has been a swift and sharp slide in tech stocks, which is probably what clued in the Senate that it is about time to read what they had actually passed.
Chief Senate Tax Writers Prefer AMT Repeal - House and Senate lawmakers plan to begin working this week on compromise tax-overhaul legislation -- a key step in their drive to send a package of tax cuts for corporations and individuals to President Donald Trump by the end of the year. Here are the latest developments, updated throughout the day: Two influential GOP senators -- Senator Rob Portman of Ohio, one of the chamber’s main tax writers, along with Senator Orrin Hatch, chairman of the tax-writing Senate Finance Committee -- said their preference is to repeal the corporate AMT.“I’m not a big AMT fan,” said Portman, who also wants to repeal the individual AMT. “I’d like to end up there, but we’ve got to do the back and forth with the House.”Hatch added: “I’d like to get rid of it.”In a last-minute change, the Senate bill preserved the corporate AMT at its current 20 percent rate, along with a modified version of the individual AMT. The House legislation repeals both levies. Another GOP member, Senator David Perdue of Georgia, said he too would like to see the AMT eliminated for corporations and individuals by the House-Senate conference committee that’s expected to begin working out compromise legislation this week.“We couldn’t go all the way because we needed the revenue,” Perdue said, referring to the corporate AMT. Repealing it would have cost about $40 billion over a decade -- which shows just how close tax writers were to hitting the $1.5 trillion deficit limit set by their budget resolution. Perdue added that his top priority is setting the corporate rate at 20 percent.President Donald Trump endorsed the work of the conference committee early Tuesday afternoon, calling the panel a “mixer,” where lawmakers will pick the good things and get rid of the things they don’t like. The result will be “something that is perfecto,” Trump said.
Republican Leaders Consider 22% Corporate Rate: WaPo -- With Republican leaders still frantically scrambling to find last-minute fixes in their tax-reform plan that will help win over moderate Republicans and deficit hawks who could create problems during the reconciliation process, the Washington Post is reporting that Republican leaders are considering a deal to roll back the corporate rate to 22%.Rumors that Republicans would be forced to accept a higher corporate rate to help offset bigger cuts for small businesses have circulated for weeks. But with Republicans hoping to win approval this week in the senate to begin the reconciliation process, time is quickly running out for Republicans to deliver a tax reform bill to Trump’s desk by year’s end. As WaPo explains, the House and Senate passed separate tax cut packages in recent weeks, and both bills would lower the corporate tax rate from 35% to 20%. But GOP negotiators are now openly discussing the possibility of moving that rate up to 22% in order to free up more revenue, people familiar with the discussions said. One of those people said the 22 percent rate is “seriously under discussion.”As is the case with most WaPo and New York Times exclusives, the information comes with the caveat that Republican strategy can change: in other words, this decision is not yet final. The White House has until recently been resistant to making this change, but President Trump said casually on Saturday morning that the 22% corporate rate might be necessary. Each percentage point that is added back to the corporate rate would free up around $100 billion in revenue over 10 years.Before tax reform can reach Trump’s desk, the House and Senate must pass matching bills following a process called reconciliation. But there are a number of changes that Republicans want to make that would make the package more costly, and the package cannot add more than $1.5 trillion to the debt over 10 years according to Congressional rules.
Trump’s casual tax comments scald his Hill allies, again - Oops, President Donald Trump did it again. His casual mention of a 22 percent corporate rate on his way to New York last Saturday kicked off a week of unexpected haggling on a topline tax issue many considered already settled, just as congressional negotiators are rushing to get a final bill to the president in time for Christmas — a date he himself has insisted on. It’s the latest example of the president getting in the way of his party’s major legislative goal, even if unintentionally, and once again shows the perils for policymakers and legislators in the Trump era, when an unexpected, off-the-cuff comment or tweet can undo weeks of work. On Friday, more than 20 conservative groups — including Americans for Tax Reform, Club for Growth, FreedomWorks and the National Taxpayers Union — sent a letter to congressional conferees reminding them that the groups’ original support for any tax overhaul was tied to that magic 20 percent figure. “We’re not into this screwing around about the corporate rate,” said Adam Brandon, president of FreedomWorks. “The 20 percent rate is incredibly important to us because we need the rates as low as possible to make sure we get 3 percent economic growth heading into the election.” Trump’s 22 percent comment reminded some of the moment, following the House’s tough passage of its health care bill, in which Trump undercut lawmakers by calling the bill “mean.” This 22-percent instance was not as politically lethal, said former congressional aides — especially since the tax legislation seems on track to ultimately pass and that matters the most. But it showed that, once again, “Trump is not engaged with the specifics at all on the debate,” added a former Senate leadership aide.
Republicans Reverse, May Allow State Income Tax Deduction -- One day after the top Senate Republicans realized they probably should have read the tax bill they voted for in the deep of the night on Saturday morning, and announced they are seeking to repeal the Alternative Minimum Tax they passed just days earlier, realizing it could punish growing companies, they now also appear to be reversing on the controversial repeal of State and Local Tax Deductions, and as Bloomberg reports, Republican lawmakers "are discussing a compromise on state and local tax deductions that would allow taxpayers to deduct state income tax, House Ways and Means Chairman Kevin Brady said."According to one proposal being discussed, taxpayers could deduct both their state income tax and state and local property taxes up to a combined limit of $10,000. This differs from the currently circulating bills which preserve the individual deduction for state and local property taxes - capped at $10,000 - but not for income taxes. The push to include income taxes could help those in high-tax states who don’t own property.Mitch McConnell confirmed he’s open to tweaking final tax legislation to appease lawmakers who want to let constituents deduct state income taxes: "There’s some in the House who would like to see that applied not just to property, but to income tax, you know, where you can sort of pick which state and local tax you want to deduct,” the Kentucky Republican said on conservative radio host Hugh Hewitt’s show. “That sounds like a kind of reasonable idea.” Summarizing the conference process, McConnell said "There are a lot of these things that are floating back and forth,” adding that he cannot predict “exactly how the final product turns out” once the House and Senate complete their conference negotiations.
Lobbyists and Tax Lawyers Giddy Over Republican Tax Giveaway - Tax reform is a principle that, in the abstract, commands support from economists on both the left and the right. The theory holds that the quality of the tax code tends to degrade over time, as clever tax lawyers discover new loopholes, and powerful business interests use their influence to gain special treatment. A poorly designed tax code will encourage people to structure their activities around obtaining favorable tax rates, rather than following market signals. Tax reform is understood as a good-government initiative to remove political favoritism from the tax code and put different forms of economic activity on an even footing. But the bills Republicans have passed in each chamber are not “tax reform” in any meaningful sense of the term. They are the precise opposite of it. Rather than removing political interference from the tax code, the Republicans instead set out to create more of it. The bill was designed by corporate lobbyists and Republican partisans, rewarding pro-Republican business interests and punitively targeting politically hostile ones. “It’s death to Democrats,” gloats Trump adviser Stephen Moore, with more than a touch of hyperbole. “They go after state and local taxes, which weakens public employee unions. They go after university endowments, and universities have become playpens of the left.” Meanwhile, the bill lavishes rewards on industries friendly to the Republican majority. Oil and gas receive favorable treatment at the expense of renewable energy. Real estate — perhaps not coincidentally, the Trump family business — makes out like a bandit. The haste with which the bills have been written and passed, combined with the unchecked influence of lobbyists, has resulted in a complex blizzard rife with loopholes. “Suddenly, there are a dozen different tax rates that apply to different businesses, in different industries, and to different investments,” Adam Looney, a former Treasury Department official, tells the New York Times. “The speed with which they’re doing this creates a level of ambiguity that will keep tax lawyers and tax professionals busy for 20 years,” adds tax lawyer Scott D. Michel. The proliferation of rates creates unlimited opportunities for gamesmanship.
House Conservatives Warn About Spending After Tax Cuts - A faction of conservative Republicans is raising warnings about federal spending, two weeks after backing tax-cut legislation that would raise federal deficits by $1 trillion over the next decade. They say that compromises struck with moderate Senate Republicans, as well as negotiations to keep Democrats from filibustering spending bills, will contain measures that increase government spending. Mark Meadows, the North Carolina Republican who is chairman of the conservative House Freedom Caucus, wouldn’t say how far he’s willing to push Republican leadership. His goal is to make sure “we don’t end up bloating our federal spending any more than it already is.” After meeting with House Speaker Paul Ryan and Majority Leader Kevin McCarthy on Wednesday, Meadows said there had been progress and that he hoped for a resolution within “hours, not days.” Meadows said the Freedom Caucus is now focused less on pushing for a stopgap funding measure that runs through Dec. 30, instead of the Dec. 22 date backed by House leaders, and more on getting a commitment to pass a defense spending bill separate from 11 other spending measures. Doing that, and pairing it with disaster aid and children’s health insurance funding, could force Senate Democrats to go along with higher defense spending without similar increases for domestic priorities, he said. Current funding runs out on Saturday. As Congress turns attention to funding the government after months devoted to passing the tax cut package, some of the lawmakers who dismissed Congress’s own analysis that the tax cuts would add deficits are raising alarms about spending. That may threaten some of the deals Senate Republican leaders cut to secure votes for the tax plan, including heading off cuts to Medicaid and legislation to stabilize Obamacare insurance markets.
To Pay for Tax Cut, Trump Mulls Taking Food From Poor Kids -- Once he’s done delivering hundreds of billions in tax breaks to the idle rich, Donald Trump hopes to take food and medical care away from the idle poor. Earlier this year, the third item on the president’s legislative agenda appeared to be an overhaul of America’s infrastructure. But congressional Republicans never had much appetite for investing in new public goods (except, of course, for those that can be used to kill people overseas). And now that they’ve added $1.5 trillion to the deficit for their potential regressive tax cuts, rebuilding the nation’s bridges is a total nonstarter on Capitol Hill. . Paul Ryan hopes to use his party’s starvation of “the beast” as an excuse for starving low-income children — and Trump is happy to oblige. As The Wall Street Journal reports: As Republicans near the finish line on a long-sought tax overhaul, President Donald Trump has committed them to taking up a welfare-revamp fight next … The president didn’t offer specifics about which of the dozens of welfare programs he was seeking to change, or how. But congressional Republicans who have been pushing him for months to pursue the issue have proposed layering tougher work requirements on beneficiaries of programs such as food stamps, which are used by around 43 million Americans, and the cash benefit known as Temporary Assistance for Needy Families, which is received by around 3.5 million people. Meanwhile, the Trump administration is signaling that it will allow Republican-led states to begin requiring drug tests for all food-stamps recipients, and imposing work requirements on Medicaid applicants. Some Republicans will frame these “welfare reforms” as fiscal necessities. Some liberals, meanwhile, will decry them as the inhumanly cruel price of the Trump tax cuts. But both these claims are dubious. For the moment, neither the president nor congressional Republicans look interested in slashing Medicare or Social Security in a midterm election year. So long as this remains the case, the GOP’s attack on the safety net can’t be credibly described as a crusade for deficit reduction. Even if Republicans succeed in significantly scaling back assistance to the poor, it will have a minuscule impact on the nation’s long-term fiscal health. The United States simply doesn’t spend a lot of money caring for its least-fortunate citizens.
Food Stamp Fight Looms In Congress After Tax Code Overhaul ― Democrats have warned that after passing a tax bill that adds to the national debt, Republicans will say it’s all the more urgent to cut Social Security and Medicare. While overhauling those popular programs is a long-term Republican goal, in the near-term conservative lawmakers are more eager to cut food stamps. Rep. Jim Jordan (R-Ohio), founder of the House Freedom Caucus, told HuffPost on Tuesday that the influential bloc of conservative Republicans will push for “welfare reform” legislation next year that would add new restrictions on Supplemental Nutrition Assistance Program benefits.“That’s what’s coming,” Jordan said, adding that President Donald Trump and House Speaker Paul Ryan (R-Wis.) support the idea. ”It’s got huge support. We just need to get it done next year.”He said the basic idea would be new restrictions on able-bodied adults ― even if they have children ― along the lines of a bill he introduced earlier this year. Robert Rector, a welfare expert with the conservative Heritage Foundation, said Jordan’s bill would cut SNAP spending by 20 percent over 10 years, which would amount to more than $100 billion. ″There’s significant savings if you do it right,” Jordan said. Roughly 42 million low-income Americans, of whom 44 percent are children, receive monthly SNAP benefits that can be used to buy food in grocery stores ― making it one of the U.S. government’s biggest and most expensive economic safety net programs. Jordan and Freedom Caucus chairman Rep. Mark Meadows (R-N.C.) talked about the idea with Trump earlier this year, and Jordan said the president is enthusiastic about it. Trump said during a speech in Missouri last week that Republicans would soon tackle welfare reform. “I know people, they work three jobs and they live next to somebody who doesn’t work at all,” Trump said. “And the person who’s not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off.”
Republicans Plan to Cut Food Stamps as Homelessness Rises in the US -- Yves Smith – Even though poverty is a difficult, many-faceted problem, the US stands out in how openly it hates the poor, even as its economic system looks increasingly designed to produce more of them. The Republican party, doing the bidding of members of the 0.1% and ideologues who treat poverty as the result of the lack of a work ethic, have made cutting the food stamp program a top priority. An overview from Huffington Post: Rep. Jim Jordan (R-Ohio), founder of the House Freedom Caucus, told HuffPost on Tuesday that the influential bloc of conservative Republicans will push for “welfare reform” legislation next year that would add new restrictions on Supplemental Nutrition Assistance Program benefits… He said the basic idea would be new restrictions on able-bodied adults ― even if they have children ― along the lines of a bill he introduced earlier this year. Robert Rector, a welfare expert with the conservative Heritage Foundation, said Jordan’s bill would cut SNAP spending by 20 percent over 10 years, which would amount to more than $100 billion…. Roughly 42 million low-income Americans, of whom 44 percent are children, receive monthly SNAP benefits that can be used to buy food in grocery stores ― making it one of the U.S. government’s biggest and most expensive economic safety net programs. Jordan and Freedom Caucus chairman Rep. Mark Meadows (R-N.C.) talked about the idea with Trump earlier this year, and Jordan said the president is enthusiastic about it… Before we turn to this Republican implementation of one of Lambert’s rules of neoliberalism, “Go die,” note that Democrats are all with the bogus premise that Federal deficit spending is a problem, and therefore budget cuts are necessary and desirable. Since neither party will cut military spending or corporate pork, the only thing left to cut is social safety nets. So don’t kid yourself about the Democrats. They’ll make cuts, but slowly and with feigned regret, while as we can see from the quotes in the HuffPo article, the Republicans make them with glee.
Trumponomics is in fact novel, we neglect it at our peril -- Tyler Cowen -- That is the topic of my latest Bloomberg column, here is the opening bit: I’ve seen hundreds of articles on President Donald Trump and trade, but the real significance of the Trump economic revolution — for better or worse — is a focus on investment. There is no coordinating mastermind, but if you consider the intersection between what the Trumpian nationalists want and what a Republican Congress will deliver, it’s this: wanting to make the U.S. a new and dominant center for investment, including at the expense of other nations. And: In essence, a new kind of supply-side economics has been invented. The theory of the 1980s focused mainly on individuals, and lowering the tax rates they faced on labor income and capital gains. Cutting these rates was supposed to mobilize the power of those individuals, through more work or more investment. The idea today is that the real power of mobilization comes through corporate associations. Assuming the tax bill passes, that theory is about to get a major test. Strikingly, the tax bill and the trade policies of the Trump administration can be viewed as having a similar underlying philosophy, whether entirely intended or not. One of the president’s first official acts was to withdrawal from the Trans-Pacific Partnership. Although I favored that agreement, as did most other economists, it’s worth considering what the most intelligent nationalist case against the TPP looks like. It’s not about trade, because the deal wouldn’t have affected tariff rates faced by Americans very much (exports of beef to Japan aside). Rather, the TPP would have given American certification to Vietnam, Malaysia and eventually other emerging economies as stable repositories of foreign investment from multinationals. That could in turn draw investment away from the U.S. Do read the whole thing, it is my favorite recent piece by me.
Collins’ Obamacare deal faces moment of truth - Sen. Susan Collins is barreling toward yet another health care showdown with her own party. But this time, she might not have the leverage to get what she wants. Republicans who watched Collins lead the rebellion over the GOP’s Obamacare repeal effort just three months ago are playing tough on yet another high-stakes bill, wagering they can do without the Maine moderate’s swing vote and still claim a narrow year-end legislative win on tax reform. Collins went along with the tax bill that repeals Obamacare’s individual mandate after Senate Majority Leader Mitch McConnell pledged to pass a pair of bills propping up Obamacare’s shaky insurance markets, including a bipartisan deal resuming payments on key subsidies that President Donald Trump halted in October. But Speaker Paul Ryan has made clear he’s not bound by the deal, and there’s little urgency among House Republicans to do much of anything on health care before the end of the year. On Thursday, Republican Study Committee Chairman Mark Walker said conservatives received assurances that talks on a spending package to keep the government open won’t address Obamacare. “The three things we were told are not gonna happen as part of our agreement: no CSRs, no DACA, no debt limit,” he said, referring to efforts to fund Obamacare’s cost-sharing subsidies. That could cost Collins’ support after she signaled that her vote on the final bill may hinge on the fate of the health care measures.
Children’s Health Insurance Program to Expire Under GOP Tax Bill - Nine million children will go without health insurance under the new GOP tax bill, says NEP’s Bill Black in his latest appearance on The Real News Network. You can view here with a transcript.
“Congressional Leaders Signal They Intend to Kick the Can Down the Road on CHIP” Again -- Chair of the House Appropriations Committee since 2017, Rodney Frelinghuysen’s campaigns have been funded by the aerospace, defense, pharmaceutical and health care industries. On domestic issues, he opposes legalized abortion, Planned Parenthood, sanctuary cities, and federal regulation of greenhouse gas emissions. He endorsed Donald Trump in the 2016 presidential election. He voted to repeal the Patient Protection and Affordable Care Act (Obamacare) and replace it with the American Health Care Act (AHCA). He was criticized for purportedly failing to have in-person town hall meetings since 2013, as well as writing a letter which had the effect of threatening an opponent’s employment. It does appear Congressman Rodney Frelinghuysen has some irons in the fire when it comes to woman’s healthcare, healthcare in general, the healthcare industry, and who is a priority in healthcare plus sanctuary cities and green-house gases. Definitely unbiased irons as Congressman Frelinghuysen, like Michigan’s Mike Bishop, refuses to meet with his constituents and learn of their interests. His “Chip Further Continuing Appropriations Bill” passed by the Senate was reported-on by the Georgetown University Health Policy Institute, Center for Children and Families’ Joan Alkers. The bill does not solve the 5 year funding issue for CHIP as proposed in another Republican led bill. What is coming to pass is a stopgap measure taking unused CHIP funding and giving portions of it to states running out of funding. What is Stopping CHIP Funding? The Hill blames it on Congress not reaching an agreement on how to fund the CHIP for children. The issue lies with the Republican Congress which wishes to take funds from other programs, etc. to fund the Children Health Insurance Program.
- • Additional Means testing of certain higher income seniors. (if you start with this, it will grow to other things also. This is another Republican scam.) • Allowing states to kick out Medicaid beneficiaries if they win the lottery (This can be done by asking for a waiver from the Republican run CMS). • Shortening the grace period for people paying their Obamacare premium payments late. (The point to this is to penalize those who have lower incomes and have trouble paying during certain time periods.)
- • Cutting more than $5 billion from the Affordable Care Act’s prevention and public health fund. These funds are used for the ACL, CDC, and SAMHSA programs.
- Not satisfied with holding children hostage in the continental United States, Republicans are also holding Puerto Rico Medicaid funding hostage.
Where the Fuck Is Trump’s Infrastructure Plan? -- Infrastructure was essential to Donald Trump’s 2016 campaign. His enthusiasm for a $1 trillion building plan to overhaul America’s roads, bridges, and other vital facilities set him apart from his spending-shy Republican opponents, and the idea was also popular with voters. Last November, just after his electoral victory, he promised to have an infrastructure bill before Congress in his first 100 days in office. In a February speech to Congress, he reaffirmed his commitment to fast action on infrastructure. Just this Thursday, the White House promised that it would release a 70-page plan—still not a full bill, but a template Congress could use to create legislation—before Trump’s first State of the Union speech on January 30, 2018. By now, it shouldn’t surprise anyone that Trump would hype up plans that don’t exist or propose timelines he can’t keep. “The administration has eliminated our ability to give them the benefit of the doubt” on timing, said Adie Tomer, an infrastructure expert at the Brookings Institute, by using “really bombastic language” but failing to act on it. Trump has taken some action on most of his other key priorities and 100-day promises, even if that action has been largely delayed, dysfunctional, or doomed. So where’s his infrastructure plan? The common narrative is that infrastructure just got lost in the scrum of the failed effort to kill the Affordable Care Act and the ongoing slog to pass tax cuts. “As often happens, this long-term problem that requires a huge allocation of funding to make a difference takes a back seat to more politically immediate priorities,” said infrastructure policy wonk Joel Moser.That, the narrative goes, was a hugely consequential decision. “Had they started with infrastructure,” said Marcia Hale of the bipartisan infrastructure advocacy group Building America’s Future, “we might be in a very different place with our politics.” Theoretically at least, it would have been a much easier legislative lift that might have drawn in Democratic support, proving that Trump could cut deals on Capitol Hill and get things done.
Net Neutrality: AT&T Court Case Could Let Telecoms Slow Internet Speeds At Will -- When the Trump administration proposed to repeal “net neutrality” rules, the initiative moved telecommunications companies one step closer to their goal of scrapping regulations that prevent them from preferencing internet content they like, and slowing down content they don’t. The initiative has drawn widespread condemnation, but it was not the only step in the industry’s battle to deregulate the internet: an imminent ruling in an obscure court case could end up leaving no federal or state agency with any right to police telecom companies’ treatment of millions of customers. Without regulatory protections, consumer advocates warn, internet service providers like Comcast and Verizon could speed up, slow down, or block whichever content they choose for whatever reasons they choose — whether to charge money for fast lanes or to prevent users from accessing content critical of their political agenda. Despite those concerns, the Trump administration issued a headline-grabbing net neutrality proposal in April, led by FCC Chairman Ajit Pai, that would preempt states from regulating internet traffic, and officially terminate the Federal Communications Commission’s jurisdiction over internet service providers. That move would return jurisdiction to the Federal Trade Commission, which has been seen as a weaker regulator because it cannot preemptively set rules but only take action after abuse harming consumers has occurred. Some conservative groups have nonetheless insisted that the FTC would be a robust watchdog, but an AT&T case moving forward in the U.S. Court of Appeals for the Ninth Circuit threatens to concurrently eliminate even the FTC’s comparatively weak right to regulate the internet. Taken together, if the FCC does not delay its vote until the court rules, the net neutrality initiative and court ruling could end up creating a complete regulatory vacuum. After the FTC brought an enforcement action against AT&T, the communications giant argued that the FTC does not have jurisdiction over the matter because a different segment of AT&T’s business is also regulated by the FCC. That argument was, in effect, a new reading of the “common carrier” exception and the case (FTC vs AT&T Mobility) found its way to the Ninth Circuit, which sided with AT&T and undercut the FTC’s regulatory authority.
FCC's net neutrality repeal sparks backlash | TheHill: The Federal Communications Commission’s (FCC) plan to scrap net neutrality rules governing how internet service providers handle web traffic has unleashed a wave of intense opposition. FCC Chairman Ajit Pai, a Republican, announced last month that the agency would vote to undo its 2015 net neutrality rules, which prevent companies like Verizon and Comcast from blocking or slowing down websites or creating internet “fast lanes.” The plan was met with instant backlash from net neutrality supporters, who have been rallying to save the rules for the better part of a year. As of Sunday afternoon, at least 750,000 people have called Congress since Pai announced his plan, according to battleforthenet.com. And activists are planning hundreds of demonstrations at Verizon stores — Pai was associate general counsel at the telecom giant from 2001 to 2003 — and congressional offices across the country next week in protest of the planned vote. Evan Greer, the campaign director for the pro-net neutrality group Fight for the Future, said she was surprised by the outpouring of support for net neutrality in the days following Pai’s announcement just before Thanksgiving.Pai’s rollback is expected to pass when the FCC votes on it this month. Still, Greer says it’s important to pressure Congress to intervene. “The reality is that Congress provides a critical role in overseeing the FCC,” she said. “If they sit back and do nothing and allow the FCC to move forward with this vote, then the blood of the internet is on their hands as well, and they will be to blame for getting rid of these basic consumer protections.”
ISP disclosures about data caps and fees eliminated by net neutrality repeal - Hidden fees that show up on broadband bills after customers sign up for service have long been a source of frustration for Internet users. Because advertised prices often don't reflect the full cost of service, the Federal Communications Commission in 2015 forced ISPs to be more transparent with customers about hidden fees and the consequences of exceeding data caps. The new requirements were part of the net neutrality rules—and are therefore going to be eliminated when the FCC votes to repeal the rules next week. The 2010 requirement had ISPs disclose pricing, including "monthly prices, usage-based fees, and fees for early termination or additional network services." That somewhat vague requirement will survive Pai's net neutrality repeal. But Pai is proposing to eliminate the enhanced disclosure requirements that have been in place since 2015. Here are the disclosures that ISPs currently have to make—but won't have to after the repeal:
- Price—the full monthly service charge. Any promotional rates should be clearly noted as such, specify the duration of the promotional period and the full monthly service charge the consumer will incur after the expiration of the promotional period.
- Other Fees—all additional one time and/or recurring fees and/or surcharges the consumer may incur either to initiate, maintain, or discontinue service, including the name, definition, and cost of each additional fee. These may include modem rental fees, installation fees, service charges, and early termination fees, among others.
- Data Caps and Allowances—any data caps or allowances that are a part of the plan the consumer is purchasing, as well as the consequences of exceeding the cap or allowance (e.g., additional charges, loss of service for the remainder of the billing cycle).
Pai's proposed net neutrality repeal says those requirements and others adopted in 2015 are too onerous for ISPs.
How Bots Broke The FCC's Public Comment System -- ON A SINGLE day in late May, hundreds of thousands of public comments poured into the Federal Communications Commission regarding its plans to roll back net neutrality protections. A week and a half later, on June 3, hundreds of thousands more followed. The spikes weren't the voices of pro-net neutrality Americans, worried what will happen if the FCC allows internet service providers to block and throttle content whenever it so chooses. In fact, they weren’t really voices at all. According to multiple researchers, more than one million of the record 22 million comments the FCC received were from bots that used natural language generation to artificially amplify the call to repeal net neutrality protections. That number may only represent a fraction of the actual bot submissions. The New York Attorney General's office is currently investigating their source.But while reports so far have focused on bad actors flooding the FCC with phony content, some of those same techniques also allowed legitimate groups, like the Electronic Frontier Foundation, to tell their members to click a button and send an auto-generated—albeit earnest—comment to the FCC, creating a groundswell of activism among actual humans. The result: A net neutrality comment period that garnered more input from the public than all previous comment periods across all government agencies—combined. “It makes it easier for people to speak out, but much more difficult for them to be heard,” says Zach Schloss, an account manager at FiscalNote, a government relationship management company that’s been analyzing the FCC’s comments.Now, as the commission attempts to sift through this unprecedented abundance of comments, discerning the legitimate from the bots could prove an insurmountable task. The net neutrality comment debacle illustrates a central challenge of managing open platforms in an age of automation. Bots are overtaking the very system that’s supposed to give consumers a say in the rules that govern them, but weeding them out may jeopardize legitimate comments.
Rural America Is Building High-Speed Internet the Same Way It Built Electricity in the 1930s -- From sticking antennae on grain silos to teaching neighborhood teens how to do home installs, it’s fascinating to document all the innovative ways underserved communities are building their own internet. But for many rural areas of America with little or no access to broadband, the answer to closing the digital divide could be something that predates the internet itself.Electric cooperatives were developed across the US in the 1930s as part of FDR’s New Deal. These not-for-profit organizations received federal subsidies to build out electricity infrastructure to power up rural America. Co-op members pay to join, and pay for their electric usage, but any extra money is reinvested into the co-op, or paid back to members. Now, many of these co-ops are taking on the digital divide by offering high speed fiber optic internet to the home for their members. As of this year, 60 electric cooperative across the US have started broadband projects, according to a recent policy brief published by the Institute for Local Self-Reliance, a nonprofit that advocates for local solutions for sustainable development. “If you go back five or six years there were five or fewer electric co-ops that were doing fiber internet to businesses and residents,” “Now there are 60 and I’m guessing there will be more than 100 by the end of next year.” Mitchell explained that electric co-ops are uniquely well positioned to start community owned internet projects, because they own all of the infrastructure connecting homes in the area. In many cases, the co-ops are already investing in gigabit fiber loops to keep their systems online, so the only hurdle is sending out fiber to the home.
United States fails to participate in key global conversations on migration - On December 2, the State Department announced—and multiple news outlets reported—the decision of the Trump administration to end U.S. participation in the Global Compact for Migration (GCM), a non-binding international agreement that is in the process of being negotiated by 193 member states of the United Nations. The GCM is an attempt to improve coordination and governance on migration, seek new solutions to challenges posed by increased migrant flows, and strengthen the contributions of migrants to sustainable development. Numerous groups working to advance migrants’ rights have condemned the U.S. withdrawal from the GCM process.The State Department’s statement came on the eve of an important intergovernmental meeting in Puerto Vallarta, Mexico, to prepare the world’s governments for the negotiations during most of 2018. The Trump administration’s statement pointed to the New York Declaration of 2016, which kicked off the process for UN Member States to negotiate a Global Compact, as containing “numerous provisions that are inconsistent with U.S. immigration and refugee policies and the Trump Administration’s immigration principles.” UN Ambassador Nikki Haley further noted that “decisions on immigration policies must always be made by Americans and Americans alone.”The GCM is a historic opportunity to improve the governance of migration. The compact is likely to address issues such as deportations, the rights of child migrants, and labor migration—but no one knows what will be in the final compact because there is no initial first or “zero” draft. In addition, the United States could decide not to support the final text if it fails to improve the status quo, and the GCM will be a non-binding agreement, meaning the United States is not required to comply with it under international law. As a result, Ambassador Haley’s statement that “the global approach in the New York Declaration is simply not compatible with U.S. sovereignty” is misleading. The U.S. government could have participated in the negotiations and then decided whether or not to support the compact. The United States is the major immigration country, hosting 20 percent of all the world’s migrants, and has decades of experience spread across multiple federal agencies that could have been useful to share with countries grappling with migration issues.
In Major Victory For Trump, Supreme Court Lets Travel Ban Take Full Effect - In a major victory for President Trump, the Supreme Court allowed his controversial travel ban to take full effect while legal challenges go forward, suggesting the court ultimately will uphold the restrictions, Bloomberg reports.Previously, the 9th Circuit Court of Appeals and a federal district court in Maryland had said the president could only block nationals from the six majority Muslim countries - Iran, Libya, Syria, Yemen, Somalia and Chad - if they lacked a bona fide relationship with a person or entity in the United States. The high court’s decision now puts those rulings on hold. As a result, Trump will now be allowed to bar entry by people from six mostly Muslim countries - even if they have a relationship with a U.S.-based person or institution, but more importantly, and the reason why Trump is about to gloat on Twitter, this marks the first time the Supreme Court has let his entry restrictions take full effect.In two identical orders, Supreme Court justices effectively superseded a compromise reached in June, when they allowed an earlier version of the ban take partial effect while exempting people with a "bona fide" U.S. connection. As Bloomberg adds, the new orders apply for the remainder of the appeals process, including possible Supreme Court review.In its orders Monday, the Supreme Court said it expects the appeals courts to rule "with appropriate dispatch."Only justices Ruth Bader Ginsburg and Sonia Sotomayor said they would have denied the government’s request, without giving an explanation. As The Hill writes, "the state of Hawaii and the International Refugee Assistance Project challenged Trump’s latest ban, arguing the Supreme Court carved out the same bona fide relationship exemption in June when it partially reinstated Trump’s 90-day ban on nationals from Iran, Libya, Somalia, Syria, Sudan and Yemen. "
Refugee Admissions Into U.S. Plunge 83% In First Two Months Of FY18 -- As monthly refugee admissions into the United States lap the last few months of Obama's administration, the stark changes enacted by the Trump White House are more apparent than ever with admissions down a staggering 83% in the first two months of fiscal 2018 (October and November) compared to the first two months of fiscal 2017. As CNS News points out, a total of only 3,108 refugees were admitted in October and November down from the 18,300 refugees who were admitted in October and November of last year. The most striking change between the refugee admissions in the initial two-month period of this fiscal year and last fiscal year was the relative differences in size of the contingents from Syria, Somalia and Iraq. In Oct.-Nov. 2016, 2,259 Syrians (97.6 percent Muslim, 1.7 percent Christian), 2,463 Somalis (99.9 percent Muslim) and 2,262 Iraqis (75 percent Muslim, 17.3 percent Christian, 7.4 percent Yazidi) were resettled.In Oct.-Nov. 2017 the numbers had dropped to 33 Syrians (66.6 percent Muslim, 33.3 percent Christian), 126 Somalis (100 percent Muslim) and 76 Iraqis (84.2 percent Muslim, 10.5 percent Christian, 3.9 percent Yazidi).Among the 3,108 refugees admitted since FY 2018 began, the five largest contingents came from Bhutan (805), the Democratic Republic of Congo (627), Burma (347), Ukraine (290) and Eritrea (281).The religious breakdown of those 3,108 refugees was: 59.6 percent Christian, 15.4 percent Muslim, 9.6 percent Buddhist, 7.6 percent Hindu, 4.7 percent Kirat and 0.9 percent Jewish.By contrast, the five countries represented most strongly among the 18,300 refugees resettled by the Obama administration in the U.S. during the first two months of FY 2017 were the DRC (4,236), Somalia (2,463), Iraq (2,262), Syria (2 ,259) and Burma (1,509).
Only 26 percent of Hurricane Harvey survivors had FEMA aid request approved, survey finds - A new survey of Southeast Texas residents shows that many survivors of Hurricane Harvey continue to suffer the effects — including financial losses and mental distress — of the historic late August storm, with the greatest hardship reported by Hispanics, African Americans and people with low income. The survey found that, although the flooding in Houston received the bulk of the media coverage, residents in the state’s “Golden Triangle,” which includes Beaumont and Port Arthur, as well residents in the coastal areas of Corpus Christi and Rockport where Harvey made landfall, were most likely to report damage to their homes or ongoing problems getting their lives back on track. The Kaiser Family Foundation and the Episcopal Health Foundation conducted the survey between Oct. 17 and Nov. 20, using cellphones and landlines to obtain responses from 1,635 randomly selected adults in 24 Texas counties hammered by Harvey. The survey’s margin of sampling error is plus or minus 3 percentage points. [ Federal aid claims jump tenfold in 2017, after series of record-breaking natural disasters ] Two out of three respondents said they’d personally suffered property damage, lost income or job disruptions. About 4 in 10 hurricane survivors applied for disaster assistance from the Federal Emergency Management Agency or the Small Business Administration. But only 26 percent said they’d been approved, and 33 percent said they’d been denied. The remainder said their applications were pending or they simply didn’t know the status of their cases. About 4 in 10 of the people who had been denied assistance said they weren’t given a reason. About 6 in 10 said they were not given instructions on how to revise their applications.
NRA bill requiring all states to recognise conceal carry permits set to pass through Congress -- While much of America has been focused on a massive tax bill making its way through Congress, and developments in the investigation of Russia’s 2016 election meddling, a bill highly favored by the firearm industry has been creeping quietly closer to becoming the law of the land. The bill, which the National Rifle Association has called its “highest legislative priority in Congress”, would require every state to recognize concealed carry permits granted by other states — even from states that don’t barre convicted stalkers or people with histories of domestic violence. The legislation already has strong support from Republicans in the House of Representatives, and is all but guaranteed to pass through that chamber quickly once a vote is held. Republicans in the Senate would then need to accomplish something they’ve had trouble with on controversial bills this year, secure several Democratic votes. And, it looks like they may have the leverage to do just that, according to the Daily Beast. “We have low crime rates, and that’s because we actually have people that are carrying” weapons, Republican Representative Raul Labrador, who represents a sparsely inhabited district in the western United States, told that news organization. “The more people carry, the lower crime will be. Apparently, they like the high crime in their states.”
GOP-led House passes bill making it easier for gun owners to carry concealed weapons across state lines - Republicans rammed a bill through the House on Wednesday that would make it easier for gun owners to legally carry concealed weapons across state lines, the first significant action on guns in Congress since mass shootings in Nevada and Texas killed more than 80 people. The House approved the bill, 231-198, largely along party lines. The measure would allow gun owners with a state-issued concealed-carry permit to carry a handgun in any state that allows concealed weapons. It now goes to the Senate.Republicans said the reciprocity measure, a top priority of the National Rifle Association, would allow gun owners to travel freely between states without worrying about conflicting state laws or civil suits. Opponents, mostly Democrats, said the bill could endanger public safety by overriding state laws that place strict limits on guns. Rep. Elizabeth Esty, D-Conn., called the bill an attempt to undermine states' rights, "hamstring law enforcement and allow dangerous criminals to walk around with hidden guns anywhere and at any time. It's unspeakable that this is Congress' response to the worst gun tragedies in American history." Esty represents Newtown, Connecticut, where 20 first-graders and six educators were fatally shot in 2012. The House vote came as the acting director of the Bureau of Alcohol, Tobacco, Firearms and Explosives said his agency expects to regulate bump-stock devices and could end up banning them. Thomas Brandon told the Senate Judiciary Committee on Wednesday that the ATF and Justice Department would not have initiated the review "if (banning them) wasn't a possibility at the end."
Trump, Christie Square Off Over High-Stakes Gambling -- On Monday, the U.S. Supreme Court will begin hearing arguments in Christie v. NCAA, which ironically pits New Jersey Governor Chris Christie and President Donald Trump against each other over the federal ban on sports gambling. Both men have had big interests in gambling—Christie runs a state that wants it, and Trump used to own three casinos there. But now Trump is in the White House, and his lawyers say the ban needs to stay in place. Known as the Professional and Amateur Sports Protection Act of 1992 (PASPA), the law criminalizes sports gambling throughout the country, except in the four states that were grandfathered in. As a result, Nevada has essentially held a legal monopoly on sports betting for decades (Delaware, Oregon, and Montana offers it to a very limited degree). So voters in New Jersey decided to give Nevada some competition. With 64 percent of the vote, their state passed a referendum in 2011 to legalize sports betting. Three years later, Christie signed that bill into law, but Atlantic City’s casinos have never been able to offer such wagering because sports leagues (NCAA, NFL, NBA, MLB, NHL) filed a federal injunction against the state and put legal betting there into a legal limbo. This has been a long, drawn-out battle in which the state of New Jersey contests that PASPA violates its 10th Amendment right to equal sovereignty, in other words, violating the state’s right to pass its own laws. The U.S. Supreme Court will begin hearing oral arguments on Monday, and a final decision will come at some point next year—June at the latest. Clearly, there are billions of dollars on the line here, and Atlantic City, a once thriving gambling mecca with deep ties to Trump has much to win or lose in this case.
Foreign Lobbyists Contributed More Than $4.5 Million to 2016 Elections - Since Donald Trump won the presidency, concerns about whether Russia played a hidden role in the 2016 election have simmered, and lawmakers have warned about the prospect of stealth foreign influence over American politics. But data compiled by International Business Times and MapLight show that foreign influence is hardly confined to the shadows. It’s a big, open, bipartisan business, with foreign government lobbyists delivering millions of dollars of campaign cash to elected officials in Washington.In all, during the last election, those lobbyists gave more than $4.5 million to federal lawmakers and candidates. Foreign lobbyists and their firms’ political action committees were also responsible for packaging a total of $5.9 million in donations for candidates and party committees, through an influence-enhancing tactic known as “bundling.”Because the donations come from foreign governments’ U.S.-based lobbyists, they effectively circumvent American laws designed to bar direct foreign donations. Under federal law, foreign nationals are prohibited from donating to any federal, state, or local campaigns, or political parties. But foreign governments frequently hire U.S. citizens to represent their interests, and those people face no such contribution ban. “I worry about foreign influence on our political system,” Larry Noble, general counsel at the nonpartisan Campaign Legal Center, told IBT/MapLight. “One of the things that recent events are highlighting is the porous nature of a lot of our laws and a lack of enforcement.”Noble, a former Federal Election Commission lawyer, said that donations by foreign lobbyists don’t often come from the lobbying firms or their PACs, but from individual members of the firm.“When that happens, how do you know whether any of that money is being directed by lobbyists of the foreign national, or if it's coming out of money they got from the foreign national for that purpose? There are lots of ways for people to get illegal money to campaigns,” Noble said. “It’s not an easy thing to prove.”
ABC Makes "Epic Mistake", Retracts Bombshell Flynn Story - Having caused chaos in financial markets briefly, set the liberal media on fire with 'I told you so's, and sparked a renewed round of #ImpeachTrump demands, ABC News issued a 'clarification' to their bombshell Flynn report that not only negates the entire story but provides President Trump with another round of ammunition to fire against the 'fake news' media. Critically, ABC News reports, correcting their earlier report, that Michael Flynn is prepared to testify that Donald Trump directed him to contact the Russians as president-elect, not as a candidate.Here is the full 'clarification'. During a live Special Report, ABC News reported that a confidant of Lt. Gen. Michael Flynn said Flynn was prepared to testify that then-candidate Donald Trump instructed him to contact Russian officials during the campaign.That source later clarified that during the campaign, Trump assigned Flynn and a small circle of other senior advisers to find ways to repair relations with Russia and other hot spots. It was shortly after the election, that President-elect Trump directed Flynn to contact Russian officials on topics that included working jointly against ISIS.So to clarify - just as President Trump had stated, there w as no contact with Russians during his time as a candidate but in fact it was in transition as he attempted to mend broken bridges with another world super-power in his role as president-elect - this in no way a criminal act at all. In fact, reaching out to foreign governments during transitions is standard procedure
Trump insists there was ‘no collusion’ with Russia as Michael Flynn guilty plea fails to show a smoking gun - Michael Flynn's guilty plea Friday revealed a new layer of lies unearthed by the far-reaching investigation into ties between President Donald Trump and Russia, and put heightened scrutiny on the president's son-in-law, Jared Kushner. But Flynn's admission, and all of the criminal cases thus far, have not resolved the fundamental question special counsel Robert Mueller is seeking to answer: Did Trump's campaign collude with Russia to win the election? Trump himself was eager to settle that question as he offered his first public response to Flynn's plea, saying Saturday: "What has been shown is no collusion, no collusion. There's been absolutely no collusion." But Mueller has left no doubt that his investigators have amassed a wealth of knowledge about the contacts between Trump associates and the Russians, and they're looking to gather more facts from Flynn, a new key cooperator. By forcing Flynn's assistance, Mueller gains someone who can put him in the room with Trump and his closest advisers during the campaign, transition and the early days of the administration, times when Trump associates have acknowledged communicating with people connected to Russia. In the hours after Flynn admitted lying about his contacts with a Russian government official , two names surfaced as integral players in his actions. Kushner was identified as a "very senior" transition official, who directed Flynn to contact foreign governments, including Russia, about a U.N. Security Council resolution last December. And KT McFarland, who served as Flynn's deputy national security adviser, was a "senior" transition official involved in discussions with Flynn about what to relay to Sergey Kislyak, then Russia's ambassador to the U.S., about the response to U.S. sanctions levied by the Obama administration. Kushner and McFarland weren't named in court papers. But McFarland's involvement was confirmed by two former transition officials who spoke on condition of anonymity because they weren't authorized to publicly discuss the matter. One of the officials confirmed Kushner's involvement.
Trump claims 'rigged system' has 'destroyed' Flynn's life, let Hillary off the hook | TheHill: President Trump on Saturday questioned whether his former national security adviser Michael Flynn was the victim of a "rigged system" after he was indicted in special counsel Robert Mueller's Russia probe. In a series of tweets on Saturday, Trump suggested Flynn had his life "destroyed" for lying to the FBI, while former Democratic rival Hillary Clinton has got off free after deleting emails. "So General Flynn lies to the FBI and his life is destroyed, while Crooked Hillary Clinton, on that now famous FBI holiday 'interrogation' with no swearing in and no recording, lies many times...and nothing happens to her? Rigged system, or just a double standard?" Trump wrote on Twitter. In another tweet, Trump reignited his attacks on Clinton, asking what the Justice Department would do to punish her for deleting emails that he suggested may have been related to the FBI's investigation into her use of a private email server during her tenure as secretary of State. "Many people in our Country are asking what the 'Justice' Department is going to do about the fact that totally Crooked Hillary, AFTER receiving a subpoena from the United States Congress, deleted and 'acid washed' 33,000 Emails? No justice!" he tweeted.
What’s in Flynn’s plea deal shouldn’t scare the White House. What isn’t should. -WaPo - Former national security adviser Michael Flynn pleaded guilty Friday to one count of making false statements to the FBI and has agreed to cooperate with special counsel Robert S. Mueller III. White House lawyer Ty Cobb issued a statement saying that “nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn.” Cobb is engaging in some legal sleight of hand. The plea deal is most noteworthy not for the charges to which Flynn pleaded guilty, but for the charges it didn’t include. Given Mueller’s long-running investigation into Flynn and the allegations that have besieged him for months, the former Trump aide appeared to be in serious legal jeopardy. That he has managed to escape with barely a slap on the wrist in exchange for his cooperation with law enforcement suggests just how much he could tell authorities about other senior Trump administration and campaign officials. Just based on what’s been publicly reported — without the benefit of knowing what else Mueller’s investigators have turned up — Flynn appeared to be on the hook for a laundry list of potential offenses. Mueller may have had enough evidence to charge Flynn with enough crimes to send him to prison for 30 years or more. Instead, Flynn has been charged with a single false statement count and — here’s the kicker — his plea agreement states that he will receive no more than six months of prison time for that. That’s an extraordinary sweetheart deal (even for the single charge). And it’s not one any prosecutor, especially one with an investigation as high-profile as Mueller’s, would make lightly. Mueller would offer this kind of a deal only if he could get testimony that helps his case, and if that testimony allows him to go higher up the chain. There aren’t many targets that are higher than the national security adviser — which leads to President Trump’s inner circle, and Trump himself.
"The Whole Thing Is Completely Absurd": Kremlin Blasts Notion That Flynn "Influenced" Putin -- As the U.S. media and Washington D.C. legislators continue to lose their collective minds over the Michael Flynn charges, Kremlin press secretary Dmitry Peskov took to the podium earlier today to dismiss the notion that Flynn's comments to former ambassador Sergey Ivanovich had any impact on Putin's ultimate decision to retaliate against U.S. sanctions as"completely absurd." Per the RT:“Flynn was in no position to request anything of Sergey Ivanovich [Kislyak, Russia’s former US ambassador] let alone to expect any requests to be relayed to Vladimir Putin – the whole thing is completely absurd,” said the Russian President’s press secretary Dmitry Peskov during a media briefing in Moscow.In the end Russia did postpone its response, but Peskov says that “the decision was taken by Putin alone, and cannot be attributed to any requests or recommendations.”“What information Putin receives from his ambassadors is of no concern to anyone else,” said Peskov. “The Russian pres ident makes all decisions independently on the basis, as he has said many times, of Russia’s national interest.”
White House paranoid: ‘Everyone thinks they’re being recorded’ --Paranoia is enveloping the White House and President Donald Trump’s network of former aides and associates as Robert Mueller’s Russia probe heats up. Former national security adviser Michael Flynn agreed to cooperate with investigators as part of the plea deal he reached last week, adding to the worry already inside Trump’s circle surrounding the secret deal struck earlier this summer by former campaign aide George Papadopoulos, whose cooperation was kept quiet for months before being unsealed in late October. Both cases raise the possibility that other current or former colleagues have also flipped sides — and they're prompting anxiety that those people could be wearing wires to secretly tape record conversations.“Everyone is paranoid,” said a person close to Trump’s White House. “Everyone thinks they’re being recorded.” Mueller is doing little to abate those suspicions. Tucked inside last week’s 10-page plea deal Flynn struck with government prosecutors is an agreement that the former White House national security adviser could avoid a potential lengthy jail term in part by “participating in covert law enforcement activities.”
Nunes blows up, threatens contempt after FBI stonewalls House on Russia investigator demoted for anti-Trump bias- House Intelligence Committee chairman Devin Nunes has issued an angry demand to the FBI and Department of Justice to explain why they kept the committee in the dark over the reason Special Counsel Robert Mueller kicked a key supervising FBI agent off the Trump-Russia investigation. Stories in both the Washington Post and New York Times on Saturday reported that Peter Strzok, who played a key role in the original FBI investigation into the Trump-Russia matter, and then a key role in Mueller's investigation, and who earlier had played an equally critical role in the FBI's Hillary Clinton email investigation, was reassigned out of the Mueller office because of anti-Trump texts he exchanged with a top FBI lawyer, Lisa Page, with whom Strzok was having an extramarital affair. Strzok was transferred to the FBI's human resources office — an obvious demotion -- in July.The Post reported that Strzok and Page exchanged text messages that "expressed anti-Trump sentiments and other comments that appeared to favor Clinton." Word of the messages and the affair were news to Nunes, even though the committee had issued a subpoena that covered information about Strzok's demotion more than three months ago. The committee's broadly worded subpoena for information related to the so-called Trump dossier went to the FBI and DOJ on Aug. 24. In follow-up conversations on the scope of the subpoena, committee staff told the FBI and DOJ that it included information on the circumstances of Strzok's reassignment.
Jared Kushner Failed to Disclose He Led a Foundation Funding Illegal Israeli Settlements Before U.N. Vote -- Jared Kushner failed to disclose his role as a co-director of the Charles and Seryl Kushner Foundation from 2006 to 2015, a time when the group funded an Israeli settlement considered to be illegal under international law, on financial records he filed with the Office of Government Ethics earlier this year. The latest development follows reports on Friday indicating the White House senior adviser attempted to sway a United Nations Security Council vote against an anti-settlement resolution passed just before Donald Trump took office, which condemned the structure of West Bank settlements. The failure to disclose his role in the foundation—at a time when he was being tasked with serving as the president’s Middle East peace envoy—follows a pattern of egregious omissions that would bar any other official from continuing to serve in the West Wing, experts and officials told Newsweek. The first son-in-law has repeatedly amended his financial records since his initial filing in March, along with three separate revisions to his security clearance application. Despite correcting his financial history on multiple occasions, he has yet to include his role as co-director to the family foundation. The omission was first discovered by a team of researchers at American Bridge, a progressive research and communications organization, and shared exclusively with Newsweek on Friday afternoon. The researchers suggested Kushner’s failure may have been more than an inadvertent mistake, but instead an attempt to avoid "potential conflicts with his job negotiating Middle East peace." Newsweek later independently confirmed Kushner's omission on his multiple financial disclosures.
Deutsche Bank Received Subpoena on Client Trump -- Special prosecutor Robert Mueller zeroed in on President Donald Trump’s business dealings with Deutsche Bank AG as his investigation into alleged Russian meddling in U.S. elections widens. Mueller issued a subpoena to Germany’s largest lender several weeks ago, forcing the bank to submit documents on its relationship with Trump and his family, according to a person briefed on the matter, who asked not to be identified because the action has not been announced. “Deutsche Bank always cooperates with investigating authorities in all countries,” the lender said in a statement to Bloomberg Tuesday, declining to provide additional information. Deutsche Bank for months has rebuffed calls by Democratic lawmakers to provide more transparency over the roughly $300 million Trump owed to the bank for his real estate dealings prior to becoming president. Representative Maxine Waters of California and other Democrats have asked whether the bank’s loans to Trump, made years before he ran for president, were in any way connected to Russia. The bank previously rejected those demands, saying sharing client data would be illegal unless it received a formal request to do so. Trump has denied any wrongdoing. Calls and emails to the White House weren’t immediately returned. Handelsblatt reported the subpoena earlier on Tuesday. Mueller’s investigation -- which is looking into alleged Russian interference into last year’s U.S. election and whether Trump’s winning campaign assisted in those efforts -- appears to be entering a new phase. Trump’s former national security adviser, Michael Flynn, pleaded guilty Friday to lying to FBI agents, becoming the fourth associate of the president ensnared by Mueller’s probe. More significantly, he also is providing details to Mueller about the Trump campaign’s approach to Flynn’s controversial meeting with a Russian envoy during the presidential transition. Trump’s relationship with Deutsche Bank stretches back some two decades and the roughly $300 million he owed to the bank represented nearly half of his outstanding debt, according to a July 2016 analysis by Bloomberg. That figure includes a $170-million loan Trump took out to finish a hotel in Washington. He also has two mortgages against his Trump National Doral Miami resort and a loan against his tower in Chicago.
Mueller Goes After Trump's Bank Accounts, Subpoenas Deutsche Bank --Special Counsel Robert Mueller has subpoenaed Deutsche Bank, demanding that it disclose details of transactions and documents on accounts help by President Trump and members of his family as the "Russian collusion" probe now turns its attention to Trump's bank accounts. According to Handelsblatt, which first reported the news, the bank received the subpoena several weeks ago. Trump has had a banking relationship with Deutsche Bank dating back nearly two decades and the German lender's $300 million loan accounts for nearly half of his outstanding debt (based on a July 2016 analysis by Bloomberg). Trump's debt to Deutsche includes $170m relating to a Washington hotel. The media is taking the Deutsche Bank news as a sign that Mueller’s investigation into alleged Russian interference in the 2016 alleged campaign is “deepening”. However, it was clear that a subpoena was coming more than four months ago (see below) and, besides Michael Flynn, Mueller’s investigation has included interviews with three other former Trump aides recently, former Chief of Staff Reince Priebus, former spokesman Sean Spicer and National Security Council chief of staff Keith Kellogg, according to people familiar with the investigation. As Bloomberg adds, "the news comes as Mueller’s investigation appears to be entering a new phase, with Trump’s former national security adviser, Michael Flynn, pleading guilty Friday to lying to FBI agents, becoming the fourth associate of the president ensnared by Mueller’s probe. More significantly, he also is providing details to Mueller about the Trump campaign’s approach to Flynn’s controversial meeting with a Russian envoy during the presidential transition." In June 2017, Deutsche Bank cited privacy laws for rejecting a request from US lawmakers to provide details of its relationship with Trump. The bank said that releasing information on Trump was illegal unless it received a formal request – hence the subpoena. The goal of the top Democrat on the House Financial Services Committee, Maxine Waters, had been to discover whether Russian entities had provided guarantees – or were connected in any way - to the loans to Trump or his family. According to The Guardian newspaper, Deutsche had conducted an internal investigation but.The internal review found no evidence of any Russia link, but Deutsche Bank is coming under pressure to appoint an external and independent auditor to review its business relationship with President Trump.
Serially Charged Deutsche Bank Gets a Subpoena from Mueller - Pam Martens -- If Deutsche Bank is trying to remove itself from scandalous headlines, it’s not doing a very good job at it. The German language newspaper, Handelsblatt, reported yesterday that Special Counsel Robert Mueller has subpoenaed bank records from Deutsche Bank relating to President Trump and his family members. Handelsblatt writes that “The former real-estate baron has done billions of dollars’ worth of business with Deutsche Bank over the past two decades, and First Lady Melania, daughter Ivanka and son-in-law Jared Kushner are also clients.” The central focus of the Mueller probe is the Trump campaign’s involvement with Russia. On May 23 of this year, Congresswoman Maxine Walters and other House Democrats sent John Cryan, CEO of Deutsche Bank, a letter regarding its ties to the Trump family and Russia. “Deutsche Bank’s failure to put adequate anti-money laundering controls in place to prevent a group of traders from improperly and secretly transferring more than $10 billion out of Russia is concerning. According to press reports, this scheme was carried out by traders in Russia who converted rubles into dollars through security trades that lacked any legitimate economic rationale. The settlement agreements reached between the Bank and the New York Department of Financial Services as well as the U.K. Financial Conduct Authority raise questions about the particular Russian individuals involved in the scheme, where their money went, and who may have benefited from the vast sums transferred out of Russia. Moreover, around the same time, Deutsche Bank was involved in an elaborate scheme known as ‘The Russian Laundromat,’ ‘The Global Laundromat,’ or ‘The Moldovan Scheme,’ in which $20 billion in funds of criminal origin from Russia were processed through dozens of financial institutions.” Walters also outlined to Cryan why she and her colleagues were suspicious about Deutsche making loans to Trump.
Robert Mueller Crosses Trump’s “Red Line” By Seeking Information About Trump’s Finances - The past two months have seen several major developments in special counsel Robert Mueller’s investigation of Russian interference with the 2016 election and possible collusion between the Trump campaign and Russia. This includes the indictments of Paul Manafort and his associate Rick Gates and the plea deals that were reached with Trump campaign aide George Papadopoulos and former National Security Adviser Lt. General Michael Flynn. President Trump, the Administration, and Trump’s own legal team have responded to these developments with a combination of dismissal and the claim that these events mean that Mueller is nearing the end of his investigation. Most serious legal analysts, of course, have dismissed the latter argument as absurd, especially given the fact that Friday’s announcement of the Flynn plea deal suggests that Flynn, who was close to Trump right up to the day he was dismissed from the White House and may have been in frequent contact with the President after that according to some reports, has information that Mueller finds valuable to his investigation and which is likely to lead him to expand it rather than draw it to close. That conclusion is further supported by new reports that Mueller has subpoenaed records from Deutsche Bank regarding Trump’s personal and business finances: A U.S. federal investigator probing alleged Russian interference in the 2016 U.S. presidential election asked Deutsche Bank for data on accounts held by President Donald Trump and his family, a person close to the matter said on Tuesday. Germany’s largest bank received a subpoena from Special Counsel Robert Mueller several weeks ago to provide information on certain money and credit transactions, the person said, without giving details, adding key documents had been handed over in the meantime.Deutsche Bank, which has loaned the Trump organization hundreds of millions of dollars for real estate ventures, said it would not comment on any of its clients. Mueller is investigating alleged Russian attempts to influence the election, and potential collusion by Trump aides. Russia has denied U.S. intelligence agencies’ conclusion that it meddled in the campaign and Trump has said there was no collusion with Moscow. A U.S. official with knowledge of Mueller’s probe said one reason for the subpoenas was to find out whether Deutsche Bank may have sold some of Trump’s mortgage or other loans to Russian state development bank VEB or other Russian banks that now are under U.S. and European Union sanctions.Holding such debt, particularly if some of it was or is coming due, could potentially give Russian banks some leverage over Trump, especially if they are state-owned, said a second U.S. official familiar with Russian intelligence methods
Here’s Why Trump’s Lawyer Is Denying that Deutsche Bank Got a Subpoena - A lawyer who is part of President Donald Trump’s legal defense team, Jay Sekulow, has denied the news reports that Deutsche Bank has received a subpoena from Special Counsel Robert Mueller’s office for banking records related to Trump and his family members.In a statement to Reuters, Sekulow stated:“We have confirmed that the news reports that the Special Counsel had subpoenaed financial records relating to the president are false. No subpoena has been issued or received. We have confirmed this with the bank and other sources.”But in the same article that relayed that statement from Sekulow, Reuters’ reporters Arno Schuetze and Karen Freifeld undercut the credibility of Sekulow’s statement by writing the following:“A U.S. federal investigator probing alleged Russian interference in the 2016 U.S. presidential election asked Deutsche Bank for data on accounts held by President Donald Trump and his family, a person close to the matter said on Tuesday, but Trump’s lawyer denied any such subpoena had been issued.”The German newspaper, Handelsblatt, which broke the original story on the Deutsche Bank subpoena, shot back with this headline yesterday: “Yes, Deutsche Bank did get a subpoena from Mueller,” adding the following:“According to our information, the subpoena from Mr. Mueller, who is investigating Russian meddling in the 2016 US elections, is in connection with Mr. Trump’s camp, requiring the bank to provide information on financial transactions and loans. It remains unclear whether the subpoena relates to the US president personally or a family member. Given that qualification, we are standing by our reporting.”Sekulow is not the most credible legal voice to be speaking for President Trump. In June, comedians ridiculed Sekulow for his flip flops on Sunday talk shows on whether the President was or was not under investigation by the Special Counsel. During Sekulow’s appearance on Fox News, he first told Chris Wallace that the President was not under investigation, only to minutes later state that Trump was under investigation. (See the bizarre video clip below.) Jay Sekulow is enmeshed in right-wing funding of right-wing pursuits. The right-wing network needs Trump to use his bully pulpit to advance their agenda quickly before the mid-term elections potentially erode their power base in the House and Senate. It serves their purposes to pretend that Mueller’s investigation has nothing to do with Trump personally; that it’s simply a “witch hunt,” and to promote the narrative that any media outlet that suggests otherwise is simply engaging in “fake news.”
It Is Now an Obstruction Investigation - Which means that it’s an impeachment investigation. The smoke is clearing from an explosive Mueller investigation weekend of charges, chattering, and tweets. Before the next aftershock, it might be helpful to make three points about where things stand. In ascending order of importance, they are:
- 1.) There is a great deal of misinformation in the commentariat about how prosecutors build cases.
- 2.) For all practical purposes, the collusion probe is over. While the “counterintelligence” cover will continue to be exploited so that no jurisdictional limits are placed on Special Counsel Robert Mueller, this is now an obstruction investigation.
- 3.) That means it is, as it has always been, an impeachment investigation.
Many analysts are under the misimpression that it is typical for federal prosecutors to accept guilty pleas on minor charges in exchange for cooperation that helps build a case on major charges. From this flawed premise, they reason that Mueller is methodically constructing a major case on Trump by accepting minor guilty pleas from Michael Flynn and George Papadopoulos for making false statements, and by indicting Paul Manafort and an associate on charges that have nothing to do with Trump or the 2016 election.That is simply not how it works, strategically or legally.As I’ve tried to explain a few times now (see here and here), if a prosecutor has an accomplice cooperator who gives the government incriminating information about the major scheme under investigation, he pressures the accomplice to plead guilty to the major scheme, not to an ancillary process crime — and particularly not to false-statements charges.Strategically, and for public-relations purposes (which are not inconsequential in a high-profile corruption investigation, just ask Ken Starr), a guilty plea to t he major scheme under investigation proves that the major scheme really happened — here, some kind of criminal collusion (i.e., conspiracy) in Russia’s espionage operation against the 2016 election. The guilty-plea allocution, in which the accomplice explains to the court what he and others did to carry out the scheme, puts enormous pressure on other accomplices to come forward and cooperate. In a political corruption case, it can drive public officials out of office.
WSJ Editorial Board Calls On "Too Conflicted" Mueller To Step Down -- Via The Wall Street Journal Editorial Board, The special counsel is stonewalling Congress and protecting the FBI... Donald Trump is his own worst enemy, as his many ill-advised tweets on the weekend about Michael Flynn, the FBI and Robert Mueller’s Russia probe demonstrate. But that doesn’t mean that Mr. Mueller and the Federal Bureau of Investigation deserve a pass about their motives and methods, as new information raises troubling questions.The Washington Post and the New York Times reported Saturday that a lead FBI investigator on the Mueller probe, Peter Strzok, was demoted this summer after it was discovered he’d sent anti-Trump texts to a mistress. As troubling, Mr. Mueller and the Justice Department kept this information from House investigators, despite Intelligence Committee subpoenas that would have exposed those texts. They also refused to answer questions about Mr. Strzok’s dismissal and refused to make him available for an interview.The news about Mr. Strzok leaked only when the Justice Department concluded it couldn’t hold out any longer, and the stories were full of spin that praised Mr. Mueller for acting “swiftly” to remove the agent. Only after these stories ran did Justice agree on Saturday to make Mr. Strzok available to the House. This is all the more notable because Mr. Strzok was a chief lieutenant to former FBI Director James Comey and played a lead role investigating alleged coordination between the Trump campaign and Russia during the 2016 election. Mr. Mueller then gave him a top role in his special-counsel probe. And before all this Mr. Strzok led the investigation into Hillary Clinton’s emails and sat in on the interview she gave to the FBI shortly before Mr. Comey publicly exonerated her in violation of Justice Department practice.
Mueller Makes Sure His Investigation Will Live On Even If He’s Fired -- The Dec. 1 plea deal struck with President Trump’s former national security adviser, Michael Flynn, marked a big step forward in Robert Mueller’s Russia investigation. It may also have provided some protection for Mueller against being fired by the president—and helped ensure that his probe will continue, even if one day he’s not leading it. Flynn pleaded guilty to one count of lying to federal agents about his communications with the Russian ambassador last December. Given the other potential crimes that Flynn may have committed, including his failure to disclose that he was being paid millions of dollars by a Turkish company while serving as a top official in the White House, the relatively light charge signaled to many that Flynn had something significant worth sharing. As Mueller’s probe has gotten closer to Trump’s inner orbit, speculation has risen over whether Trump might find a way to shut it down. The Flynn deal may make that harder. For one thing, it shows that Mueller is making progress. “Any rational prosecutor would realize that in this political environment, laying down a few markers would be a good way of fending off criticism that the prosecutors are burning through money and not accomplishing anything,” says Samuel Buell, a former federal prosecutor now at Duke Law School. The Flynn plea also makes it difficult for Trump to fire Mueller without inviting accusations of a cover-up and sparking a constitutional crisis, says Michael Weinstein, a former Department of Justice prosecutor now at the law firm Cole Schotz. “There would be a groundswell, it would look so objectionable, like the Saturday Night Massacre with Nixon,” Weinstein says, referring to President Richard Nixon’s attempt to derail the Watergate investigation in 1973 by firing special prosecutor Archibald Cox. Even if Mueller goes, his team is providing tools that other prosecutors or investigators can use to continue inquiries. Flynn’s deal requires him to cooperate with state and local officials as well as with federal investigators. That includes submitting to a polygraph test and taking part in “covert law enforcement activities.” Mueller also has provided a road map to state prosecutors interested in pursuing money laundering charges against Trump’s former campaign chairman, Paul Manafort.
Sources in Trump’s White House report meetings to assemble a network of deniable wetwork/black ops spooks to target Trump’s political enemies in the US and elsewhere -- Multiple White House sources have told reporters that the Trump administration has been negotiating with Erik Prince (founder of the war-crimes plagued mercenary firm Blackwater; brother to pyramid-scheme billionaire/Education Secretary Betsy Devos) and ex-CIA operative John R. Maguire to assemble a private army of deniable, off-the-books spy/mercenaries who could target Trump's "deep state" political enemies in the USA, and kidnap and render similar figures overseas. Prince denied the report and threatened to sue The Intercept for publishing it. Mercenaries who had worked for Prince at Blackwater confirmed the story to Jeremy Scahill (one of the foremost experts on Blackwater) and Matthew Cole, whose in-depth story is a must-read. According to the story, US intelligence chiefs were not briefed on Trump's plan. Also said to be involved in the plan is Oliver North, a disgraced perjuring war criminal implicated in Reagan's Iran-Contra terrorism-funding project. “[Maguire] said there were people inside the CIA who joined in the previous eight years [under Obama] and inside the government and they were failing to give the president the intelligence he needed,” said a person who was pitched by Maguire and other Amyntor personnel. To support his claim, Maguire told at least two people that National Security Advisor H.R. McMaster, in coordination with a top official at the National Security Agency, authorized surveillance of Steven Bannon and Trump family members, including Donald Trump Jr. and Eric Trump. Adding to these unsubstantiated claims, Maguire told the potential donors he also had evidence H.R. McMaster used a burner phone to send information gathered through the surveillance to a facility in Cyprus owned by George Soros.
An Angry Senator Grassley Lashes Out At FBI, DOJ In Fiery Senate Floor Speech -- Senator Chuck Grassley (R-IA) blasted the FBI and Senate Democrats on Wednesday for their unwillingness to fairly investigate Hillary Clinton and the Obama Administration, stating that the Democrats on the committee he oversees "only want to talk about [President] Trump." In a fiery speech to the Senate, Grassley lambasted Nancy Pelosi (D-CA) and other Democrats for "a double standard here in the way that they desperately want to go after the president but ignore all other potential wrongdoing in the previous administration." He then tore into the credibility of the Justice Department and the FBI, pointing out that the veteran FBI agent placed in charge of both the Clinton investigation and the Trump-Russia, Peter Strzok, is wildly anti-Trump. Grassley insisted that both the Trump-Russia investigation and the Clinton email investigation are intricately connected to the firing of the former FBI Director James Comey, so they must be investigated together. From his speech:There are two major controversies plaguing the credibility of the Justice Department and the FBI right now. On the one hand the Trump Russia investigation, and then on the other hand the handling of the Clinton investigation. Any congressional oversight related to either one of these topics is not credible without also examining the other. Both cases were active during last year's campaign. Both cases have been linked to the firing of the FBI Director.These questions go to the heart of the integrity of our federal law enforcement and justice system.
Treasury office accused of deceiving congressional auditors -- A U.S. Treasury Department office allegedly manipulated information that it turned over to congressional auditors and provided misleading answers during interviews. That’s according to a scathing statement Thursday from the Government Accountability Office, the watchdog agency that reports to Congress. In its 11-page statement, the GAO blasted the Office of Financial Research, which was established by the Dodd-Frank Act to improve the quality of financial data that is available to regulators and to conduct research related to financial stability. The GAO’s findings provide new grist for congressional Republicans who have long been hostile to the research office. Rep. Ann Wagner, R-Mo., raised the question Thursday of whether the embattled Treasury office should be shut down. “From studies that impugn the workplace culture, to low morale, multiple ongoing investigations, and today’s harsh criticism of OFR by the Government Accountability Office, it appears to both outsiders and insiders that this organization is completely dysfunctional,” Wagner said. The GAO said that it launched its review of the research office in January 2015, but was stymied by agency officials who dragged their feet. “Many meetings took months to schedule, some were canceled with short notice, and responses to requests for documentation and other information were delayed,” Lawrence Evans, a managing director at the accountability office, said in the statement. In June 2016, GAO was contacted by a whistleblower who alleged misconduct inside of OFR in connection with the congressional watchdog’s audit. GAO said that it later learned that the Treasury inspector general office was conducting an investigation of similar allegations from whistleblowers. At that point, GAO decided to shut down its review. Appearing before a House panel on Thursday, the research office's director, Richard Berner, did not dispute the GAO’s findings, but disagreed it was purposeful.
Treasury Department To Investigate If Treasury Secretary Is A Liar Or An Incompetent -- We’ve been pretty clear with our assessment that Mnooks might be the least-qualified Treasury Secretary in modern memory. And we’ve also made no bones that we believe his greatest skill is using his inherited wealth and privilege as a kind of metaphorical Crisco, slathering his body and soul with it to slide seamlessly from one golden opportunity to the next. So it didn’t surprise us at all that after Stevie had told anyone that would listen that he had hundreds of people working around the clock at Treasury to score the Trump tax plan, no one could find any scoring from the Treasury Department. And now everyone else is starting to grasp our feelings about Stevie Mnooks: The Treasury Department’s inspector general has launched an inquiry into whether the department hid an analysis of the Republican tax bill — or even did one at all. Treasury Secretary Steven T. Mnuchin has said economic growth stimulated by the bill’s large tax cuts would offset lost revenue and indicated his department would produce an analysis proving it. But no analysis has been released as the Senate prepared to vote on its version of the tax legislation. The House approved its tax bill on Nov. 16. We aren’t even sure if Mnuchin was even fully aware that he had failed to get scoring done of the tax plan. It stands to reason that he assumed saying it enough times out loud would get the point across to staff that this is something he wanted done, so everyone moved at once to do it.
‘This is the final product’: Reg relief backers resist changes to bill - — A bipartisan Senate alliance working on a bank regulatory relief bill appeared even stronger Tuesday as it worked to minimize changes in the interest of moving the legislative package to the Senate floor. The legislation, which passed the Senate Banking Committee 16-7, is the culmination of years of negotiations between moderate Democrats and Republicans on the panel. While the bill is not as ambitious as other relief proposals, it is the banking industry’s best prospect to roll back financial regulations since the Dodd-Frank financial reform law was passed in 2010. Lawmakers supporting the bill made a pact not to agree to changes — even changes they favored — so they could keep the alliance intact. As a result, the panel made no substantive changes to the bill before it sending it to the full Senate. “There are going to be some amendments today that I think have good merit. Very reluctantly I am going to have to vote against most if not all of them because I gave my word,” said Sen. John Kennedy, R-La. But he added there was no guarantee he would support the bill on the Senate floor since he wants stricter curbs on the credit reporting agencies. Senate Banking Committee Chairman Mike Crapo, R-Idaho, said that with the legislation being a "bipartisan compromise," it wasn't going to please everyone. “None of us got everything,” he said. Speaking to reporters, Crapo said the show of unity was "the same dynamic that was going through as negotiations occurred." He negotiated the final bill — which includes raising the asset threshold for "systemically important" banks from $50 billion to $250 billion, simplified capital requirements and a Volcker Rule exemption for small banks — with a core of moderate Democrats after his talks broke down with Sen. Sherrod Brown of Ohio, the committee's ranking Democrat who opposes the bill. But members of Warren and Brown's party who supported the compromise held strong. Perhaps the strongest indicator of the commitment from Democrats supporting the deal was when Sen. Catherine Cortez Masto, D-Nev., introduced an amendment reinstating the Consumer Financial Protection Bureau's politically contentious arbitration rule. The four moderate Democrats who had cut the deal with Crapo — Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia — all voted against the amendment. “We have been at this for five or six years and … this is the final product,” Tester of the overall bill.
Leaving Dodd-Frank’s ‘Hotel California’ not as hard as you think — The Dodd-Frank Act included a provision to lock some of the biggest firms into the law's enhanced supervisory regime even if they tried to leave. But that grasp may not be as strong as it used to be. Zions Bancorp.'s recent decision to focus just on its bank subsidiary already cast doubt on the need to own a bank holding company. But the calculus could also change for larger companies — specifically investment bank giants like Goldman Sachs and Morgan Stanley — due in part to the changing nature of regulatory policy roughly a decade after the financial crisis. “A larger, more complex bank holding company … might consider debanking,” said David Portilla, partner at Debevoise & Plimpton. At issue is Dodd-Frank's so-called Hotel California provision, which was drafted with Goldman and Morgan in mind and ensured that once they became BHCs, they could not just shed that status to escape regulation. The section's nickname comes from the lyrics of the famous Eagles song: "You can check out anytime you like, but you can never leave." It stipulated that shedding a BHC meant still being regulated as a nonbank "systemically important financial institution." The idea was that that alternative might be unappealing enough so that the bank kept its holding company. But observers say policymakers could alter nonbank supervision to make that alternative more appealing."Theoretically there is room for a large broker-dealer to be a nonbank SIFI and be subject to a different set of rules than a bank holding company that has a large broker-dealer business," said Portilla. "There’s certainly flexibility.” Under Dodd-Frank, nonbank SIFIs are still supervised by the Fed, but the law allows firms removing their holding company to appeal their SIFI designation to the Financial Stability Oversight Council. Zions, which is above $50 billion in assets, has indicated that it will pursue that course to shed its SIFI status once its restructuring is complete. Still, Sandy Brown, a partner at Alston & Bird, said the particular path that Zions has chosen — to shed its holding company and become a pure bank — is something that smaller bank holding companies might consider, but probably not any of the larger banks. For the larger banks — particularly those that only became bank holding companies during the financial crisis — there may be some appeal in going the other way and shedding the bank altogether.
Dodd-Frank Rollback Bill: “It’s Christmas for the C-Suite and Crumbs for the Cratchits” - Pam Martens - Just when you thought the bills coming out of this Congress could not get any more repugnant in their giveaways to the richest Americans, the U.S. Senate Banking Committee proved otherwise yesterday.The hearing to approve Senate Bill S.2155 was so tainted with doublespeak and preposterous assertions that it would beef up consumer protections, while actually slashing them to shreds, that the video of the hearing has just up and disappeared. As of 8:00 a.m. this morning, it’s not on the Senate Banking Committee website. All that we could locate to review what actually went down in this sellout-to-the-rich session was an audio recording at C-SPAN. Curiously, however, there are numerous breaks in this audio where the speaker’s comments are cut off. Typically, these occur when a Democrat is challenging some provision in the bill. C-SPAN notes that the audio “was produced by the U.S. Congress.” In a shocking rebuke to their constituents, four Democrats on the Banking Committee joined with 12 Republicans to pass the measure. Those four are: Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia.In his opening statement, Democratic Senator Sherrod Brown, the ranking member of the Senate Banking Committee, called the bill “Christmas for the C-suite, and crumbs for the Cratchits.” His full statement appears below.In a 7-page, November 30 letter to the Senate Banking Chair Mike Crapo and ranking member Brown, the nonprofit watchdog, Public Citizen, provided a detailed critique of the critical consumer protections that would be rolled back under this bill. The letter stated: “When Senator Crapo became chair, he proposed an open process, and he invited proposals for economic growth. This drew scores of thoughtful proposals. Public Citizen advanced two ideas: one to establish an office at the Securities and Exchange Commission to promote employee concerns in the market; and another to restore the Glass-Steagall separation of commercial and investment banking, a policy endorsed by both Republican and Democratic platforms. Since then, however, the committee has failed to consider these ideas in hearings.
Four questions on reg relief’s future after landmark vote — Even though the bipartisan regulatory relief bill passed by the Senate Banking Committee Tuesday has numerous steps before becoming law, the panel's approval of the package was still a landmark moment. The committee's vote of 16-7 in favor of the bill not only was a rare moment of bipartisanship, but unlike past efforts to water down the Dodd-Frank Act, lobbyists are optimistic that this one will succeed. Yet the committee passage is just that; the bill still needs to go to the full Senate where the process could entail extended debate and amendments. Beyond that, the House would need to agree with whatever version the Senate has finalized. Below are key questions about the next legislative steps and the potential impact of the bill:
- Does the committee's approval of the bill ensure Senate passage? It might. The bill's margin of support out of committee reflects the support from key Democrats, which is essential to meeting the required 60-vote threshold in the full Senate. Three moderate Democrats on the panel — Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota and Jon Tester of Montana — negotiated the package with Senate Banking Committee Chairman Mike Crapo, R-Idaho. Virginia Democrat Mark Warner also voted for the bill.
- What happens after it passes the Senate, if it passes? The Senate would have to then negotiate with the House on a final legislative version. This is more complicated than it sounds. The two chambers have been far apart on regulatory relief, with the House — which only needs a simple majority to pass legislation — supporting more ambitious regulatory relief.
- Why is this regulatory relief effort faring better than other past ones? The Senate bill so far has avoided relatively extreme provisions to roll back Dodd-Frank, like those supported in the House, that would lose Democratic support. Following years of negotiations, Crapo and Democrats settled on a package that could be endorsed by both sides.
- What can banks expect if the legislation passes? The bill is a significant win for small and medium sized banks. It raises the Dodd-Frank asset threshold for being a "systemically important financial institution" $50 billion to $100 billion immediately, and then to $250 billion after 18 months. Banks have long said that the so-called SIFI threshold is arbitrary and way too low. Banks that are designated as SIFIs are subject to an onerous stress-testing regime and stricter capital requirements, and have to file annual resolution plans known as “living wills.”
New OCC head scraps plan to move big-bank examiners off-site -- The Office of the Comptroller of the Currency is eliminating a plan designed to ensure its examiners did not get too close to the big banks they supervise. The agency has long intended to remove hundreds of examiners who work inside the offices of JPMorgan Chase & Co., Citigroup Inc. and other lenders. In just his second week on the job, OCC chief Joseph Otting nixed the plan. “Upon review, it is not practical to continue the agency’s efforts to move resident examiners out of on-site locations,” Otting, a former banker, said in a statement. Other reforms, such as regularly rotating supervisors from bank to bank so they don’t spend too long in a particular firm, show the OCC has taken steps to prevent “regulatory capture,” said Otting, who ran OneWest Bank Group when Treasury Secretary Steven Mnuchin was the lender’s chairman. The agency cited the high cost of Manhattan real estate and the burden examiners would face in slogging back and forth between government offices and Wall Street banks as reasons not to relocate examiners.The move is the latest example of how regulators under President Trump are quietly rethinking Wall Street oversight even if they’ve made little progress so far easing rules passed in the wake of the 2008 financial crisis. Pulling embedded examiners out of big banks had been considered a key initiative to ensure supervisors didn’t develop a form of Stockholm Syndrome that kept them from aggressively looking out for abuses.
Trump Dumps Plan to Prevent Banks From Seducing Regulators - A high-profile plan to prevent federal watchdogs from getting too cozy with banks they are supposed to police has been scrapped by President Donald Trump’s newest Wall Street regulator. For years, the Office of the Comptroller of the Currency intended to remove hundreds of examiners who work inside the offices of JPMorgan Chase & Co., Citigroup Inc. and other lenders. In just his second week on the job, OCC chief Joseph Otting nixed the effort.“Upon review, it is not practical to continue the agency’s efforts to move resident examiners out of on-site locations,” Otting, a former banker, said in a statement to Bloomberg News.Other reforms, such as regularly rotating supervisors from bank to bank so they don’t spend too long in a particular firm, show the OCC has taken steps to prevent “regulatory capture,” said Otting, who ran OneWest Bank Group when Treasury Secretary Steven Mnuchin was the lender’s chairman. Factors cited as contributing to the OCC maintaining the status quo include the high cost of Manhattan real estate and the burden examiners would face in slogging back and forth between government offices and Wall Street banks.The move is the latest example of how regulators under Trump are quietly rethinking Wall Street oversight even if they’ve made little progress so far easing rules passed in the wake of the 2008 financial crisis. Pulling embedded examiners out of big banks had been considered a key initiative to ensure supervisors didn’t develop a form of Stockholm Syndrome that kept them from aggressively looking out for abuses. The examiners employed by the OCC and the Federal Reserve Bank of New York are akin to cops walking the beat, because they are tasked with the crucial job of making sure banks follow the rules and don’t take undue risks. The agencies have special office space in each lender’s building, with their watchdogs largely quarantined from casual interactions with bankers. At the OCC, the regulator of national banks, Otting is halting something that hasn’t happened yet. About 65 percent of its large-bank examination force remains on-site, the same as two years ago, according to the regulator. And the number of embedded supervisors has actually risen to 517 from 430 in 2015.
Fed faulted for failing to do more to prevent regulatory capture ---Federal Reserve Board should take more aggressive steps to prevent regulatory capture in the supervision of the nation’s largest banks, according to a top government watchdog.The Government Accountability Office concludes in a new report that a seven-year-old Fed-wide supervisory program for big banks should be strengthened, criticizing the Fed’s Board of Governors for so far failing to implement an enterprise risk management framework. Such a risk management system could help the central bank head off situations where regulators adopt the mindset of the bank they are supervising, a problem known as regulatory capture, the report argues. “Among many factors that contributed to the financial crisis of 2007-2009 was weakness in federal supervision of large banks, and some analyses have identified regulatory capture as one potential cause of this weakness,” the GAO wrote in a letter to Reps. Maxine Waters, D-Calif., and Al Green, D-Texas, who requested the report.The report did not identify any specific instances of regulatory capture at the Fed, though the GAO said that it was not looking for evidence of either the presence or absence of the phenomenon. Thirteen financial institutions are in the Fed’s supervisory program for large firms. The list includes JPMorgan Chase, Citigroup, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse, Deutsche Bank and UBS.
Fed opens black box on stress tests (but not too far) The Federal Reserve Board on Thursday proposed to give banks more insight into portfolio performance under its stress testing models in an effort to help banks better understand the Fed’s methodology without giving away too much. “This enhanced transparency will bolster the credibility of our stress tests and help the public better evaluate the results,” Randal Quarles, the Fed's vice chairman for supervision, said in a statement. “The proposed changes will also generate valuable insight from stakeholders and we look forward to it.” The central bank issued a handful of proposals outlining several policy changes, some of which Fed Governor (and now chairman-designate) Jerome Powell said would be coming months ago. The proposal would give banks “enhanced descriptions of supervisory models, including key variables,” as well as models on loan loss rates on loans and statistics on the loss characteristics for certain loan groups. The proposal would also provide for banks “portfolios of hypothetical loans and the estimated loss rates associated with the loans in each portfolio,” the Fed said. Under the existing stress testing regime, the Fed makes certain aspects of its modeling process known in an appendix to the released results, but those disclosures are limited to the basic structure of the model — indicating that losses are arrived at based on other models that, for example, assess the probability of default, the expected losses from a default or the bank’s exposure upon default. The proposed rule would go one step further and disclose some actual equations detailing the probability of default, or losses from default.
Regulators have bigger role to play in cybersecurity: Fed’s Quarles - Bank regulators have a bigger role to play in preventing cybercrime and should focus more on connecting financial institutions with national security agencies, Federal Reserve Vice Chair for Supervision Randal Quarles said Friday. Speaking at a gathering in New York hosted by the Group of Thirty, Quarles described cybersecurity as the biggest risk facing the financial sector. He also said that federal banking regulators should be “bringing more of the resources of the government to bear” to boost digital defenses.“We have a variety of resources in the government that we can appropriately and usefully bring that are really separate from the financial regulatory complex,” Quarles said at the event, which was held at UBS' corporate offices. Describing cyber threats as a “matter of national security,” he said he sees the “most benefit” in facilitating communication with security agencies. “My hope is that the financial regulators can be catalysts to helping encourage that direct communication,” Quarles said.
Trump wades into Wells Fargo saga, promising tough penalties - President Trump vowed Friday to pursue strong penalties against Wells Fargo, denying a report that the Consumer Financial Protection Bureau is reviewing tens of millions of dollars in proposed fines to be paid by the embattled bank. Trump wrote on Twitter that fines against the $1.9 trillion-asset bank will be pursued and possibly strengthened. Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating! — Donald J. Trump (@realDonaldTrump) December 8, 2017The president appeared to be responding to a Reuters story that was published Thursday. The story cited anonymous sources who said that acting CFPB Director Mick Mulvaney is reviewing the terms of a tentative settlement with Wells regarding alleged wrongdoing in its mortgage business. The report said that former CFPB Director Richard Cordray approved the proposed terms before stepping down in November. When asked for comment about the president's tweet, a Mulvaney aide at CFPB said that the bureau cannot discuss any pending enforcement actions. "However, as a matter of principle, Acting Director Mulvaney shares the President's firm commitment to punishing bad actors and protecting American consumers," John Czwartacki, a senior advisor at CFPB, said in an email. A Wells Fargo spokesman declined to comment.
Trump’s Wells Fargo tweet left Washington tongue-tied -- In vowing to come down hard on Wells Fargo, President Trump left many in Washington speechless on Friday—literally.After Trump wrote on Twitter that fines against the $1.9 trillion-asset bank will be pursued and possibly strengthened, the first time in recent memory that a president vowed tough action against a specific bank that remains under investigation, nearly everyone held their fire. That included the major trade groups, such as American Bankers Association, Independent Community Bankers of America, and the Consumer Bankers Association, which had little incentive to antagonize a president whose regulatory agenda they support. But it also included Democrats, such as Sen. Elizabeth Warren and Rep. Maxine Waters, who have fiercely criticized both the bank and the Republican president, and likely did not want to give the appearance of defending either one. Even Wells Fargo itself declined to comment. Analysts said that Trump's tweet was shrewd, though some also voiced concern about its implications for the independence of the Consumer Financial Protection Bureau. “The best move politically is always to bash the biggest bank. The president fundamentally understands this,” Jaret Seiberg, an analyst at Cowen Washington Research Group, wrote in a note to clients. The president's attack appeared to be a response to a Reuters story that was published the day before. That story cited anonymous sources who said that acting CFPB Director Mick Mulvaney is reviewing the terms of a tentative settlement with Wells regarding alleged wrongdoing in its mortgage business. The report said that former CFPB Director Richard Cordray approved the proposed terms before stepping down in November.
Transparency on Wall Street: SEC Chair Raises Weak Defenses – Pam Martens - On November 8, the Securities and Exchange Commission (SEC) Chairman, Jay Clayton, delivered a speech at the Practising Law Institute’s 49th Annual Institute on Securities Regulation. His focus was transparency on Wall Street and he had this nugget of wisdom to share with the audience:“Looking back at enforcement actions, a common theme emerges – where opacity exists, bad behavior tends to follow. As Joseph Pulitzer said: ‘There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy.’ The remainder of my remarks will concentrate on topics that have proven over time to be fertile ground for fraud on investors. The SEC may not yet have policy or rulemaking answers in these areas, but we are on the lookout for ways to fight the type of opacity that can create an environment conducive to misconduct.” The SEC was created to police Wall Street under the Securities Exchange Act of 1934. The legislation came on the heels of the U.S. Senate holding three years of hearings that showed Wall Street to be a cesspool of opaque self dealing and collusion that had led to the 1929 stock market collapse and ensuing Great Depression. The SEC has now had 83 years to hone its investigative skills and techniques. And yet, it wore blinders in the runup to the epic Wall Street crash of 2007-2009, which was caused by the same type of corruption that was ferreted out by the U.S. Senate after the 1929 crash. Its blinders remain securely in place.
Why so many women business owners avoid bank loans - When women business owners need financing to fund growth, buy equipment or cover expenses, they often will turn credit cards or tap their personal savings before seeking loans from banks, credit unions or other lenders.Among the reasons are that women generally fear debt more than men do and are often gun-shy about applying for loans if they have previously been rejected, bankers and observers said.Also, many might be so focused on running their businesses that they don’t take the time to network and develop relationships with other business owners or even business bankers who could provide guidance on how to grow their operations, said Charles Smith, a Small Business Administration specialist with the $10.7 billion-asset Eastern Bank in Boston. “A lot of women entrepreneurs isolate themselves … whereas men tend to congregate,” Smith said. “That creates a special layer of problems. You’re not getting adequate support, and you’re not getting the same networking opportunities as your male counterparts.”
Madden ruling was a step backward. Congress should fix it -- In May of 2015, a panel of the Second Circuit Court of Appeals came to the eyebrow-raising conclusion in a case called Madden v. Midland that perfectly valid loans made by a bank could be transformed into illegally usurious loans if sold to a nonbank after the fact. Most legal observers, including the Obama administration’s solicitor general, concluded that the Second Circuit had probably erred in its reading of the “valid when made” doctrine. Nevertheless, more than 100 consumer and civil rights groups are now urging Congress not to reverse the impact of the Madden ruling. I have been, far more often than not, on the same side of policy issues as the leading consumer and civil rights groups. But I disagree here: Madden is not just legally wrong; it is also bad public policy, because it moves us further away from creating a more effective and inclusive financial system. Bipartisan, bicameral proposals have already been introduced in Congress to fix Madden. Congress should pass them. To understand why, it’s useful to take a step back. Shortly after the Dodd-Frank Act was passed, I was asked by now-Sen. Elizabeth Warren to join a small team at the Treasury Department that was standing up what would become the Consumer Financial Protection Bureau. The goals that brought me to Washington are the same that underlie the CFPB’s mission statement even today: to help consumer finance markets work for the American people. Like most in financial services, I was deeply concerned that the industry I had worked in my entire career had not only failed to make lives better for a great many people, but had instead made them worse.
Trump’s Coup on Consumer Protection - The Consumer Financial Protection Bureau is in limbo as two people claim to be its new acting director. The outgoing head tapped Leandra English as his successor, but Donald Trump then appointed Mick Mulvaney, who has called the CFPB a “sick, sad” joke. NEP’s Bill Black appears on The Real News Network discussing the attack on CFPB. You can view here with a transcript.
Will bad blood over CFPB hamper reg relief bill? - The ill will generated between Democrats and Republicans in the controversy over appointing an acting chief for the Consumer Financial Protection Bureau adds a new wrinkle to congressional talks over a bipartisan regulatory relief deal. The Senate Banking Committee is scheduled to vote Tuesday on the targeted relief package, worked out between Chairman Mike Crapo, R-Idaho, and four moderate Democrats. The bill is expected to pass the panel easily, and it currently has nine Democratic cosponsors — along with Independent Angus King, who caucuses with the Democrats — that is enough to vote the bill out of the full Senate. Yet the deal was worked out before the politically charged war of words between Democrats and Republicans over who will run the CFPB.Senate negotiators are still confident the bipartisan coalition will hold, but analysts say the CFPB turmoil — triggered by former Director Richard Cordray’s attempt to handpick an acting successor followed by President Trump’s countermove installing Mulvaney — has left Democrats vexed and could affect how many votes the reg relief bill ultimately gets. “For members on the fence about whether to support this deal, the president’s decision to create this drama and appoint a White House official as acting director of CFPB … will provide one more reason to oppose the legislation,” Crapo ended up cutting a deal with moderate Democrats — including Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia — after his talks broke down with Sen. Sherrod Brown, D-Ohio, the committee’s ranking member. The resulting deal makes limited changes compared with a more ambitious House reg relief proposal, proposing noncontroversial measures such as simplified capital rules and a higher asset threshold for banks considered “systemically important.” Yet the spirit of bipartisanship reflected in the deal was in contrast to the events that started Nov. 24. As Mulvaney worked out of the CFPB’s office at the beginning of the week, English attended a photo shoot on Capitol Hill with Senate Minority Leader Chuck Schumer and Sen. Elizabeth Warren, D-Mass., the CFPB’s original architect. The back-and-forth was seen as hurting the cause of bipartisan reg relief.
How will Mick Mulvaney change the CFPB? | American Banker podcast -The battle for control of the Consumer Financial Protection Bureau appears to be over for now. How will the winner, Trump-appointed Mick Mulvaney, reshape the consumer watchdog agency? American Banker Editor-in-Chief Rob Blackwell shares his inside-the-Beltway take on the CFPB’s future.
CFPB's Mulvaney backs congressional repeal of payday lending rule - Acting CFPB Director Mick Mulvaney endorsed Monday a Congressional effort to overturn the agency's short-term lending rule, revealed plans to install more political appointees at the agency and acknowledged a possible prank played on him. During a briefing with reporters, Mulvaney said he had asked legal staff to brief him on whether the agency could retool the recently finalized short-term lending rule, but acknowledged that may not be possible. "It was fairly far out the door by the time we got here," said Mulvaney, who heads the Office of Management and Budget and was installed as acting CFPB director last week. (His leadership is still subject to a legal challenge by Deputy Director Leandra English.) But Mulvaney made it clear he backed a House effort introduced on Friday to roll back the CFPB rule via the Congressional Review Act, a law that gives Congress 60 session days to nullify a regulation via a majority vote. “I would support the Congress to move forward with the” Congressional Review Act, said Mulvaney, a former South Carolina congressman. Mulvaney said he spoke to Rep. Dennis Ross, R-Fla., who co-sponsored the bill, along with Reps. Tom Graves, R-Ga.; Alcee Hastings, D-Fla.; Henry Cuellar, D-Tex.; Steve Stivers R-Ohio; and Collin Peterson, D-Minn. It "is the more appropriate place … for the Congress to handle it through" a Congressional Review Act resolution, Mulvaney said.
House Members Tee Up Bipartisan Bill to Kill CFPB Payday Lending Rule - Jerri-lynn Scofield - Three Democrats and three Republicans have co-sponsored a resolution, under the Congressional Review Act (CRA), to scuttle the Consumer Financial Protection Bureau’s payday lending rule. CRA’s procedures to overturn regulations had been invoked, successfully, only once before Trump became president. Congressional Republicans and Trump have used CRA procedures multiple times to kill regulations (as I’ve previously discussed (see here, here, here and here). Not only does CRA provide expedited procedures to overturn regulations, but once it’s used to kill a regulation, the agency that promulgated the rule is prevented from revisiting the issue unless and until Congress provides new statutory authority to do so. As I wrote in an extended October post, CFPB Issues Payday Lending Rule: Will it Hold, as the Empire Will Strike Back, payday lending is an especially sleazy part of the finance sewer, in which private equity swamp creatures, among others, operate. The industry is huge, according to this New York Times report I quoted in my October post, and it preys on the poorest, most financially-stressed Americans: There are now more payday loan stores in the United States than there are McDonald’s restaurants. The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people, many of whom lack other access to credit, take out the short-term loans each year, researchers estimate. The CFPB’s payday lending rule attempted to shut down this area of lucrative lending– where effective interest rates can spike to hundreds of points per annum, including fees Tactically, as with the ban on mandatory arbitration clauses in consumer financial contracts– an issue I discussed further in RIP, Mandatory Arbitration Ban, (and in previous posts referenced therein), the CFPB under director Richard Cordray made a major tactical mistake in not completing rule-making sufficiently before the change of power to a new administration- 60 “session days” of Congress, thus making these two rules subject to the CRA. The House Financial Services Committee press release lauding introduction of CRA resolution to overturn the payday lending rule is a classic of its type, so permit me to quote from it at length:
Mulvaney's plan to embed political staffers in CFPB sparks backlash – Critics are blasting Mick Mulvaney’s aggressive push to rapidly remake the Consumer Financial Protection Bureau, arguing that his plans threaten to compromise the agency’s independence, while also establishing a blueprint for undermining the autonomy of other financial regulatory agencies.Mulvaney, the White House budget director who was named the bureau’s acting director last month by President Trump, said Monday that he plans to start hiring political staffers, and to pair them with the career officials who currently head various CFPB divisions. For "every major branch of CFPB — enforcement, rulemaking, education, legal, maybe somebody in the Northeast division, somebody in the Southeast division, somebody out West," Mulvaney said he would "try to marry [that branch's] senior staffer ... up with a political position." Those comments poured fuel on an already smoldering legal fight for control of the six-year-old consumer agency. Leandra English, who was named deputy director by outgoing Director Richard Cordray, filed a lawsuit last week seeking to block Mulvaney’s appointment. The Trump administration won the first round of the court battle; the next hearing is scheduled for Dec. 22.Congress designed the CFPB to be an independent agency in the mold of the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve Board. Those agencies typically have far fewer political appointees than other parts of the executive branch. At the OCC, the only political appointee is Comptroller Joseph Otting, a spokesman said Tuesday. Members of the FDIC’s board are political appointees, but the agency has just one additional political staffer, according to a spokeswoman. And the Federal Reserve Board has no political staff appointees, though its board members are confirmed by the Senate.
New York CU sues Trump over CFPB appointee -- Lower East Side People’s Federal Credit Union has filed a lawsuit against President Donald Trump and Michael Mulvaney over what they see as a violation of the constitution in Mulvaney’s appointment to head up the Consumer Financial Protecion Bureau. For the $55 million credit union, “it is plain that [CFPB Deputy Director] Leandra English is the only lawful acting director in charge of the CFPB,” according to the lawsuit that was filed in federal Court in Manhattan.The suit argues that the Dodd-Frank Act requires that English should remain acting director until the president nominates and the Senate confirms a new director.“We support the CFPB as a protector of our low-income members’ financial rights, and fear that the appointment of an acting director beholden to the White House could result in upheaval and ultimate dissolution of this critical agency,” said the credit union's CEO, Linda Levy, in a press release. “Having experienced the devastation that the 2008 mortgage crisis wreaked on our low-income members, we need the CFPB to protect communities targeted by financial predators.”The small Manhattan-based credit union's suit argues that Trump’s appointment has thrown financial institutions “into a state of regulatory chaos.” Meanwhile, both CU trade groups have already recognized Mulvaney over English as acting director.
Senate Democrats demand CFPB leader 'who is tough on Wall Street' — Virtually the entire Senate Democratic caucus called on President Trump to nominate a permanent Consumer Financial Protection Bureau director quickly to replace interim Director Mick Mulvaney. In a letter dated Monday, the 44 Democrats — led by Sherrod Brown of Ohio, the ranking member on the Banking Committee — took an obvious dig at Mulvaney, the White House budget director who was installed at CFPB despite having called the agency a “sick, sad” joke. His appointment is still being challenged by CFPB Deputy Director Leandra English, who is arguing in court that she is the legal acting director until Trump nominates a successor to Richard Cordray. “Assigning leadership of the CFPB to someone who already has a full-time job reporting to the White House and who does not believe in the CFPB’s mission jeopardizes the agency’s independence and effectiveness,” the senators wrote. “We urge you to nominate a CFPB Director who will bring to the job both bipartisan support and a track record of being tough on Wall Street. Following the Dodd-Frank succession provision and nominating a director who will fight for consumers allows the CFPB to continue its work without political interference.” The senators said the CFPB has helped push back against special interests, which, they said, is an issue Trump ran on in the 2016 election. “Polling shows that the vast majority of Americans agree that the CFPB has been doing great wor holding special interests accountable,” they said, adding that 74% of “Americans — Republicans and Democrats — approve of the CFPB’s mission and 55% of Republicans who voted for you believe that the CFPB should be left alone to do its work or even be given expanded authority to do more.”
The CFPB’s losing streak: A blow-by-blow - During the past two months, the agency has suffered a series of setbacks. Lawmakers scrapped one of its key rules and are aiming at another; its leader quit and his hand-picked successor is waging a legal battle to try and get control of the agency; the Trump administration's choice for interim agency head has signaled he intends drastic changes; and the Government Accountability Office just effectively eliminated the agency's guidelines to auto lenders. Meanwhile, the bureau has already pulled back on some enforcement matters and observers predict that trend will only continue. While part time Acting Director Mick Mulvaney (he also runs the Office of Management and Budget) has pledged not to shut down the agency, he has made his disdain clear for many of its past activities. “You could imagine that the Office of Management and Budget under the Trump administration might look very cautiously, even cynically, against rules that were produced by" former CFPB Director Richard Cordray, Mulvaney said.Mulvaney said he's not sure what the agency will focus on next. “I am trying to figure out how to articulate how things are going to be different,” he told reporters. “That is really what I need to set aside some time to do fairly quickly.” Whatever it is, it's liable to look significantly different. Following are some of the defeats suffered by the CFPB in recent weeks — and others that may still be in the works.
GAO effectively scraps CFPB auto lending guidance — The Consumer Financial Protection Bureau’s 2013 guidance putting indirect auto lenders on the hook for unintentional discrimination by their partner dealers should have been subject to congressional review and must be resent by the agency, the Government Accountability Office said Tuesday. In a letter to Sen. Pat Toomey, R-Pa., the agency said the controversial bulletin “is a general statement of policy and a rule under the” Congressional Review Act. The decision effectively scraps the auto lending guidance because it was not properly sent to Congress for review — and therefore it can no longer be used by agency examiners until that occurs. “GAO’s decision makes clear that the CFPB’s back-door effort to regulate auto loans, which was based on a dubious legal justification, did not comply with the Congressional Review Act,” Toomey said in a press release. “GAO’s decision is an important reminder that agencies have a responsibility to live up to their obligations under the law. When they don’t, Congress should hold them accountable. I intend to do everything in my power to repeal this ill-conceived rule using the Congressional Review Act.” But a full-fledged Review Act push by Toomey probably won’t be necessary. The GAO’s decision remands the guidance to the CFPB, which must resend it for lawmakers' review. It is highly unlikely that the CFPB will do so now that it is under the control of acting CFPB director Mick Mulvaney, given Republicans’ long-standing objections to the guidance.
Consumer bureau reconsidering fine against Wells Fargo for mortgage fees: report | TheHill: The acting head of the Consumer Financial Protection Bureau (CFPB) is reportedly mulling whether to go ahead with a multimillion-dollar penalty for alleged mortgage fraud by Wells Fargo. Reuters reported that the CFPB and Wells Fargo had been hashing out a settlement over the bank charging potentially more than 100,000 mortgage borrowers unnecessary fees to lock in low mortgage rates. Acting CFPB Director Mick Mulvaney, the White House budget director, said last week he’d review each of the 14 pending enforcement actions left to him by former Director Richard Cordray. Mulvaney, a staunch conservative, had routinely spoken out against the CFPB as a congressman, sponsoring bills to eliminate the agency. He and fellow Republicans have accused Cordray and the CFPB of abusing its unique independence and broad power to harm the financial markets. “The structure of the CFPB is just fundamentally flawed. Authority that I have now as the acting director really should frighten people,” Mulvaney said last week on Fox Business. “We’re going to try and limit as much as we can what the CFPB does to sort of interfere with capitalism and with the financial services market," he said. The acting director imposed a 30-day hiring and regulatory freeze upon assuming control of the CFPB last Monday, and just began making payments from the bureau’s civil penalties fund. Mulvaney said he’s reviewing the various lawsuits CFPB is involved in and has already sought delays in two cases where his opinion differs from Cordray’s.
Elizabeth Warren And Sherrod Brown Slam Mulvaney For Conflicts Of Interest - Democratic Sens. Elizabeth Warren (MA) and Sherrod Brown (OH) on Friday slammed President Donald Trump’s top financial regulator Mick Mulvaney after evidence surfaced that as a Congressman he raked in campaign contributions from payday lenders just days before he pressured government officials to back off predatory lending regulations. Warren suggested the $55,000 worth of campaign donations from payday lenders was a reward from the financial industry to Mulvaney for defending their interests. Brown said Mulvaney, who is now the acting director of the Consumer Financial Protection Bureau, has a clear conflict of interest that disqualifies him from permanently serving in that role. The two lawmakers serve on the powerful Senate Banking Committee that oversees the CFPB. The statements from the two senior banking committee lawmakers were prompted by a Friday morning IBT report that published 268 pages of correspondence between then-Congressman Mulvaney and the agency he now runs. The documents show Mulvaney twice wrote or signed letters pressuring financial regulators to help payday lenders. One of the letters, which was signed by Mulvaney and 11 House colleagues on Sept. 29, 2016, came after Mulvaney had received $18,400 in campaign donations from payday lenders and their trade associations over the previous three weeks. “Mr. Mulvaney spent his years in Congress trying to gut consumer protections and undermine the CFPB — and he racked up big donations from payday lenders and banks for his efforts,” Warren told IBT in an emailed statement. “His illegal appointment to lead the consumer agency is a slap in the face for working families who’ve been cheated.” The revelations about Mulvaney’s letters followed an earlier IBT report documenting how Mulvaney’s former top aide is now lobbying for Santander, a megabank that, until Mulvaney took over, had faced a potential CFPB enforcement action. Brown, the ranking Democrat on the Senate Banking Committee, said that taken together, he believes Mulvaney needs to be removed.
CFPB Reportedly Funneled Billions Into "Secret Democrat Slush Fund", Consultant Claims -- A consultant who worked with the highly politicized Consumer Financial Protection Bureau (CFPB) claims the organization funneled a large portion of over $5 billion in collected penalties to "community organizers aligned with Democrats" as part of a giant slush fund, the Post reports. [The CFPB] Funneled a large portion of the more than $5 billion in penalties collected from defendants to community organizers aligned with Democrats — “a slush fund by another name,” said a consultant who worked with CFPB on its Civil Penalty Fund and requested anonymity. Created six years ago as the brainchild of Senator Elizabeth Warren and slipped into the Dodd Frank bill before it was passed by Congressional Democrats, the CFPB became one of the most powerful agencies in D.C., with the ability to exercise enormous power over the U.S. economy while its budget remained unencumbered by congressional oversight. As one Hill writer put it: The problem is that this agency and its director were set up to be free from the control of the Congress. Congress’s fundamental obligation to oversee and fund such bureaus or agencies is short-circuited when it comes to the CFPB. In structuring it in the manner written by now-Sen. Warren (D-Mass.), the law abrogated the idea of a government by the people, for the people and of the people. Instead, it established an autocratic and unaccountable power center for people of Warren’s ideological persuasion — those who view our market economy as an enemy that must be managed by a chosen few. The creation of the CFPB as a rogue agency with a dictatorial leader is one of the most significant acts of malfeasance perpetrated on the American constitutional system since the Sedition Acts of 1798.
Bitcoin Heads to Wall Street Whether Regulators Are Ready or Not - Two U.S. exchanges, including the parent of the venerable Chicago Mercantile Exchange, are racing to embrace bitcoin, dragging federal regulators into a realm skeptics call a fad and fraud.The development shows how some big financial players are moving to co-opt the volatile cryptocurrency and lure more mainstream investors into the market, even before regulators have agreed on just what bitcoin is. CME Group Inc’s contracts will debut Dec. 18. Cboe Global Markets Inc. didn’t announce a start date. Both got the green light Friday after going through a process called self-certification -- a pledge to the U.S. Commodity Futures Trading Commission that the products don’t run afoul of the law. The news pushed bitcoin’s price higher.The moves are a watershed for Wall Street professionals -- including institutional investors and high-speed traders -- who’ve been eager to bet on cryptocurrencies and their wild swings, but worried about doing so on mostly unregulated markets. The new products are subject to CFTC oversight. CME, Cboe and Cantor Fitzgerald LP’s Cantor Exchange -- which is creating another kind of bitcoin derivative, binary options -- promised to help the agency surveil the underlying bitcoin market. Trading in bitcoin and other cryptocurrencies is largely unregulated, and that’s the point. Bitcoin was introduced in the wake of the 2008 financial crisis as a way of avoiding governments and central banks. Now with its meteoric rise and the proliferation of cryptocurrencies, banks, brokers and mainstream investors want in. And they want regulation, something they’ll get plenty of in a market like CME or Cboe’s.
Bitcoin futures trading approval sparks concerns about bank control - Wall Street has a green light to enter the bitcoin market, and a number of bitcoin enthusiasts are very unhappy about it. On Friday, the Commodity Futures Trading Commission announced it would allow CME Group and CBOE Global Markets to list bitcoin futures. The move could open the floodgates to new investment, as CME and CBOE will become the first traditional U.S. exchanges to offer trading in bitcoin-related financial products. But dozens of the cryptocurrency's supporters complained that the move marks the end of bitcoin's freewheeling, decentralized ways, and they took to Twitter to decry what they see as an attempt by banks to wrest control of the digital-asset market. "Bitcoin futures really scare me," tweeted one user, a self-described contrarian investor, "in my opinion it could well be the death of bitcoin as we know it. It's a huge step in the door for the corrupt banks and hedge funds to manipulate price action without owning the (Real Bitcoin)." Many bitcoiners expressed concern that banks would be able to treat the cryptocurrency like precious metals. "Before you celebrate understand how futures destroyed silver enthusiasts by banks and exchanges making longs and shorts without caring about actual silver," one account wrote
The Winklevoss twins are now Bitcoin billionaires - The Winklevoss twins, famously known for suing Mark Zuckerberg after claiming he stole their idea for Facebook, are now Bitcoin billionaires, according to a few reports. Cameron and Tyler Winklevoss won $65 million from the Facebook lawsuit, and invested $11 million of their payout into Bitcoin in 2013, amassing one of the largest portfolios of Bitcoin in the world — 1 percent of the entire currency’s dollar value equivalent, said the twins at the time. Their slice of the Bitcoin pie is now worth over $1 billion after Bitcoin surged past $10,000 last week to now trade at $11,100, according to CoinDesk. The cryptocurrency has surged over 10,000 percent since the Winklevoss’ investment, when one coin traded at around $120. "If Bitcoin is a better gold or seen as a type of gold-like asset, then it could be in the trillions on a market cap," Tyler Winklevoss told CNNMoney in 2015. "We do feel those are very real possibilities." The twins have never sold a single Bitcoin, reports The Telegraph, noting that only a handful of Bitcoin wallets hold more than $1 billion worth of the cryptocurrency. One of those wallets belongs to the mysterious inventor, known only under the pseudonym of Satoshi Nakamoto.
Goldman Sachs Will Clear Bitcoin Futures, Report - Despite all the risk/margin worries, and volatility fearmongering, and fraud allegations, Bloomberg reports that, according to a person familiar, Goldman Sachs plans to clear bitcoin futures contracts when they go live next week. “Given that this is a new product, as expected we are evaluating the specifications and risk attributes for the bitcoin futures contracts as part of our standard due diligence process,” Tiffany Galvin, a spokeswoman for the bank, said in an emailed statement.Goldman Sachs Chief Executive Officer Lloyd Blankfein said last month that it’s too early for his bank to need a bitcoin strategy and that he doesn’t consider the digital currency to be a store of value.Blankfein said in the Bloomberg Television interview that he felt no urgency for his firm to develop a plan for dealing with bitcoin given its volatility. Bank of America Corp. and Citigroup Inc. won’t immediately offer clearing of the products when they start trading, people briefed on those lenders’ decisions said. The Wall Street Journal reported the banks’ decisions earlier Thursday. However, we suspect that Goldman's confirmation will bring the rest quickly to market.
People Who Can’t Remember Their Bitcoin Passwords Are Really Freaking Out Now - Bitcoin has had quite a week. On Thursday, the cryptocurrency surged past $19,000 a coin before dropping down to $15,600 by Friday midday. The price of a single Bitcoin was below $1,000 in January. Any investors who bought Bitcoins back in 2013, when the price was less than $100, probably feel pretty smart right now. But not all early cryptocurrency enthusiasts are counting their coins. Instead they might be racking their brains trying to remember their passwords, without which those few Bitcoins they bought as an experiment a few years ago could be locked away forever. That’s because Bitcoin’s decentralization relies on cryptography, where each transaction is signed with an identifier assigned to the person paying and the person receiving Bitcoin. It’s how the system is able to process large transactions without a central bank, since each exchange is guaranteed by authenticating when money is going from one wallet to another using both public identifiers and private passcodes, and no one can access your Bitcoin wallet without your private password. If someone else somehow had your password and swiped your coins, they’re gone for good. Passwords are used to unlock your bitcoin wallet address, and if you forgot your password, those coins are locked away. There’s no central point of control to help retrieve your Bitcoin or change your password. If there was an easy means of cracking open people’s Bitcoin wallets when a password was lost, the cryptocurrency would be worthless, since the whole point is security without centralization.
What happens when bitcoin’s market cap overtakes world GDP? -- Izabella Kaminska - Because there’s no reason why it couldn’t. And that’s the problem. Unlike any other market in the world, there are no natural sellers in bitcoin. Even the miners who mint coin stockpile as much of it as possible and try to obtain as much free energy from alternative non monetary sources. If and when they are forced to sell to pay for electricity bills they do so through established bilateral OTC channels out of fear that dumping huge amounts of coin on public exchanges could impact upward momentum, eating into their potential gains. Over the last year bitcoin positions across many markets have become entirely one-directional. We’re told, for example, that over 90-95 per cent of client flow on some of the most popular CFD and spread betting platforms is on the long side. Prudent platforms tend not to like this sort of thing. Ideal markets for them are ones that offer a good balance of buyers and sellers so that flows can be offset naturally against each other (known in the industry as being internalised) without the need to hedge the differentials.
SEC Wins Injunction Against ICO Organized By Financial Fraudster -- The Securities and Exchange Commission is stepping up its long-overdue crackdown on shady initial coin offerings that are churning out suckers at a record clip with one simple promise: Invest in our coin and you, too, can receive an astronomical IRR just like your savvy cousin who bought a handful of bitcoins back in 2011 and decided to hold on for dear life.In an enforcement action that, as far as we can tell, is the first of its kind anywhere, the SEC just won an emergency asset freeze to stop an initial coin offering that the agency said has defrauded investors by promising a 13-fold profit in less than a month.While such an outrageous guarantee should immediately set alarm bells ringing in the minds of any experienced investor, bitcoin’s 1,000%-plus return so far t his year has inspired many lazy would-be crypto millionaires to throw caution to the wind and approach every new ICO with a level of credulity that’s totally unjustified. But anybody who actually reads the “white papers” that many of these companies release will realize that they typically comprise hypertechnical gibberish designed to convince investors that there is no problem in the world today that can’t be solved with a blockchain and thousands of monetized tokens.
Common securitization platform testing taking longer than expected - Testing of the common securitization platform is taking longer than expected, but the Federal Housing Finance Agency said it won't delay the 2019 launch of Fannie Mae and Freddie Mac's new single "uniform mortgage-backed security." Meanwhile, the FHFA and government-sponsored enterprises are encouraging secondary market participants to begin their own preparations for the industrywide transition. Common Securitization Solutions, the joint venture created by Fannie Mae and Freddie Mac to develop and operate the platform, is testing the data acceptance, issuance support, bond administration and disclosures modules with both Fannie Mae and Freddie Mac. But that testing is taking longer than expected and will now stretch into 2018, the FHFA said in a Dec. 4 update on the initiative.For lenders, a combined platform and security could indirectly improve the prices their loans fetch on the secondary market. That's because, if all goes according to plan, the modernized platform and single security would attract more investors to the MBS market. Earlier this year, the FHFA announced a revised timeline for the CSP, delaying full implementation until 2019 following "lessons learned" from the first phase.
Blockchain moves in on digital mortgage process -- Blockchain technology company Block One Capital has signed a binding term sheet to acquire 40% of the equity of New York-based Finzat, a private entity aiming to develop a blockchain system to create a safer, more compliant digital mortgage process, according to the company. Block One Capital is to invest $600,000 for up to 40% of Finzat, with an additional milestone payment of $800,000 upon Finzat meeting certain term conditions outlined in the term sheet. Finzat's blockchain system aims to tackle of number of issues in the residential mortgage market, including transaction tracking, compliance, auditing and security. "The Finzat system aims to permanently preserve loan information at the point of every decision and eliminates the need to recreate proof at the backend. The need for such a system is validated by more rigorous and standardized compliance regulations that are being phased in, as mortgage markets continue to move towards a mainstream paperless mortgage process," according to Block One Capital.
Faster mortgage closings could boost fraud, risk consultant warns --A quicker, digital mortgage origination process could improve customer service but it also may make home lenders more susceptible to identity theft, according to LexisNexis Risk Solutions."Digital mortgage absolutely has a lot of promise but it's also something that we have to look at how we do it so we don't create new avenues for fraud to be able to be perpetrated," said Nick Larson, business development manager in the real estate and mortgage space at the company. Identity verification is identified as a top mobile channel concern by 36% of mortgage production companies, according to a recent lender breakout of the company's annual True Cost of Fraud survey. Digital mortgage lenders find synthetic identities are involved in 25% of the fraud they experience. Mortgage lenders are fraud targets less often than other types of consumer lenders, but they are only slightly better at preventing fraud, LexisNexis Risk Solutions finds.There were 851 fraud attempts per month on average at mortgage lenders and 30% of those attempts resulted in a loss of funds, according to the survey.In comparison, other credit lenders experienced 1,362 attempts, 34% of which were successful.
Breaking down Hensarling’s GSE reform overture — House Financial Services Committee Jeb Hensarling shifted tactics on housing finance reform Wednesday, acknowledging that a bill he’s pushed for years to virtually eliminate the government’s role in the mortgage market lacks the support to become law. The Texas Republican also conceded that while he opposes any kind of government guarantee of the mortgage market, it would be impossible to pass a reform effort without one.“I continue to believe that a government guarantee in the secondary mortgage market remains a bad idea, a risky idea, and an unneeded idea,” Hensarling told the National Association of Realtors. “I also believe the idea is not going away anytime soon and I fully expect it to be part of any successful reform effort in this Congress.” While Hensarling still prefers his approach, a bill called the PATH Act, he is now actively pursuing other options. He explicitly endorsed a plan by a former top regulator of Fannie Mae and Freddie Mac while outlining a set of principles he said are essential to any reform effort.He also acknowledged that any bipartisan deal would include some support for affordable housing, another area where Hensarling has been vigorously opposed in the past. “While I personally have not changed … my mind that the best path forward remains the PATH Act, after carefully surveying today’s political landscape, I do not see the PATH Act’s passage likely,” he said. Hensarling’s concessions are significant, and boost momentum for a bipartisan deal by the end of next year — the tenth anniversary of the government takeover of Fannie and Freddie. The Texas Republican’s change of heart comes ahead of a renewed push by Senate lawmakers to agree on a deal on reform of the government-sponsored enterprises. Until Wednesday, Hensarling had appeared to favor an all-or-nothing approach, though privately many financial services lobbyists said the lawmaker would have been willing to compromise.
Fannie and Freddie: Should they stay or should they go? - Two steps forward and one step back. That appears to be the current state of play regarding the effort to revamp the housing finance system. On the one hand, House Financial Services Committee Chairman Jeb Hensarling made significant concessions this week in an effort to strike a bipartisan and bicameral deal, agreeing to include a government guarantee of the mortgage market and affordable housing measures. Yet just as he moved closer to Senate lawmakers working on their own, they moved further away from him. The current plan is to keep Fannie Mae and Freddie Mac alive in a new system, a break from the Senate’s last effort. That sets up a new potential disagreement with Hensarling, who made it clear the two government-sponsored enterprises should be wound down. Under Hensarling’s most recent proposal, Fannie and Freddie would be liquidated and their charters repealed, while they are replaced with a revamped Ginnie Mae that issues mortgage-backed securities. The Senate, meanwhile, would keep Fannie and Freddie as two of several private-sector guarantors. The question of what happens to Fannie and Freddie has always been a central one in discussions of housing finance reform. But until recently, there appeared to be a broad, bipartisan agreement that they should be eliminated. It was one area where Hensarling agreed with the Obama administration and Senate Banking Committee Chairman Mike Crapo. Yet now that consensus appears to have unraveled and may prove to be a significant challenge. The question is why.
FHA loan limits get a boost for 2018 - The Federal Housing Administration has updated its new schedule of loan limits for 2018, with most areas in the country set to experience an increase.The national loan limit for one-unit homes will be $294,515 in 2018, up from $275,655 this year. In high-cost areas, county-level loan limits can be as high as $679,650, up from $636,150.The maximum loan limits for FHA forward mortgages will rise in 3,011 counties and apply to FHA case numbers assigned on or after Jan. 1, 2018. In 223 counties, FHA's loan limits will remain unchanged. The limit for FHA-insured Home Equity Conversion Mortgages will rise to $679,650, from $636,150. While forward mortgage loan limits are set on the county level, there is only a single loan limit for all reverse mortgages. The National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, requires the FHA to base its floor and ceiling limits on the loan limit set by the Federal Housing Finance Agency, which will rise to $453,100 in 2018 from this year's $424,100. The FHA's minimum national loan limit is set at 65% of $453,100, which applies to areas where 115% of the median home price is less than the floor limit. Areas where the loan limit exceeds this floor are considered high-cost, and HERA requires the FHA to establish its maximum loan limit ceiling for these areas at 150% of the national conforming limit.
FHA ceases approvals of PACE loans, citing taxpayer risk - — The Federal Housing Administration will stop approving new mortgages on properties encumbered by assessments used to finance and update heating and cooling systems, the Department of Housing and Urban Development said Thursday. These Property Assessed Clean Energy (PACE) assessments place taxpayers at risk, according to HUD Secretary Ben Carson, because PACE loans take a first-lien position. “FHA can no longer tolerate putting taxpayers at risk by allowing obligations like these to be placed ahead of the mortgage itself in the event of a default,” Carson said in a press release. “Assessments such as these are potentially dangerous for our [FHA] Mutual Mortgage Insurance Fund and may have serious consequences on a consumer’s ability to repay, or when they attempt to refinance their mortgage or sell their home,” he added. The ban on financing properties with existing PACE assessments goes into effect in 30 days, according to an FHA Mortgagee Letter dated Dec. 7.The HUD press release said the FHA "is also concerned about PACE obligations being placed on FHA-insured mortgage that are already outstanding.”"FHA intends to monitor this carefully to determine whether further action is needed," according to the announcement.The largest provider of PACE Loans, Renew Financial Group, based in Oakland, Calif., could not be reached for comment.But the Mortgage Bankers Association welcomed the FHA's PACE decision. "MBA applauds HUD's announcement and fully supports these reforms," MBA President and CEO David Stevens said in a statement Thursday. "PACE liens pose a real danger to secured lenders and to the [Mortgage Mutual Insurance Fund] because they erode the underlying collateral due to their priority lien position in the event of default," he said.
Moody's Warns U.S. Office Real Estate At "Cyclical Tipping Point" That Will Devastate CMBS Market -- We've frequently written about the growing supply problem in the major commercial real estate markets across the country (for example: NYC Commercial Real Estate Sales Plunge Over 50% As Owners Lever Up In The Absence Of Buyers). Now it seems that Moody's is also growing somewhat concerned that growing supply, combined with waning demand and bubbly valuations, is a toxic combination for commercial office real estate projects and could result in disastrous consequences for the CMBS market. Here are the highlights from Moody's:
- Issuers are aggressively underwriting loans to peaking property values and cash flows, while new office construction is ramping up in a number of major cities. Supply is set to exceed demand in many cases, a credit negative for office-backed CMBS.
- » Late-cycle supply-demand imbalances and aggressive underwriting weaken credit quality of CMBS office issuance. Underwritten office property values far surpass those of the pre-financial crisis peak, especially for central business district (CBD) offices, while many US cities are set to have an oversupply of new office inventory. Over the last 12 months, office properties backing new issue conduit/fusion CMBS received our highest value haircuts of any major property type, averaging 53% for CBD offices and 48% for suburban offices.
- » The imbalance caused by new construction and softening economic demand mirrors the inflection points of previous cycles. Through 2018, we expect the annual growth rate of US office space to roughly double that of the last three years. Meanwhile, the 2018 growth rate of office-using employment will decelerate by about half that of 2017. As supply exceeds demand, the overall office vacancy rate will likely climb more than 1.5 percentage points over the next three years from the current cyclical low of about 13%.
- » Clear signs of a momentum shift in the largest CBD office markets. San Francisco and Seattle are the two largest supply-demand imbalanced CBD office markets, and both have vacancy rates likely to double in the next three years to over 12%. Vacancy rates of the four other largest markets will rise 1%-2% over the same period. Additionally, cap rates have been rising in these six markets, signaling a cyclical inflection point in the CRE capital markets as well as in the CRE space market.
Foreclosure giant to close its doors for good - RCO Legal, once one of the largest foreclosure law firms in the Northwest, is shutting down permanently in December, a victim of the strong economy and housing market.Joshua Schaer, an RCO lawyer, informed a federal judge of the pending shutdown in a Dec. 4 court filing. "RCO Legal is closing all offices in Washington and nationwide, and (my) employment with RCO Legal will be terminated as of Dec. 12, 2017," Schaer wrote.The pending closure comes barely a month after the U.S. Justice Department accused Northwest Trustee Services, RCO's controversial parent company, of illegally foreclosing against 28 veterans.The impact of RCO's closure on Northwest Trustee is unclear. The company did not return multiple phone calls and emails.Lance Olsen, a former partner of RCO back when it was known as Routh Crabtree & Olsen, said his former firm is a victim of what he called the "foreclosure bust.""The faucet turned off in a big hurry," Olsen said. "Far more loans are being modified than being sent to foreclosure. That combined with a strong housing market, the business just isn't there." Though its roots go back 40 years, Northwest Trustee and RCO attained a new prominence after the great housing bust of 2008. It represented lenders who were foreclosing on delinquent homeowners at rates not seen since the Great Depression. RCO is based in Bellevue, Wash., but has offices in Portland, Ore., and in several other states.
Black Knight Mortgage Monitor: Tax Changes may Reduce Supply of Homes for Sale - Black Knight released their Mortgage Monitor report for October today. According to Black Knight, 4.44% of mortgages were delinquent in October, up from 4.35% in October 2016. Black Knight also reported that 0.68% of mortgages were in the foreclosure process, down from 0.99% a year ago. This gives a total of 5.12% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Tax Reform Could Further Constrict Already Tight Housing Inventory, While Increasing Net Housing Expenses for Many Buyers Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of October 2017. Given the significant impact proposed changes to the tax code could have on the housing and mortgage markets, this month Black Knight explored the impact from the Senate and House versions of tax reform as currently written. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, proposed changes to the standard deduction, mortgage interest deduction (MID) and capital gains exemptions in particular could put even more pressure on already limited available housing inventory, with ramifications for both current homeowners and prospective buyers.Black Knight also found that proposed changes to the capital gains exemption on profits from the sale of a home (requiring five years of continuous residence as compared to the current two) could impact approximately 750,000 home sellers per year, also potentially increasing pressure on available inventory. Leveraging the company’s SiteX property records database, Black Knight found that on average, over the past 24 months, more than 14 percent of property sales were by homeowners falling into that two-to-five-year window and who would no longer be exempt from capital gains taxation. On average, $60 billion in capital gains each year could be impacted, with a worst-case scenario (taxing the full amount under the highest tax bracket) putting the cost to home sellers at approximately $23 billion. If such homeowners choose to forego or delay selling to avoid a tax liability, this may also further reduce the supply of homes for sale.
CoreLogic: "2.5 million Homes still in negative equity" at end of Q3 2017 -- From CoreLogic: CoreLogic Reports Homeowner Equity Increased by Almost $871 Billion in Q3 2017 CoreLogic® ... today released its Q3 2017 home equity analysis which shows that U.S. homeowners with mortgages (roughly 63 percent of all homeowners*) have collectively seen their equity increase 11.8 percent year over year, representing a gain of $870.6 billion since Q3 2016. Additionally, homeowners gained an average of $14,888 in home equity between Q3 2016 and Q3 2017. Western states led the increase, while no state experienced a decrease. Washington homeowners gaining an average of approximately $40,000 in home equity and California homeowners gaining an average of approximately $37,000 in home equity. On a quarter-over-quarter basis, from Q2 2017 to Q3 2017, the total number of mortgaged homes in negative equity decreased 9 percent to 2.5 million homes, or 4.9 percent of all mortgaged properties. Year over year, negative equity decreased 22 percent from 3.2 million homes, or 6.3 percent of all mortgaged properties, from Q3 2016 to Q3 2017. “Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.”
Reducing payments does more than reducing principal, study shows -- Cutting payments helps stave off default, but principal reduction on underwater loans and lower consumer debt levels are less effective, according to the JPMorgan Chase Institute's new study of post-crisis modifications."The most important finding that also would come as a surprise to a lot of people is that it's not really about the wealth effect and principal reductions for underwater borrowers; it's really about payment relief," said Diana Farrell, president and CEO of the institute.A 10% payment reduction resulted in a 22% reduction in the default rate, according to the study.Mods that reduced principal on underwater loans, but did not fully restore equity, did not appear to have much bearing on whether or not a borrower defaulted. Neither did the amount of nonmortgage debt consumers had."Adding to the principal reduction when a loan was underwater didn't change the foreclosure picture," Farrell said.Few borrowers have access to a resource like liquid savings, but in cases where it is available it does appear effective in staving off default, said Farrell. The findings support the effectiveness of mortgage policies that help borrowers create that kind of buffer, she said.The study reflects anonymized data from 450,000 JPMorgan Chase customers who between July 2009 and June 2015 received first-time mortgage relief through the Home Affordable Modification Program, from a proprietary Chase modification or from a government-sponsored enterprise mod. The use of principal reduction to make a loan less severely underwater proved largely ineffective in conjunction with these types of modifications. But it could still be useful in other situations, Farrell said.
Changes to Capital Gains Taxes Could Radically Alter the Calculus for Home Sellers -- Proposed changes to the laws governing the exclusion of home sales from capital gains taxes would both radically change the time horizon for short-term homeowners considering selling their home and have a potentially huge impact on the inventory of homes for sale. Under current law, home sellers aren’t responsible for paying capital gains taxes on the first $500,000 in profit from the sale of their home, provided the home is their primary residence and that they have lived in it for two of the past five years. Under the current policy, a seller that sold the median property in their city would pay capital gains taxes after four years of ownership in only 14 of the 6,949 cities analyzed by Zillow nationwide. But plans proposed recently by both the U.S. House and Senate would change the residency requirement to five of the past eight years – a change that, had it been enacted last year, would have affected 11 percent of U.S. home sellers. Were these laws enacted, an owner of the nation’s median-valued property ($202,700 as of September) that decided to sell after four years – a year shy of the five-year rule currently proposed – would have a capital gains tax bill of $2,363, compared to $0 currently. Put in context, assuming that buyer was to turn around and again buy a median-valued home, that could be the difference between having a roughly 9 percent down payment versus a 10 percent down payment. The impact would be far greater for similarly short-tenured home sellers living in pricey and/or rapidly appreciating areas. Owners of the median home in Palo Alto, one of the nation’s most expensive cities, selling their home after four years would owe $97,200 in capital gains tax under the new law, a $75,000 increase over current law or 2.8 percent of the current median home value in Palo Alto. In Dallas, a much more affordable city than Palo Alto but one in which home values are growing quickly each year, the owner of the area’s median home that chose to sell after four years would pay capital gains taxes to the tune of $7,537. This could mean the difference between a 15 percent down payment and a 20 percent down payment on the typical home in the city of Dallas.
CoreLogic: House Prices up 7.0% Year-over-year in October -- Notes: This CoreLogic House Price Index report is for October. The recent Case-Shiller index release was for September. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Marks Second Consecutive Month of 7 Percent Year-Over-Year Increases in October CoreLogic® ... today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for October 2017, which shows home prices are up both year over year and month over month. Home prices nationally increased year over year by 7 percent from October 2016 to October 2017, and on a month-over-month basis home prices increased by 0.9 percent in October 2017 compared with September 2017, according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.2 percent on a year-over-year basis from October 2017 to October 2018, and on a month-over-month basis home prices are expected to decrease by 0.2 percent from October 2017 to November 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. CR Note: The YoY increase has been in the 5% to 7% range for the last couple of years. This is the top end of that range. The year-over-year comparison has been positive for over five consecutive years since turning positive year-over-year in February 2012.
MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 1, 2017. The prior week’s results included an adjustment for the Thanksgiving holiday... The Refinance Index increased 9 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 38 percent compared with the previous week and was 8 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.19 percent from 4.20 percent, with points increasing to 0.40 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity will not pick up significantly unless mortgage rates fall well below 4%. The second graph shows the MBA mortgage purchase index. According to the MBA, purchase activity is up 8% year-over-year.
HUD reports first increase in homeless veterans since 2010 - One night in January, volunteers across the country counted 40,056 veterans living on the streets or in transitional housing and shelters — 585 more than in 2016 and the first increase of homeless veterans since 2010. The Department of Housing and Urban Development reported this week the results of its annual point-in-time count of the country's homeless. The findings were released Wednesday at the same time concerns were growing among advocates that the federal government was stripping resources from one program that has been successfully housing veterans. The report, which found 553,742 people homeless in the U.S., showed that veterans accounted for 9 percent of them. Of the homeless veterans counted, 38 percent were in places deemed unsuitable for habitation. The number of homeless female veterans increased by 7 percent. Largely driving the increase this year: 1,860 more homeless veterans in California, where 29 percent of homeless veterans live, HUD reported. Veteran homelessness decreased in 36 states and Washington. "But it's not a huge surprise, given some of the affordable housing issues that we've seen out on the West Coast." There's a severe affordable housing shortage in Los Angeles County. Excluding that county, overall veteran homelessness would have decreased by 3.2 percent.
VA slashes program that helps homeless veterans obtain housing: report | TheHill: The Department of Veterans Affairs is slashing funding for a key program that helps provide housing to homeless veterans, according to a new report. Politico reports the VA told advocates and state officials in a call last week that the $460 million program would essentially end. VA Secretary David Shulkin reportedly told those on the call that the money for the program would now go to VA hospitals for use as they see fit. The hospitals must show that they are working to deal with homelessness as part of their work, according to Politico. Activists and officials were reportedly furious about the decision, five people who listened in on the call told the news organization. Elisha Harig-Blaine of the National League of Cities told Politico after the call that the VA was “putting at risk the lives of men and women who’ve served this country.” The decision comes after a joint press conference between Shulkin and Secretary of Housing and Urban Development Ben Carson at a Washington, D.C. homeless shelter in which the two announced a new commitment to ending homelessness among the nation’s veterans. The program provides housing vouchers to veterans via the Department of Housing and Urban Development while the VA continues helping veterans find more permanent housing. More than half of the veterans housed via the program have problems like chronic illness or substance abuse, according to Politico. Shulkin issued a statement to Politico Wednesday saying he would get input from local VA leaders “on how best to target our funding to the geographical areas that need it the most.”
Leading Index for Commercial Real Estate "Remains Strong" in November - Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Dodge Momentum Index Remains Strong in November: The Dodge Momentum Index surged again in November, climbing 13.9% to 149.5 (2000=100) from the revised October reading of 131.3. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The November increase was the second month of strong gains after a four-month period of softness. November’s advance was the result of healthy gains in both the commercial and institutional sectors. From October to November, the commercial portion of the Momentum Index advanced 19.6%, while the institutional portion grew 5.5%. On a year-over-year basis, the Momentum Index is now nearly 21% higher, with the commercial portion up 24% and the institutional side up 17%. The turnaround in October and November suggest that building activity should continue to expand in 2018.
Fed's Flow of Funds: Household Net Worth increased in Q3 -- The Federal Reserve released the Q3 2017 Flow of Funds report today: Flow of Funds. According to the Fed, household net worth increased in Q3 2017 compared to Q2 2017: The net worth of households and nonprofits rose to $96.9 trillion during the third quarter of 2017. The value of directly and indirectly held corporate equities increased $1.1 trillion and the value of real estate increased $0.4 trillion. The Fed estimated that the value of household real estate increased to $24.2 trillion in Q3. The value of household real estate is now above the bubble peak in early 2006 - but not adjusted for inflation, and this also includes new construction. The first graph shows Households and Nonprofit net worth as a percent of GDP. Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. This graph shows homeowner percent equity since 1952. Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008. In Q3 2017, household percent equity (of household real estate) was at 58.5% - up from Q3, and the highest since Q1 2006. This was because of an increase in house prices in Q3 (the Fed uses CoreLogic). Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 50+ million households with mortgages have far less than 58.5% equity - and about 2.5 million homeowners still have negative equity. The third graph shows household real estate assets and mortgage debt as a percent of GDP. Mortgage debt increased by $85 billion in Q3. Mortgage debt has declined by $0.7 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates). The value of real estate, as a percent of GDP, was up in Q3, and is above the average of the last 30 years (excluding bubble). However, mortgage debt as a percent of GDP, continues to decline.
US Credit Card Debt Surges Above $1 Trillion, Just Shy Of All Time Highs As Student, Car Loans Breach Records - Earlier in 2017, using the latest - and soon to be revised - Fed data, newspapers and financial media reported that US consumer credit card debt had risen above $1 trillion for the first time since the financial crisis.Ironically, just a few months later the Fed revised its data series sharply lower, sending the revolving credit total back under this "psychological number." At least until recently, when the latest consumer credit update from the Fed disclosed that in October, consumer credit rose by $20.5 billion, more than the $17.5 billion expected, of which $12.2 billion was non-revolving, auto and student loans, and $8.3 billion was credit card debt. This was the biggest monthly increase in credit card debt since last November's (revised) $12.3 billion. Total consumer credit rose by 6.5% Y/Y, rising to $3.802 trillion as of Oct 31. That number is more than double the rate of increase of US GDP or wage growth, making it clear just where America's "purchasing power" comes from.Finally, this was also the single biggest monthly increase in consumer credit since November 2016.And while nonrevolving credit reached a fresh record high of $2.791 trillion, revolving - or credit card debt - is now back well over a trillion dollars, or $1.011 trillion to be precise, and fast approaching the all time bubble high of $1.02 trillion hit in the summer of 2008.
One in five American households have ‘zero or negative’ wealth -- One in five households has zero or negative wealth, according to a report released this week by the Institute for Policy Studies, a progressive think tank based in Washington, D.C. What’s more, an even greater share of African-American (30%) and Latino (27%) households are “underwater” financially. The combined impact of $1 trillion in credit-card debt, $1.4 trillion in student loan debt, and stagnant wages are taking a toll. U.S. homes have regained value since the Great Recession, but many households have not. “Millions of American families struggle with zero or negative wealth, meaning they owe more than they own,” the report found. “This means that they have nothing to fall back on if an unexpected expense comes up like a broken down car or illness.” And inequality could get worse through new tax cuts for the wealthy. Looking at private income, such as earnings and dividends, and government benefits like Social Security, the income of families near the top increased roughly 90% from 1963 to 2016, while the income of families at the bottom rose less than 10%,according to a separate report released last month by the Urban Institute, a nonprofit policy group based in Washington, D.C., while most other groups have been left behind. And that gap between rich and poor is only going to get worse, Hoxie said. The wealthiest 25 individuals in the U.S., including Microsoft co-founder Bill Gates, Amazon CEO Jeff Bezos and Facebook CEO Mark Zuckerberg, own $1 trillion in combined assets. These 25 — a group equivalent to the active roster of a major league baseball team — hold more wealth than the bottom 56% of the U.S. population.
Trade Deficit at $48.7 Billion in October --From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports. Exports decreased slightly, and imports increased, in October. Exports are 18% above the pre-recession peak and up 6% compared to October 2016; imports are 5% above the pre-recession peak, and up 7% compared to October 2016. In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $47.26 in October, up from $45.15 in September, and up from $40.03 in October 2016. The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China increased to $35.2 billion in October, from $31.2 billion in October 2016.
October Trade Deficit at $48.7B, Worse Than Forecast -- The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Since 1976, the United States has had an annual negative trade deficit. . Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports. The October increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $69.1 billion and a decrease in the services surplus of less than $0.1 billion to $20.3 billion. Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9 percent, from the same period in 2016. Exports increased $97.5 billion or 5.3 percent. Imports increased $146.6 billion or 6.5 percent. Today's headline number of -48.73B was worse than the Investing.com forecast of -47.50B. The previous month was revised downward by 1.4B and revisions were made going back to April. This series tends to be extremely volatile, so we include a six-month moving average.
US Trade Deficit Surges Near Five Year High Despite Sliding Dollar -- The US trade balance surprisingly blew out in October, increasing from $44.9 billion to $48.7 billion, as unexpectedly exports decreased and imports increased despite the ongoing dollar weakness, missing estimates of $47.5 billion. October's number was tied for the widest deficit going back to early 2012.... and marks a stark divergence with the recent dollar weakness which would suggest an improvement in US trade data. Broken down by components, the goods deficit increased $3.8 billion in October to $69.1 billion. The services surplus decreased less than $0.1 billion in October to $20.3 billion. Exports of goods and services decreased less than $0.1 billion, or less than 0.1 percent, in October to $195.9 billion. Exports of goods decreased $0.3 billion and exports of services increased $0.3 billion.
- The decrease in exports of goods mostly reflected decreases in foods, feeds, and beverages ($1.3 billion) and in capital goods ($1.2 billion). An increase in industrial supplies and materials ($2.6 billion) partly offset the decreases.
- The increase in exports of services mostly reflected increases in financial services ($0.1 billion) and in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade?related, and other services.
- Imports of goods and services increased $3.8 billion, or 1.6 percent, in October to $244.6 billion. Imports of goods increased $3.5 billion and imports of services increased $0.3 billion.
- The increase in imports of goods mostly reflected increases in industrial supplies and materials ($1.8 billion), in other goods ($1.1 billion), and in consumer goods ($0.8 billion).
- The increase in imports of services mostly reflected an increase in transport ($0.3 billion).
Broken down by region, the October figures show surpluses, in billions of dollars, with South and Central America ($3.9), Hong Kong ($2.3), Brazil ($1.1), Singapore ($0.7), Saudi Arabia ($0.3), and United Kingdom ($0.2). Deficits were recorded, in billions of dollars, with China ($31.9), European Union ($12.0), Mexico ($6.0), Japan ($5.9), Germany ($5.3), Italy ($2.7), South Korea ($2.7), India ($2.1), Canada ($1.9), OPEC ($1.6), France ($1.6), and Taiwan ($1.6).
- The deficit with China increased $2.1 billion to $31.9 billion in October. Exports decreased $0.8 billion to $10.6 billion and imports increased $1.2 billion to $42.5 billion.
- The deficit with the European Union decreased $2.5 billion to $12.0 billion in October. Exports increased $1.4 billion to $25.0 billion and imports decreased $1.1 billion to $37.0 billion
- The balance with members of OPEC shifted from a surplus of $0.6 billion to a deficit of $1.6 billion in October. Exports decreased $0.9 billion to $4.3 billion and imports increased $1.3 billion to $5.9 billion.
U.S. wholesale inventories fall as sales rise solidly (Reuters) - U.S. wholesale inventories fell slightly more than initially estimated in October as sales increased strongly, suggesting that inventory investment will probably not provide a large boost to economic growth in the fourth quarter. The Commerce Department said on Friday that wholesale inventories dropped 0.5 percent after edging up 0.1 percent in September. The department reported last month that wholesale inventories declined 0.4 percent in October. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - fell 0.5 percent in October. Inventory investment contributed eight-tenths of a percentage point to the economy’s 3.3 percent annualized growth pace in the third quarter. Inventory investment increased solidly in the third quarter after slowing sharply at the start of the year. Auto inventories fell 0.7 percent in October after a similar drop in September. There were decreases in inventories of computer, electrical and professional equipment, among others. Sales at wholesalers advanced 0.7 percent in October after surging 1.4 percent in September. Sales of motor vehicles jumped 3.4 percent in October after rising 0.8 percent the prior month. At October’s sales pace it would take wholesalers 1.25 months to clear shelves, down from 1.26 months in September.
AAR: Rail Carloads decreased, Intermodal Solid in November -- From the Association of American Railroads (AAR) Rail Time Indicators. In November 2017, like in October 2017, U.S. rail traffic had both a glass-is-half-empty and a glass-is-half-full feel to it. It’s half empty because total carloads were down 0.9% (11,442 carloads) in November, their fifth straight year-over-year monthly decline after eight straight monthly increases. Railroads, of course, are concerned with their total level of business, not just particular commodities, so total carloads matter. Eight of the 20 categories the AAR tracks had carload declines in November, but three of these were especially important: coal (down 22,560 carloads, or 5.0%), grain (down 16,311 carloads, or 12.7%), and petroleum and petroleum products (down 3,877 carloads, or 7.2%). All three of these categories saw carload declines in November for reasons that don’t have much to do with the state of the economy. So, the half-full feel comes from the fact that many traffic categories that are more sensitive to the economy did relatively well in November (e.g., steel, up 6.9%; stone, clay, and glass products, up 6.0%; chemicals up 3.6%). That’s a good sign for the economy going forward. The fact that intermodal originations were up 3.8% (50,029 containers and trailers) in November and will almost certainly set a new annual record in 2017 is a good sign as well. This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA). Dark blue is 2017. Rail carloads have been weak over the last decade due to the decline in coal shipments. Originated carloads on U.S. railroads totaled 1,307,521 in November 2017, down 0.9% (11,442 carloads) from November 2016 thanks mainly to big declines in carloads of coal, grain, and petroleum products. Total carloads averaged 261,504 per week in November 2017, ahead of November 2015 (260,453) but otherwise the lowest weekly average for November since sometime prior to 1988, when our data begin.
Carmageddon For Tesla - Wolf Richter - This is where Hype Goes to Die... Yesterday was the monthly moment of truth for automakers in the US. They reported the number of new vehicles that their dealers delivered to their customers and that the automakers delivered directly to large fleet customers. These are unit sales, not dollar sales, and they’re religiously followed by the industry. Total sales in November rose 0.9% from a year ago to 1,393,010 new vehicles, according to Autodata, which tracks these sales as they’re reported by the automakers. Sales of cars dropped 8.2%. Sales of trucks – which include SUVs, crossovers, pickups, and vans – rose 6.6%. Strong replacement demand from the hurricane-affected areas in Texas papered over weaknesses elsewhere. As always, there were winners and losers. And one of the losers was Tesla. There is nothing wrong with a tiny automaker trying to design, make, and sell cool but expensive cars that a few thousand Americans might buy every month, and trying to do so on a battleground dominated by giants. Porsche has been doing that for years. Porsche AG is owned by Volkswagen AG, which is itself majority-owned by Porsche Automobil Holding SE. Tesla is out there by itself.And Tesla has put electric vehicles on the map. That was a huge feat. EVs have been around since the 1800s, but given the challenges that batteries posed, they simply didn’t catch on until Tesla made EVs cool. Yet Tesla has to buy the battery cells from battery makers, such as Panasonic. Tesla isn’t quite out there by itself, though. The Wall Street hype machine backs it up, dousing it with billions of dollars on a regular basis to burn through as fast as it can. This masterful hype has created a giant market capitalization of about $52 billion, more than most automakers, including Ford ($50 billion). It’s not far behind GM ($61 billion). But Tesla – which lost $619 million in Q3 – delivered only 3,590 vehicles in November in the US, down 18% from a year ago.
US factory orders slip; business spending robust - (Reuters) - New orders for U.S.-made goods fell less than expected in October and shipments of core capital goods were much stronger than previously reported, pointing to sustained strength in manufacturing that should buoy the economy. Factory goods orders dipped 0.1 percent amid a drop in demand for both civilian and defense aircraft after an upwardly revised 1.7 percent jump in September, the Commerce Department said on Monday. “These data remain consistent with a solid upswing in manufacturing activity and an acceleration in corporate capital spending,” said John Ryding, chief economist at RDQ Economics in New York. Economists had forecast factory orders falling 0.4 percent in October after a previously reported 1.4 percent increase in the prior month. Orders for non-defense capital goods excluding aircraft -seen as a measure of business spending plans - rose 0.3 percent in October instead of the 0.5 percent drop reported last month. These so-called core capital goods orders surged 2.3 percent in September. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, advanced 1.1 percent in October instead of the previously reported 0.4 percent rise. Core capital goods shipments increased 1.3 percent in September. October’s upward revision to core capital goods shipments prompted forecasting firm Macroeconomic Advisers to boost its fourth-quarter GDP growth estimate by two-tenths of percentage point to a 2.7 percent annualized rate. Economists at Barclays lifted their forecast to a 2.5 percent pace from a 2.4 percent rate. The economy grew at a 3.3 percent pace in the third quarter.
ISM Non-Manufacturing Index decreased to 57.4% in November -- The November ISM Non-manufacturing index was at 57.4%, down from 60.1% in October. The employment index decreased in November to 55.3%, from 57.5%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: November 2017 Non-Manufacturing ISM Report On Business® "The NMI® registered 57.4 percent, which is 2.7 percentage points lower than the October reading of 60.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 61.4 percent, 0.8 percentage point lower than the October reading of 62.2 percent, reflecting growth for the 100th consecutive month, at a slightly slower rate in November. The New Orders Index registered 58.7 percent, 4.1 percentage points lower than the reading of 62.8 percent in October. The Employment Index decreased 2.2 percentage points in November to 55.3 percent from the October reading of 57.5 percent. The Prices Index decreased by 2 percentage points from the October reading of 62.7 percent to 60.7 percent, indicating prices increased in November for the sixth consecutive month. According to the NMI®, 16 non-manufacturing industries reported growth. The rate of growth has lessened in the non-manufacturing sector after two very strong months of growth. Comments from the survey respondents indicate that the economy and sector will continue to grow for the remainder of the year."This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This suggests slower expansion in November than in October.
ISM Non-Manufacturing: Continued Growth in November -- The Institute of Supply Management (ISM) has now released the November Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 57.4 percent, down 2.7 from 60.1 last month. Today's number came in below the Investing.com forecast of 59.0 percent. Here is the report summary: "The NMI® registered 57.4 percent, which is 2.7 percentage points lower than the October reading of 60.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 61.4 percent, 0.8 percentage point lower than the October reading of 62.2 percent, reflecting growth for the 100th consecutive month, at a slightly slower rate in November. The New Orders Index registered 58.7 percent, 4.1 percentage points lower than the reading of 62.8 percent in October. The Employment Index decreased 2.2 percentage points in November to 55.3 percent from the October reading of 57.5 percent. The Prices Index decreased by 2 percentage points from the October reading of 62.7 percent to 60.7 percent, indicating prices increased in November for the sixth consecutive month. According to the NMI®, 16 non-manufacturing industries reported growth. The rate of growth has lessened in the non-manufacturing sector after two very strong months of growth. Comments from the survey respondents indicate that the economy and sector will continue to grow for the remainder of the year." [Source] Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.
Markit Services PMI: Slower Expansion in November - The November US Services Purchasing Managers' Index conducted by Markit came in at 54.5 percent, down 0.8 from the final October estimate of 55.3. The Investing.com consensus was for 55.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: November survey data signalled a slower rate of expansion in business activity across the US service sector. Although output growth eased slightly to a five-month low, the upturn in new business accelerated and was solid overall. Employment growth meanwhile reached a three month peak, which helped alleviate capacity pressures. In line with this, backlog accumulation softened to a five-month low. Inflationary pressures intensified with both input prices and output charges rising at quicker paces. The latest survey also indicated a fall in business confidence to the joint-lowest since February. The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.5 in November, down from 55.3 in October. Although the latest index reading indicated a slightly weaker output expansion, the overall rate of growth was strong by recent standards nonetheless. Anecdotal evidence suggested that increases in activity were due to greater new order volumes and robust client demand. [Press Release] Here is a snapshot of the series since mid-2012.
Weekly Initial Unemployment Claims decrease to 236,000 -- The DOL reported: In the week ending December 2, the advance figure for seasonally adjusted initial claims was 236,000, a decrease of 2,000 from the previous week's unrevised level of 238,000. The 4-week moving average was 241,500, a decrease of 750 from the previous week's unrevised average of 242,250. Claims taking procedures continue to be disrupted in the Virgin Islands. Claims taking process in Puerto Rico has still not returned to normal. The previous week was unrevised.
ADP: Private Employment increased 190,000 in November - From ADP: Private sector employment increased by 190,000 jobs from October to November according to the November ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis...“The labor market continues to grow at a solid pace,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Notably, manufacturing added the most jobs the industry has seen all year. As the labor market continues to tighten and wages increase it will become increasingly difficult for employers to attract and retain skilled talent.”Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is red hot, with broad-based job gains across industries and company sizes. The only soft spots are in industries being disrupted by technology, brick-and-mortar retailing being the best example. There is a mounting threat that the job market will overheat next year." This was slightly below the consensus forecast for 192,000 private sector jobs added in the ADP report.
A Closer Look at This Morning's ADP Employment Report - In this morning's ADP employment report we got the November estimate of 190K new nonfarm private employment jobs from ADP, a decrease over October's 235K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail. Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high. There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above began drifting higher in early 2015, only to decrease slightly and level off in 2017. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing.
Zandi Warns "Job Market Feels Like It Might Overheat" As Manufacturing Jobs Grow At Fastest Pace On Record --Following October's better-than-expected surge in ADP employment data (as goods-producing jobs soared), November was expected to see some slowdown, and it did,printing right on expectations at +190k (close to NFP's 195k exp).“The labor market continues to grow at a solid pace,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.“Notably, manufacturing added the most jobs the industry has seen all year. As the labor market continues to tighten and wages increase it will become increasingly difficult for employers to attract and retain skilled talent.”Mark Zandi, chief economist of Moody’s Analytics, said,“The job market is red hot, with broad-based job gains across industries and company sizes. The only soft spots are in industries being disrupted by technology, brick-and-mortar retailing being the best example. There is a mounting threat that the job market will overheat next year.” Of note perhaps is Nov 2017's ADP print is 16% lower than Nov 2016's.
Challenger Job-Cut Report December 7, 2017: Highlights: Lay-off announcements rose to 35,038 in November vs 29,831 in October and 26,936 in November last year. This is the highest total in seven months and, though still at an historically low level, does hint at softer-than-expected results for tomorrow's monthly employment report. Health care had the highest total for a second month with services and computer products also showing sizable totals.
November Employment Report: 228,000 Jobs Added, 4.1% Unemployment Rate -- From the BLS: Total nonfarm payroll employment increased by 228,000 in November, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. ... The unemployment rate held at 4.1 percent in November, and the number of unemployed persons was essentially unchanged at 6.6 million. The change in total nonfarm payroll employment for September was revised up from +18,000 to +38,000, and the change for October was revised down from +261,000 to +244,000. With these revisions, employment gains in September and October combined were 3,000 more than previously reported. In November, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $26.55. Over the year, average hourly earnings have risen by 64 cents, or 2.5 percent.The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 228 thousand in November (private payrolls increased 221 thousand). Payrolls for September and October were revised up by a combined 3 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In November the year-over-year change was 2.07 million jobs. The third graph shows the employment population ratio and the participation rate.The Labor Force Participation Rate was unchanged in November at 62.7%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio decreased to 60.1% (black line). The fourth graph shows the unemployment rate. The unemployment rate was unchanged in October at 4.1%. This was above expectations of 185,000 jobs, and the previous two months combined were revised up slightly.
November Payrolls Jump 228K, Beat Expectations But Wage Growth Disappoints -- In a continuation of the recent theme shown by the labor market, the BLS reported that November payrolls rose by a seasonally adjusted 228K, beating expectations of 200K, if lower than October's downward revised 244K (from 261K) while September was revised up from +18,000 to +38,000. With these revisions, employment gains in September and October combined were 3,000 more than previously reported. There were few surprises in the report, which saw the labor force participation rate flat at 62.7%, near a 30+ year low, while the unemployment rate also remained unchanged at 4.1%, the lowest since Dec 2000. And while overall the labor report was strong, there was the usual disappointment in wage growth, with avg. hourly earnings rising 0.2% m/m, below the consensus estimate of est. 0.3%, with the October number revised lower to -0.1%. The Year over year number also missed, printing at 2.5%, up from October's 2.3% but below the consensus print of 2.7%. Some further details:
- Nonfarm private payrolls rose 221k vs prior 247k; est. 195k, range 155k-250k from 31 economists surveyed
- Manufacturing payrolls rose 31k after rising 23k in the prior month; economists estimated 15k, range 10k to 35k from 19 economists surveyed
- Underemployment rate 8% vs prior 7.9%
- Change in household employment 57k vs prior -484k
And from the report: Total nonfarm payroll employment increased by 228,000 in November. Employment continued to trend up in professional and business services, manufacturing, and health care. Employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016. Employment in professional and business services continued on an upward trend in November (+46,000). Over the past 12 months, the industry has added 548,000 jobs. In November, manufacturing added 31,000 jobs. Within the industry, employment rose in machinery (+8,000), fabricated metal products (+7,000), computer and electronic products (+4,000), and plastics and rubber products (+4,000). Since a recent low in November 2016, manufacturing employment has increased by 189,000.
November Jobs Report: good month, same caveats - HEADLINES:
- +228,000 jobs added
- U3 unemployment rate unchanged at 4.1%
- U6 underemployment rate rose +0.1% from 7.9% to 8.0%
- Not in Labor Force, but Want a Job Now: rose +53,000 from 5.175 million to 5.238 million
- Part time for economic reasons: rose +48,000 from 4.753 million to 4.801 million
- Employment/population ratio ages 25-54: rose +0.2% from 78.8% to 79.0%
- Average Weekly Earnings for Production and Nonsupervisory Personnel: rose +$.0.5 from a downwardly revised $22.19 to $22.24, up +2.4% YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
- Manufacturing jobs rose by +31,000 for an average of +--,000 a month vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.
- Coal mining jobs fell -400 for an average of ----- a month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
- the average manufacturing workweek was unchanged at 40.9 hours. This is one of the 10 components of the LEI.
- construction jobs increased by +24,000. YoY construction jobs are up +184,000.
- temporary jobs increased by +16,300.
- the number of people unemployed for 5 weeks or less increased by +121,000 from 2,129,000 to 2,250,000. The post-recession low was set al,ost two years ago at 2,095,000.
- Overtime was unchanged at 3.5 hours.
- Professional and business employment (generally higher- paying jobs) increased by +46,000 and is up +548,000 YoY.
- the index of aggregate hours worked in the economy rose by 0.1% from 115.4 to 115.5.
- the index of aggregate payrolls rose by 0.4% from 171.1 to 171.7.
November Jobs Report – The Numbers - Briefly – WSJ -- U.S. employers added 228,000 jobs in November, and the unemployment rate was unchanged from a month earlier at 4.1%. Economists surveyed by The Wall Street Journal had expected 195,000 new jobs and a 4.1% jobless rate. Here are some of the key figures from Friday’s Labor Department report.The jobless rate in November was unchanged from a month earlier at 4.1%. The rate matched the lowest level since December 2000. Though the November unemployment rate is unlikely to change Federal Reserve officials’ expected decision to raise interest rates at their December meeting next week, it could influence how aggressively the central bank decides to pursue rate increases in 2018. The U.S. economy added 228,000 jobs in November, marking the 86th consecutive month employers added to payrolls. Leisure and hospitality, the sector most affected by late-summer hurricanes, added 14,000 jobs last month, a sharp pullback from the 104,000 the sector recovered in October. Employment in construction, manufacturing and health care continued to trend upward. November’s 2.5% year-over-year increase in average hourly earnings remained subdued, despite a historically low unemployment rate. On the month, wages rose by a nickel in November after falling by 3 cents in the prior month. October wage-growth figures may have been held down by an influx of low-wage restaurant and bar workers re-entering the workforce after hurricanes had ravaged employment in these areas a month earlier. Workforce participation was steady at 62.7% in November. The labor-force participation rate bottomed out in September 2015, after a 15-year decline, and has stabilized over the last couple of years. An aging population could keep labor force participation from rising much more. A broad measure of unemployment and underemployment known as the U-6, which includes people stuck in part-time jobs and others, ticked up to 8% in November. Though the November rate is up from October’s decade-low reading of 7.9%, it’s still well below summer levels of 8.6%. This broader unemployment measure has fallen this year in tandem with the narrower unemployment rate known as the U-3.
November Employment Remains Strong (6 graphs) Payroll employment rose 228,000 for November as reported by the BLS, with the private sector gaining 221,000. The increases were widespread, with only Utilities down slightly and Information employment down 4,000. The Goods producing sector was up 62,000: Mining and Logging 7,000, Construction 24,000 and Manufacturing 31,000. Government employment was up 7,000 after declining for the past few months. Revisions nearly offset, with September up 20,000 and October down 17,000. Average weekly hours rose to 34.5 and average hourly earnings up from $26.50 to $26.55. From the household data there is little to report. basically no change in the unemployment rate, from 4.06 % to 4.12%, or the participation rate. However, long term unemployment remains remarkably elevated. The overall strength of the labor market and the previous GDP report make a December rate hike pretty much a done deal.
Jobs report: Another strong month as payrolls settle into solid trend, but wage growth still underwhelms –Jared Bernstein - The US labor market continues to add jobs at a strong clip, as robust consumer demand is generating a virtuous cycle of job growth, increased weekly hours, wage growth (though see ongoing caveats below), and hiring. Payrolls were up by 228,000 last month, above expectations for about 190,000. The unemployment rate held steady at 4.1 percent, a 17-year low. Our official monthly jobs smoother filters out some of the noise in the payroll data by taking monthly averages over the last 3, 6, and 12 months. The fact that the bars are all about the same height reveals the underlying trend in job growth to be around 170,000 per month, a healthy pace for this stage of the recovery. As labor markets close in on full employment, job growth slows a bit as workers become more scarce. However, given the movement of other key variables, namely, wages and prices, the full-employment, full-resource-utilization case cannot yet be made, as I show below. Once again, hourly wage growth is a sore point. The two figures below show yearly wage growth for all private-sector workers and for the 80% of the workforce that’s blue-collar in goods production or non-managerial in services. In both cases, the 6-mos moving average reveal a flattening trend. Basically, in 2015-16, the tightening job market drove wage growth up from 2 to 2.5 percent, around where it has been stuck since. In fact, that’s precisely last month’s yearly growth rate for all private workers (2.5%). Given the consumer inflation has been running at around 2%, that’s but a small hourly wage gain in real terms, and certainly less than I’d expect given a 17-year low in the jobless rate. That said, other series show stronger wage growth, as Dean Baker and I point out here, especially for middle-wage and minority workers, so the jury’s not in on the mystery of the missing wage growth. All told, in a series that mashes together 5 different wage series (which I’ll post later) we see a mild acceleration, but again, less than would be expected.
Another Solid Gain For US Company Payrolls In November - Private payrolls in the US continued to increase at a healthy pace in November, rising 221,000 from the previous month, the US Labor Department reports. The advance marks the second month of 200,000-plus growth. The year-over-year increase ticked up fractionally, suggesting that the labor market’s trend may be stabilizing after sliding for much of the year. Today’s update is encouraging, but the latest numbers still point to an ongoing deceleration in the annual pace of growth — a downshift that’s been underway for more than two years. The 1.65% increase in November vs. the year-earlier level marks a three-month high, but the downside momentum appears intact. Indeed, it’s not obvious that the long, slow slide from the 2.57% post-recession peak in February 2015 has run its course for the year-over-year change. Looking past the short-term noise still points to a labor market that’s aging. There’s nothing ominous on the immediate horizon, but the prospects remain weak for expecting an acceleration in the growth trend. An annual rise in private employment above 1.5%, however, is strong enough to keep the economy humming and investor sentiment bubbling. The question for 2018 is whether gravity will continue to take a toll on the trend? For now, the near-term outlook remains encouraging. “Not that it was a hurdle to raising rates next week, but the Fed will feel very comfortable with this kind of a jobs report,” Ward McCarthy, chief financial economist at Jefferies, tells Bloomberg. “We continue to march toward full employment. Wages are moving in the right direction but they’re still slower than we would have liked and certainly slower than what’s expected at this stage of the cycle.”
Where The Jobs Were In November: Who's Hiring... Who Isn't -- Assuming that the BLS' estimate of avg hourly warnings growing only 0.2% in November is accurate, it would imply that - as has often been the case - the bulk of job growth in November took place in minimum-paying and other low-wage jobs. However, a breakdown of jobs added by industry shows the contrary to expectations, the bulk of new job creation, and 3 of the 4 top category, were not in the "low wage" bucket. In fact, as shown below, with the exception of Education and Health jobs which rose by 54K in November, Manufacturing (+31K), Professional and Business Services (+27), and Construction (+24) were the fastest growing occupations in the previous month. Furthermore, according to Southbay Research hurricanes boosted the number:
- Specialty Trade Construction (+23k) - this is the sector that handles the interiors, electricals, and so forth
- Food Services (+21k)
On the negative side, consumer spending does not appear to be driving much hiring
- Retail (+19K)
- Temp workers (+18K)
- Leisure & Hospitality (+14K) and that includes a hurricane boost
Finally, white collar hiring was up strongly (Technical services +23K) and Healthcare (+40K). Meanwhile, as SouthBay cautions, small business hiring doesn't seem to be materializing. This could be less demand (NFIB, JOLT and other surveys point to strong hiring desire) and more about supply. If so, that's inflationary.
Comment on Employment Report: Some Additional Hurricane Bounce Back - The headline jobs number was strong at 228 thousand, probably somewhat due to an additional bounce back from the hurricanes, and above expectations. The previous two months were revised up slightly by a combined 3 thousand jobs. The September jobs report was revised up again (now up to 38 thousand), and that keeps the record job streak alive, now at 86 consecutive months (93 months if we remove the decennial Census hiring and firing). In November, the year-over-year change was 2.07 million jobs. This is still generally trending down. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.5% YoY in November. Wage growth had been trending up, although the acceleration in wage growth stalled this year. From the BLS report: The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 4.8 million, was essentially unchanged in November but was down by 858,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.The number of persons working part time for economic reasons increased slightly in November. The number working part time for economic reasons suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.0% in November. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.58 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.62 million in OctoberThis is the lowest level since June 2008.This is trending down, but still a little elevated. The headline jobs number was solid and the unemployment rate unchanged at a low level - both positive signs and a continuation of multi-year trends. However wage growth was disappointing again.
Living in cars, working for Amazon: meet America’s new nomads -- Millions of Americans are wrestling with the impossibility of a traditional middle-class existence. In homes across the country, kitchen tables are strewn with unpaid bills. Wages minus grocery receipts. Minus medical bills. Minus credit card debt. Minus utility fees. Minus student loan and car payments. Minus the biggest expense of all: rent. In the widening gap between credits and debits hangs a question: which bits of this life are you willing to give up, so you can keep on living? During three years of research for my book, Nomadland: Surviving America in The Twenty-First Century, I spent time with hundreds of people who had arrived at the same answer. They gave up traditional housing and moved into “wheel estate”: RVs, travel trailers, vans, pickup campers, even a salvaged Prius and other sedans. For many, sacrificing some material comforts had allowed them to survive, while reclaiming a small measure of freedom and autonomy. But that didn’t mean life on the road was easy. Since 2009, the year after the housing crash, groups of such workers had migrated each fall to the mobile home parks surrounding Fernley. Most had traveled hundreds of miles – and undergone the routine indignities of criminal background checks and pee-in-a-cup drug tests – for the chance to earn $11.50 an hour plus overtime at temporary warehouse jobs. They planned to stay through early winter, despite the fact that most of their homes on wheels weren’t designed to support life in subzero temperatures. Amazon recruited these workers as part of a program it calls CamperForce: a labor unit made up of nomads who work as seasonal employees at several of its warehouses, which the company calls “fulfillment centers”. Along with thousands of traditional temps, they’re hired to meet the heavy shipping demands of “peak season” – the consumer bonanza that spans the three to four months before Christmas. While other employers also seek out this nomadic workforce – the available jobs range from campground maintenance to selling Christmas trees and running amusement park rides – Amazon has been the most aggressive recruiter. .
US Homelessness Rate Rose This Year For First Time Since 2010 --Here’s one statistic about the US economy that you probably won’t find in President Trump’s twitter feed.Thanks to a surge in homelessness centered around several large west coast cities, the overall rate of homelessness in the US ticked higher this year, the first increase since 2010, according to a survey from the Department of Housing and Urban Development.The U.S. Department of Housing and Urban Development released its annual Point in Time count Wednesday, a report that showed nearly 554,000 homeless people across the country during local tallies conducted in January. That figure is up nearly 1 percent from 2016.Of that total, 193,000 people had no access to nightly shelter and instead were staying in vehicles, tents, the streets and other places considered uninhabitable. The unsheltered figure is up by more than 9 percent compared to two years ago.Increases are higher in several West Coast cities, where the explosion in homelessness has prompted at least 10 city and county governments to declare states of emergency since 2015.The homelessness crisis is only one byproduct of the burgeoning wealth inequality in the US caused by the Federal Reserve’s decision to pump trillions of dollars of “stimulus” into the markets.Central-bank money printing has caused asset valuations to balloon while wages for everyone but the most highly skilled workers have stagnated, as the chart below illustrates.
America's homeless population rises for the first time since the Great Recession - America’s homeless population has risen this year for the first time since the Great Recession, propelled by the housing crisis afflicting the west coast, according to a new federal study. The study has found that 553,742 people were homeless on a single night this year, a 0.7% increase over last year. It suggests that despite a fizzy stock market and a burgeoning gross domestic product, the poorest Americans are still struggling to meet their most basic needs. “The improved economy is a good thing, but it does put pressure on the rental market, which does put pressure on the poorest Angelenos,” said Peter Lynn, head of the Los Angeles homelessness agency. The most dramatic spike in the nation was in his region, where a record 55,000 people were counted. “Clearly we have an outsize effect on the national homelessness picture.” Ben Carson, secretary of the Department of Housing and Urban Development, which produced the report, said in a statement: “This is not a federal problem – it’s everybody’s problem.” . Advocates who have witnessed the homelessness crisis unfold since it emerged in the early 1980s are grimly astonished by its persistence. “I never in a million years thought that it would drag on for three decades with no end in sight,” said Bob Erlenbusch, who began working in Los Angeles in 1984. The government mandates that cities and regions perform a homeless street count every two years, when volunteers fan out everywhere from frozen parks in Anchorage to palm-lined streets in Beverly Hills and enumerate people by hand. Those numbers are combined with the total staying in shelters and temporary housing. The tally is considered a crucial indicator of broad trends, but owing to the difficulties involved it is also widely regarded as an undercount.
Why are America’s farmers killing themselves in record numbers? - We were growing food, but couldn’t afford to buy it. We worked 80 hours a week, but we couldn’t afford to see a dentist, let alone a therapist. I remember panic when a late freeze threatened our crop, the constant fights about money, the way light swept across the walls on the days I could not force myself to get out of bed. “Farming has always been a stressful occupation because many of the factors that affect agricultural production are largely beyond the control of the producers,” wrote Rosmann in the journal Behavioral Healthcare. “The emotional wellbeing of family farmers and ranchers is intimately intertwined with these changes.”Last year, a study by the Centers for Disease Control and Prevention (CDC) found that people working in agriculture – including farmers, farm laborers, ranchers, fishers, and lumber harvesters – take their lives at a rate higher than any other occupation. The data suggested that the suicide rate for agricultural workers in 17 states was nearly five times higher compared with that in the general population.After the study was released,Newsweek reported that the suicide death rate for farmers was more than double that of military veterans. This, however, could be an underestimate, as the data collected skipped several major agricultural states, including Iowa. Rosmann and other experts add that the farmer suicide rate might be higher, because an unknown number of farmers disguise their suicides as farm accidents. The US farmer suicide crisis echoes a much larger farmer suicide crisis happening globally: an Australian farmer dies by suicide every four days; in the UK, one farmer a week takes his or her own life; in France, one farmer dies by suicide every two days; in India, more than 270,000 farmers have died by suicide since 1995.
Nearly Insolvent Illinois Just Issued AAA-Rated Bonds Via This Shady Goldman Sachs Financing Structure -The state of Illinois is a financial disaster that will undoubtedly be forced into bankruptcy at some point in the future. As we've pointed out multiple times over the past several months, the state faces a staggering $130 billion funding gap on its public pensions, a mountain of debt and $16.4 billion in accrued payables because they can't even afford to pay their bills on a timely basis. So what do you do when you're effectively a junk-rated credit risk but you need to sell another bond deal to keep your ponzi scheme going a little longer? Well, you turn to Goldman Sachs to help you engineer a shady corporate structure that supposedly gives new bondholders first dibs on sales tax revenue (i.e. you prime other unsecured bondholders)...which is just clever enough to fool the rating agencies into giving it a AAA-rating but, as analysts and investors point out, is unlikely to mean much of anything in a bankruptcy scenario. Per the Wall Street Journal:Yet the nation’s third-largest city is on the verge of selling as much as $3 billion in bonds at a triple-A rating, the latest twist in the tale of cash-strapped U.S. municipalities adopting Wall Street financial engineering in their struggle to raise money in the market.Echoing methods adopted by Puerto Rico and New York, Chicago has created a new company to sell debt, offering a tempting pledge to investors: a dedicated first claim to the city’s sales-tax revenue. In theory, that should make the debt as secure as U.S. Treasury bonds. But there is a catch: analysts and investors say in the scenario of a bankruptcy, it is difficult to predict whether owners of the new bonds would get paid back ahead of other creditors, pensioners or even police and emergency services workers.
Arizona Cop Acquitted For Killing Crawling Man Who Was Begging For His Life: Graphic Video -- Arizona jurors watched the video below, which shows former Mesa, Arizona, police officer Philip Mitchell Brailsford shooting and killing a man who was begging for his life and attempting to follow the officer's orders to crawl down a hotel hallway. Yesterday, the jurors found Brailsford not guilty of second-degree murder and reckless manslaughter. Do you agree? (Warning: The video is pretty graphic.)
USDA Makes School Meals More Flexible, Translation: Less Nutritious - The U.S. Department of Agriculture (USDA) announced its revised school meal rules, in words that would make George Orwell proud: The U.S. Department of Agriculture today [Nov. 29] provided local food service professionals the flexibility they need to serve wholesome, nutritious, and tasty meals in schools across the nation. The new School Meal Flexibility Rule ... reflects USDA's commitment, made in a May proclamation to work with program operators, school nutrition professionals, industry, and other stakeholders to develop forward-thinking strategies to ensure school nutrition standards are both healthful and practical ... This action reflects a key initiative of USDA's Regulatory Reform Agenda, developed in response to the President's Executive Order to alleviate unnecessary regulatory burdens . Try and get your head around this. The revised rules make school meals less nutritious. They allow schools to:
- Serve flavored rather than plain low-fat milk (higher in sugar).
- Be exempt from serving whole grain-rich products.
- Have until the end of the 2020-2021 school year to reduce the salt in school meals.
This rule will be in effect for school year 2018-2019. USDA is accepting public comments for longer term use here . I will never understand why adults would lobby to make school meals less healthful, but here is the School Nutrition Association praising the changes. The association cites survey data indicating that 65 percent of school districts are having trouble with whole grains and 92 percent with sodium requirements.
Will Ketchup Again Count as a Vegetable? USDA Delays School Lunch Rules - Jerri-lynn Scofield - The United States Department of Agriculture (USDA) last week announced changes to school lunch rules, allowing schools for the time being to serve low-fat flavoured milk (chocolate milk), and relaxing both sodium and whole grains requirements. Full compliance for some provisions is pushed back to the end of the 2018-19 school year, and for others, until 2021. These tweaks don’t at present threaten the overall 2011 framework of the Healthy, Hunger-Free Kids Act of 2010. Health experts quoted in a NBC News report on the rule change, including American Heart Association CEO Nancy Brown, challenged the USDA’s rationales for the changes: that kids are throwing food away, and some schools having a tough time complying with the standards: “In the last five years, nearly 100 percent of the nation’s participating schools have complied with updated school meal standards. Kids across the country have clearly benefited from these changes,” Brown said in a statement. “Their meals have less salt, sugar and saturated fat, and they eat 16 percent more vegetables and 23 percent more fruit. Why would the USDA want to roll back the current standards and reverse this excellent progress?”
Baltimore Students Create An App To Detect If Their Heroin Is Laced With Fentanyl - If you have a smartphone, you’ve probably heard the distinct sound of an AMBER alert and or perhaps weather notifications. These notifications are free and great, alerting us to potential danger, and what we need to do to prepare. With the help of student programmers, Baltimore health officials have launched a similar notification service, but it’s to warn residents in the city when a deadly batch of drugs enters their neighborhood. Mike LeGrand, co-founder of the nonprofit Code in the Schools, worked with a team of student programmers around Baltimore to develop ‘Bat Batch Alert‘, an anonymous free text messaging service aimed at helping those struggling with heroin addiction to stay alive.LeGrand got the idea of ‘Bad Batch Alert’, after he lost a close friend in Florida to an opioid overdose. With a grant from Baltimore City’s health department and data feeds from Emergency medical services (EMS), LeGrand was able to track the “hot spots of fentanyl overdoses” across the city. The service also has a built-in suite of commands aimed at providing support and recovery tools, such as access the 24-hour crisis line, real-time notification of the needle exchange van’s current location, and access to the Naloxone training schedule.
How Government Created the Myth of Adolescence and the Terrible Consequences -- Why are teens so angsty and rebellious? Because they are biologically adults, being treated like children. Jane Addams likely had good intentions when in the early 20th century she helped create the juvenile justice system and laws against child labor. But fast forward to present day and her influence on how society treats young adults has disastrous effects on young individuals and society at large.Tom Woods hosted Dr. Robert Epstein on his podcast to discuss this problem. Epstein wrote a book called Teen 2.0: Saving Our Children and Families from the Torment of Adolescence. In it, he makes the case that the government, the pharmaceutical industry, and purveyors of “teen culture” have created a myth about post-pubescent young adults.Many people believe the psychological and social problems associated with American youths is a natural part of the teenage years. Epstein explains that the root of the issue is treating people who are physiologically young adults as children. It started with Jane Addams creating a culture that prolonged childhood. The government went on to require public education which grouped youths with peers their age. At a time when teenagers should be learning from more mature and intelligent adults, they are instead exposed to an echo chamber of immature peers.
Is Going To College Worth It? (Yes, If You're White!) -- Over the past few years, individual wealth grew for all Americans. But that doesn’t mean everybody is on level ground. HowMuch.net's graphic below shows the net worth disparity between racial groups, both with and without a college education. HowMuch.net created this graphic using new data from a Federal Reserve analysis of recent trends in consumer financing. Consumers were broken into four groups – white, black, Hispanic, and “other.” The “other” group contains everyone who isn’t white, black, or Hispanic, making it a bit of a minority melting pot. As you can see, education clearly impacts an individual’s net worth, but it isn’t the great equalizer that many think. Data shows that race and ethnicity still have major impacts on net worth, whether or not individuals have an education.Consider this: a bachelor’s degree allows black and “other” Americans to experience a six-fold increase in median net worth. Hispanic wealth increases by four-and-a-half times. White wealth triples.For minorities, this ends up being between $56,000 and $175,000.That sounds pretty good, but it’s even better if you’re white. White graduates increase their median net worth by about $300,000 – far more than any other group. The white advantage is so big that whites without a degree are up to 40% richer than black and Hispanic individuals who do have college degrees!
What’s in House Republicans’ new plan to reform the federal role in higher education – AEI - Last week, Republicans on the House Education and Workforce Committee led by Representative Virginia Foxx (R-NC) unveiled a 542-page bill to overhaul the Higher Education Act (HEA), the principal law governing the federal role in higher education. Touching on everything from the federal student loan program to campus free speech, the bill would be the most ambitious federal reform of higher education in a decade if it became law. Reforms to the trillion-dollar federal student loan program will undoubtedly have the broadest impact of any section of the bill. Republicans would merge the six different federal student loan programs into one loan program, the Federal ONE Loan. Despite the name, however, the ONE loan would in many ways recreate the current complex system of separate loans to undergraduates, graduate students, and parents. Currently, undergraduate students can borrow at low interest rates from the federal government, up to an annual cap. Most undergraduates receive some of their loans as “subsidized” loans, which do not accrue interest while the student is enrolled in school. The House plan raises undergraduate loan limits by around $2,000 per year, while ending subsidized loans. Interest rates on all types of federal loans remain the same. Observers may worry that increasing loan limits could lead to increases in tuition, as evidence suggests is the usual result. The changes to graduate and parent loans are more radical—and welcome. Currently, graduate students and parents can borrow unlimited amounts through the federal student loan program. Evidence suggests such unlimited loans lead colleges to increase tuition and crowd out a healthy private market for student lending. The bill caps graduate student borrowing at $28,500 per year and parent borrowing at $12,500 per year. While these loan limits are a step in the right direction, Congress could go farther and eliminate both categories of loans altogether. The House plan also reforms the way students repay their loans. Currently, borrowers have the option to use either a standard plan, with fixed payments over ten years, or an income-driven repayment (IDR) plan, which sets annual loan payments at 10% of the borrower’s discretionary income. . Borrowers who work in certain occupations can receive forgiveness after just ten years. Given that graduate students can borrow unlimited amounts, unlimited loan forgiveness presents an obvious financial problem for Uncle Sam. The HEA proposal attempts to address this.
DOJ ‘Reviewing’ Harvard’s Offer of Access to Student Records - Harvard Crimson - The Department of Justice is “reviewing” Harvard's offer on Friday to give the federal government access to redacted student records as part of its investigation into the College’s admissions practices, according to a department spokesperson. Seth P. Waxman ’73, a partner at the law firm representing Harvard, wrote in a letter to the Justice Department Friday that Harvard would provide redacted versions of “all of the documents sought” by the Department. The records, Waxman wrote, “include some of the most sensitive information with which Harvard has been entrusted by its students and applicants.” In the letter, he invited government lawyers to view the documents at the law firm WilmerHale’s Washington, D.C. office during the office’s business hours, instead of allowing the Justice Department to copy the documents.The Justice Department had threatened to sue Harvard if it it did not comply with its request for documents by Dec. 1. But Harvard’s new plan presents “a potential path forward,” Justice Department spokesperson Devin M. O’Malley wrote in an emailed statement Friday.“The Department of Justice takes seriously any potential violation of an individual’s civil and constitutional rights. We are pleased that Harvard today indicated it too takes this matter seriously,” O’Malley wrote. “The Department is reviewing the University’s response and declines comment at this time.”The Justice Department began investigating allegations that Harvard’s admissions processes unfairly disadvantage Asian-American applicants this summer, worrying critics who say the investigation could threaten affirmative action policies in place across higher education. The government is seeking the student records as evidence in the investigation.In his letter, Waxman condemned the Justice Department’s warning that it could take legal action against the University. “If the Department follows through on its threat of litigation, it is the Department that will needlessly be delaying the resolution of this matter,” he wrote.
Ending Ivy-League bigotry -- The US Justice Department finally is confronting Harvard University and other elite colleges that blatantly discriminate against Asian-American applicants with a quota system. To get into Harvard, students of Asian heritage have to score hundreds of points higher on competitive exams than non-Asians with similar or even inferior academic records. That’s why the Trump administration’s Justice Department is demanding Harvard’s admissions records and launching an investigation. No surprise Harvard is stonewalling. It has plenty to hide. Harvard’s quota system is a direct threat to the American dream for countless Asian families here in New York City and across the nation. Often new to the country and struggling economically, these parents make sacrifices and encourage their children to study diligently. It pays off. Asian students make up 60 percent of the students in New York’s highly competitive specialized public high schools, like Stuyvesant and Bronx High School of Science. But Harvard is shutting its door to many of them. As the number of Asian-American college applicants with top academic credentials has soared over the last two decades, Harvard has kept acceptances at around 20 percent of each entering class. Harvard doesn’t admit that, but the proof is in plain sight. In 2014, Harvard was sued by Students for Fair Admissions, an advocacy group of mostly first generation Asian-Americans, including parents of high-school students striving to qualify for Ivy League admissions. Their lawsuit claims that the rigid racial make-up of every Harvard class — with consistent percentages of whites, Hispanics and blacks — is the result of an illegal quota system and insidious discrimination. In states like California that bar affirmative action in public college admissions, the soaring number of college-age Asian-Americans has led to a rapid increase in their presence on competitive campuses. Asian-American students now win nearly half the places at California Institute of Technology, up from only a quarter in 1992. But not so at Harvard — proof, according to Students for Fair Admissions, of a secret quota.
Poll: Student Debtors Want Student Loan Payments This Holiday Season, Not Gifts -- Whether it be Christmas, Hanukkah, Kwanzaa, or another holiday, December is the month of giving and receiving. For borrowers currently in repayment on their educational debt, they will have no choice but to give during the holiday season. Across the United States, millions of student debtors will send their December student loan payments to either a federal student loan servicer or private student loan company. After they have done all of their giving, what will student loan borrowers desire most as a present? The Student Loan Report polled 1,000 student loan borrowers currently in repayment to find out if they would rather receive a gift or an equally-valued student loan payment this holiday season. The Student Loan Report presented the following question to 1,000 student loan borrowers currently in repayment: "If you had the choice this year, would you rather receive a gift this holiday season or an equally valued payment towards your student loans?" Over two-thirds (69.30 percent) of respondents would prefer an equally valued student loan payment this holiday season instead of a traditional holiday present, which was the preferred option for 30.70 percent of borrowers in repayment. A result like this just goes to show just how serious the student loan debt crisis in the U.S. has become. In a time when you are left in the dust if you are not up-to-speed on all the latest tech gadgets and products, student loan borrowers would still prefer a contribution towards their educational debt. According to our data, the national student loan debt is currently $1.41 trillion, an amount owed by more than 44 million borrowers. The average student loan borrower owes $27,857 in educational debt upon graduation.
Two student loan studies everyone missed – AEI - The first study was released in late 2016 by Constantine Yannelis of New York University.[1] Yannelis examines whether the law that prevents borrowers from discharging their federal loans in bankruptcy, and a separate wage garnishment policy, prevent “strategic defaults.” That is, the study looks at whether borrowers with the means to repay their loans would opt not to in the absence of these policies (i.e., strategic default). Yannelis relies on a dataset that only a handful of researchers have ever been allowed to access. The dataset links the National Student Loan Data System, which houses records for all federal student loans, with each borrower’s federal income tax information. Using this data, he focuses on changes in borrower repayment patterns before and after key policy changes related to bankruptcy and wage garnishment.Prior to 1998, Congress allowed borrowers to discharge their federal student loans like other consumer debt in bankruptcy, but only after the seventh year of repayment.[2] The Higher Education Amendments of 1998 removed the year-seven provision, making the loans non-dischargeable except in rare circumstances.[3] The change to the bankruptcy law also appears to have reduced strategic defaults. Yannelis findings suggest that reinstating dischargeability of student loans with a seven-year requirement would increase the default rate by 1.65 percentage points, and that removing the waiting period (i.e. full dischargeability) would increase defaults by 5 percentage points. . The second study, by Monica Bhole, an economist and recent graduate of Stanford University, examines how the federal Grad PLUS loan program affected private lending for graduate and professional school.[5] In 2006, Congress removed the $20,500 annual borrowing limit for graduate students in the loan program.[6] Those limits are still in place for a subset of loans (Stafford loans), but as of 2006, graduate and professional students may borrow above those limits up to the full cost of attendance through the federal Grad PLUS loan program. The loans carry higher interest rates and fees than Stafford loans, but like Stafford loans they qualify for generous repayment plans such as income-based repayment and loan forgiveness programs. Similar to the Yannelis study, Bhole uses the policy change in 2006 to create a control and a treatment group to isolate differences in borrowing patterns that can be attributed to the new policy. Because undergraduates would, in theory, exhibit changes in borrowing patterns due to other factors like changes in the economy or student demographics in the same way as graduate students, changes in borrowing patterns between the two groups are likely due to graduate students gaining access to Grad PLUS loans.
How Not to Erase Student Debt - Even by government standards, it is a colossally dumb idea: revoking someone's license to work as a way to get them to pay off their student loans. Yet many states do just that.Student loan debt has more than doubled since 2009 to $1.3 trillion today. The average borrower in the class of 2016 left campus more than $30,000 in debt -- triple the level from 1990, while earnings for newly minted grads have remained flat. Many are struggling to keep up with payments. Of the 22 million Americans with student loan debt, 30 percent are in default (at least a year behind on a payment) or delinquent (at least a month behind). The tax bill passed by the House, which would eliminate deductions for interest on student loans, may worsen this situation.Many with student debt they cannot repay did not complete their degree or received a diploma that is worth little more than the paper it's printed on. Others struggle to find work.In 19 states, those who fail to repay loans can lose their professional license to work. At risk are nurses, teachers, social workers, engineers, beauticians, small business owners, and nearly anyone else who relies on a state certification.In South Dakota, those who fall behind without entering a repayment plan can lose their driver's license, making travel to work difficult if not impossible. There is no reliable data on the number of Americans who have had their licenses suspended for failure to repay their loans, but even one is too many. Other than bringing back debtors' prisons, it's hard to imagine a more counterproductive idea.
"Almost A Given It Will End Badly": Vanguard Founder Jack Bogle Says U.S. Pensions Are Doomed -- Legendary investor Jack Bogle is apparently not all that optimistic that public pension funds in the U.S. are going to be able to meet their future funding obligations. Speaking with Bloomberg earlier today, Bogle predicted that bond returns will be a paltry 3% over the next decade, with stock returns not that much better, making it almost impossible for pensions to meet their arbitrary 7.5%-8.0% return hurdles.The founder of Vanguard Group thinks a conservative portfolio of bonds will only return about 3 percent a year over the next decade, and stocks won’t do much better, with a 4 percent annual gain over a similar period. This is “totally defeating” for pensions, which “are not going to be able to meet their 7.5 percent or 8 percent obligations,” Bogle said in a Bloomberg Radio interview that aired Thursday.“The only return you get on a bond is from the interest coupon,” with fluctuations in prices eventually evening out and becoming relatively negligible over the longer term, he said. Given a portfolio of about half corporate bonds and half U.S. Treasuries, the blended yield is about 3 percent today.“So that’s what you get over the next decade,” he said. “It is almost a given that it will end badly,” he said.
CVS To Buy Aetna For $69BN In Year's Largest Deal, "Reshaping Health Care" -- A deal that was months in the making is finally official, with Aetna's board of directors approving on Sunday the health insurer’s sale to drugstore chain operator CVS Health Corp for approximately $207 per share in cash and stock, in a deal worth $67 billion, multiplenews sources reported on Sunday afternoon. The purchase price represents a premium of 29% to where Aetna shares were trading before the WSJ first reported that the two companies were in talks in October. The deal will be this year’s largest corporate acquisition, and in combining one of the nation’s largest pharmacy benefits managers (PBMs) and pharmacy operators with one of its oldest health insurers, will "reshape health care" by bringing a large insurer and a big provider of pharmacy services under one roof. As part of the acquisition, three Aetna directors, including Aetna’s Chairman and CEO Mark Bertolini, will join CVS’s board of directors. After the deal closes, Aetna will operate as a separate unit run by members of the current management.The acquisition will be financed with a mix of cash and debt. Barclays, Goldman Sachs and Bank of America have committed to provide $49 billion of financing, Bloomberg reported.With Aetna currently employing 49,500 while CVS has 204,000 full and part-time employees, the combined company will boast a quarter million workers, if only for the time being. The deal, which is expected to close in the second half of 2018, will create cost savings of about $750 million, which means tens of thousands of layoffs.
Emergency rooms are monopolies. Patients pay the price - The doctor checked his blood pressure, asked about the pain, and gave him a muscle relaxant. The visit was quick and easy, lasting about 20 minutes.But Saifan was shocked when he received bills totaling $2,429.84. The bill included a $3.50 charge for the muscle relaxant. The rest — $2,426.34 — was from “facility fees” charged by the hospital and doctor for walking into the emergency room and seeking care. Because Saifan’s health spending is still within his plan’s deductible, he is responsible for the entire amount. “I called the insurance company to make sure the bill was real,” he says. “They said it was a reasonable price, and gave me a breakdown.” There are 141 million visits to the emergency room each year, and nearly all of them (including Saifan’s) have a charge for something called a facility fee. This is the price of walking through the door and seeking service. It does not include any care provided. Emergency rooms argue that these fees are necessary to keep their doors open, so they can be ready 24/7 to treat anything from a sore back to a gunshot wound. But there is also wide variation in how much hospitals charge for these fees, raising questions about how they are set and how closely they are tethered to overhead costs. Most hospitals do not make these fees public. Patients typically learn what their emergency room facility fee is when they receive a bill weeks later. The fees can be hundreds or thousands of dollars. That’s why Vox has launched a year-long investigation into emergency room facility fees, to better understand how much they cost and how they affect patients. Saifan’s bill was so expensive, it turns out, because the hospital used the facility fee typically reserved for complex, intensive emergency room visits. Saifan’s visit where he received a muscle relaxant was coded by the doctor as a level 4 visit — the second highest — and came with hefty fees as a result.
San Diego Continues Desperate Attempt To Control Hepatitis A Outbreak -- San Diego is desperately trying to control a Hepatitis A outbreak brought on by the homeless problem plaguing the state of California.The city has now opened the first of three giant tents meant to contain the outbreak of the deadly virus.The first of three industrial-sized tents to house the homeless as part of the city’s efforts to contain a hepatitis A outbreak. The outbreak itself stems from the deplorable conditions people were living in on the streets – mainly, the fecal matter that is left from those who live on the street. Of course, the government isn’t going to climb off the backs of their residents in California, instead, they will continue to raise taxes and create more homeless people while desperately and frantically trying to stop the problems that their overbearing government has caused. About 20 people made their way to a bunk bed Friday in the tent that will house 350 single men and women. Two other giant tents will open later this month — one specifically for families and one for veterans. The tents will house a total of 700 people with an attempt to keep them from defecating on the street and spreading the Hepatitis A virus. More than 3000 people are homeless in San Diego, and risk contracting the disease which has killed 20 people so far. The city had to divert $6.5 million budgeted for permanent housing to fund the operation of the tents for seven months. The tents will provide an array of services from mental health care to housing navigators. But the city still faces an acute housing shortage for the poor. Faulconer has earmarked more than $80 million in stolen (taxpayer) funds to address the problem. So the city wants to fix poverty by taking more from earners and creating more poverty. Bravo, California.
DOJ Launches Investigation Into Planned Parenthood Over Fetal Tissue Harvesting Practices -- The Department of Justice (DOJ) has launched an investigation into Planned Parenthood's controversial fetal tissue practices following a December 2016 recommendation by the Judiciary Committee contained within a 63 page report on the subject, entitled: "Human Fetal Tissue Research: Context and Controversy." The committee's report was prompted by a disturbing series of undercover videos released in 2015 by the Center for Medical Progress (CMP), which appeared to show Planned Parenthood negotiating with an operative over the price of fetal tissue. In a letter seen by The Washington Examiner, DOJ Assistant AG for Legislative Affairs, Stephen Boyd, asks Judiciary Committee chairman Chuck Grassley (R-IA) for an unredacted version of the committee's report. Assistant Attorney General for Legislative Affairs Stephen Boyd pursued the committee's request, formally asking Grassley and ranking member Dianne Feinstein, D-Calif., on Thursday for the documents for investigative purposes and not for a formal legal proceeding, which he notes would need a Senate resolution.Boyd explained that he is requesting the documents in order to further the department s ability to conduct a thorough and comprehensive assessment of that report based on the full range of information available." -The 2015 undercover sting on Planned Parenthood was conducted over a period of 30 months, with the CMP claiming that the videos were evidence of Planned Parenthood engaging in the illegal sale of fetal tissue. Glenn Simpson of Fusion GPS reviewed the videos and found them to be altered. CMP shot back, claiming the edits were of "bathroom breaks and waiting periods."
Canola oil linked to worsened memory and learning ability in Alzheimer’s -- Canola oil is one of the most widely consumed vegetable oils in the world, yet surprisingly little is known about its effects on health. Now, a new study published online December 7 in the journal Scientific Reports by researchers at the Lewis Katz School of Medicine at Temple University (LKSOM) associates the consumption of canola oil in the diet with worsened memory, worsened learning ability and weight gain in mice which model Alzheimer's disease. The study is the first to suggest that canola oil is more harmful than healthful for the brain. "Canola oil is appealing because it is less expensive than other vegetable oils, and it is advertised as being healthy," Curious about how canola oil affects brain function, Dr. Praticò and Elisabetta Lauretti, a graduate student in Dr. Pratico's laboratory at LKSOM and co-author on the new study, focused their work on memory impairment and the formation of amyloid plaques and neurofibrillary tangles in an Alzheimer's disease mouse model. Amyloid plaques and phosphorylated tau, which is responsible for the formation of tau neurofibrillary tangles, contribute to neuronal dysfunction and degeneration and memory loss in Alzheimer's disease. The animal model was designed to recapitulate Alzheimer's in humans, progressing from an asymptomatic phase in early life to full-blown disease in aged animals. Dr. Praticò and Lauretti had previously used the same mouse model in an investigation of olive oil, the results of which were published earlier in 2017. In that study, they found that Alzheimer mice fed a diet enriched with extra-virgin olive oil had reduced levels of amyloid plaques and phosphorylated tau and experienced memory improvement. For their latest work, they wanted to determine whether canola oil is similarly beneficial for the brain. One of the first differences observed was in body weight - animals on the canola oil-enriched diet weighed significantly more than mice on the regular diet. Maze tests to assess working memory, short-term memory, and learning ability uncovered additional differences. Most significantly, mice that had consumed canola oil over a period of six months suffered impairments in working memory.
UN warns of drug-resistant germ risk brewing in nature -- The UN warned Tuesday of a ticking time bomb of drug-resistant germs brewing in the natural environment, aided by humans dumping antibiotics and chemicals into the water and soil. If this continues, people will be at an ever-higher risk of contracting diseases which are incurable by existing antibiotics from swimming in the sea or other seemingly innocuous activities, a report said. "Around the world, discharge from municipal, agricultural and industrial waste in the environment means it is common to find antibiotic concentrations in many rivers, sediments and soils," the study found. "It is steadily driving the evolution of resistant bacteria," it said. "A drug that once protected our health is now in danger of very quietly destroying it." The report, "Frontiers 2017", was released at the UN Environment Assembly, the highest-level gathering on matters concerning the environment. Health watchdogs are already deeply worried about the dwindling armoury of weapons against germs. A report in 2014 warned that drug-resistant infections might kill 10 million people a year by 2050, making it the leading cause of death, over heart disease and cancer. Bacteria acquire drug resistance partly by exposure to antibiotics. To survive the drug onslaught, bacteria can transfer, even between different species, genes that confer immunity.
U.S. Has The Worst Rate Of Maternal Deaths In The Developed World - NPR and ProPublica teamed up for a six-month long investigation on maternal mortality in the U.S. Among our key findings:
- More American women are dying of pregnancy-related complications than any other developed country. Only in the U.S. has the rate of women who die been rising.
- There's a hodgepodge of hospital protocols for dealing with potentially fatal complications, allowing for treatable complications to become lethal.
- Hospitals — including those with intensive care units for newborns — can be woefully unprepared for a maternal emergency.
- Federal and state funding show only 6 percent of block grants for "maternal and child health" actually go to the health of mothers.
- In the U.S, some doctors entering the growing specialty of maternal-fetal medicine were able to complete that training without ever spending time in a labor-delivery unit.
Read and listen to the full report here.
Air Pollution Puts Health of Unborn Babies at Risk, Study Shows -- We already know that air pollution is bad for our lungs, but a new study shows that air pollution can even harm a baby that hasn't left the womb. Researchers at Imperial College London have found an association between exposure to road traffic pollution and an increased risk of low birth weights at term. A low birth weight, which is less than 5 pounds, 8 ounces, can lead to health issues for some babies, such as breathing problems, an increased risk of infection, and low blood sugar. In the long term, babies born with a low birth weight are more likely than babies born at a normal weight to have diabetes, heart disease, high blood pressure and other health conditions. While the current study was conducted in London, the authors pointed out that their findings also apply to other cities around the world and are calling on governments to tackle the issue of highly polluting vehicles in urban areas. The research, published Wednesday in the British Medical Journal, comes at the same time that a new Unicef analysis determined that 17 million babies under the age of one are breathing toxic air, which could cause damage to brain tissue and impair cognitive development.
Air pollution harm to unborn babies may be global health catastrophe, warn doctors -- Air pollution significantly increases the risk of low birth weight in babies, leading to lifelong damage to health, according to a large new study. The research was conducted in London, UK, but its implications for many millions of women in cities around the world with far worse air pollution are “something approaching a public health catastrophe”, the doctors involved said. Globally, two billion children – 90% of all children – are exposed to air pollution above World Health Organization guidelines. A Unicef study also published on Wednesday found that 17 million babies suffer air six times more toxic than the guidelines.The team said that there are no reliable ways for women in cities to avoid chronic exposure to air pollution during pregnancy and called for urgent action from governments to cut pollution from vehicles and other sources. “It is an unacceptable situation that there are factors a woman cannot control that adversely affect her unborn baby,” The study analysed all live births in Greater London over four years – over 540,000 in total – and determined the link between the air pollution experienced by the mother and low birth weight, defined as less than 2.5kg (5.5lbs). The scientists found a 15% increase in risk of low birth weight for every additional 5 micrograms per cubic metre (µg/m3) of fine particle pollution. The average exposure of pregnant women in London to fine particle pollution is 15µg/m3, well below UK legal limits but 5µg/m3 higher than the WHO guideline. “The UK legal limit is not safe and is not protecting our pregnant women and their babies,” said Toledano. “We know that low birthweight is absolutely crucial,” she said. “It not only increases the risk of the baby dying in infancy, but it predicts lifelong risk of diabetes, cardiovascular disease etc. You are setting in stone the whole trajectory of lifelong chronic illness.”
Air pollution alters Staphylococcus aureus and Streptococcus pneumoniae biofilms, antibiotic tolerance and colonisation - Wiley - Air pollution is the world's largest single environmental health risk (WHO). Particulate matter such as black carbon is one of the main components of air pollution. The effects of particulate matter on human health are well established however the effects on bacteria, organisms central to ecosystems in humans and in the natural environment, are poorly understood. We report here for the first time that black carbon drastically changes the development of bacterial biofilms, key aspects of bacterial colonisation and survival. Our data show that exposure to black carbon induces structural, compositional and functional changes in the biofilms of both S. pneumoniae and S. aureus. Importantly, the tolerance of the biofilms to multiple antibiotics and proteolytic degradation is significantly affected. Additionally, our results show that black carbon impacts bacterial colonisation in vivo. In a mouse nasopharyngeal colonisation model, black carbon caused S. pneumoniae to spread from the nasopharynx to the lungs, which is essential for subsequent infection. Therefore our study highlights that air pollution has a significant effect on bacteria that has been largely overlooked. Consequently these findings have important implications concerning the impact of air pollution on human health and bacterial ecosystems worldwide.
Association of air particulate pollution with bone loss over time and bone fracture risk: analysis of data from two independent studies - Lancet - Air particulate matter is a ubiquitous environmental exposure associated with oxidation, inflammation, and age-related chronic disease. Whether particulate matter is associated with loss of bone mineral density and risk of bone fractures is undetermined. We did two independent studies with complementary designs, objectives, and measures to determine the relationship between ambient concentrations of particulate matter and bone health. In the Medicare analysis, risk of bone fracture admissions at osteoporosis-related sites was greater in areas with higher PM2·5 concentrations (risk ratio [RR] 1·041, 95% CI 1·030 to 1·051). This risk was particularly high among low-income communities (RR 1·076, 95% CI 1·052 to 1·100). In the longitudinal BACH/Bone study, baseline black carbon and PM2·5 concentrations were associated with lower serum parathyroid hormone (β=–1·16, 95% CI −1·93 to −0·38, p=0·004, for 1 IQR increase [0·106 μg/m3] in the 1-year average of black carbon concentrations; β=–7·39, 95% CI −14·17 to −0·61, p=0·03, for 1 IQR increase [2·18 μg/m3] in the 1-year average of PM2·5 concentrations). Black carbon concentration was associated with higher bone mineral density loss over time at multiple anatomical sites, including femoral neck (−0·08% per year for 1 IQR increase, 95% CI −0·14 to −0·02) and ultradistal radius (−0·06% per year for 1 IQR increase, −0·12 to −0·01). Black carbon and PM2·5 concentrations were not associated with serum calcium or serum 25(OH)D concentrations. Our results suggest that poor air quality is a modifiable risk factor for bone fractures and osteoporosis, especially in low-income communities.
Is This Nuclear Plant to Blame for Soaring Thyroid Cancer Rates in New York? -- In the late 1970s, the rate of new thyroid cancer cases in four counties just north of New York City—Westchester, Rockland, Orange and Putnam counties—was 22 percent below the U.S. rate. Today, it has soared to 53 percent above the national rate. New cases jumped from 51 to 412 per year. Large increases in thyroid cancer occurred for both males and females in each county. That's according to a new study I co-authored which was published in the Journal of Environmental Protection and presented at Columbia University. This change may be a result of airborne emissions of radioactive iodine from the Indian Point nuclear power plant, which is located at the crossroads of those four counties and has been operating since the mid-'70s. Exposure to radioactivity is the only known cause of thyroid cancer. Indian Point routinely releases more than 100 radioactive chemicals into the environment. These chemicals enter human bodies through breathing and the food chain, harming and killing healthy cells. One of these chemicals is radioactive iodine, which attacks and kills cells in the thyroid gland, raising the risk of cancer. "The statistical aberration of increased cancer rates should be a concern to us all," said Peter Schwartz, a Rockland County businessman diagnosed with thyroid cancer in 1986. "After Fukushima, it finally occurred to me that my thyroid cancer was connected to Indian Point."
Gates Foundation Hired PR Firm to Manipulate UN Over Gene Drives - The Bill and Melinda Gates Foundation this year paid a PR firm called Emerging Ag $1.6 million to recruit a covert coalition of academics to manipulate a UN decision-making process over gene drives, according to emails obtained through Freedom of Information requests. Gene drives are a highly controversial new genetic extinction technology. They have been proposed as potentially able to eradicate malarial mosquitoes, agricultural pests, invasive species, as well as having potential military uses. Emerging Ag calls itself “a boutique international consulting firm providing communications and public affairs services.” Its president and founder is Robynne Anderson, a former international communications director of CropLife, the global lobby group for the biotechnology, seed, and pesticide industries. The FOIA emails reveal that the project coordinated by Emerging Ag was dubbed the “Gene Drive Research Sponsors and Supporters coalition”. It consisted of three members of a UN committee called the Ad Hoc Technical Expert Group on Synthetic Biology (AHTEG) plus a larger group of 65 covertly recruited, but seemingly independent, scientists and officials, all coordinated by a still larger number of government officials (mainly from English-speaking countries), PR advisors, academics, and members of various Gates-funded projects. The AHTEG on Synthetic Biology is part of the UN Convention on Biological Diversity (CBD). This AHTEG is tasked with creating a formal set of regulatory recommendations to help governments avoid negative impacts on biodiversity. Its recommendations are supposed to draw from the discussions of an online forum of experts called The UN CBD Online Forum on Synthetic Biology
Genetically Engineering Yourself Sounds Like a Horrible Idea—But This Guy Is Doing It Anyway - Zayner’s audience sat in the fashionably decaying ballroom of an old garbage collectors’ social club in Oakland. They had come from universities, startups and do-it-yourself garage biolabs, united if not by a love of citizen science then by a curiosity as to what it is exactly that Zayner is up to. A computer nerd turned NASA scientist turned establishment-science cynic, Zayner is something like the self-appointed leader of a small but burgeoning biohacking movement. He presides over a loose coterie of professional and self-taught scientists who believe that ground-breaking science does not require either a fancy lab or degree. Zayner was about to talk about his attempts to genetically modify his own body, an endeavor likely to raise at least a couple eyebrows, including the federal government’s. “This is our world now, the world of the base pair and the amino acid, the beauty of the protein,” he began, extolling the dawn of an era defined by synthetic biology and its advancements in understanding the underpinnings of life. He projected the 1986 Hacker Manifesto onto a towering screen behind him. Zayner frequently draws parallels between early computer hackers and today’s DIY biologists: Tools like genetic engineering are poised to drastically reshape our world, and he believes that biohackers could be the ones to free them from the Ivory Tower. He began to read aloud from the manifesto as if delivering a scientific sermon, swaying back and forth, possessed by the weight of the words. His voice grew closer to a shout with every line. “We explore and you call us criminals,” he read, quoting the manifesto. “We exist without skin color, without nationality, without religious bias, and you call us criminals. You build atomic bombs, you wage war, you murder, cheat, lie to us and try to make us believe it’s for our own good, yet we’re the criminals.” At the time, no one had actually called him a criminal, but months later, a warning issued by the FDA would give his reading more meaning. He turned to the crowd for a dramatic finish. “Yes I am a criminal,” he read. “And my crime is that of curiosity.” Applause erupted. Zayner took another gulp from his beer.
The Scary New Evidence on BPA-Free Plastics - “I worry about what are the health impacts of the chemicals leaching out of that sippy cup,” Green said, before listing some of the problems linked to those chemicals—cancer, diabetes, obesity. To help solve the riddle, he said, his organization planned to test BPA-free sippy cups for estrogenlike chemicals. The center shipped Juliette’s plastic cup, along with 17 others purchased from Target, Walmart, and Babies R Us, to CertiChem, a lab in Austin, Texas. More than a quarter came back positive for estrogenic activity. These results mirrored the lab’s findings in its broader National Institutes of Health-funded research on BPA-free plastics. CertiChem and its founder, George Bittner, who is also a professor of neurobiology at the University of Texas-Austin, had recently coauthored a paper in the NIH journal Environmental Health Perspectives. Itreported that “almost all” commercially available plastics that were tested leached synthetic estrogens—even when they weren’t exposed to conditions known to unlock potentially harmful chemicals, such as the heat of a microwave, the steam of a dishwasher, or the sun’s ultraviolet rays. According to Bittner’s research, some BPA-free products actually released synthetic estrogens that were more potent than BPA. Estrogen plays a key role in everything from bone growth to ovulation to heart function. Too much or too little, particularly in utero or during early childhood, can alter brain and organ development, leading to disease later in life. Elevated estrogen levels generally increase a woman’s risk of breast cancer. Estrogenic chemicals found in many common products have been linked to a litany of problems in humans and animals. According to one study, the pesticide atrazine can turn male frogs female. DES, which was once prescribed to prevent miscarriages, caused obesity, rare vaginal tumors, infertility, and testicular growths among those exposed in utero. Scientists have tied BPA to ailments including asthma, cancer, infertility, low sperm count, genital deformity, heart disease, liver problems, and ADHD. “Pick a disease, literally pick a disease,” says Frederick vom Saal, a biology professor at the University of Missouri-Columbia who studies BPA.
Many Floridians Unknowingly Drink Contaminated Water - — Florida is plagued by a stain of stealth pollution seeping from thousands of leaking petroleum tanks fouling both surface and groundwater, according to Public Employees for Environmental Responsibility (PEER). The resultant risks to human health are aggravated by gaping holes in public notice requirements, as most affected residents do not know they live atop or next to contaminated sites.Today, Florida has more than 19,000 contaminated sites registered in the state-funded cleanup programs – half of which (9,971) are still being cleaned up, or are awaiting cleanup. In addition, private parties are responsible for financing cleanups of another 12,000 contaminated sites– 2,657 of which are in cleanup or awaiting cleanup. Altogether, the state still has in excess of 12,000 active contamination sites.The problem’s magnitude is underlined by the fact that more than half of Florida’s total estimated 44,000 underground and aboveground storage tanks have leaked their remaining petroleum products into the ground. These leaks taint surrounding groundwater and surface waters, as well as soils in the vicinity.Yet, public awareness of the proximity of these thousands of contaminated sites is limited because –
- State law requires that notice be given only to residents who own, or live on property known to be contaminated and there is no requirement notice be given to other persons, e.g. other persons who may live on contaminated property. Instead, it is up to property owners and/or landlords to decide whether to provide this notice;
- Unless site rehabilitation efforts expand to include neighboring property, residents who live on, or own, property that is adjacent to such property receive no notice of the contamination, even if they have a drinking water well that may cause the underground contamination plume to migrate to that well due to its use; and
- Cleanup of contaminated petroleum sites in Florida can occur without any notice to the public, other than property owners whose property is directly affected by the contamination.
“The location of these sites is not always obvious to the unsuspecting passerby,” stated Florida PEER Director Jerry Phillips, a former Department of Environmental Protection (DEP) enforcement attorney. “Since many of the sites were contaminated decades ago and have since been abandoned, it is sometimes difficult to detect past contamination, no matter how severe, just by looking at the property.”
Stop Talking Affordable Water and Start Talking Poverty – Zetland -- Circle of Blue published this long, aggravating article of the efforts of activists, water managers and (far too many consultants) to “find a compromise” on the price of water that will cover system costs without “burdening the poor.” Let me solve this “puzzle.” First, there’s no point in making water cheap to help poor people. Cheap water will not make them rich. If you want to help poor people, then give them money.Second, water utilities are neither charities nor social innovators. Their job is to deliver safe and adequate quantities of water at prices that cover their costs of operations, maintenance and expansion. Utilities that are underfunded (like those in India that lose money on every cubic meter delivered) cannot provide good service.* Utilities that are asked to take care of poor people (like those in England where the government is too stingy to help poor people [pdf]) lose track of their primary mission (good service) as they struggle to identify who is “poor”.** Third, any politician who claims that water needs to be cheap to help poor people is a lying, lazy incompetent. It’s the politician’s job to tax the rich to help the poor, but US politicians work for the rich. Sad. Bottom line: Water utilities need money to operate and deliver safe, adequate water to customers who should pay for it. If those customers are too poor, then the government should give them money, not undermine utility finances with counterproductive “affordable water” mandates.
Colorado Water Plan Has Become 'Colorado Dam Plan' - You'd have thought the earth moved exactly two years ago with all the ballyhoo at the State Capitol when Gov. John Hickenlooper unveiled the final Colorado Water Plan. . Bold promises were made that the plan was going to save our rivers , farms, cities, and the whole state from the coming catastrophe of population growth. I warned that the plan was too heavily focused on draining and damming rivers rather than protecting and restoring them. Now, two years out from that unveiling, I take no solace in being right. In fact, the Colorado Water Plan has become the "Colorado Dam Plan." If you look at the sheer amount of money so far spent and supported, the state's endorsements and loans for dams have outsized water conservation and river restoration by a margin of at least 50 to 1. Before the ink was dry, Hickenlooper used the plan to endorse the $350 million "Moffat Collection System Project," which would be a massive enlargement of Denver Water's "Gross Dam" in Boulder County. In fact, it would build the tallest dam in the history of Colorado and fill it by draining another 4.5 billion gallons of water every year out of the already severely degraded Upper Colorado River in Grand County. If that wasn't enough, Hickenlooper then used the plan to endorse the $380 million "Windy Gap Firming Project," which would take another 9 billion gallons of water every year out of the same Upper Colorado River, reducing its flow to a small fraction of its natural beauty. To add insult to injury, the Colorado Water Conservation Board (all appointed by Hickenlooper) then ran a bill through the Legislature to loan that project $90 million to give it financial legs because it couldn't stand on its own two feet. And there's more.
Harvey leaves thousands still waiting on clean water — Thousands of people are still waiting on access to safe drinking water in parts of Texas more than three months after Hurricane Harvey.The storm and the heavy rains that followed overflowed drainage districts, cut off water and prompted hundreds of boil-water notices across the Gulf Coast. More than a dozen boil-water notices remain in effect across affected areas.The areas included cities, mobile home parks and housing developments in seven counties across southeast Texas, the Beaumont Enterprise reported . The Texas Commission on Environmental Quality reports more than 3,700 people in those areas haven’t had clean drinking water since late August.In Rose City, the city’s boil notice hasn’t been lifted because the plan hasn’t met TCEQ standards for pH levels and other chemicals, said Janice Ratcliff, the city’s water operator. Running water returned to the city’s 600 residents in September, but it still requires a two-minute rolling boil before safe consumption.“It’s been so touch-and-go,” Ratcliff said. “It will run good for two weeks but then something will happen. It just makes no sense to remove the notice just to have to go right back on it.”Ratcliff said the city’s original goal was to have the notice rescinded for good by Thanksgiving. But issues with insurance have pushed back installing the necessary equipment.
Plan to burn hurricane debris sparks health fears in US Virgin Islands - As the U.S. Virgin Islands struggles to recover from Hurricanes Maria and Irma, a coalition of environmental groups and health experts have come out in strong opposition to a proposal to burn hundreds of thousands of cubic yards of downed trees and other vegetation in open air incinerators. The groups say it would further exacerbate health disparities in the predominantly black population where nearly one in four people lives below the federal poverty line.The U.S. Virgin Islands Senate passed legislation to ban the proposed burn on Friday, and the Sierra Club and other environmental groups have threatened to sue the U.S. Army Corps of Engineers and the Federal Emergency Management Agency if they go ahead w ith the incineration plan. Those opposed say the islands' 100,000 residents are already choking on exhaust from diesel generators that are now pervasive across the territory, where more than half the population lacks electricity. They are instead arguing for composting of the debris, some 400,000 cubic yards on the Island of St. Croix alone, and using the compost to enrich eroded soil depleted by the storms.The decision on whether to burn or compost is up to the territory's governor, Kenneth Mapp, who must now decide whether to sign the legislation into law.Incineration is estimated to cost $5.2 million, compared to $5.3 million for mulching and $7.1 million for composting, according to cost estimates for 400,000 cubic yards of tree debris prepared by the Army Corps and shared with members of the U.S. Virgin Islands Senate. Opponents of burning say FEMA and the Army Corps advised the governor to burn the debris and offered financing that favors incineration over composting. "If it was a community that was not of color, I think the factors for this decision would have been handled with much more sensitivity,"
What Life Is Like For A Million People In Puerto Rico Who Still Don't Have Power - If you ever wondered what it would look like if the grid collapsed here on the mainland, the island of Puerto Rico is a tragic, real-life case study. These stories show us what life is like for more than a million people who STILL don’t have power and running water nearly 3 months after Hurricanes Irma and Maria devastated their communities. According to a website showing the status of utilities on the island, four months after two hurricanes wrought havoc, 32% of Puerto Ricans are still without power and nearly 10% are still without running water. However, even those who have running water must boil it. But statistics don’t tell the real story. At first, it was a war zone. In the first days after the grid went down, chaos ruled. I vetted as many of the stories as I could and concluded: …there is very little food, no fresh water, 97% are still without power, limited cell signals have stymied communications, and hospitals are struggling to keep people alive. There is no 911. Help is not on the way. If you have no cash, you can’t buy anything. As people get more desperate, violence increases. (source) Other outlets told the same stories. Jeffrey Holsman wrote a guest post for USA Today, sharing what he was witnessing….we face hours upon hours of waiting in lines for gas that might not be there; hours waiting in bank and ATM lines for money that might not be there; hours waiting in grocery store lines for food that might not be there. (source) It only took a few days before people began to become ill from the tainted water.There were many injuries related to the storm, as well as the aftermath, and these crises were compounded by the lack of medical assistance. A month after Hurricane Maria, the situation was still very grim. Three million residents were still without electricity and one million were without running water. (source) At two and a half months post-hurricane, PBS reported the following statistics:
- 66 percent of power on the island has been restored
- 93 percent of the island has access to water, but it remains on a boil advisory
- 73 percent of cell sites are up and running
- 982 survivors remain in 41 shelters across the island
The island still looks like a war zone. Previously, Puerto Rican officials estimated that the island would have electricity again by December? It turns out they were wrong. Now it looks like everyone in Puerto Rico won’t have power until February… at the earliest.
More Climate Change Refugees Means More Walls -- When I first talked to the three Honduran men in the train yard in the southern Mexican town of Tenosique, I had no idea that they were climate-change refugees. When I asked why they were heading for the United States, one responded simply, “No hubo lluvia.” (“There was no rain.”) In their community, without rain, there had been neither crops, nor a harvest, nor food for their families, an increasingly common phenomenon in Central America. In 2015, for instance, 400,000 people living in what has become Honduras’s “dry corridor” planted their seeds and waited for rain that never came. As in a number of other places on this planet in this century, what came instead was an extreme drought that stole their livelihoods. For Central America, this was not an anomaly. Not only had the region been experiencing increasing mid-summer droughts, but also, as the best climate forecasting models predict, a “much greater occurrence of very dry seasons” lies in its future. Central America is, in fact, “ground zero” for climate change in the Americas, as University of Arizona hydrology and atmospheric sciences professor Chris Castro told me. And on that isthmus, the scrambling of the seasons, an increasingly deadly combination of drenching hurricanes and parching droughts, will hit people already living in the most precarious economic and political situations. Across Honduras, for example, more than 76% of the population lives in conditions of acute poverty. The coming climate breakdowns will only worsen that or will, as Castro put it, be part of a global situation in which “the wet gets wetter, the dry gets drier, the rich get richer, the poor get poorer. Everything gets more extreme.”
Lake Chad: The World’s Most Complex Humanitarian Disaster - Moussa Mainakinay was born in 1949 on Bougourmi, a dusty sliver in the lake’s southern basin. Throughout his childhood and teen-age years, he never went hungry. The cows were full of milk. The islands were thick with vegetation. The lake was so deep that he couldn’t swim to the bottom, and there were so many fish that he could grab them with his hands. The lake had given Mainakinay and his ancestors everything—they drank from it, bathed in it, fished in it, and wove mats and baskets and huts from its reeds. In the seventies, Mainakinay noticed that the lake was receding. There had always been dramatic fluctuations in water level between the rainy and the dry seasons, but now it was clear that the mainland was encroaching. Floating masses of reeds and water lilies began to clog the remaining waterways, making it impossible to navigate old trading routes between the islands. Lake Chad is the principal life source of the Sahel, a semiarid band that spans the width of Africa and separates the Sahara, in the north, from the savanna, in the south. Around a hundred million people live there. For the next two decades, the entire region was stricken with drought and famine. The rivers feeding into Lake Chad dried up, and the islanders noticed a permanent decline in the size and the number of fish. Then a plague of tsetse flies descended on the islands. They feasted on the cows, transmitting a disease that made them sickly and infertile, and unable to produce milk. For the first time in Mainakinay’s life, the islanders didn’t have enough to eat. The local medicine man couldn’t make butter, which he would heat up and pour into people’s nostrils as a remedy for common ailments. Now, when the islanders were sick or malnourished, he wrote Quranic verses in charcoal on wooden boards, rinsed God’s words into a cup of lake water, and gave them the cloudy mixture to drink. By the end of the nineties, the lake, once the size of New Jersey, had shrunk by roughly ninety-five per cent, and much of the northern basin was lost to the desert. People started dying of hunger.
Only 60 Years of Farming Left If Soil Degradation Continues - Generating three centimeters of top soil takes 1,000 years, and if current rates of degradation continue all of the world's top soil could be gone within 60 years, a senior UN official said on Friday. About a third of the world's soil has already been degraded, Maria-Helena Semedo of the Food and Agriculture Organization (FAO) told a forum marking World Soil Day. The causes of soil destruction include chemical-heavy farming techniques, deforestation which increases erosion, and global warming. The earth under our feet is too often ignored by policymakers, experts said. "Soils are the basis of life," said Semedo, FAO's deputy director general of natural resources. "Ninety five percent of our food comes from the soil." Unless new approaches are adopted, the global amount of arable and productive land per person in 2050 will be only a quarter of the level in 1960, the FAO reported, due to growing populations and soil degradation. Soils play a key role in absorbing carbon and filtering water, the FAO reported. Soil destruction creates a vicious cycle, in which less carbon is stored, the world gets hotter, and the land is further degraded.
Ventura County wildfire destroys more homes, reaches Pacific Ocean - LA Times: The fire that has ravaged Ventura County continued to burn out of control Wednesday, reaching the Pacific Ocean unchecked as officials warned many more homed have been lost. The fast-moving, wind-driven wildfire continued to rage through the city of Ventura on Tuesday evening, jumping Highway 33 and burning through oil fields before crossing the 101 Freeway into Solimar Beach, authorities said. The blaze has consumed 50,500 acres on its journey to the ocean. The 101 remains open, but authorities warned drivers to be cautious traveling through the area. Thousands of homes were still threatened by flames, 27,000 people were forced to flee, a firefighter was injured and Gov. Jerry Brown declared a state of emergency, as some 1,100 personnel continued to battle the blaze.At least 150 structures — including one large apartment complex and the Vista Del Mar Hospital, a psychiatric facility — were consumed by flames. But Cal Fire suspects the true number is hundreds more; firefighters just haven’t been able to get into areas to know for sure. Authorities Tuesday evening continued to widen evacuation zones and announced dozens of school closures in Ventura and Conejo Valley for Wednesday. The fall weather sequence helped spark the Thomas fire, which as of 7:45 p.m. Tuesday was 0% contained, fire officials said. In the last couple of years, the rains came before the Santa Ana winds. But this year, with no rain in three months, the winds hit dry fuels.
150,000 Flee Los Angeles As Wildfires Rage - "We'll Be Fighting This All Week" - In what sounds like a replay of the devastating fires that killed dozens of people and torched a broad swath of California wine country this past summer, at least five discrete fires barreled across Southern California with extreme speed, torching more than 65,000 acres as firefighters struggled to contain the simultaneous infernos. The first blaze started at about 6:25 p.m. Monday in the foothills near Thomas Aquinas College in Santa Paula, a popular hiking destination. It grew quickly to more than 15 square miles in the hours that followed, consuming vegetation that hasn’t burned in decades, Ventura County Fire Sgt. Eric Buschow said, according to CNN. Powerful Santa Ana winds and extremely dry conditions have fueled the wildfires, according to the Washington Post, adding hundreds of millions – if not billions – of dollars in damage to what has already been a devastating year for fires. The winds that caused the fires were part of the season’s longest and strongest wind event – driving down from the desert and mountains into the city of Los Angeles. So far, the latest fires have forced tens of thousands to flee their homes, burned down more than a hundred buildings and triggered power outages in the region. According to CNN, on Tuesday, the city of Ventura declared a daily curfew, beginning 10 pm to 5 am. The curfew is to protect residents and prevent crime such as looting in the evacuation areas, the city said. The largest fire, called the Thomas Fire, was seen crossing the 101 Freeway north of the city of Ventura. That fire had been burning at nearly an acre per second Tuesday. At that speed, it would have covered Manhattan's Central Park in about 14 minutes. The Thomas Fire spanned 50,000 acres (about 78 square miles) in Ventura County alone, which sits just north of Los Angeles. The fire was 0% contained as of Tuesday night.
Creek Fire Crews Battling 'Hurricane-Force' Winds Thursday – Although they expect violent wind gusts, crews battling the Creek Fire in the hills above Sylmar will try to gain momentum Thursday against a wind-driven blaze that has destroyed or damaged at least 30 homes and threatened thousands of others. The fire, which has scorched 12,605 acres, broke out at 3:42 a.m. Tuesday in the area of Gold Creek and Little Tujunga roads in the Kagel Canyon area. More than 1,600 firefighters and other personnel were deployed against the fire, which was 10 percent contained as of Thursday. Santa Ana winds gained strength Wednesday night and are expected to continue Thursday, with some fire officials warning of “hurricane- force” winds. Three firefighters were injured Tuesday and hospitalized in stable condition. At least 30 homes were destroyed or damaged, about 20 of them in the Little Tujunga, Kagel Canyon and Lopez Canyon areas. The other 10 homes were within Los Angeles city limits, according to Margaret Stewart of the Los Angeles Fire Department. Evacuation orders first issued Tuesday were affecting about 110,000 households, according to Los Angeles Mayor Eric Garcetti, who said evacuated residents would not be allowed to return home Wednesday night.
Hurricane-Force Winds Fan SoCal Wildfires As 200,000 Residents Flee Their Homes -- At least four devastating wildfires continued to ravage Southern California from Ventura County south to Los Angeles, as the stifling smoke and flames drove tens of thousands of people living in the Los Angeles area from their homes in an eerie replay of the fires that decimated Northern California’s wine country two months ago. Officials in Southern California have warned that powerful winds (as high as 80 mph in some spots, the same speed as a low-level hurricane) would continue to fan the flames after returning overnight. So far, more than 200,000 people have evacuated their homes and many more are expected to flee. The Los Angeles Fire Department has ordered the evacuation of the 20.5 square miles including and surrounding the Creek Fire, which jumped the 210 Freeway and is threatening Santa Ana's Sylmar and Lake View Terrace neighborhoods. The Rye Fire in Santa Clarita prompted the shutdown of Highway 5, according to Mashable. “We are in the beginning of a protracted wind event,” said state fire chief Ken Pimlott. “There will be no ability to fight fire in these kinds of winds,” Pimlott said. “At the end of the day, we need everyone in the public to listen and pay attention. This is not ‘watch the news and go about your day.’ This is pay attention minute-by-minute … keep your head on a swivel.”
Fire and fear stretch across Southern California as wildfires roar from Ventura to San Diego — Fire continued to tear across Southern California on Thursday, surrounding communities and shrouding much of the region in searing flame and thick, choking smoke. And where there was no fire, there was fear. Fear of what could come next as wildfires ravaged the state for a fourth day. Fear of what could happen if the winds shifted, if the flames moved, if new blazes erupted and were strengthened by the powerful gusts already fueling the infernos burning across the region. Tens of thousands of people fled their homes, running from fires without any idea of when they could return or what they might find when they do. They grabbed pets, clothes and mementos before hurrying off in search of shelter. Veteran firefighters described some of the blazes — at least five separate fires in the region — as unlike anything they had ever encountered. Thousands of firefighters and other first responders fanned out to save lives, protect homes and shepherd people to safety, joined by reinforcements that flocked in from other parts of the country. [ Southern California’s fire situation is worsening as ‘epic’ winds rage ] Authorities had not reported any deaths due to the blazes by Thursday, but they spoke bluntly about the danger that remained through week’s end. While the most severe winds are forecast to slacken Friday and Saturday, lessening the fire danger some, the National Weather Service cautions the risk of fires will remain elevated through Sunday as conditions remain abnormally dry and breezy. “We are a long way from being out of this weather event,” Ken Pimlott, director of Cal Fire, said at a briefing Thursday. “In some cases, the worst could be yet to come in terms of the wind.” The National Weather Service warned that if new fires do begin, they could spread rapidly. The warning appeared to be borne out on Thursday in San Diego County, where a blaze, dubbed the Lilac Fire, grew to 2,500 acres in just a few hours and prompted mandatory evacuations. Officials warned it was growing dangerously fast and said it threatened 1,000 structures. Aerial footage taken from a news helicopter showed it burning through what local news reports identified as a retirement community.
Southern California ‘like a war zone’ as raging wildfires grow larger — Wildfires continued to ravage Southern California for a fifth day Friday, with growing blazes and new fires sending rivers of flames through communities and injuring several people. The largest of the fires spread to nearly 180 square miles and crept toward the college town of Santa Barbara, while a new blaze in San Diego County grew quickly and dangerously, forcing a new round of evacuations. These dangers came as firefighters confronted a half-dozen blazes across the region, fires that imperiled communities and homes, burned through streets and roared over mountains, forcing many to flee and leaving them with no idea when they could return home or if they would have anything to return to. The San Diego County blaze, dubbed the Lilac Fire, started Thursday morning and grew to more than 4,000 acres by that night. Ron Lane, the county’s deputy chief administrative officer, said it had never experienced December winds like these before. The Lilac blaze destroyed at least 20 buildings, and three people suffered burns, according to county officials. Another person was injured by smoke inhalation, while two firefighters combating the blaze were injured. Authorities ordered a wave of evacuations and said more could follow. “We are nowhere near the end of this,” Lane said. “There are thousands of homes that are within the path of these fires.” Gov. Jerry Brown (D), who has declared emergencies in Ventura and Los Angeles counties, issued a similar declaration for San Diego County as officials worked to organize evacuation plans. Hundreds of schools were shuttered across the region, some transforming into shelters to house people who fled their homes. Forecasts said the most severe winds that have whipped up and moved the blazes would slacken Friday and Saturday, lessening the fire danger some. But the National Weather Service cautioned that the risk of fires will stay elevated through Sunday as conditions remain abnormally dry and breezy.
Southern California wildfires burn with little containment as conditions worsen - ABC News: Firefighters across Southern California are battling six major wildfires, and brutal Santa Ana winds are expected to continue fanning the flames through Saturday. California's Department of Forest and Fire Protection tweeted Thursday afternoon that the new fires, the Lilac fire in San Diego County and the Liberty fire in Riverside County, are now being fueled by continued Santa Ana winds and low humidity. Winds are expected to die down some on Friday, before picking up again in intensity on Saturday. There are now 6 major wildfires burning in Southern California. #RyeFire #SkirballFire #CreekFire #ThomasFire #LilacFire and #LibertyFire all being fanned by continued #SantaAnaWinds and low humidity. Get information at: https://t.co/OtkdreDFEq pic.twitter.com/XG8WUVGNak — CAL FIRE PIO (@CALFIRE_PIO) December 7, 2017 The weather is not cooperating with the hundreds of officials trying to contain the flames in the region. Red flag warnings have been extended across much of Southern California through Saturday, and high winds warnings are in effect for mountains and valleys in Los Angeles and Ventura counties. Winds gusted to over 60 mph in Ventura and Los Angeles counties on Thursday, causing embers to spread even more. Gusts were in the 30 to 50 mph range in San Diego County. Much of Southern California is also experiencing humidity levels in the teens or even single digits. Relative humidity in San Diego Thursday afternoon was just 5 percent.
"It Was Like A War Zone" - Heavy Winds Push Wildfires Toward San Diego As Bel Air Burns -- Images of charred palm trees and the burnt-out husks of multi-million-dollar homes flooded social media for a fifth day Friday as the SoCal wildfires that exploded into life at the beginning of the week showed no signs of slowing. Instead, some of the largest fires have entered the heart of Los Angeles – America’s second largest city – and are menacing some of the most expensive homes in the country. To date, six large wildfires have scorched 141,000 acres in the state, with the flames spreading as far south as San Diego, Cal Fire officials said. At least 5,700 firefighters from several agencies and at least nine states are working to contain the massive walls of flames. The fires have forced 190,000 people out of their homes in a hurry. Many took only their pets and a few choice mementos. The Skirball fire that’s terrorizing Bel Air isn’t nearly as large as some of the other fires raging in Ventura and LA counties, but it has had an outsize impact in terms of cost. Two days ago, local media reported that the fire had torched a mansion owned by media mogul Rupert Murdoch. Though Murdoch later clarified that the property was (mostly) intact, other homes in the area are at risk of being reduced to cinders. So far, the fire has damaged many homes in the hills of Bel Air, Los Angeles’ most expensive neighborhood according to Zillow. At least six of those, which Zillow estimates to be worth around $20 million, were completely destroyed on Wednesday. According to the Wall Street Journal, about 1,700 homes were in mandatory evacuation zones from the Skirball Fire. The company estimates the homes’ values totaled $6.4 billion, where the median home value is just under $3 million. Beyond Bel Air, there are 86,242 homes in Ventura and Los Angeles counties that are at "some level of risk" from the Thomas, Rye and Creek Wildfires, according to CoreLogic. The combined reconstruction cost value of these properties is $27.7 billion – nearly triple the $10 billion in damages caused by the NorCal fires.
Destructive toll of Southern California fire siege comes into focus - LA Times: The powerful Santa Ana winds that fueled a five-day fire siege across Southern California this week began to ease Friday, but the destructive toll of the blazes continued to grow and firefighters will remain on high alert through the weekend. The fires, which stretched from Ojai to Oceanside, destroyed more than 500 structures and forced hundreds of thousands of people from their homes. The smoke created air quality problems that officials said reached unprecedented levels in some areas.As hot, dry Santa Anas faded, officials warned that breezes from the ocean could pick up, changing the direction of the flames, placing fire crews at higher risk of getting caught without an escape route. In northern San Diego County, the Lilac fire — which ignited Thursday off Interstate 15 — forced large swaths of Bonsall and Oceanside to evacuate. More than 1,000 firefighters were battling the blaze, which held at 4,100 acres from the night before with 15% containment. The Lilac fire destroyed at least 105 structures, including a number of mobile homes, authorities said Friday. Three people were injured, and 25 horses were killed at a thoroughbred training center. The 15,619-acre Creek fire near Sylmar was 70% contained as of Friday night. At least 56 residences and 49 other structures were destroyed and an additional 45 residences and 25 other structures damaged. The 475-acre Skirball fire in Bel-Air was 50% contained. Six houses were destroyed. The Thomas fire in Ventura County was still the largest, spanning 143,000 acres from Santa Paula to the coast, with significant growth north of Ojai. It was 10% contained as of Friday night and had destroyed 476 structures. More than 87,000 people had been evacuated because of the Thomas fire alone.
U.S. Forest Service didn’t call for pulling its land from Bears Ears, USDA nominee tells Senate -- Two senior Senate Democrats want President Trump to explain why he’s poised to remove protections for U.S. Forest Service land in the Bears Ears National Monument when the agency did not recommend any such change, according to a letter obtained by The Washington Post. Sen. Debbie Stabenow (Mich.), the top Democrat on the Senate Agriculture Committee, and Sen. Michael F. Bennet (Colo.), the ranking Democrat on the Agriculture subcommittee on conservation, forestry and natural resources, made the inquiry Friday after Trump’s nominee to serve as U.S. Department of Agriculture general counsel informed them that the department had not recommended the Interior Department remove any Forest Service acreage from existing national monuments. There are 289,000 acres of Forest Service land currently in Utah’s Bears Ears, which Trump is poised to shrink Monday by as much as 85 percent, according to draft documents obtained by the Post. Some of that land would be affected under the draft maps Interior has prepared, though officials have cautioned that the final boundaries could still be changed before Trump issues a proclamation on Monday. Under the 1906 Antiquities Act, presidents can unilaterally designate national monuments on federal land or in federal waters if they conclude these areas are under threat. A national monument can be comprised of land from multiple jurisdictions. Forest Service land falls under USDA, while National Park Service and Bureau of Land Management acreage falls under Interior. Federal waters are typically managed by the National Oceanic and Atmospheric Administration, which is part of the Commerce Department. In a letter to Trump, Stabenow and Bennet write that any effort to remove Forest Service land from either Bears Ears or four California national monuments under review would be at odds with the agency’s own recommendations to Interior Secretary Ryan Zinke.
Trump slashes Utah land protections | TheHill: President Trump on Monday shank two massive, controversial national monuments in Utah, potentially opening thousands of acres to drilling, mining and grazing. The reductions erase efforts to preserve the monuments by President Obama and President Clinton, and represent the largest-ever rollback of protected areas in history, environmental groups say. Trump signed two proclamations, one scaling back Obama’s 1.4-million-acre Bears Ears National Monument to 220,000 acres — an 84 percent reduction — and another reducing Clinton’s 1.9-million-acre Grand Staircase-Escalante National Monument to 1 million acres. It’s the Both monuments in southern Utah have long been opposed by state leaders. Obama and Clinton created them under the Antiquities Act, which gives presidents authority to unilaterally protect any federally owned area from development, with few restrictions. “Some people think that the natural resources of Utah should be controlled by a small handful of very distant bureaucrats located in Washington. And guess what? They’re wrong,” Trump said during a visit to Salt Lake City where he made the announcement. “The families and communities of Utah know and love this land the best and you know the best how to take care of your land.”
Trump shrinks two huge national monuments in Utah, drawing praise and protests -- President Trump on Monday drastically scaled back two national monuments established in Utah by his Democratic predecessors, the largest reduction of public-lands protection in U.S. history. Trump’s move to shrink the Bears Ears and Grand Staircase-Escalante national monuments by more than 1.1 million acres and more than 800,000 acres, respectively, immediately sparked an outpouring of praise from conservative lawmakers as well as protests by activists outside the White House and in Utah. The changes plunge the Trump administration into uncharted legal territory, as no president has sought to modify monuments established under the 1906 Antiquities Act in more than half a century. His decision removes about 85 percent of the designation of Bears Ears and nearly 46 percent of that for Grand Staircase-Escalante, land that potentially could now be leased for energy exploration or opened for specific activities such as motorized vehicle use. The two proclamations are the first in a series of major changes Trump intends to make to numerous monuments, which range from a forested patch of the Pacific Northwest to a stretch of the Atlantic Ocean off New England. Interior Secretary Ryan Zinke, who has reviewed more than two dozen sites established by Democratic and Republican presidents under an executive order Trump signed in April, said he would release his report on the study Tuesday. Zinke has recommended downsizing Oregon’s Cascade- Siskiyou and Nevada’s Gold Butte national monuments and shifting the way several others are managed, according to a copy obtained by The Washington Post. If these revisions are successfully sustained in court, they would redefine not only how existing public lands are protected but the extent to which future presidents could dictate that they remain untouched. Conservatives have long sought to curb a president’s unilateral power to safeguard federal lands and waters under the law, a practice that both Democrats and Republicans have pursued since it was enacted under Theodore Roosevelt. The issue has been a particular flash point in the West, where some residents think the federal government already imposes too many restrictions on development, and others, including tribal officials, believe greater protections of ancient sites are needed.
Trump Sued Over ‘Unlawful’ Shrinking of Utah National Monuments - Environmental groups hit President Donald Trump with a lawsuit just hours after he announced he’ll shrink two national monuments in Utah that contain stunning red-sandstone vistas, historic relics and energy resources. The Wilderness Society, the Sierra Club, Natural Resources Defense Council and seven other groups alleged that the president overstepped his authority in scaling back the 1.4-million-acre Bears Ears to about 220,000 acres, and the 1.9-million-acre Grand Staircase-Escalante national monument to about 1 million acres. The Antiquities Act of 1906, signed into law by President Theodore Roosevelt, authorizes presidents to create national monuments, according to the complaint filed Monday in federal court in Washington. “It does not authorize presidents to abolish them either in whole or in part, as President Trump’s action attempts to do.” Former President Barack Obama designated Bears Ears as a national monument last December over the objections of Utah’s Republican political leadership. Former President Bill Clinton established Grand Staircase in 1996.
Navajo Nation sues Trump over Utah monument reduction | TheHill: The Navajo Nation and four other American Indian tribes said Tuesday they had sued President Trump to undo his action reducing the Bears Ears National Monument in southern Utah. The federal lawsuit, which the tribes had long promised, argues that Trump did not have the legal authority to remove more than 80 percent of the land protections that former President Barack ObamaBarack Hussein ObamaFormer New Mexico gov: Trump's foreign policy is getting 'criticized by everybody' Overnight Regulation: Feds push to clarify regs on bump stocks | Interior wants Trump to shrink two more monuments | Navajo Nation sues over monument rollback | FCC won't delay net neutrality vote | Senate panel approves bill easing Dodd-Frank rules Obama: US opting out of Paris agreement 'a difficult position to defend' MORE had established in 2016. “Through the Antiquities Act, Congress delegated to the president the limited authority to designate national monuments and retained to itself the power to revoke or modify national monuments,” the tribes wrote in a statement.“The proclamation signed by President Trump today is so extreme that it revokes and replaces Bears Ears and thereby violates the Antiquities Act and seizes authority that the Constitution vests solely in Congress.” Even though previous presidents have cut national monuments, supporters of Bears Ears say the Antiquities Act does not specifically address recisions, so Trump’s actions are illegal. Trumps supporters, such as the Pacific Legal Foundation, disagree. They say that the ability to undo monument designations is implicit in the Antiquities Act, since presidents have the authority to create them. The Navajo Nation, Hopi Tribe, Zuni Tribe, Ute Indian Tribe and Ute Mountain Ute Indian Tribe consider much of Bears Ears to be religiously and historically valuable, though the land is owned by the federal government. For years, the tribes had pushed for the federal government to protect the land, joined by environmental groups. When Congress failed to protect it themselves, Obama created the national monument, amid strong opposition from Republicans and local Utah leaders.
Now we finally know how much federal land could be at stake in Trump’s rush for more drilling - In his speech from Salt Lake City, Utah, on Monday, President Trump called the national monuments he was there to shrink a “natural bounty” that the nation should put “to great and wonderful use.” In this administration, “natural bounty” and “great and wonderful use” do not necessarily refer to the monuments’ beauty and cultural value, but to the vast potential oil, gas, and coal reserves beneath them. Trump’s actions Monday foreshadow the much wider stakes of his presidency: Beyond monuments, many federal lands sit on top of fossil fuels, and he has wide latitude to open them up to more development.If fossil fuels are the Holy Grail for the Trump administration—and his emphasis on “energy dominance” suggests they are—there is far more at stake than the 2 million acres the president rescinded from Bears Ears and Grand Staircase-Escalante’s monument designations. More than 120 million acres of protected land—larger than the state of California—are situated over rich reserves of oil, coal, and gas, according to a new analysis by Greenpeace’s Unearthed investigations team. They calculate that within those public lands are 28.9 million acres of national forests, 13.6 million acres of national wildlife refuge, 2.9 million acres of parks, and 7 million acres of wilderness overlapping with fossil fuel fields and basins. This is the first relatively comprehensive inventory of federally protected land intersecting with oil, coal, and gas deposits. Unearthed compared fossil fuel estimates from the US Geological Survey, Energy Information Administration, and Alaska Department of Resources with federal land data from the Geological Survey, using mapping software to calculate the percentages of federal land acreage that overlap. Their interactive map shows the overlay:
Zinke Calls for Reducing Two More National Monuments, Exposing Public Lands to Grazing and Logging - More than three months after he delivered his national monument recommendations to the White House, Interior Sec. Ryan Zinke on Tuesday finally made public his list of proposed reductions and management changes to 10 monuments. The announcement came one day after President Donald Trump , in the largest rollback of protected areas in U.S. history, signed a pair of proclamations slashing the size of Bears Ears National Monument and Grand Staircase–Escalante National Monument. Zinke's final report to the president is largely identical to a version of the recommendations that was leaked to the Washington Post and the Wall Street Journal in September. In addition to the reductions in the two Utah monuments Trump announced Monday, Zinke is urging unspecified reductions in Nevada's Gold Butte National Monument and Cascade-Siskiyou National Monument, which straddles the California-Oregon border. The report also urges the president to consider changing the boundaries of two marine monuments in the Pacific Ocean: Pacific Remote Islands and Rose Atoll. Conservation groups and some elected officials quickly criticized Zinke's recommendations. "Secretary Zinke falsely claims the Interior Department is listening to the voices of Oregonians when it comes to the agency's damaging, vague recommendation to close off public access to the Cascade-Siskiyou monument," Sen. Ron Wyden, an Oregon Democrat and an outspoken proponent of the Cascade-Siskiyou National Monument, said. "This is not what the majority of Oregonians signed up for when they spoke out in favor of expanding protections for this Oregon treasure. These public lands belong to all Oregonians and all Americans, not to corporations or Trump's department heads." Environmental organizations, led by several southwestern Native American nations, are already moving to block Trump's national monument reductions, which they say are illegal.
Q & A: What Price Do We Put on Our Oceans? - Jerri-Lynn here: This interview with Erik Solheim, Executive Director United Nations Environment, on the eve of the 3rd UN Environment Assembly, in Nairobi, Kenya, discusses clean-up measures that seem to me to be a mere drop in the oceans, compared to the magnitude of world environmental clean-up problems. Starting tomorrow and continuing through December 6, 193 UN member states will discuss and make global commitments to environmental protection. I suppose that there’s small cause for optimism that some of the world’s poorest countries– Bangladesh, India, Kenya, have taken steps such as banning plastic bags. Those of us in richer countries that continue to state their produce in plastic might take note. Overall, however, the future looks bleak.
El Niño Might Speed Up Climate Change- Every two to seven years, abnormally warm water in the Pacific Ocean causes an atmospheric disturbance called El Niño. It often makes extreme weather worse in various places around the world: greater floods, tougher droughts, more wildfires. Now scientists have new evidence indicating El Niño conditions might also add extra carbon dioxide to the atmosphere as well as lessen the ability of trees to absorb the greenhouse gas. By certain measures, the most recent El Niño, which held sway in 2015 and 2016, was one of the three strongest on record, along with episodes in 1982–1983 and 1997–1998. Although its impacts on land were not clearly stronger than those of the other events, it appears it was the major culprit for a record increase in CO2 during its reign. “CO2 emissions from fossil fuels and industry did not really change from 2014 to 2016,” says climate scientist Pierre Friedlingstein at the University of Exeter in England, and an author of the 2017 carbon budget report released by the Global Carbon Project in November. So the dramatic increase, he says, must be due to how land and sea responded to El Niño. A recent article in Science about satellite measurements made during El Niño by NASA’s Orbiting Carbon Observatory-2 showed most of the extra CO2 originated in the tropics. It also suggested each tropical region contributed a similar amount of CO2 as in other strong El Niño years, each in its own way. In South America's Amazon, for example, slower-growing plants absorbed less CO2, whereas in Africa, plants and soils released more of the gas. The observations are based on satellite readings of CO2, carbon monoxide (which is released by wildfires) and other factors like the fluorescence of the chlorophyll in plant tissues (which reflects growth). But scientists would want some ground-truthing to prove El Niño conditions in the tropics boosted atmospheric CO2 levels. In the past, field data from plants and soils during an El Niño has been thin, but in 2015 researchers were better prepared.
La Niña established in tropical Pacific - Australian Bureau of Meteorology - The Bureau’s ENSO Outlook has been raised to LA NIÑA, indicating that the tropical Pacific has reached La Niña levels. Climate models suggest this La Niña will be weak and short-lived, persisting until early southern autumn 2018. Signs of La Niña in the equatorial Pacific have increased during spring. The central to eastern tropical Pacific Ocean has cooled steadily since winter, and is now at La Niña thresholds (0.8 °C below average). Atmospheric indicators, including the Southern Oscillation Index (SOI), trade winds and cloud, also show clear La Niña patterns. In order for 2017–18 to be classed as a La Niña year, the event needs to last for at least 3 months. Climate models surveyed by the Bureau suggest that while this event is likely to persist over the southern summer, it will be weaker than the strong La Niña of 2010–12. La Niña typically brings above average rainfall to eastern Australia during late spring and summer. However, sea surface temperature patterns in the Indian Ocean and closer to Australia are not typical of a La Niña event, reducing the likelihood of widespread above average summer rainfall. La Niña can also increase the chance of prolonged warm spells for southeast Australia. The Indian Ocean Dipole (IOD) is currently neutral. IOD events are unable to form between December and April.
Venezuela's last glacier is about to disappear - Venezuela used to have five glaciers. Today, only one remains. The last glacier in Venezuela, the Humboldt glacier, is about to disappear. “Reduced to an area of ten football pitches, a tenth of its size 30 years ago, it will be gone within a decade or two,” reports The Economist. Once Venezuela loses the Humbolt, it will become the first country in modern history to have lost all of its glaciers. The glacier is expected to completely vanish in ten to twenty years, and scientists have expressed the importance of studying the glacier in its last stages. However, the political and economic crisis in Venezuela makes it difficult to study the glacier. In the past, studies have shown how rapid glacier retreat affects the water cycle in glacier-dependent basins, which changes water regulation and availability. Thus, the disappearance of the Humboldt glacier will impact local communities as run-off stability and water supply for agriculture change.
A third of Asia’s glaciers could be gone by 2100 - Asia will likely lose at least one-third of its glaciers by the end of this century, according to a recent study published in Nature. The ambitious target of keeping global average temperatures from increasing more than 1.5 degrees Celsius (or 2.7 degrees Fahrenheit) above pre-industrial levels set by the Paris Climate Accords won’t even be enough to curtail this fate, with rising temperatures having an outsized effect on glaciers in the high mountains of Asia. “Our work shows that a global temperature rise of 1.5 degrees actually means a temperature increase of 2.1 degrees on average for the glacierized area in Asia,” Philip Kraaijenbrink, the lead author on the paper told GlacierHub. “We show that even if the world meets this extreme ambitious target, thirty-six percent of the ice volume will be lost by 2100.” The goal of 1.5 degrees is generally regarded as extremely ambitious, and Kraaijenbrink and his team found that under more realistic scenarios, ice loss will be between 49 and 64 percent. Meltwater from those glaciers supply water to 800 million people. A loss of even one-third of the glaciers in the region has the potential for serious consequences for water management, food security, and energy production. Kraaijenbrink’s study stops short of investigating the actual impact this loss may have on people, and it is difficult to predict exactly what the future will hold for communities downstream of these glaciers. In addition to showing that a warming world will lead to losses of glaciers, the researchers also found large differences in how glaciers in the region would respond to climate change. Much of this is due to the characteristics of the individual glaciers, like the amount of debris cover, or differences in local precipitation and temperature projections. Places like Hindu Kush and Pamir, for example, will experience a mean increase in temperature over 2 degrees, while other locations like the Central Himalayas will be closer to the global mean increase.
Melting Ice Could Mess Up Deep Sea Chemistry - Melting glaciers might be making ocean water more acidic, an unexpected finding that's given scientists new cause for concern. A new study published yesterday in the journal Nature Climate Change suggests surprising ways that climate change is drastically altering the water chemistry in deep seas—a process that may happen faster than researchers anticipated. The threat of ocean acidification has drawn increasing attention in recent years. The ocean absorbs a substantial amount of the carbon dioxide that humans emit into the atmosphere—and when carbon dioxide goes into the sea, a chemical reaction occurs that causes the water to become more acidic. That's a big concern for marine biologists, as research suggests that the decreasing pH levels could disrupt the ability of corals, mollusks and other marine organisms to build the hard outer shells they need to survive. But as the new research points out, dead plants and animals also release carbon dioxide as they drift to the bottom of the sea and decompose. Deep ocean currents can help to move the carbon dioxide throughout the water so it doesn't sit in one place. But some scientists believe that certain effects of climate change—including the influx of cold, fresh water from melting glaciers, or an increase in the heat absorption as sea ice disappears and exposes the water to the sun—may eventually disrupt these currents or cause them to slow down. Now, the new study's authors suggest this process could speed up the acidification of the deep seas. In fact, their new research suggests this process may already be occurring in the Sea of Japan, a 380,000-square-mile body of water between Japan, North and South Korea, and Russia. In the new paper, the scientists analyzed 50 years of collected data on water chemistry in the Sea of Japan, from 1965 through 2015. They found that the deep waters have, in fact, been growing more acidic—and the acidification rate is 27 percent higher than the rate occurring at the surface, a "truly noteworthy" finding.
In Alaska's Thawing Permafrost, Humanity's 'Library Is on Fire' - With temperatures rising faster in the Arctic than anywhere else in the world, the very ground on which communities are built is slumping as the permafrost thaws, and the sea ice that sustains vital animal populations is melting earlier and re-forming later than ever before. Less sea ice means stronger storms and bigger waves, and villages across the region are at risk of falling into the sea as each year coastal erosion eats away at the shoreline. As Ahsoak works to preserve Inupiaq culture, the physical world that shaped that culture is facing an urgent threat. That's the context in which the archaeologist Anne Jensen, a native of upstate New York who arrived in Utqiagvik 22 years ago, is at work on another project of cultural preservation. The Ukpeaġvik Iñupiat Corporation (UIC), the local native corporation, hired her in the 1990s to help preserve and learn about archaeological sites in the area. Every summer, Jensen and a crew of volunteers venture out to remote areas, sleeping in tents to excavate sites that are hundreds or thousands of years old. It was on one of these digs in the early 2000s that Jensen and Ahsoak first crossed paths—he worked as a logistics coordinator and bear guard as Jensen excavated a historical site on Point Barrow, learning about how Ahsoak's ancestors once lived. While their methods differ, Ahsoak and Jensen's missions in many ways align. And in climate change, they face a common obstacle. The homes, weapons, and even bodies that Jensen digs up are extraordinarily well preserved—unlike archaeological sites elsewhere in the world, these pieces of history have been locked in ice. But as the permafrost thaws, so do these sites, and as erosion eats away at the coast, it's washing away the history locked inside it. Once gone, the story that these sites can tell, about food webs, migratory patterns, and traditional ways of life, will disappear too. Just as Ahsoak is working to preserve his community's traditions, Jensen is racing to capture this historical record before it's lost—and, perhaps, to find in the region's past some answers for its future.
Arctic sea ice melt to exacerbate California droughts: study (Reuters) - Melting Arctic sea ice could render sun-soaked California vulnerable to a recurrence of the severe drought suffered in recent years as it is likely to cause high pressure systems that push away rain-bearing storms, a study released on Tuesday said. As temperatures rise, the Arctic Ocean is expected to become ice-free within two or three decades, resulting in more of the sun’s heat being stored in the Arctic Ocean, leading to atmospheric circulation changes and cloud formations in the tropical Pacific that move north. That will lead to the building of high pressure system known as an atmospheric ridge in the northern Pacific off California’s coast, steering storms north into Alaska and Canada, the study said. “This has the potential to make a drought very similar to the one we had in 2012 to 2016,” said Ivana Cvijanovic, an atmospheric scientist at the Department of Energy’s Lawrence Livermore National Laboratory. Cvijanovic led the study with contributions from colleagues at the lab and at University of California, Berkeley. The recent five-year drought cost California’s farmers billions of dollars in lost production, slashed seasonal agriculture jobs by the thousands, and spiked electricity bills for residents as hydroelectric systems failed. U.S. meetings on the Arctic warming are mostly attended by scientists and members of Alaskan communities, but Cvijanovic said residents of other regions should pay attention. “Studies like this one imply that it’s not only a problem (for communities in Alaska) and that Arctic Sea ice loss that we expect in the next couple of decades could have massive effects” on Californians and other people around the world, she said. Modeling by the scientists showed that the loss of sea ice could cause a 10 to 15 percent decrease in California’s rainfall when considering a 20-year mean, with some years becoming much drier and others becoming wetter.
US government report finds steady and persistent global warming --The US Global Change Research Program recently released a Climate Science Special Report. It is clearly written – an authoritative summary of the science, and easy to understand. The first main chapter deals with changes to the climate and focuses much attention on global temperatures. When most people think of climate change, they think of the global temperature – specifically the temperature of the air a few meters above the Earth surface. There are other (better) ways to measure climate change such as heat absorbed by the oceans, melting ice, sea level rise, or others. But the iconic measurement most people think of are these air temperatures, shown in the top frame of the figure below. The top chart is shown as a temperature “anomaly,” which means a departure from normal. Right now the anomaly is nearly 2°F, meaning that we have warmed 2°F from what the normal temperature should be. The graph shows four datasets, so it doesn’t matter whose temperature data we use; the results are the same. Global land-air temperatures have been rising pretty steadily since approximately 1960.The next graph shows ocean surface temperatures. They too are rising and have been increasing for a number of decades. Sea surface temperatures are determined from satellites, from sensors on ships, and from floating instruments spread across the ocean. Over the decades, we have obtained better coverage of the ocean. Decisions are made from different research teams on how to combine measurements from different instruments and how to interpolate between measurement locations. But regardless of the decisions made, we see the temperatures rise. The third graph shows sea level. It has been rising for more than a century. Sea level rise is a favorite measurement for scientists because it integrates the heat added to the Earth’s climate. The heat ends up in the ocean waters and causes the waters to become less dense. The lower density of water causes much of the sea level rise in the graph.
The most accurate climate change models predict the most alarming consequences, study finds - The climate change simulations that best capture current planetary conditions are also the ones that predict the most dire levels of human-driven warming, according to a statistical study released in the journal Nature Wednesday. The study, by Patrick Brown and Ken Caldeira of the Carnegie Institution for Science in Stanford, Calif., examined the high-powered climate change simulations, or “models,” that researchers use to project the future of the planet based on the physical equations that govern the behavior of the atmosphere and oceans. The researchers then looked at what the models that best captured current conditions high in the atmosphere predicted was coming. Those models generally predicted a higher level of warming than models that did not capture these conditions as well. The study adds to a growing body of bad news about how human activity is changing the planet’s climate and how dire those changes will be. But according to several outside scientists consulted by The Washington Post, while the research is well-executed and intriguing, it’s also not yet definitive. “The study is interesting and concerning, but the details need more investigation,” said Ben Sanderson, a climate expert at the National Center for Atmospheric Research in Boulder, Colo. Brown and Caldeira are far from the first to study such models in a large group, but they did so with a twist. Brown and Caldeira compared models’ performance with recent satellite observations of the actual atmosphere and, in particular, of the balance of incoming and outgoing radiation that ultimately determines the Earth’s temperature. Then, they tried to determine which models performed better. “We know enough about the climate system that it doesn’t necessarily make sense to throw all the models in a pool and say, we’re blind to which models might be good and which might be bad,” said Brown, a postdoc at the Carnegie Institution. The research found the models that do the best job capturing the Earth’s actual “energy imbalance,” as the authors put it, are also the ones that simulate more warming in the planet’s future.
Global Warming’s Worst-Case Projections Look Increasingly Likely - MIT - Global warming’s worst-case projections look increasingly likely, according to a new study that tested the predictive power of climate models against observations of how the atmosphere is actually behaving. The paper, published on Wednesday in Nature, found that global temperatures could rise nearly 5 °C by the end of the century under the the UN Intergovernmental Panel on Climate Change’s steepest prediction for greenhouse-gas concentrations. That’s 15 percent hotter than the previous estimate. The odds that temperatures will increase more than 4 degrees by 2100 in this so-called “business as usual” scenario increased from 62 percent to 93 percent, according to the new analysis. Climate models are sophisticated software simulations that assess how the climate reacts to various influences. For this study, the scientists collected more than a decade’s worth of satellite observations concerning the amount of sunlight reflected back into space by things like clouds, snow, and ice; how much infrared radiation is escaping from Earth; and the net balance between the amount of energy entering and leaving the atmosphere. Then the researchers compared that “top-of-atmosphere” data with the results of earlier climate models to determine which ones most accurately predicted what the satellites actually observed. The simulations that turned out to most closely match real-world observations of how energy flows in and out of the climate system were the ones that predicted the most warming this century. In particular, the study found, the models projecting that clouds will allow in more radiation over time, possibly because of decreased coverage or reflectivity, “are the ones that simulate the recent past the best,” The UN’s seminal IPCC report relies on an assortment of models from various research institutions to estimate the broad ranges of warming likely to occur under four main emissions scenarios. In another key finding, the scientists found that the second-lowest scenario would be more likely to result in the warming previously predicted under the second-highest by 2100. In fact, the world will have to cut another 800 gigatons of carbon dioxide emissions this century for the earlier warming estimates to hold. (By way of comparison, total greenhouse-gas emissions stood at about 49 gigatons last year.)
Climate change would be way worse if oceans didn't absorb carbon dioxide - If you stare long and hard enough at emissions data, you’ll find many fascinating and important stories. For instance, you likely know that a lot of the carbon dioxide humans emit ends up in the oceans. But do you have any real sense of just how much? The chart below shows all the sources and sinks of carbon dioxide. For instance, absent any other factors, all the oil burned from 1870 to 2016 added about 70 parts per million (ppm) of carbon dioxide to the atmosphere. During the same time, it turns out, oceans sucked up about 69 ppm of carbon dioxide from the atmosphere. If I hadn’t looked at that chart, I would never have discovered that, in a way, nearly all the emissions from oil burned since 1870 have ended up in the oceans. That’s remarkable for two reasons. We’ve burned a lot of oil, and thus produced a lot of carbon dioxide. Without the oceans, that carbon dioxide would have otherwise remained in our atmosphere and spent all those years absorbing sun’s heat. On the other hand, it’s still having a large negative impact on the environment: the oceans are acidifying and corals dying.Let’s try another. You’ve likely heard that methane is many times more potent a greenhouse gas than carbon dioxide. But just how bad is methane’s impact on the environment? Very bad.The chart shows how much each greenhouse gas contributes to trapping the sun’s radiation. (Where there usually is an X-axis, the chart shows confidence in the corresponding data points.) Carbon dioxide, no surprises, captures the most heat. But methane comes a close second, even though there’s 200 times more carbon dioxide in the atmosphere than there is methane.Why does all this emissions geekery matter? As the statistician William Edwards Deming said, “If you can’t measure it, you can’t manage it.” And managing greenhouse-gas emissions is essential if we’re to reach zero and save the planet.
EPA chief says agency scientists are free to present their work publicly - The Environmental Protection Agency will not block its scientists from freely discussing their work in public, Administrator Scott Pruitt promised lawmakers this week, in the wake of a recent incident in which researchers were barred from presenting findings on climate change at a conference. In a letter to Sen. Sheldon Whitehouse (D-R.I.) and other members of the Senate Environment and Public Works Committee, Pruitt did not explain why the EPA had instructed two of its scientists and one contractor not to speak as planned at an Oct. 23 scientific meeting in Providence, R.I. The agency had previously said only that it was “not an EPA conference.”But Pruitt did write that such action would not happen again.“Procedures have been put in place to prevent such an occurrence in the future,” he noted in his letter, which was first obtained by the New York Times. And, he continued, he has assured senior leaders in the agency’s Office of Research and Development “that they have the authority to make decisions about event participation going forward.”“As always, [agency] scientists are asked to speak directly to the science in their presentations, leaving policy statements to the relevant EPA programs,” Pruitt wrote. “Additionally, I am committed to upholding EPA’s Scientific Integrity Policy, which ensures that the agency’s scientific work is of the highest quality, is presented openly and with integrity, and is free from political interference.”The EPA’s decision to not allow the researchers to present at the State of Narragansett Bay and Its Watershed program in October angered academics and congressional Democrats such as Whitehouse. The conference marked the culmination of a three-year study on the status of the bay, New England’s largest estuary, and the challenges it faces. Climate change featured as a significant factor in the 500-page report.
NASA has never gone this long without a formal administrator - Four-time astronaut Charles Bolden resigned as NASA administrator on January 20, 2017, leaving the space agency after more than seven years on the job. Since then, a former director of the Marshall Space Flight Center in Alabama, Robert Lightfoot, has served as interim director. He has held this post now for 315 days, or nearly 11 months. According to an analysis of the gaps between administrators at the space agency, NASA has never gone this long without a formal administrator. Beginning with T. Keith Glennan in 1958 and running through the term of Charles Bolden six decades later, there have been ten transitions between NASA administrators. The average gap between administrators has been 3.7 months. The Trump administration nominated pilot and Congressman Jim Bridenstine to become NASA’s administrator three months ago, so it does not deserve all of the blame for a lack of formal leadership at the space agency. Congress finally held a confirmation hearing for Bridenstine on November 1, during which he faced strong criticism from Sen. Bill Nelson (D-Fla.). “Your recent public service career does not instill great confidence about your leadership skills or ability to bring people together,” Nelson said, asserting that a political figure should not lead an apolitical agency such as NASA. “In fact, your record and behavior in Congress is as divisive and extreme as any in Washington.” Although it is true that Bridenstine has strong political positions, he also has experience as a fighter pilot and, during his tenure in Congress, has been among the most active members on spaceflight issues. Opponents have also questioned Bridenstine’s views on climate change, which in the past have included doubt about humanity’s effect on a warming world. During his confirmation hearing, Bridenstine said he believes humans are contributing to climate change.
Moody's: Climate change is forecast to heighten US exposure to economic loss placing short- and long-term credit pressure on US states and local governments -- The growing effects of climate change, including climbing global temperatures, and rising sea levels, are forecast to have an increasing economic impact on US state and local issuers. This will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies, Moody's Investors Service says in a new report. The report differentiates between climate trends, which are a longer-term shift in the climate over several decades, versus climate shock, defined as extreme weather events like natural disasters, floods, and droughts which are exacerbated by climate trends. Our credit analysis considers the effects of climate change when we believe a meaningful credit impact is highly likely to occur and not be mitigated by issuer actions, even if this is a number of years in the future. Climate shocks or extreme weather events have sharp, immediate and observable impacts on an issuer's infrastructure, economy and revenue base, and environment. As such, we factor these impacts into our analysis of an issuer's economy, fiscal position and capital infrastructure, as well as management's ability to marshal resources and implement strategies to drive recovery. Extreme weather patterns exacerbated by changing climate trends include higher rates of coastal storm damage, more frequent droughts, and severe heat waves. These events can also cause economic challenges like smaller crop yields, infrastructure damage, higher energy demands, and escalated recovery costs. "While we anticipate states and municipalities will adopt mitigation strategies for these events, costs to employ them could also become an ongoing credit challenge," "Our analysis of economic strength and diversity, access to liquidity and levers to raise additional revenue are also key to our assessment of climate risks as is evaluating asset management and governance."
Senate tax measure helps President Trump pivot away from clean energy and back to fossil fuels - LA Times - The Trump administration’s campaign for “American energy dominance,” which focuses on elevating the nation’s fossil fuel production, received a potential big boost from Republican senators early Saturday. The tax measure they approved proposes to open the Arctic to oil and gas development, weaken investment incentives for solar and wind production, and end a big tax credit for new electric vehicles. Taken together, the Senate tax provisions are clearly allied with the Trump administration’s goal to shift American energy development back to black fuels and reverse Obama-era programs to encourage cleaner technologies to generate electricity and move people and goods. Arguably the most significant Senate tax provision is meant to tilt a 40-year-old conflict between the oil industry and conservationists toward opening a 1.5-million-acre stretch of the Arctic National Wildlife Refuge to energy exploration. The struggle over the so-called 1002 Area, one of the longest running and most intensely debated in U.S. environmental history, has commanded the attention of every president since Jimmy Carter. The Senate’s decision to proceed with oil and gas exploration was hailed today by its chief champion, Sen. Lisa Murkowski (R-Alaska). “Opening the 1002 Area and tax reform both stand on their own, but combining them into the same bill, and then successfully passing that bill, makes this a great day to be an Alaskan,” she said in a statement. Democratic lawmakers and environmental groups responded with vows to keep the entire 19.3-million-acre refuge undeveloped.
The GOP Tax Bill Is Basically Like Throwing Gasoline On The Dumpster Fire That Is the Climate Crisis - The GOP’s latest tax bill won’t just benefit the wealthy at the expense of everyone else, it will also be horrible for the planet—and not just in the ways you might think. In the Republicans’ bid to pass as many of their long-standing priorities as possible, they’ll also do plenty to cook the planet. For starters, the bill would extend a generous corporate tax cut to the very industries now careening the planet and humanity toward a hotter, wetter future, namely coal, oil and gas. It would also open up 1.5 million acres of Alaska’s Arctic National Wildlife Refuge for oil and gas drilling. An analysis from Oil Change International released last year found that nearly two-thirds of fuel reserves in existing oil and gas fields need to remain undeveloped to keep the earth from warming beyond 2 degrees, a threshold that itself would mean large-scale climate impacts and severe loss of land in low-lying areas. The bill could also make it harder for the United States to break its addiction to fossil fuels. Though it wouldn’t eliminate existing tax credits for renewable fuel sources, the legislation could make these credits harder to access. On November 22, a provision many renewable energy advocates hoped would get left behind in the House version of the tax package—the Base Erosion Anti-Abuse Tax (BEAT) provision—re-emerged in the Senate version, prompting a vocal response from solar and wind trade associations. “We normally don’t speak in these kinds of terms, where we talk about collapse of the tax equity market,” a joint letter from several renewables trade associations stated in response. “We’re looking at the end of the principal financing mechanism that has fostered growth of the renewable energy sector since the 1990s.” The BEAT provision would essentially add uncertainty for investors in renewable projects that they could collect tax equity from Production and Investment Tax Credits, which currently subsidize around a third of wind and solar development. According to a blog post from Keith Martin, a lawyer specializing in tax and project financing, so-called tax equity financing provides around 40 to 50 percent of the funds for the average solar project and 50 to 60 percent for the average wind project.
Trump will suspend a rule to limit a pollutant far worse than carbon dioxide - The Trump administration will suspend a rule to limit methane leaks from oil and gas operations on federal land, but its true aim may be to kill the Obama-era requirement. A notice slated to be published Friday in the Federal Register by the Bureau of Land Management said the agency “has concerns regarding the statutory authority, cost, complexity, feasibility, and other implications” of the 2016 rule, which is set to go fully into effect next month. Methane is a colorless and odorless gas that is up to 36 times as potent as carbon dioxide in terms of contributing to global warming. As development of oil and gas has increased through hydraulic drilling, or fracking, in shale formations, so have methane emissions. The rule’s intent was to reduce wasted natural gas from “venting, flaring, and leaks during oil and natural gas production” through drilling on federally leased property and on Indian land. It began to take effect in January, with provisions phased in since then. The rule was to be fully enforced by next Jan. 17. The delay, according to a BLM statement on Thursday, will avoid forcing oil and gas operations to comply with requirements “that may be rescinded or significantly revised in the near future.” The agency said it would review the rule over the next year. But as the Trump administration has backed away from capping some methane leaks, an oil and gas industry advocacy group has stepped in with a program to reduce the leaks. “The program overall is set up to continuously improve the environmental performance for onshore operators throughout the country through the process of learning, collaborating and taking action,” Erik Milito, director of upstream and industry operations for the American Petroleum Institute, said in a statement. “This is a very robust program.”
Pruitt: EPA to replace Obama climate rule | TheHill: The Environmental Protection Agency (EPA) is committing to pursue a replacement climate change rule for power plants after repealing the Obama administration’s regulation on the matter, agency head Scott Pruitt told a House Energy and Commerce Committee panel on Thursday. “We are going to be introducing a replacement rule too, in place of the Clean Power Plan,” Pruitt told Rep. Raul Ruiz (D-Calif.) in response to questioning about the EPA’s plans to repeal the Obama rule. Pruitt has previously only committed to consider such a replacement rule. When the EPA proposed the repeal in October, it said it would soon seek formal comment on replacing the Clean Power Plan.Numerous business groups opposed to the Obama rule have been pushing Pruitt to write a replacement. They’ve argued that a replacement would shield companies and the federal government from future litigation on climate and fulfill the EPA’s obligation to regulate power plants’ carbon dioxide. But the Trump administration’s climate rule is likely to be far weaker than Obama’s, which sought a 32 percent reduction in the power sector’s carbon emissions. Pruitt has taken the position that many of the provisions of Obama’s rule were illegal under the Clean Air Act, notably that it required emissions reductions based on a power utility’s ability to shift generationally away from coal plants and toward lower-emitting sources. The Trump administration’s rule is also likely to let states decide their levels of emissions cuts, without the EPA dictating levels.
ExxonMobil opposes ALEC’s attempt to fight EPA climate policy | TheHill: Exxon Mobil Corp. is coming out against an American Legislative Exchange Council (ALEC) proposal that would push the Trump administration to rescind a federal finding that greenhouse gases are harmful. ExxonMobil is the country’s largest oil and natural gas company and a member of the ALEC task force planning to vote on the resolution Wednesday. ALEC’s draft resolution goes after the Obama administration’s 2009 endangerment finding at the Environmental Protection Agency (EPA), which requires the EPA to take actions under the Clean Air Act to restrict greenhouse gas emissions.That finding served as a lynchpin for climate regulations under former President Barack Obama. ALEC's resolution calls the Obama administration finding “flawed,” specifically taking issue with the science that it cited, and calls upon the EPA to “reopen and review” it. “As has been previously communicated to ALEC, we are concerned by the language of the resolution, especially relating to climate science, and do not support the resolution,” Kenneth Freeman, ExxonMobil’s manager of United States government relations, wrote in the Monday letter to ALEC's energy, environment and agriculture task force. “ExxonMobil will continue to oppose the resolution and will vote against it should it come before the taskforce or the board.” ExxonMobil’s public dissent is part of a broader rift that the climate resolution is exposing within ALEC, a group funded by organizations like Koch Industries Inc. and coal miner Peabody Energy Corp., which pushes conservative policies in the state and federal governments.
Oil Firms Pledge to Plug Methane Leaks in Bid to Burnish Image - As the Trump administration rolls back Obama-era curbs on greenhouse gas emissions, more than two dozen oil companies are uniting in a voluntary effort to pare methane leaks and better position natural gas for a clean-energy future. As part of the new initiative, dubbed "the Environmental Partnership," ConocoPhillips, Occidental Petroleum Corp., Royal Dutch Shell Plc and 23 other oil and gas companies have signed agreements committing to phase out certain leak-prone devices and take other steps to keep methane from being released into the atmosphere. The effort, coordinated by the industry’s top trade group, the American Petroleum Institute, follows a series of separate announcements by major oil companies committing to rein in the potent greenhouse gas. It also comes as oil companies seek to burnish their image and boost the clean energy profile of gas to make it more attractive for foreign buyers seeking lower-carbon sources of electricity. "Producers have to think about the world outside the United States, and they have to think about the world after Donald Trump -- and both of those things matter when it comes to making an investment with a 15-, 20- or 50-year life" . "For producers to credibly sell natural gas as a clean fuel into a greening world, they have to credibly show emissions-reduction technologies." Methane, the main ingredient in natural gas, has been shown to warm the atmosphere 84 times more than carbon dioxide when measured over two decades. Oil companies have been selling gas around the world as a low-carbon alternative to coal, which produces twice as many carbon dioxide emissions when burned to generate electricity. But that sales pitch is undermined when methane leaks from wells and pipelines. And the Trump administration’s efforts to loosen emission-cutting requirements could worsen the situation. Under President Trump, the Environmental Protection Agency has halted writing another methane regulation for new and modified wells, and the Interior Department is planning changes to a separate Obama-era rule that applied on public land.
GE Slashes 12,000 Jobs In Troubled Global Power Business --A day after labor unions warned that General Electric was planning thousands of job cuts in its troubled power-generation unit, GE confirmed that it’s planning to cut 12,000 jobs globally in its power business as the company’s new leadership tries to revive the company’s moribund stock price. The reductions would account for about 18% of GE Power’s workforce, will mostly affect professional and production workers outside the US. GE is also paring back capital expenditures and research-and-development spending as it grapples with a sharp downturn in gas- and coal-power markets. The cuts add to a flurry of reductions by recently installed Chief Executive Officer John Flannery, who has already scaled back use of corporate jets and delayed work on a new Boston headquarters since taking over from longtime CEO Jeff Immelt back in August. GE, the world’s largest maker of gas turbines, said last month it would pare the quarterly dividend and sell some businesses.
Renewable Energy Is Surging. The G.O.P. Tax Bill Could Curtail That - — The Republican tax bills moving through Congress could significantly hobble the United States’ renewable energy industry because of a series of provisions that scale back incentives for wind and solar power while bolstering older energy sources like oil and gas production.The possibility highlights the degree to which the nation’s recent surge in renewable electricity generation is still sustained by favorable tax treatment, which has lowered the cost of solar and wind production while provoking the ire of fossil-fuel competitors seeking to weaken those tax preferences.Whether lawmakers choose to protect or jettison various renewable tax breaks in the final bill being negotiated on Capitol Hill could have major ramifications for the United States energy landscape, including the prices consumers pay for electricity. Wind and solar are two of the fastest-growing sources of power in the country, providing 7 percent of electricity last year. Sharp declines in the cost of wind turbines and photovoltaic panels, coupled with generous tax credits that can offset at least 30 percent of project costs, have made new wind and solar even cheaper than running existing fossil-fuel plants in parts of the country. In different ways, direct and indirect, the House and Senate bills each imperil elements of that ascension. A Senate bill provision intended to stop multinational companies from shifting profits overseas could unexpectedly cripple a key financing tool used by the renewable energy industry, particularly solar, by eroding the value of tax credits that banks and other financial institutions buy from energy companies. The House bill’s effects would be more direct, rolling back tax credits for wind farms and electric vehicles, while increasing federal support for two nuclear reactors under construction in Georgia. Fossil fuel producers are under little pressure in either bill and some would stand to benefit: The Senate legislation would open the Arctic National Wildlife Refuge in Alaska to oil drilling, while a last-minute amendment added by Senator John Cornyn, Republican of Texas, would allow oil and gas companies to receive lower tax rates on their profits.
Bitcoin Could Cost Us Our Clean-Energy Future - Yves Smith - Last week, the value of a single bitcoin broke the $10,000 barrier for the first time. Its creators envisioned it as a replacement for money itself — a decentralized, secure, anonymous method for transferring value between people. But what they might not have accounted for is how much of an energy suck the computer network behind bitcoin could one day become. Simply put, bitcoin is slowing the effort to achieve a rapid transition away from fossil fuels. What’s more, this is just the beginning. Given its rapidly growing climate footprint, bitcoin is a malignant development, and it’s getting worse. Cryptocurrencies like bitcoin provide a unique service: Financial transactions that don’t require governments to issue currency or banks to process payments. But the rise of bitcoin is also happening at a specific moment in history: Humanity is decades behind schedule on counteracting climate change, and every action in this era should be evaluated on its net impact on the climate. Increasingly, bitcoin is failing the test. Digital financial transactions come with a real-world price: The tremendous growth of cryptocurrencies has created an exponential demand for computing power. As bitcoin grows, the math problems computers must solve to make more bitcoin (a process called “mining”) get more and more difficult — a wrinkle designed to control the currency’s supply. Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day. And miners are constantly installing more and faster computers. Already, the aggregate computing power of the bitcoin network isnearly 100,000 times larger than the world’s 500 fastest supercomputers combined. The total energy use of this web of hardware is huge — an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy annually. And that power-hungry network is currently increasing its energy use every day by about 450 gigawatt-hours, roughly the same amount of electricity the entire country of Haiti uses in a year. That sort of electricity use is pulling energy from grids all over the world, where it could be charging electric vehicles and powering homes, to bitcoin-mining farms. The world’s largest bitcoin mines are in China, where they siphon energy from huge hydroelectric dams, some of the cheapest sources of carbon-free energy in the world. One enterprising Tesla owner even attempted to rig up a mining operation in his car, to make use of free electricity at a public charging station. In just a few months from now, at bitcoin’s current growth rate, the electricity demanded by the cryptocurrency network will start to outstrip what’s available, requiring new energy-generating plants. And with the climate conscious racing to replace fossil fuel-base plants with renewable energy sources, new stress on the grid means more facilities using dirty technologies. By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today.
Federal Tax Credits Drive Foreign Wind Investment; Nearly $5 Billion In Tax Credits Go To Just Six Foreign Companies (with interactive map) Investment in U.S. wind energy production has increased tenfold over the past decade with the help of billions of dollars in federal tax help, with foreign companies making up much of the increase. Indeed, six foreign-owned wind energy companies have received at least $4.8 billion in federal tax credits between 2000 and 2015, according to a 2015 report from Good Jobs First, a nonprofit group that tracks government spending. Those companies include Iberdrola, a Spanish-owned wind energy company that, at $2.2 billion, has received more money from the U.S. government than any other company. Between 2004 and 2014, the amount of U.S. farmland controlled by foreign investors and corporations doubled from 13.7 million acres to 27.3 million, according to an analysis of data from the U.S. Department of Agriculture.More than a third of that increase, 4.5 million acres, was due to long-term leases of farmland for wind farms and solar farms.The acreage is valued at $7.9 billion.During the same period, the amount of megawatts of produced by installed wind farms grew from 6,723 megawatts to 65,880 megawatts.Fueling the increase were bountiful U.S. tax credits.Wind energy companies, including government-owned companies, such as EDP Renewables (owned by Portugal) and Electricite de France (owned by France), were able to take advantage of a tax credit offered after the economic downturn in 2008. As part of the American Recovery and Reinvestment Act, wind energy companies could choose to convert the production tax credit (based on how much electricity they produce) into an investment tax credit (based on how much they invested, whether the technology worked or not). Through the act, the companies received cash grants up front in lieu of tax credits down the road. These investments, called Section 1603 grants, were designed to help jumpstart the rural economy after a departure of investment in the industry. Loomis said that the European companies have had been able to gain so much of the U.S. market and capitalize on these tax credits because they have invested in wind turbines for decades and were better equipped to build utility-scale wind farms.
What Was Once Hailed as First U.S. Offshore Wind Farm Is No More - Cape Wind, the offshore wind project off the coast of Massachusetts that drew the ire of the Kennedy and Koch families, is officially dead.Energy Management Inc. has ceased efforts to build what was once expected to become the first offshore wind farm in the U.S., according to an emailed statement from Chief Executive Officer Jim Gordon. The project’s Boston-based developer has already notified the U.S. Bureau of Ocean Energy Management that it has terminatsed the offshore wind development lease it received in 2010.Cape Wind suffered a slow death. Efforts to develop the 468-megawatt offshore farm, proposed to supply power to Cape Cod and the islands of Martha’s Vineyard and Nantucket, began in 2001 but came up against relentless opposition from a mix of strange bedfellows including the Kennedy family and billionaire industrialist William Koch. While Energy Management won several court battles, the project couldn’t survive the 2015 cancellation of contracts to sell its power to local utilities.“Jim Gordon really was a visionary,” Amy Grace, a New York-based analyst for Bloomberg New Energy Finance, said in an interview Friday. “He brought the project to the goal-post. He just faced a very vicious and very well-funded lobbying organization to protect Nantucket Sound.” Cape Wind, which called for as many as 130 turbines in Nantucket Sound, once appeared to be on the vanguard of clean energy in the U.S. The project had a federal lease to develop an area 5 miles (8 kilometers) off Cape Cod. Spread over 25 square miles known as Horseshoe Shoal, it could have generated enough electricity to power 200,000 homes, according to the U.S. Energy Department.
Scientists demand end to crop-based biofuels - A group of 177 Dutch scientists have signed a letter urging the Netherlands to back a complete phase-out of crop-based biofuels at European level, calling them a “false solution to climate problems”.The scientists pointed to a study commissioned by the EU executive, which found that crop-based biodiesel has on average 1.8 times the climate impact of fossil diesel, “and this number increases to three times more in case of biodiesel from palm oil”. Biodiesel accounts for 80% of all biofuels used in the European Union, and around a third of this comes from palm oil, making drivers of cars and trucks the biggest consumers of palm oil in the bloc. The remaining 20% is bioethanol, which is mainly made from home-grown crops such as sugar beet and wheat. Beyond the impact of EU biofuels policy on climate change, the scientists also criticised it for driving habitat and biodiversity loss, reducing areas’ resilience to local climatic conditions, undermining food security and increasing prices, and concentrating land in the hands of multinational companies at the expense of small-scale farmers. “In short, a mixture of fuel crop oil relies on the unfounded assumption that this leads to more sustainable fuel use, but in reality causes ecological and social degradation,” the scientists wrote. “The policy serves as a veil that obscures the risks involved in fossil fuels while offering no more than a false solution for our energy requirements.”The 177 signatories called on the Dutch government to acknowledge the damage caused by EU biofuels policy and to write a commitment to abandon them into the bloc’s 2030 Sustainable Development Agenda.
Can the trucking sector's shift to CNG and LNG survive low diesel prices? U.S. trucking companies, trash haulers and transit agencies continue to invest in new vehicles fueled by compressed natural gas or liquefied natural gas, in part to meet corporate or agency carbon-footprint goals. But the economic rationale for switching trucks and buses from diesel to CNG or LNG is weaker than it was a few years ago, when diesel cost two-thirds more than natural gas fuels on a per-BTU basis — prices for diesel, CNG and LNG are now in the same ballpark. Also, developing regional or national networks of CNG/LNG fueling stations doesn’t come cheap. Today, we discuss the growing use of natural gas in trucks and buses — and threats to that trend. CNG and LNG also can serve as transportation-fuel alternatives to diesel or motor gasoline. To make CNG, you compress natural gas to more than 3,000 pounds per square inch (psi) — typically 3,600 psi. Compression reduces gas’s volume to about 1% of what it would be at normal atmospheric pressure, but CNG still takes up 3.8 times more space than diesel on a per-BTU basis. To make LNG, you supercool natural gas to minus 260 degrees Fahrenheit in a liquefaction plant (at normal atmospheric pressure); LNG takes up 1.7 times more space than diesel per BTU, but unlike CNG, you need to keep LNG supercooled (at fueling stations and on the LNG-fueled truck) until it’s converted back to a gas.
California Bill in the Works to Banish Gasoline Cars by 2040 -- A California lawmaker wants to put the state alongside China, France and the U.K. and have its legislature consider a ban on vehicles powered by fossil fuels. California Assemblymember Phil Ting, a Democrat who is chairman of the chamber’s budget committee, said he plans to introduce a bill that, starting in 2040, would allow the state’s motor vehicles department to register only “clean” vehicles that emit no carbon dioxide, such as battery-electric or hydrogen fuel-cell cars. “Until you set a deadline, nothing gets done,” Ting, who represents much of San Francisco, said in a phone interview Tuesday. “It’s responsible for us to set a deadline 23 years in advance.” Ting said he’ll introduce the bill when lawmakers return to Sacramento next month for the upcoming legislative session. If adopted, it would eliminate a huge chunk of carbon emissions from the transportation sector -- now the top source of the greenhouse gas in the U.S. -- as part of the state’s quest to slash emissions by 80 percent from 1990 levels by 2050.
Malawi suffers blackouts as drought exposes 98% reliance on hydro power - Large parts of Malawi have been plunged into darkness as water levels at the country’s main hydro power plant fell to critical levels due to a severe drought, according to its electricity company. The impoverished southern African country which relies on hydroelectricity has been hit by intermitted blackouts since last year, but the outages have recently worsened, lasting up to 25 hours. The state-owned Electricity Supply Corporation of Malawi (Escom) said on Thursday that power output had been halved as water levels in the Shire river dropped to critical levels. A number of businesses and hospitals in the country had been forced to use diesel-powered generators to keep the lights on.
Pakistan, Nepal, Myanmar Cancel Chinese Hydro Projects - Over the past few weeks, Pakistan, Nepal and Myanmar have cancelled three major projects planned by Chinese companies. The three projects, worth nearly $20 billion, all involved or were related to hydroelectricity -- the production of electricity by water power. The cancellations come as a blow to China’s trade-linking project, the “One Belt, One Road” initiative. Pakistan noted difficult financing terms by China as its reason for canceling the $14 billion Diamer-Bhasha Dam project. Nepal’s deputy prime minister blamed financial issues with a Chinese company for his country’s decision to cancel a $2.5 billion contract for a hydroelectricity project. And Myanmar announced last month that it is no longer interested in big hydroelectric power projects. The announcement came three years after Myanmar stopped a $3.6 billion Chinese-supported dam project. The decisions by China’s neighbors could mean a serious loss of prestige for the One Belt, One Road initiative. The effort involves plans to build power stations, roads and other infrastructure around the world. A number of local political and economic reasons were partly responsible for the cancellations. But observers say there is a growing recognition among poorer countries that large infrastructure projects come at a very high price. Asked about the decisions by Pakistan and Nepal, the Chinese foreign ministry said it knew nothing about them.
How Trump Did the Impossible: Getting Solar and Oil Lobbyists to Unite - In his 20 years of promoting renewable energy in Washington, Gregory Wetstone has made common cause with a range of special interest groups:- environmentalists, power utilities, even a handful of natural gas producers. But President Donald Trump’s efforts to bail out the coal industry led Wetstone, the head of the American Council on Renewable Energy, to find a surprising new partner: Big Oil.Within hours of Energy Secretary Rick Perry releasing a proposal to overhaul the country’s power markets to advantage unprofitable coal and nuke plants, Wetstone was busy pulling together a team of unlikely allies, including solar installers, oil refineries and natural gas drillers, all of whom were worried that the plan would raise electricity costs and undercut their fuel source in the power markets.With uncharacteristic speed for a collection this broad, Wetstone’s renewable energy council joined the American Petroleum Institute and 19 other groups to submit comments that noted their unlikely alliance, slyly noting the proposal’s "power to unite." They dubbed the plan ill defined, unwarranted and unreasonable. “It’s not often that our interests align, but I think everyone recognizes the importance of standing up together,” he said in an interview. “It’s a reflection of how disruptive the policy put forward would be. The lobbying is aimed at the Federal Energy Regulatory Commission, which oversees the nation’s electricity markets and is set to decide by Dec. 11 whether or how to act on the Energy Department’s proposal. If approved, it could help achieve Trump’s goal of putting some U.S. coal miners back to work by giving unprofitable coal power plants an edge against more economical ones that run off cheap wind, solar and natural gas. When he proposed his grid overhaul, Perry asked FERC to allow power plants with 90 days of fuel on site to charge customers more money. Coal and nuclear plants store their fuel at the plant; natural gas and renewables typically don’t. No one is really sure how much that would raise Americans’ power bills. Estimates range from a few hundred million dollars to more than $200 billion.
New US FERC chief asks DOE's Perry for an extension on grid rule - On the same day he took his seat as chairman of the US Federal Energy Regulatory Commission, former Jones Day attorney Kevin McIntyre sought a 30-day extension of the deadline for FERC to respond to the Department of Energy's notice of proposed rulemaking on grid resilience."The proposed extension is critical to afford adequate time for the new commissioners to consider the voluminous record and engage fully in deliberations," McIntyre said in a letter to energy secretary Rick Perry made public late Thursday. McIntyre noted that two new commissioners had been sworn in over the last two weeks and that over 1,500 comments had been submitted to the agency on the proposal. McIntyre was sworn in Thursday, over a month after he and Richard Glick, former senate energy and commerce committee minority general counsel, were confirmed by the Senate. Glick took his seat at the commission on November 29. While the DOE's proposal set a 60-day deadline for FERC action, McIntyre said the law under which the DOE made the proposal, the DOE Organization Act, gives the secretary discretion on whether to alter deadlines."I respectfully request that you grant the proposed extension and arrange for publication of your decision in the Federal Register at the earliest possible opportunity," he said.A DOE source said Perry has received the request and it is being reviewed. Prior to McIntyre joining the commission, Neil Chatterjee, who served as chairman since early August, advocated for an interim step in response to the DOE proposal that would hold off coal and nuclear plant retirements while the commission hammered out a longer-term proposal to address challenges to baseload generation in wholesale power markets.
Bob Murray had early access to Rick Perry to share coal plan - Coal magnate Bob Murray pitched Energy Secretary Rick Perry on his plan to throw an economic lifeline to coal companies less than a month before Perry set in motion plans to aid the industry, according to newly disclosed photographs that show the two meeting. In These Times obtained pictures of Murray and Perry from a March 29 meeting at Energy Department headquarters, less than a month after Perry was sworn in. Several other officials were in attendance, including Andrew Wheeler, who at the time was a lobbyist for Murray and has since been nominated as the Environmental Protection Agency's No. 2 official. The meeting puts Murray and Perry together at a crucial moment in the timeline of the Trump administration's push to save the struggling coal industry, an effort that would benefit Murray Energy in particular while raising electricity prices for potentially millions of people. A month before the meeting, one of Murray's biggest customers, FirstEnergy, told investors it was seriously considering seeking bankruptcy protection for its merchant division, FirstEnergy Solutions, a move that would likely void its supply contracts with Murray’s coal mines. Three weeks after Murray's visit, Perry would order a grid study that later became part of the justification for a proposed rule to reward coal and nuclear power plants for providing "grid resiliency." DOE did not dispute the validity of the photos. The photographs show Perry sitting at the head of a table in the Department of Energy, with Bob Murray, CEO of Murray Energy, to his left, and Wheeler down the table from Murray. "Enclosed is an Action Plan for achieving reliable and low cost electricity ... and to assist in the survival of our Country's coal industry, which ... power grid reliability and low cost electricity," Murray writes in a cover letter to Perry, parts of which are visible in one photo from the meeting. Though the document has never been publicly released, DOE critics say Murray's plan appears to have inspired DOE's grid study and the proposed rule Perry sent FERC in September. Copies are visible at the seats of most of the participants, including Perry and Murray. Wheeler, who told members of the Senate Environment Committee he had only seen the memo briefly, is not holding a copy in the photos obtained by In These Times. Murray told Greenwire in November he "didn't have any involvement" in writing the rule.
Tax reform losers from biofuels to coal to get second chance - Energy lobbyists, who failed to get a range of expired breaks for biofuels to coal-fired power plants into the $1.5 trillion tax overhaul bill making its way through Congress, may get a second chance before the end of the year. The Senate plans to act on a slate of expired tax credits before month’s end, according to John Thune, the Senate’s No. 3 ranking Republican who serves on the Finance Committee. Lobbyists have been told the package of "tax extenders" -- renewing tens of billions of dollars in expired tax incentives -- could be hitched to must-pass government funding legislation expected in coming weeks. "I would say the discussion of the extenders package is a golden opportunity," said Scott Segal, a Bracewell LLP lobbyist seeking tax credits for small wind projects, geothermal heat pumps, and fuel cells. Representatives of the House and Senate tax writing committees didn’t respond to requests seeking comment on the timing. In addition to the expiring benefits, the American Coalition for Clean Coal Electricity, which represents companies such as American Electric Power Co. and Peabody Energy Corp., is seeking a new tax credit for existing coal-fired power plants that would total $65 billion over 10 years. "We think we have a good case to make," said Paul Bailey, the group’s president. "We’ve had a lot of retirements and there is a lot of concern about reliability and grid resilience so we think that is a good reason to have a tax credit that would prevent some coal retirements." The proposal, which would allow nearly every U.S. coal plant to qualify, comes as the Federal Energy Regulatory Commission is also moving forward with a rule to help coal plants that would apply to about 40,000 megawatts of coal out of a fleet of about 260,000 megawatts, Bailey said.
CEO says late changes to Senate tax-cut bill ‘wipes out' what Trump has done for coal | TheHill: The CEO of one of the nation’s largest coal companies ripped the Senate tax-reform bill, saying late changes to the bill would “wipe out” coal mining jobs. Robert Murray, founder and CEO of Murray Energy, said Tuesday that the tax hike on coal mining firms that would result from the changes would cancel out progress that President Trump has made on reviving the coal industry, according to CNN. “We won’t have enough cash flow to exist,” Murray told CNNMoney. “This wipes out everything that President Trump has done for coal.”The Senate amended its version of the bill last Friday to keep the alternative minimum tax for businesses in order to pay for other changes to the bill — including a more generous deduction for pass-through businesses and the allowance of a property tax deduction for individuals of up to $10,000. But keeping the alternative minimum tax, and the imposition of new limits on the interest deductions that businesses can mark off, would cost Murray Energy $60 million in taxes, Murray told CNN. The fight over the alternative minimum tax will be an issue in the House–Senate conference. The House bill repeals the tax. Trump campaigned heavily on revitalizing the coal industry in the U.S. and has made moves to roll back regulations, particularly Obama-era rules related to climate change, that the coal industry has opposed.
Major electric vehicle tax credit remains in limbo after tax overhaul passes in senate - A significant tax credit which helps boost sales of EVs in the United States remains in limbo after the Senate passed their version of the overhaul in the early hours of Saturday morning. The Senate’s plan left that tax credit alone, as Green Car Reports notes, but still has to be reconciled with the version passed by the House of Representatives. Currently, Americans get a tax credit which ranges between $2,500 and $7,500 (depending on the vehicle’s battery capacity) for each electrified vehicle they purchase. Once an automaker sells 200,000 electrified vehicles, the plan is to phase that credit out for that company. However, the tax overhaul passed by the House of Representatives called for an immediate repeal of this credit. The Senate chose to left it in, however, and this and several other major differences means that the tax plan must now be reconciled between the two houses’ versions. A conference committee with House and Senate members will most likely be formed to transform these two versions of the tax overhaul into a single, unified plan. That reconciled tax plan will then be presented to the president for ultimate approval. If it includes the House’s plan to axe the EV credit, though, it will be extremely bad news for the auto industry, which hasn’t sold anywhere near that 200,000-EV mark but has started to invest more heavily in EVs to meet tightening emissions regulations. General Motors, Tesla and Nissan are the only three to have used over 100,000 of their EV tax credits, with other automakers far behind even that, Green Car Reports notes.
China is winning 'desperate' global race to control lithium for electric vehicles - China is outpacing the U.S. and other countries in a global race to secure supplies of an all-important element for electric cars. China has emerged as the leading market player for electric and hybrid cars, accounting for approximately half of global sales. And with the world's second-largest economy keen to develop the industry within its own borders, Beijing is looking to import a lot more lithium. "Lithium is coming of age in a big way. It's the core ingredient to 99 percent of electric vehicles and as a result, demand is going through the roof," Simon Moores, managing director at research and data provider at Benchmark Mineral Intelligence, told CNBC in a phone interview. As demand for electric vehicles skyrockets, Chinese firms have rapidly been making deals in a bid to secure supplies of lithium — a vital component used in batteries for electric vehicles. Demand for lithium had been "bubbling under the surface" for several years, Moores said, before a renewed interest in electric cars about 18 months ago triggered a "desperate" global pursuit. China wants 'to control electric vehicle supply chain' Governments and car manufacturers worldwide have taken steps to electrify fleets and further phase out the combustion engine. The lithium-ion batteries are able to produce more electricity per unit than conventional batteries. The global push to roll out electric cars — which emit less climate-warming carbon emissions — has been amplified by concerns over air pollution, particularly from diesel cars. And Beijing's pursuit of lithium for electric cars appears aligned to the plans of Chinese President Xi Jinping, although industry analysts said cost, rather than environmental concern, was the primary reason for China to pivot toward alternative energy.
America Crowns a New Pollution King - For the first time in 40 years, power plants are no longer the biggest source of U.S. greenhouse gas pollution. That dubious distinction now belongs to the transport sector: cars, trucks, planes, trains and boats. The big reversal didn’t happen because transportation emissions have been increasing. In fact, since 2000 the U.S. has experienced the flattest stretch of transportation-related pollution in modern record keeping, according to data compiled by the U.S. Energy Information Administration. The big change has come from the cleanup of America’s electric grid. The chart below shows carbon dioxide emissions from transportation exceeding those from electricity production in 2016 for the first time since 1978. The pollution gap has continued to widen further in 2017, according to a Bloomberg analysis. Electricity use in the U.S. hasn’t declined much in the last decade, but it’s being generated from cleaner sources. A dramatic switch away from coal, the dirtiest fuel, is mostly responsible for the drop in emissions. Coal power has declined by more than a third in the last decade, according to the EIA, while cleaner natural gas has soared more than 60 percent. Wind and solar power are also increasingly sucking the greenhouse gases out of U.S. electricity production. This is good news, and not just because carbon dioxide emissions are the biggest contributor to global climate change. The shift to cleaner energy also has immediate local improvements to health by reducing the burden of asthma, cancer and heart disease. The transportation sector is also entering a critical period of reformation. Cars are becoming more efficient under aggressive pollution rules passed under President Barack Obama, but that’s so far been offset by an ever-rising American appetite for SUVs, crossovers and pickup trucks. Even the nation’s clean-air policies could soon change. The Trump administration is considering rolling back the toughest fuel-efficiency standards, which are set to take effect in the early 2020s. Investments in electric cars may soon begin to do to the transportation sector what wind and solar have done to the power sector: turn the pollution curve upside down.
Natural gas power generation share grew in Southern states for a decade as coal declined - Coal’s share of total electricity generation in the South declined over the past decade, from 50% in 2006 to 29% in 2016. As the use of coal has declined, the use of natural gas has increased. In 2016, southern states used natural gas for 42% of their electricity generation, a bigger share than the U.S. average of 34%. The mix of fuels used to generate electricity varies among southern states, but the overall mix is dominated by natural gas and coal. At the state level, natural gas made up as much as 89% of in-state electricity generation in Delaware to as little as 2% in West Virginia.Competition between the fuels for electricity generation has resulted in U.S. net generation of electricity from natural gas surpassing coal for the first time in 2016. For the South as a whole, natural gas surpassed coal for electricity generation in 2012, 2015, and 2016. Within the South, the share of natural gas used for electric generation in the West South Central census division—which includes Arkansas, Louisiana, Oklahoma, and Texas—has been larger than the share of coal for more than a decade. In the East South Central division, which includes Alabama, Kentucky, Mississippi, and Tennessee, coal-fired electricity generation remains higher than natural gas-fired generation, although the difference has narrowed. In the South Atlantic division, which includes West Virginia, Maryland, and Delaware and extends along the Atlantic Ocean to Florida, natural gas first surpassed coal used for electricity generation in 2015. Most Southern states that use coal for the largest share of their electricity generation are part of the Northern or Central Appalachian basins, two of five major coal mining regions in the United States. West Virginia and Kentucky are among the top five coal mining states, and both states use coal for most of their electricity generation—94% and 83%, respectively. Tennessee, Arkansas, and Maryland also used more coal (37%–39%) than the national average of 30% in 2016. More coal-fired generating units were retired in the South between 2006 and 2016 than units fueled by any other fuel type, with 20.8 gigawatts (GW) of capacity taken offline during that period. Although 9.6 GW of coal capacity was added between 2007 and 2013, no coal units have been installed since 2013. New installed capacity in the region came primarily from natural gas and wind, with an additional 47.0 GW and 25.6 GW installed,
US energy storage surges 46% led by big project in windy Texas - U.S. energy-storage capacity surged 46 percent in the third quarter, mainly due to a single big project in Texas, the biggest source of wind power. Power companies and developers added 41.8 megawatts of storage systems, including a 30-megawatt utility-scale project in Texas, according to a report Thursday from GTM Research and the Energy Storage Association. California added 8.4 megawatts of residential and commercial systems. The industry installed 28.6 megawatts in the third quarter of 2016. Driven by regulatory demands and sharp price declines, energy-storage is becoming more common. Prices for lithium-ion battery packs have fallen 24 percent from 2016 levels, according to Bloomberg New Energy Finance. Utilities including Exelon Corp., Duke Energy Corp. and American Electric Power Co., meanwhile, are increasingly receptive to storage projects, which potentially will facilitate wider adoption of wind and solar power. GTM forecasts that 295 megawatts will be in operation in the U.S. by year-end, up 28 percent from 2016. And more is coming. GTM projects the U.S. energy-storage market will be worth $3.1 billion in 2022, a seven-fold increase from this year. “Energy storage is increasingly acknowledged in utilities’ long term resource planning across the country,”
Poor bear brunt of Beijing coal cleanup with no heating at -6C- While middle class Beijingers breathe the cleanest air in recent winters, in Zhuozhou, a small city 20 minutes by train from Beijing’s downtown, residents are shivering through cold nights without heating. The reason: a five-year anti-pollution drive has forced rural areas in northern China to switch from dirty coal to the cleaner alternative. The massive retrofitting campaign has sent gas prices soaring while many are left without heating systems at all. In two villages close to Zhuozhou’s high-speed railway station, on the city’s eastern edge, villagers estimate only about one third of homes have been connected with natural gas supply, while others say they are still anxiously waiting for the gas company to install furnaces. Their old-fashioned coal stoves were all demolished as the government intensified efforts to phase out coal use in rural homes. As temperatures drop to about -6C, they say nights are “increasingly unbearable”, especially for seniors and toddlers. A street cleaner said he had to burn firewood to keep warm. “It is very cold, but there’s nothing we can do except wait,” said one mother who was reluctant to be named. Urban residents of Zhuozhou are more vocal about their grievances, as the sudden increase in natural gas demand means disruption in supply for existing users. “Every day from 7pm to early next morning, there’s no heating. Sometimes the gas supply is not stable when cooking,” said a taxi driver who gave his surname as Feng. Hebei provincial government, which administers Zhuozhou, issued an orange alert for natural gas supply on 28 November. It is the second on a four-tier warning system, indicating a demand-supply gap between 10% and 20% that will have a “relatively big impact” on economic and social operation.The provincial government said it would cut supply for industrial users and prioritise use for residential and public buildings, including schools and hospitals. Neighbouring Shandong, Shanxi and Shaanxi provinces all report similar problems.
Gas Shortage Has China Backtracking On Coal Ban - China is backpedaling on its massive push for the coal-to-gas switch after the move created gas shortages in the north that left people freezing in the cold snap, financial magazine Caixin reported on Thursday. The Chinese Ministry of Environmental Protection said on Monday in an urgent letter to 28 cities in the north that residents now could continue burning coal or firewood to keep themselves warm in the areas where the switch from coal to natural gas and electricity has not been completed, Caixin reports, despite the ban on coal. “It is not wrong for Beijing to push the coal-to-gas switch, but the process was a bit too fast and outpaced the market’s capacity,” Xu Bo, a researcher with CNPC’s Research Institute of Economics and Technology, told Reuters. So big has been the drive to switch from coal to gas, that China has been buying up liquefied natural gas (LNG) cargoes on the spot market, pushing spot prices higher than the prices of the oil-indexed LNG cargos in the long-term delivery contracts. Last week, Asia’s LNG spot prices jumped to the highest since January 2015 due to the Chinese demand and strong oil prices. The country’s biggest LNG importer, CNOOC, is said to have leased two tankers to store emergency LNG supplies offshore as the ‘cleaner-fuel’ drive leads to unprecedented soaring gas demand and concerns of fuel shortages this winter. Chinese LNG imports have soared this year, and China is now very close to surpassing South Korea as the world’s second-largest LNG buyer, the no.1 being Japan.
Europe's Coal Plants Will Bleed More Cash Through Next Decade - Almost all coal plants in the European Union will be outspending their income by the end of the next decade, relying on subsidies to stay open to back up wind and solar generation. About 54 percent of the region’s plants already fail to break even, according to a report by London-based Carbon Tracker Initiative published Friday. The facilities are kept online by government handouts running into millions of euros for some stations just to be available in case they are needed to meet spikes in demand. As nations from the U.K. to Austria plan to exit the dirtiest power plant fuel and investors such as Norway’s sovereign wealth fund, the world’s biggest, pull money out of coal-hungry utilities, the fuel’s future has never looked so bleak. Power producers from Britain’s Drax Group Plc to Steag GmbH and Uniper SE in Germany are already closing or converting stations away from coal at a record pace. By 2030, 97 percent of plants will have negative cash flow as the European Commission plans to end so-called capacity payments for coal by the middle of the next decade and battery storage technology improves to provide more of the power needed at peak times, according to Carbon Tracker. “Coal is going to be put into a death spiral and there’s not much that asset owners can do about that other than to lobby and hope that the state will bail them out,” Margins at plants will be further squeezed as the cost of European carbon allowances, permits needed to emit the greenhouse gas, is predicted to triple to 31 euros ($37) a ton by 2030, according to Bloomberg New Energy Finance. But utilities expect to operate at least some of their plants beyond 2030, according to the report. Based on company filings and member state phase-out policies, only 27 percent of operating coal units in the EU are planning to close before 2030 as they await clarity on how much capacity is needed for security of supply, Carbon Tracker said.
Nearly all European coal-fired power plants will be loss-making by 2030 -research (Reuters) - European power companies could save billions of dollars by stepping up closure of coal-fired power plants as nearly all of them will be loss-making in Europe by 2030, think-tank Carbon Tracker Initiative says. Coal power should be phased out in the European Union by 2030 to meet the Paris Agreement’s target to limit the rise in global average temperature to below 2 degrees Celsius. However, the bloc is still reliant on coal-fired power and only 27 percent of coal-fired power plants in the EU plan to close before 2030, Carbon Tracker said in a report released on Friday, basing its estimate on company reports and countries’ phase-out policies. Fifty four percent of European coal-fired power plants are currently cashflow negative and this could increase to 97 percent by 2030 due to rising carbon prices and stricter air quality rules, Carbon Tracker said, based on modelling from commodity price forecasts, asset operating costs, gross profitability and government policies. “Since the majority of coal units are loss-making by 2030, the EU could avoid 22 billion euros ($26 billion) in losses by phasing out coal power in line with the Paris Agreement,” Carbon Tracker said. Germany-based units could save 9 billion euros by phasing out coal, while Poland could save 3 billion euros. The utilities who have the most to gain from phasing-out coal are Germany’s RWE and Uniper, who could save 3 billion euros and 1.7 billion euros, respectively, according to Carbon Tracker. Coal-fired power currently makes up 26 percent of total EU power generation. Carbon Tracker, however, says coal power’s operating costs could be higher than onshore wind by 2024 and solar photovoltaic by 2027, while energy storage technologies and power reduction firms increasingly provide back-up power. Analysis by the Institute for Energy Economics and Financial Analysis earlier this year said more than 100 separate power plants — representing a third of Europe’s large-scale coal-fired power plant capacity — face costly air quality upgrades or closure as a result of the pollutant limits.
Coal terminal backers file 2nd suit against Washington state (AP) — The backers of one of the biggest coal terminals in North America have filed a second lawsuit against Washington state over a $680 million coal export terminal. Millennium Bulk Terminals-Longview filed the lawsuit Monday in Thurston County Superior Court against the state Department of Ecology. The lawsuit alleges Ecology violated public records laws by withholding the basis for its findings in a key environmental impact statement. A county hearing examiner last month relied on that statement when he denied two shoreline permits that Millennium Bulk needs for its Columbia River coal dock. Ecology described nine adverse impacts from the coal dock in its report, from noise pollution to an impact on tribal resources. The hearing examiner added a tenth impact — greenhouse gas emissions. Millennium says the state didn't provide the modeling data it used to estimate greenhouse gases and particulate emissions.
Bombs in Your Backyard - For the past year, ProPublica has been documenting the state of toxic pollution left behind by the military across the U.S. As part of this investigation, we acquired a dataset of all facilities that the Department of Defense considers contaminated. Today we used the data to publish an interactive news application called Bombs in Your Backyard. Here’s how you can use it to find hazardous sites near you — and what, if anything, is being done to remedy the pollution.The data, which has never been released before, comes from the Defense Environmental Restoration Program, which the DOD administers to measure and document cleanup efforts at current and former military locations. There are a lot of great local investigative stories waiting to be done with the data. This reporting recipe is meant to help you find and report ones near you. Why You (and Your Readers) Should Care:
- There are more than 40,000 hazardous sites across the country polluted by U.S. military operations, affecting a total amount of land larger than the entire state of Florida. Some of these sites are probably near you and you may not even know it.
- Many of these sites have extensive groundwater and soil pollution, or present a risk of exploding bombs and munitions, even if they are open to the public. Some have been converted to parks and wildlife reserves and even housing developments.
- Many sites were part of old defense facilities that have long since shut down, and may not be known locally, even though a risk of exposure to contaminants may still be present.
- Even sites where the DOD says it has already completed its response can present an ongoing threat or risk to the public.
- While the data pinpoints a precise location, contamination from that location may well affect a much larger area, including public and private lands and the water supplies beneath them. You may want to investigate environmental concerns in an area surrounding a defense site for connections to the pollution there.
Secrecy surrounds pro-coal group eyeing Ohio wind cases - A pro-coal group that has appeared in multiple Ohio wind farm cases has not disclosed its members, raising questions about who funds the nonprofit organization and what relationship it might have to other parties. The Campaign for American Affordable and Reliable Energy (CAARE) has been added to the service list in ten wind energy matters at the Ohio Power Siting Board. As a result, its lawyers would formally receive copies of all filings. The group formally sought to become a party in only one of those cases, involving the Paulding Wind Farm. An administrative law judge denied that request because the group’s interest was “nothing more than objections to wind farms generally.” In two other cases, the same lawyers for CAARE later went on to represent individuals opposed to the projects. Counsel for CAARE would not discuss any of the cases. “I act as legal counsel for intervenors and such, but I’m not authorized to speak to the press about anything, so I can’t,” said John Stock at the Columbus office of Benesch Friedlander Coplan & Aranoff. “That’s just been the policy from day one, so don’t take it personally.” Stock likewise would not provide contact information for any member or officer of CAARE. And while the one filing that sought party status for the group said CAARE’s members were companies in the coal industry, it did not say who any of them were. There is no claim of illegal or unethical conduct by CAARE or its lawyers. Nonetheless, advocates say, the secrecy raises questions about transparency. Counsel for CAARE has represented other pro-coal interests and has represented landowners opposed to wind projects in at least one other state. “Ohioans deserve to know who the secretive coal interests behind CAARE are, so they can properly assess the impact these companies and their products have had on the environment and public health,” said David Anderson at the Energy and Policy Institute, headquartered in San Francisco.
State board to consider Oregon natural gas power plant - Toledo Blade - Construction is expected to begin in January on Oregon’s second major power plant fueled by natural gas, a $900 million project that reinforces how America’s fracking boom is upending the energy marketplace.The Ohio Power Siting Board’s first order of business at its monthly meeting in Columbus on Thursday afternoon is to issue a permit to a Massachusetts developer planning to build the 955-megawatt project on behalf of Clean Energy Future-Oregon, LLC.Plans call for that plant to begin operating in 2020 next to the 960-mw Oregon Clean Energy plant that went online this summer. Both are attractive to the 13-state regional grid operator that includes Ohio, PJM Interconnection LLC, because each will have the capacity to produce more electricity than FirstEnergy Corp.’s cash-strapped Davis-Besse nuclear plant in nearby Ottawa County. FirstEnergy has said it may close Davis-Besse prematurely unless it finds a buyer or gets assistance from the Ohio General Assembly to help that plant and its Sammis coal-fired power plant in southern Ohio
Activists Take Aim at Energy Development to Amend Ohio Constitution - Natural Gas Intelligence -- Frustrated by industry pushback and court defeats, two citizens’ rights groups are spearheading ballot initiatives in Ohio to amend the state constitution in a way that would better guarantee local governments’ ability to regulate hydraulic fracturing (fracking) and related activities.Local charter amendments to ban or control fracking and other industrial operations have either been rejected by municipalities, or shot down by judges as a violation of state law, and the Ohio Department of Natural Resources’ (ODNR) centralized regulatory authority. The Pennsylvania-based Community Environmental Legal Defense Fund (CELDF), which has drafted and advanced the amendments across the Appalachian Basin, along with the Ohio Community Rights Network, wants to take the issue to a statewide vote.The proposals would alter Ohio law to ensure local governments may pass and enforce laws without concerns about legal challenges they have faced. Referendums, let alone constitutional amendments, are an uphill battle ,and the organizers face a lengthy process. But it marks the first time such groups have pursued statewide community rights amendments in a new and broader threat to oil and natural gas development in Ohio.“The simple answer to that is yes, because I think it’s designed to change the whole preemptive provisions in the Ohio Revised Code that are enacted by Chapter 1509, making ODNR the preemptive ruler on oil and gas permitting and development,” said energy attorney Alan Wenger of Youngstown-based Harrington, Hoppe & Mitchell Ltd., when asked if the amendments would dramatically change the industry’s regulatory scheme. “It would throw everything up in the air.”The Ohio Attorney General’s office certified two petitions last month to amend the state constitution. One would guarantee “local authority to enact laws to protect inalienable rights and the health, safety and welfare of community members and natural ecosystems, free from state preemption or corporate interference.” The other would extend the right to referendum to residents living in townships and counties. Only those living in cities and villages can currently pursue ballot initiatives. For now, however, industry representatives aren’t concerned. The Ohio Oil and Gas Association (OOGA) has reviewed the proposals and is monitoring the situation, but officials there acknowledged that organizers have a lengthy process to follow before anything gets on the state ballot.
Biting the Hand That Feeds: Environmental Group Pushes Anti-Fracking Amendment in Ohio - Earlier this year, a Pennsylvania-based group called Community Environmental Legal Defense Fund (CELDF) was pressuring the city of Youngstown, Ohio to put an anti-fracking measure on the ballot for its next local election. Having failed to pass the measure in November after it was taken off the ballot, the group is reorganizing, with the goal this time of amending Ohio’s state constitution to allow towns to ban fracking altogether. “For years we have tried to protect our communities from harmful corporate projects. Today, we understand why we can’t get what we want: We are blocked by a system designed to force the harms in against our will,” said Greg Pace, a member of the Ohio Community Rights Network, which submitted the proposed amendment to the state attorney general. CELDF assisted the Ohio Community Rights Network in drawing together the proposed amendments. The group offered similar assistance to groups pushing for similar amendments in Oregon, Colorado, and New Hampshire, framing the debate as a matter of local control over land use. As of yet, none of the measures have been successful. In Colorado, the measure did not ultimately end up on the ballot in 2016. In New Hampshire, legislators have several times considered the measure, but it has yet to be on the ballot. “This amendment secures the right of local, community self-government for the people of Ohio by guaranteeing local authority to enact laws to protect unalienable rights and the health, safety and welfare of community members and natural ecosystems, free from state preemption or corporate interference,” reads the Ohio petition. In practice, the amendment would allow towns and local municipalities to pass their own regulations banning fracking within the city limits or on city land. This is likely an attempt to close a loophole in the earlier Youngstown fracking ban proposition, which many had pointed out would be in violation of the state constitution were it to have passed.“This goes beyond fossil fuel industries,” said Tish O’Dell, CELDF’s Ohio organizer. “The right to pass local laws regarding fracking, gun control, predatory lending, minimum wage, and more, are thwarted by state preemptive laws. And those laws are often written by industry.” Thus far, CELDF has completed the first two steps in the process of adding the constitutional amendment to the ballot. In mid-November, the group submitted two petitions to Ohio Attorney General Mike DeWine, who certified the signatures. An additional 26 steps, including the drafting and certification of the ballot measure language, must be completed before the July 26, 2018 deadline.
Responders seeking fracking chemical identities - A policy group has partnered with emergency management agencies across 21 states, including Ohio, to petition the U.S. Environmental Protection Agency to disclose the identities of chemicals used by oil and gas drilling companies in the hydraulic fracturing process. The policy group, the Partnership for Policy Integrity, was formed “to promote sound energy policy and to help citizens enact science-based policies that protect air quality, ecosystems and the climate. Our current work focuses on biomass energy, oil and natural gas drilling and hydraulic fracturing,” said Dusty Horwitt, senior counsel for the group. Horwitt said in a release that the state of Ohio and the federal government often prevent citizens, even first responders, from knowing what chemicals are used in drilling operations because they deem their extracting process as “confidential business information.” In a letter dated Nov. 15 and sent to U.S. EPA Director Scott Pruitt, the group, along with more than 100 first responders, health professionals and scientists from 21 states and the District of Columbia, requested the EPA disclose the identities of 41 chemicals that EPA regulators reviewed between 2003 and 2014, under a program created by the Toxic Substances Control Act to ensure that new chemicals are safe before they are used commercially. The Partnership for Policy Integrity claims evidence has shown the 41 chemicals likely were used for hydraulic fracturing, and that chemical manufacturers have declared confidential some or all of the chemicals’ identifying information, as permitted by the TSCA.
New estimates of abandoned Pa. oil and gas wells less dire, still daunting - Pittsburgh Post-Gazette Maybe the number of old oil and gas wells lost in Pennsylvania’s landscape isn’t as enormous as the worst-case estimates suggest.Terry Engelder, professor emeritus of geosciences at Penn State, has a new appraisal based on historical records that is, in comparison, merely overwhelming.Mr. Engelder is famous for his estimates, most notably his calculation of the amount of recoverable natural gas trapped in the Marcellus Shale that helped trigger a world-changing rush to explore it.In recent presentations to the state’s crude oil development council andonline through the Penn State Extension, he suggested that the total number of wells ever drilled in Pennsylvania is 382,000.Minus the state’s active wells, that would leave 252,000 plugged and abandoned wells, of which the Pennsylvania Department of Environmental Protection has no record of at least 168,000.That big number is significantly lower than the 470,000 to 750,000 abandoned wells that a group of researchers led by Mary Kang, a postdoctoral researcher at Stanford University, said in a 2016 paper could be lingering in Pennsylvania’s forests, fields and neighborhoods.The count matters because abandoned wells can be dangerous and contribute to climate change. Depending on its state of decay, each well is a potential conduit for gas and oil to reach the surface, which can interfere with modern drilling, pollute streams and drinking water, create explosion hazards in homes and add the potent greenhouse gas methane to the atmosphere. Ms. Kang said in an email that Mr. Engelder's analysis “does not appear to be as thorough as mine and includes only select and very few documents,” some of which conflict with other historical records. She said her recent field-based research, which has not yet been published, provides “evidence for much higher numbers of wells” than Mr. Engelder's estimate “and closer to my 2016 paper.”
Why $84 Billion from China Can't Buy a U.S. East Gas Hub -- During President Donald Trump’s visit to Asia this week, a Chinese energy company pledged to spend almost $84 billion helping West Virginia build an entire supply chain that would bring the benefits of America’s shale gas boom to bear. Much of it will probably never materialize. Here are the reasons why. China Energy Investment Corp. and West Virginia have grand -- albeit non-binding -- plans to build new gas-fired power plants, along with complexes to store the fuel and chemical plants to help turn it into plastics. Based on a statement from West Virginia’s Department of Commerce, China Energy Investment would spend $83.7 billion over 20 years, or more than $4 billion annually. As Bloomberg Intelligence energy analyst Michael Kay points out, not even U.S. energy pipeline giant Kinder Morgan Inc. budgets that much for growth projects. There just isn’t enough infrastructure with high enough returns to make it worthwhile. “That’s not going to happen,” Kay says. “The problem isn’t necessarily anything other than financial.” Companies and politicians have been pushing for more pipelines and plants there since the shale boom unleashed a flood of gas from formations like the Marcellus a decade ago. West Virginia, in the heart of Coal Country, could especially use the help after a market collapse forced shut hundreds of U.S. mines. Another plus -- the region offers an alternative to the hurricane-prone Gulf Coast. One reason more projects haven’t taken off: The Gulf Coast is an easier and often cheaper alternative with existing pipelines to power plants, chemical plants and storage tanks. Meanwhile Texas is home to its own giant shale plays, including the Permian Basin where 9 billion cubic feet of gas is pulled from oil wells every day.
West Virginia weighs permit for Atlantic Coast Pipeline — West Virginia environmental regulators Wednesday announced two public hearings on issuing a construction stormwater permit for the Atlantic Coast Pipeline, which would carry natural gas southeast from the center of the state. The 600-mile (965-kilometer) pipeline would extend almost 100 miles (160 kilometers) through five counties in West Virginia, then cross Virginia and bend through eastern North Carolina. West Virginia's Department of Environmental Protection said that if approved, that permit would give the state agency wide-ranging inspection and enforcement authority over the project. At the same time, the department said it was waiving its issuance of a state certification under the federal Clean Water Act, saying provisions in the U.S. Army Corps of Engineers nationwide permit are "designed to mirror" the state's terms. "Under the nationwide permit, enforcement would be left to federal agencies and would be limited to stream crossings," it said. The lead developer of the 600-mile (965-kilometer), approximately $5 billion Atlantic Coast Pipeline is Dominion Energy, along with partners Duke Energy, Piedmont Natural Gas and Southern Co. Gas. The Federal Energy Regulatory Commission gave its project approval in October. Dominion Energy spokesman Aaron Ruby said Wednesday that the developers support the West Virginia decision, calling it "a key step toward beginning construction later this year." It will bring thousands of jobs and millions of dollars to West Virginia, he said.
Pipeline opponents urge state board to to deny water quality permit 'without prejudice.' Can it do that? - Dozens of people urged the seven members of the State Water Control Board at an all-day meeting Wednesday to reject outright a proposed water quality certification necessary for the Mountain Valley Pipeline, which will run from West Virginia through six Southwest Virginia counties. A smaller number of pipeline proponents called on the citizen board to endorse the Virginia Department of Environmental Quality’s conditions, intended to shield the more than 1,100 waterways the pipeline will cross. Construction produces sediment loads and entails blasting, trenching and drilling through streams and along some of the state’s steepest terrain. But others suggested a third option: Deny the certification “without prejudice” and invite the pipeline developers and the DEQ to fix what critics contend has been an inadequate process to vet the potential water impacts of the MVP, led by EQT Midstream Partners, and another, longer natural gas pipeline project, the Dominion Energy-led Atlantic Coast Pipeline. Dominion’s pipeline faces the same approval process next week. Can the board, which is tasked with deciding whether there is a “reasonable assurance” that construction of the pipelines will not violate state water quality standards, do that? Last week, the DEQ would not answer questions about the menu of options available to the board members. On Wednesday, though, the first of two days of meetings on the Mountain Valley Pipeline, a spokesman for the DEQ said it can’t. Some environmentalists have long grumbled that the DEQ presents the water board with a narrow slate of options that constrain its authority. Bill Hayden, the spokesman, noted that the board will pick up discussions about the certification and its options Thursday, when it is expected to make a decision on the MVP. “DEQ does not consider denial without prejudice an option. Only denial is an option,” Hayden said. “It is possible the board could ask counsel about the ‘without prejudice’ part.”
Study suggests hydrofracking is killing farm animals, pets - A new report has found dozens of cases of illness, death and reproductive issues in cows, horses, goats, llamas, chickens, dogs, cats, fish and other wildlife, and humans. It says these conditions could be the result of exposure to gas drilling operations. The paper's authors, Robert Oswald, a professor of molecular medicine at Cornell's College of Veterinary Medicine, and veterinarian Michelle Bamberger, DVM '85, interviewed animal owners in six states -- Colorado, Louisiana, New York, Ohio, Pennsylvania and Texas -- and cited 24 cases where animals were potentially affected by gas drilling. According to the study, recently published online and appearing soon in print, in New Solutions: A Journal of Environmental and Occupational Health Policy, making a direct link between death and illness is not possible due to incomplete testing, proprietary secrecy from gas drilling companies regarding the chemicals used in hydrofracking, and non-disclosure agreements that seal testimony and evidence when lawsuits are settled. Some of the case studies include:
- In Louisiana, 17 cows died within an hour of direct exposure to hydraulic fracturing fluid. A necropsy report listed respiratory failure with circulatory collapse as the most likely cause of death.
- A farmer separated his herd of cows into two groups: 60 were in a pasture with a creek where hydrofracking wastewater was allegedly dumped; 36 were in separate fields without creek access. Of the 60 cows exposed to the creek water, 21 died and 16 failed to produce calves the following spring. None of the 36 cows in separated fields had health problems, though one cow failed to breed in the spring.
- Another farmer reported that 140 of his cows were exposed to hydrofracking fluid when wastewater impoundment was allegedly slit, and the fluid drained into a pasture and a pond. "These farmers saw workers slitting the liner to decrease the amount of liquid in the impoundment in order to refill it," said Bamberger. "We have heard it now on several occasions." Of the 140 cows, about 70 died, and there were high incidences of stillborn and stunted calves.
Appalachia region drives growth in U.S. natural gas production since 2012 -- Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017. Drilling wells in the Appalachia region has become very productive. The average monthly natural gas production per rig for new wells in the Appalachia region increased by 10.8 million cubic feet per day since January 2012. EIA attributes this increase to efficiency improvements in horizontal drilling and hydraulic fracturing in the region, which include faster drilling, longer laterals, advancements in technology, and better targeting of wells. For example, in West Virginia, the average lateral length per well has increased from about 2,500 feet in 2007 to more than 7,000 feet in 2016. Some operators have recorded lateral lengths as long as 15,000 feet in the Marcellus and 19,000 feet in the Utica. Along with longer horizontal drilling, the days it takes for completion have decreased from about 30 days in 2011 to 7 days in 2015. The Marcellus shale extends from New York in the north to Kentucky and Tennessee in the south and is the most productive natural gas-producing formation in the Appalachian Basin. The formation's footprint covers about 95,000 square miles. Dry natural gas wells in the Marcellus are mostly located in the eastern portion of the play, and liquids-rich wells are typically located in the western portion. The Utica Play consists of two stacked geological units: the Utica and Point Pleasant formations. These formations are older—and therefore deeper—than the Marcellus formation. The Utica play spans about 60,000 square miles across Ohio, West Virginia, Pennsylvania, and New York.
Inside FERC December US national gas average up 56 cents to $3.08/MMBtu - US December monthly natural gas prices largely rose as the market moves into the heart of peak winter heating season, pushing regions such as the Northeast to December levels not seen since 2014. Algonquin city-gates December jumped $3.15 to $5.80/MMBtu, up nearly 119% from November levels and one of the highest December levels since 2014, ushering in the upcoming winter at a high level. The remainder of the Northeast rose as well, pushing the regional average to $4.27/MMBtu, up $1.72/MMBtu. In the core of the Appalachian production basin, Dominion, Appalachia December movement was unfazed by numerous record output levels in recent months, soaring 93 cents to $2.50/MMBtu, nearly $1 above November as numerous infrastructure projects provided an outlet for sky-high production. Increases in the Upper Midwest region were not as pronounced, with Chicago city-gates December up 27 cents to $3.10/MMBtu. A contributing factor in the more-minimal rise is the ever-increasing supply of gas traversing the region. This dynamic, driven in part by increasing Western Canadian, Rockies and Northeast flows through the region, has weighed on the January futures basis contract as well in recent days. Rising in a similar fashion, Houston Ship Channel tacked on 24 cents to $3.00/MMBtu, but looking deeper into the upcoming winter, more pronounced increases along the Gulf Coast could be looming as LNG export demand soars on the back of strong consumption in northeastern Asia. To the east of Houston Ship Channel, benchmark Henry Hub December jumped 34 cents to $3.08/MMBtu, in line with other December contract movements in the Southeast.
NYMEX Jan gas down 5.2 cents at $2.933/MMBtu on mixed fundamentals - NYMEX January natural gas futures moved higher in US overnight trading before retracing their gains as traders consider supportive weather against bearish supply. Colder weather outlooks for major heating regions support the upside, while the recent and impending lackluster pace of storage erosion is keeping downward pressure on the market. At 6:50 am ET (1150 GMT) the contract was 5.2 cents lower at $2.933/MMBtu. Updated National Weather Service projections for the six-to-10-day and eight- to 14-day periods continue to show the US split between below-average temperatures over the entire eastern half and aboveaverage temperatures over the bulk of the West, with a narrow swath of average temperatures over the Central US. Cold weather in store for the major heat-consuming regions in the East should boost demand and weekly stock withdrawals, but recent mild conditions have meant modest storage withdrawals.
Algonquin Pipeline expansion opponents urge residents to get informed - Environmental activist groups that oppose the Algonquin Pipeline Expansion are urging residents in the Lower Hudson Valley to educate themselves as the next leg of the controversial project kicks off. On Monday evening, an informational session was organized by Stop the Algonquin Pipeline Expansion (SAPE) was held, the first of two programs scheduled over the next week for residents in Somers. Enbridge is in the midst of expanding the half-century old natural gas pipeline that will run north from Pennsylvania, passing through communities in Rockland, Putnam and Westchester counties and up into New England. Removing and replacing the existing 26-inch pipeline with a 42-inch one will allow for more natural gas to go north from Pennsylvania to Canada, an upgrade that utility companies say is needed to deliver cheaper gas to power plants, particularly on cold days when demand rises. Work done so far includes a new section through Stony Point, under the Hudson River, into Verplanck near the Indian Point Energy Center. The next phase - the $452 million Atlantic Bridge Project - involves four miles of pipeline from Stoney Street to Stephanie Lane, modifying a Yorktown metering station and relocating a pigging station from Yorktown to Stephanie Lane in Mahopac. Work is scheduled to begin this fall and take about a year. Courtney Williams, a Peekskill mother, ran through a presentation on Monday covering the expansion of the high-pressure pipeline, as well as the metering, pigging and compressor stations, as well as known concerns related to the work.“My life has been this pipeline for many years now,” Williams, whose home is located just feet away from the pipeline, told the several dozen attendees at the program. Since 2014, Williams, a cancer researcher, has become a spokesperson against the project, joining other environmental activists, officials and residents who have formed a major opposition movement.
In Massachusetts, protesters balk at pipeline company’s payments to police - It started as a faceoff between the protesters and the cops, but quickly escalated. As the police closed in, Colon-Aponte tried to move away from the front line. After she turned her back, an officer shoved her repeatedly, Colon-Aponte said ― at least “four or five times.” When Colon-Aponte raised her arms in submission and turned around to ask the officer to stop, she said, her hand grazed his — which provided an opening for him to arrest her for assaulting a police officer. Colon-Aponte was charged with assault and battery on a police officer, “after she allegedly pushed a trooper who was trying to clear protesters off a road they were blocking,” Massachusetts State Police Director of Media Communications David Procopio said in an email. She was one of five people arrested that day, and one of the more than 100 who have been arrested protesting at the pipeline this year. She now faces up to two and half years in jail and a fine of up to $5,000. Colon-Aponte said the police reaction to the protests, which have been peaceful and nonviolent, has been disproportionate. But pipeline protesters think there’s a reason the reaction from state police officers has been so strong. According to records anti-pipeline protesters recently obtained through a public records request, Kinder Morgan has been reimbursing state police officers from nearby Troop B headquarters in Northampton for their many hours on site. Through October, the total reimbursement has been $957,682.15, according to Cathy Kristofferson, a member of the Massachusetts Pipeline Awareness Network.Kristofferson made the public records request in response to concerns over the potential effects the payments were having on law enforcement behavior at the site.It’s not the first time an energy giant has paid police to keep watch over its assets. In Pennsylvania, Kinder Morgan hired off-duty police officers as a “deterrent” at a pipeline in 2013. And at the height of the Dakota Access Pipeline protests last year, Energy Transfer Partners offered to defray some of North Dakota’s costs for patrolling the area. The developer transferred some $15 million into state coffers as a result of patrols on the Dakota Access line at the end of September.
NJ environmentalists use new legal strategy to fight pipelines - It's not easy to thread a pipeline through the property of others.Companies can seek easement that allows them the right to use another's property for a certain purpose. If unsuccessful, the company may try to acquire the easement through the power of eminent domainOver the years, environmental groups opposed to the expansion of oil and natural gas pipelines across the nation have tried various ways to to fight against pipeline projects.Now, Garden State environmental advocates think they've found a way to stop pipeline companies from acquiring the land they need in the first place, and a pipeline project in New Jersey may serve as the legal battleground.The New Jersey Conservation Foundation has sued the Federal Energy Regulatory Commission on the grounds that the agency's use of eminent domain to take over land for the construction of interstate natural gas pipelines is often unconstitutional. (The NJCF is represented by the Eastern Environmental Law Center and the Columbia University Environmental Law Clinic.)The lawsuit, filed in federal court in November, cites the Fifth Amendment requirement that any eminent domain action be made for "public use."Environmentalists claim that FERC has consistently failed to prove that pipeline projects are necessary, and thus, the eminent domain land seizures further private profits rather than the public good. "We've taken this action because it's become abundantly clear that the way that [FERC] is approaching their review of proposed pipelines really is at odds with the Fifth Amendment of the Constitution," said Tom Gilbert, a campaign director for the New Jersey Conservation Foundation.
Trump officials examining states' authority in pipeline delays - After years of pipeline projects getting held up or derailed by environmental concerns, the Trump administration is examining ways to get around state roadblocks that have made it increasingly difficult to build in certain parts of the United States. In late October, the Federal Energy Regulatory Commission startled many state officials when it granted a construction permit for a natural gas pipeline in New York, despite state regulators turning down the developer over concerns the project would increase greenhouse gas emissions that contribute to climate change. The Trump administration, meanwhile, has for months discussed the possibility of using federal authority to speed infrastructure development, a potential political third rail for Republicans who have long proclaimed the sanctity of states' rights. "This is an administration that's going to carry out its agenda by all means necessary," said Devashree Saha, director of energy and environmental policy at The Council of State Governments, a non-partisan advocate for state governments. "The New York example is the first we're seeing, but it could be a harbinger of things to come."FERC's action comes as the oil and gas industry increases pressure on the administration and lawmakers to intervene against an increasingly visible "Keep it in the Ground" movement that is leading campaigns across the country to stop pipelines, drilling and other activities that support production and consumption of fossil fuels, the primary cause of global warming. Political leaders in a handful of northeast states, most visibly New York, are beginning to listen, in some cases factoring climate change into regulatory decisions.
Enbridge halts Great Lakes Line 5 pipeline due to bad weather (Reuters) - Enbridge Inc temporarily shut down its Line 5 oil pipeline across the Straits of Mackinac in North America’s Great Lakes on Tuesday, due to high winds and nine-foot (3 meter) high waves, according to the Michigan Agency for Energy (MAE). The 540,000 barrel per day pipeline carries Canadian light crude and refined products from Wisconsin to Ontario and is a key link in Enbridge’s network, which transports the bulk of Canadian crude exports to the United States. Light synthetic Canadian crude prices weakened by 35 cents on Tuesday, according to Shorcan Energy brokers. One market participant in Calgary said the dip was most likely in relation to the Line 5 outage. In a statement on its website, the MAE said Enbridge told Michigan that Line 5 was shut down at 11.37 a.m. local time (1637 GMT) and would restart when conditions improve. Enbridge did not immediately respond to a request for comment. The Straits of Mackinac are a turbulent 5-mile (8 km) wide stretch of water connecting lakes Huron and Michigan. Some local businesses, politicians and environmental groups fear the 64-year-old underwater pipeline crossing the Straits is at risk of leaking and contaminating the Great Lakes. In response to those concerns, Enbridge signed an agreement with the state of Michigan on Nov. 27 to suspend the pipeline’s operations during sustained bad weather in which wave heights reach more than eight feet. “The purpose of the state’s agreement with Enbridge was to find practical solutions to concerns we had about the operation of Line 5 and the safety of the Great Lakes,” said Valerie Brader, executive director of the Michigan Agency for Energy.
Spilled pipeline oil in lower Plaquemines is burned, site to be evaluated Tuesday - A controlled burn to remove oil spilled after a pipeline leak near Pointe a la Hache in lower Plaquemines Parish went on as planned and air monitoring afterward showed no troubling results, the Coast Guard said Saturday (Dec. 2). The pipeline owned by XTO Energy was reported to be leaking to the Coast Guard at 2:40 p.m. Thursday. As of Thursday night, officials said, they'd removed 1,260 gallons of "product" using absorbent materials. The agency, in a press release, said fire was used to burn spilled oil in the marsh on Friday, from 12 p.m. to 3:40 p.m. "Air monitoring was conducted and the results showed no level of concern," the agency said. The press notice doesn't indicate how much oil was removed in total. Coast Guard and other officials plan to return to the site Tuesday to see if additional measures are needed. Contractors Teichman Group LLC and OMI Environmental Solutions, as well as several agencies including the National Oceanic and Atmospheric Administration, Louisiana Oil Spill Coordinators Office, Louisiana Department of Environmental Quality, and Louisiana Wildlife and Fisheries are involved in the effort. The Coast Guard said the pipeline is secured and there are no reported injuries or waterway restrictions. The cause of the spill is under investigation.
Lawsuit Launched Against Trump EPA for Approving Fracking Waste Dumping Into Gulf of Mexico - The Center for Biological Diversity filed on Thursday a formal notice of intent to sue the Trump administration for allowing oil companies to dump waste from fracking and drilling into the Gulf of Mexico without evaluating the dangers to sea turtles , whales or other imperiled marine life . In September the U.S. Environmental Protection Agency ( EPA ) finalized a Clean Water Act permit for new and existing offshore oil and gas platforms operating in federal waters off the coasts of Texas, Louisiana and Mississippi. The permit allows oil companies to dump unlimited amounts of waste fluid, including chemicals involved in fracking, into the Gulf of Mexico. "The Trump administration is letting the oil industry turn our oceans into toxic-waste dumps. The EPA's supposed to protect water quality, not help pollute the Gulf," said Kristen Monsell, a senior attorney at the Center for Biological Diversity. "It's time for the courts to remind this agency that its mission is to safeguard the environment and public health." Thursday's notice letter highlighted the fact that the agency's approval of the permit without studying risks to imperiled species in the Gulf of Mexico is a violation of the federal Endangered Species Act. Fracking chemicals and other contaminants in produced water raise grave ecological concerns because the Gulf of Mexico provides important habitat for whales, sea turtles and fish—as well as being federally designated critical habitat for imperiled loggerhead sea turtles. Dolphins and other species in the Gulf are still suffering the lingering destructive effects of the 2010 Deepwater Horizon oil spill.
Tax Bill Provision From Texas Senator Would Enrich Pipeline Giants - The controversial Keystone pipeline spilled more than 200,000 gallons of oil in South Dakota last month, prompting new pressure to slow pipeline development in the United States. Only weeks later, Republican lawmakers slipped a provision into a massive tax bill that could instead give the pipeline operator, TransCanada, a huge new tax cut. The company is one of a handful of energy giants that set up master limited partnerships (MLPs) -- financial vehicles often used to shield energy investments from taxes. The investors in those vehicles — who are often the parent company or its subsidiaries — could receive a huge boost thanks to an eleventh-hour amendment added to the GOP tax bill by Texas Sen. John Cornyn. MLPs themselves are already exempted from corporate taxes, but Cornyn’s last-minute provision would cut income taxes on the money earned by the MLP partners.The tax changes stand to enrich fossil fuel behemoths and their partners — many of whom recently delivered big campaign donations to Donald Trump and to groups backing Republican Party lawmakers. “These MLP financial vehicles already operate at a tremendous tax advantage over other publicly-traded businesses, because they are the only public companies that are allowed to escape paying corporate income tax,” Edward Kleinbard wrote in The Hill Monday. Kleinbard is a University of Southern California law professor who served as the chief of staff for Congress’s Joint Committee on Taxation. “But that existing subsidy was insufficient for Sen. Cornyn, and now existing investors in such vehicles have been awarded a further windfall by becoming eligible for the new discounted pass-through tax rates sold as tax relief for Main Street business.”
Cheniere marketing unit signs sales deal with Austria's OMV -- Cheniere Energy's marketing unit has secured a multi-year sales deal with the trading arm of Austrian energy company OMV to deliver LNG cargoes to Europe, Cheniere said Wednesday. Meanwhile, another Gulf Coast export project under development is nearing final investment decision. Details about the agreement between Cheniere Marketing and OMV, including pricing and duration, were not being released, Cheniere spokesman Eben Burnham-Snyder said in an email responding to questions. Europe and Asia are key markets for Cheniere as it adds liquefaction units, or trains, at its Sabine Pass export terminal in Louisiana and works to complete construction at its Corpus Christi, Texas, export facility. OMV produces and markets oil and natural gas. It also is involved in petrochemicals and refining. According to the company's website, OMV operates a gas pipeline network in Austria and gas storage facilities in Austria and Germany. In August 2015, Cheniere Marketing signed a similar deal with France's EDF. That sales arrangement called for delivery of up to 26 cargoes (approximately 100 MMcf/d) on Delivered Ex-Ship terms to the Dunkirk terminal through 2018. The sale price was indexed to the Dutch Title Transfer index, or TTF, with a cancellation clause written into the contract. Cheniere regulatory filings at the time stated that the variable SPA with Cheniere Marketing allowed them to purchase any LNG produced by Sabine Pass in excess of that required for other customers at "Cheniere Marketing's option" for a fee of $3/MMBtu. Cheniere Marketing owns the right to liquefy any excess, uncontracted capacity available at the Sabine Pass and Corpus Christi LNG export facilities. Platts Analytics' Bentek Energy estimated at the time of the EDF deal that that amounted to around 800 MMcf/d of potential capacity split between the seven trains under development at the two facilities.
Cheniere Boosts LNG Tanker Fleet Amid Asian Demand Boom | Rigzone - U.S. liquefied natural gas (LNG) producer Cheniere Energy has expanded its shipping fleet with a flurry of spot vessel charters to keep up with Asian winter demand growth as spot prices hit three-year highs, market sources said.Cheniere's Sabine Pass terminal in Louisiana pumped out 22 cargoes last month and more are expected as it ramps up its fourth production unit, or train, with more than half of all November volumes sold to China, Japan or South Korea, according to ship-tracking data.An 82 percent surge in Asian spot LNG prices this year, driven by robust Chinese demand, rising oil and coal prices and nuclear supply shortfalls in South Korea and Taiwan, has left producers chasing to lock in sales.The world's biggest exporter, Qatar, entirely sold out of flexible winter LNG supply following a frenetic period of deal-making with term buyers in China and South Korea.Cheniere, which is still bringing new production to market, has chartered seven additional LNG carriers on spot markets as firm demand stretches its existing fleet, increasingly tied up in long-haul voyages, trade and shipping sources said.The charters span a variety of periods, from a single voyage to six months of employment, they said. A Cheniere spokesman confirmed the company now has 22 ships on the water.
U.S. liquefied natural gas exports have increased as new facilities come online – EIA - In August 2017, total U.S. natural gas liquefaction capacity in the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) following the completion of the fourth liquefaction unit at the Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. With increasing liquefaction capacity and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November. Sabine Pass, located on the U.S. Gulf Coast near the Louisiana-Texas border, consists of four existing natural gas liquefaction units, or trains, with a fifth train currently under construction. When complete, Sabine Pass will have a total liquefaction capacity of 3.5 Bcf/d. Five additional LNG projects are currently under construction in the United States, and they are expected to increase total U.S. liquefaction capacity to 9.6 Bcf/d by the end of 2019:
- Cove Point liquefaction terminal (one train, 0.75 Bcf/d capacity) in Maryland is 97% complete, and Dominion Energy expects to place it in service before the end of 2017.
- Elba Island LNG (10 modular liquefaction trains, 0.03 Bcf/d capacity each) in Georgia is owned by Kinder Morgan. Six trains are scheduled to come online in the summer of 2018, and four trains are scheduled to come online by May 2019.
- Freeport LNG (three trains, 0.7 Bcf/d capacity each) in Texas is being developed by Freeport LNG Development, L.P. The first train is expected to come online in November 2018, with the remaining two trains following in six-month intervals.
- Corpus Christi (two trains, 0.6 Bcf/d capacity each) in Texas is being developed by Cheniere and is expected to come online in 2019.
- Cameron LNG (three trains, 0.6 Bcf/d capacity each) in Louisiana is being developed by Sempra LNG and is expected to come online in 2019.
Overall utilization of existing LNG liquefaction facilities is expected to average 80% in 2017 and 79% in 2018, based on LNG export projections in EIA’s latest Short-Term Energy Outlook. Several factors can affect utilization rates, including weather-related disruptions, demand fluctuations, seasonality in import markets, production schedules for new LNG facilities, and maintenance on existing facilities.
More U.S. oil export capacity in the works - (UPI) -- A gas pipeline running from Texas shale could be converted to send oil to the Gulf Coast by the start of the next decade, Enterprise Products Partners said. The company announced plans Wednesday to convert a pipeline in its portfolio that carries natural gas from the Permian shale basin to a crude oil pipeline. With a new gas pipeline coming into service at the end of 2019, Shin Oak, the company said it has flexibility to repurpose another line for shale oil. "We have had strong demand for crude oil transportation, storage and marine terminal services for crude oil production from the Permian Basin," CEO Jim Teague said in a statement. In its latest drilling productivity report, the U.S. Energy Information Administration put the Permian shale basin at the top in terms of U.S. shale oil producers, far exceeding output from the Bakken shale basin in North Dakota. Production from the Permian shale is expected to increase by about 2 percent from November to 2.68 million barrels per day.For gas, the Appalachian basin is by far the most productive shale reservoir in the United States, more than doubling the output from the Permian.Overall, however, the latest monthly data from the Texas Railroad Commission, the state's energy regulator, found oil production was on the decline. The preliminary rate of 2.3 million barrels per day for September, the last full month for which it published data, was lower than the same month last year by 3 percent. Enterprise said repurposing one of its gas lines to carry oil would lift its total carrying capacity to more than 650,000 barrels per day from the Permian shale to its crude oil hub in Houston.
Weekly Gas Storage: Surprise Build - The EIA released its weekly Natural Gas Storage Report today, outlining how national natural gas stocks have changed in the last week. In total, the EIA reports natural gas stocks rose by 2 Bcf last week, rising from 3,693 Bcf to 3,695 Bcf. This is 6.7% below the 3,959 Bcf that was in storage at this point last year, and is 1.0% below the five-year average of 3,731. This week’s storage build was unexpected, as analysts predicted a draw of 4 Bcf.
Researchers Find Dangerous Bacteria in Water Wells Near Texas Fracking Sites -- Two new studies from University of Texas at Arlington researchers show harmful bacteria levels in groundwater near hydraulically fractured gas drilling sites. The studies published in the peer-reviewed journal Science of the Total Environment show antibiotic-resistant bacteria exist in private water wells in the Barnett Shale and Eagle Ford Shale regions of Texas. The researchers say these bacteria could cause gastrointestinal illnesses along with rashes and eye and ear infections. But the studies make no definitive links between fracking and contaminated water. Naturally occurring gas, agriculture waste or some combination could be the contamination sources. Fracking has led to a boom in natural gas production but raised widespread concerns about possible groundwater contamination. The method uses huge amounts of pressurized water, sand and chemicals to break apart underground rock formations
E & Ps face challenges in managing "last mile" logistics -- With frac sand use — and costs — on the rise in the Permian, a number of exploration and production companies (E&Ps) are becoming more involved in managing sand acquisition and logistics. It’s not an easy job, because even though a greater share of the frac sand used in Permian wells is expected to come from local, West Texas sand mines in the coming year, those “last mile” logistics — the delivery of sand by truck from the mine, plus unloading and storage of sand at the well site — are especially complex. Today, conclude our series on frac sand with a look at the challenges E&Ps face when they assume supply chain responsibility for sand. E&Ps in the red-hot Permian and other U.S. shale and tight-oil and gas plays have had remarkable success the past few years in ratcheting down the cost of drilling and completing new wells and to increase hydrocarbon production per well. And, as they have gained a more nuanced understanding of their hydrocarbon resources, producers and their pressure pumpers have been implementing increasingly sophisticated and well-specific completion strategies to wring ever-increasing volumes of crude oil, natural gas and natural gas liquids from their wells. These gains have been particularly significant in the Permian, where E&Ps have largely figured out how to optimize production from the region’s multiple, stacked pay zones. Two key elements of their success, which we described in Faster Horses, are drilling longer horizontal wells or laterals (now often 7,500 or 10,000 feet, and sometimes longer) and intensifying completions with the use of more pressure, more frac sand per linear foot of lateral and more frac stages.
Fights lay ahead as the oil industry creeps into the Flint Hills and Douglas County - - Ten years ago, an application for a well permit in Morris County would have drawn no objections. Even three years ago, after man-made earthquakes began to hammer Oklahoma and south-central Kansas at unprecedented rates, it’s unlikely anyone in the Flint Hills would have cared too much. Then Pawnee happened. On September 3, 2016, a 5.8-magnitude earthquake rippled out from its epicenter in Pawnee, Oklahoma, and was felt as far away as San Antonio, Texas; Memphis, Tennessee; Fargo, North Dakota; and Maricopa County, Arizona. Kansas City was not spared; the quake caused a crack in the Wyandotte County Courthouse that spans from the roof down to the ground. Despite being nearly 200 miles north of the epicenter, Flint Hills residents experienced an intense battering, according to Hoedel and others, of more than a minute. Picture frames fell from walls, beds and chairs bounced around, and cracks were later found in home foundations. Before 2012, seismic activity was rare in this part of the country: Kansas averaged only one earthquake a year strong enough to feel. Then they started coming in droves: 115 in 2013 and 2014. Those were small rumbles, mostly, but now they seemed to be gaining strength. And there was an obvious culprit: wastewater-injection wells used by oil companies in the boomtowns of Oklahoma and the southern Kansas counties of Harper and Sumner. Quail Oil sought a permit to inject as many as 5,000 barrels of wastewater a day deep into the ground in Diamond Springs. Its proposed well lay atop a site where three geologic formations converge: the Bourbon Arch, the Nemaha Uplift, and the Humboldt Fault, which 150 years ago experienced the largest recorded earthquake in Kansas history. The site is less than 100 miles from the Wolf Creek nuclear reactor, and 14 miles from the Tallgrass Prairie National Reserve. It’s also home to a spring, still in use, that has been renowned for the purity of its water since the days of the Santa Fe Trail. “They called it Diamond Spring because the water is so clear and clean and delicious and sparkling,” Hoedel said. “And now this company wants to dump all this contaminated water into the ground nearby, using this process that we know causes earthquakes.” In response, Hoedel and a few other like-minded souls in the community mobilized and formed a group called the Flint Hills Stewards.
Pipeline explodes in southeastern New Mexico oil patch (AP) — A pipeline exploded in southeastern New Mexico's oil patch, closing two highways but causing no reported injuries. Eddy County Emergency Manager Jennifer Armendariz says the pipeline that exploded early Wednesday morning is in a sparsely populated area about 10 miles (16 kilometers) south of Carlsbad believed to be used for natural gas. Armendariz says four energy companies have operations in the area and that authorities are working to identify the pipeline involved so it can be shut down. The explosion occurred near the junction of U.S. 285 and State Route 31 and closed both highways.County officials initially advised nearby residents to evacuate but later advised those in a 2-mile (3-kilometer) radius of the junction to shelter in place while authorities work to stabilize the situation.
Fracking protester wants skull-and-crossbones case tossed -- An anti-fracking activist ticketed for projecting a skull and crossbones onto the wall of a Colorado courthouse argues his actions broke no law and were protected by the Constitution.The Daily Camera reports Boulder police cited David Paul for trespassing after officers say he beamed a skull and crossbones along with the words "Ban Fracking!" onto a courthouse building. The building houses Boulder County government offices. Paul is asking the judge to throw out the case. Boulder County Attorney Ben Pearlman directed police to issue the ticket, saying the county doesn't allow images or phrases to be beamed onto the building.
U.S. judge orders oil-spill response plan for Dakota Access Pipeline (Reuters) - A federal judge ordered Energy Transfer Partners LP to coordinate with local tribes and the Army Corps of Engineers to create an oil-spill response plan for the controversial Dakota Access Pipeline by next April, a decision he said will allow oil to keep flowing and prevent spills. The order on Monday by U.S. District Judge James Boasberg came nearly six months after he ruled that the Army Corps of Engineers review of the project, which transports oil from North Dakota near Native American reservations to Illinois, was inadequate before it granted federal permits. In October the judge ruled that crude oil can continue to flow through the 1,170-mile (1,900-km) North Dakota-to-Illinois pipeline while the review is conducted. It has shipped crude since June. The order met the requests of the Standing Rock Sioux and Cheyenne River Sioux tribes to get an independent, third-party auditor to share data obtained during the review. The order must be implemented by April 1. “While we think that the pipeline should have been shut down, we are gratified that the federal court has put measures in place to reduce risks and provide some independent oversight to reduce the risk of a spill from this project,” said Standing Rock Chairman Mike Faith. Boasberg also asked Energy Transfer Partners for other interim measures on Monday. He asked the company to begin submitting bi-monthly reports later this month on safety conditions at the Lake Oahe pipeline crossing, the center of months of anti-pipeline protests last year. In his ruling Boasberg cited concerns about oil spills raised by last month’s 5,000-barrel spill at the Keystone pipeline in South Dakota, near the boundaries of tribal lands, as a reason for independent monitoring of Dakota Access. “Although the Court is not suggesting that a similar leak is imminent at Lake Oahe, the fact remains that there is an inherent risk with any pipeline,” Boasberg wrote in his eight-page order.
Court Orders Monitoring Of Dakota Access Pipeline After Keystone Spill - A federal court ordered the United States Army Corps of Engineers and Dakota Access to participate in multiple measures to monitor the oil pipeline constructed on land which under the 1851 treaty belongs to the Standing Rock Sioux tribe.The U.S. District Court for the District of Columbia invoked the recent spill of 210,000 gallons of oil from the Keystone XL pipeline in Marshall County, South Dakota, to justify the need for court monitoring.Judge James E. Boasberg wrote [PDF], “The spill occurred near the boundaries of the Lake Traverse Reservation, home of the Sisseton Wahpeton Oyate Tribe, thus highlighting the potential impact of pipeline incidents on tribal lands. Although the court is not suggesting that a similar leak is imminent at Lake Oahe, the fact remains that there is an inherent risk with any pipeline.”Although the court refused to completely shut down the pipeline in October, it previously acknowledged “allowing oil to flow through the pipeline” would create “potentially disruptive” effects and could lead to incidents that may potentially “wreak havoc on nearby communities and ecosystems.”The court instructed the Army Corps, Dakota Access and Sioux and Cheyenne Tribes to finalize “spill response plans” for Lake Oahe. The plans are to be filed with the court by April 1, 2018, and directly related to the risk of a spill. Dakota Access was also ordered to complete a third-party audit of its compliance with permits and regulations. The court requested the company consult with the Tribes when selecting this auditor so that they may share their own data with the auditor during the process. The results of the audit are also to be complete by April 1.
Amid deregulatory push, API launches push to limit methane emissions - The American Petroleum Institute Tuesday plans to unveil a voluntary industry program aimed at reducing methane emissions from US oil and natural gas operations, an effort to launch as the Trump administration continues its push to weaken and repeal methane rules finalized by the Obama administration. The API initiative, known as The Environmental Partnership, will initially include 26 oil and gas companies, including Shell, Pioneer Natural Resources and Cabot Oil and Gas, in all major US plays, according to Erik Milito, director of upstream and industry operations for API. Under the initiative, which will launch on January 1, participating companies will: commit to implement leak monitoring using the latest detection methods; replace or retrofit highly emitting pneumatic controllers; and attempt to minimize emissions from manual liquids unloading for gas production sources. "We've done it in a very surgical way so that we've picked programs that are actually going to help us see tangible improvements and really provide us a platform to really show continued emissions reductions," Milito said. Milito said the 26 companies already signed onto the program account for "tens of thousands" of US oil and gas sites, including many with multiple wells. He said the companies account for an estimated 25% of all domestic natural gas production. The percentage of total oil output represented was unavailable, he said. The program is voluntary, however, and, outside of potential removal from the program, there is no consequence for non-compliance. API will compile methane data in an annual report from the partnership, but there will be no formal monitoring and new industry standards implemented, Milito said.
GOP on verge of opening Arctic refuge to drilling | TheHill: Lawmakers are the closest they’ve been in decades to letting oil and natural gas companies drill in northeast Alaska’s Arctic National Wildlife Refuge (ANWR). The tax bill approved by the Senate includes a provision allowing two sales of drilling rights in the coastal plain of the wildlife refuge. While the House’s version of the tax bill does not include ANWR drilling, the provision is likely to survive in the final legislation and become law if it reaches President Trump’s desk. But even after the policy is approved, ANWR drilling is far from certain. Companies are unlikely to jump at the opportunity to drill there, analysts say, and any exploration is likely years away. And even if companies are interested in drilling there, environmental groups are nearly certain to challenge them every step of the way in the courts. Plus, if Democrats elect a president or take a majority in the House or Senate, they could put up significant roadblocks, or even stop ANWR drilling altogether. “There’s a lot of manic hyperbole about ‘oh my gosh, they’re going to start drilling tomorrow.’ That couldn’t be further from the truth,” said Kara Moriarty, president of the Alaska Oil and Gas Association, which has strongly supported allowing ANWR drilling for decades, an opinion shared by most residents and state leaders in Alaska. The U.S. Geological Survey estimates that the federally owned refuge’s coastal plain, the only area that would be open for drilling, could have up to 11.8 billion barrels of oil, though it hasn’t updated the assessment in years.
Major conservation group blasts GOP tax bill for allowing Arctic drilling: 'Simply shameful' | TheHill: A major conservation group is blasting the newly passed Senate GOP tax bill for allowing oil drilling in the Arctic National Wildlife Refuge (ANWR), calling the bill “simply shameful.” “Opening the Arctic to drilling as part of this tax plan is simply shameful. The Arctic Refuge isn’t a bank—drilling there won’t pay for the tax cuts the Senate just passed,” National Audubon Society President and CEO David Yarnold said in a statement Saturday. “The American people don’t support drilling in the Arctic and it’s up to the House to reject this flawed bill."The Republican tax bill included a provision to open up a section of ANWR to oil drilling for the first time. Democrats attempted to stop the provision in a late-night amendment vote, but that effort was shot down by Senate Republicans. Sen. Lisa Murkowski (R-Alaska) argued that the provision would create jobs as well as “protect an environment that as Alaskans we know how to protect.” The Audubon Society pushed back against that claim, citing dozens of Arctic wildlife scientists who united in opposition to the drilling expansion last week. “By making oil and gas drilling a primary purpose of the wildlife refuge and mandating an 800,000-acre oil and gas program, Senator Murkowski’s bill effectively undermines the environmental and wildlife protections that typically apply to oil and gas development on federal lands,” the group said.
The GOP tax bill could forever alter Alaska’s indigenous tribes - Bernadette Demientieff is a member of the Gwich’in, an indigenous tribe of roughly 9,000 people that spans north-central Alaska and northern Canada. And then, one day in 2014, something called to her, she felt the urge to step out onto the tundra. She started walking, up and out of the center of town—and then she turned around and looked: In front of her stretched the Arctic National Wildlife Refuge, the largest area of untouched wilderness in the United States. The land, an open expanse of peaks and rivers, spanned hundreds of miles past the horizon to the unseen, icy flat of the Arctic Ocean.“I started crying and crying,” she said. “And I asked the Creator for forgiveness.” Now 42, Demientieff is the executive director of the Gwich’in Steering Committee. She has spent years trying to protect the Arctic National Wildlife Refuge, or ANWR (pronounced AN-wahr), from oil and gas exploration. That fight suffered a major loss Saturday, the result of lawmakers voting on an expansive and quickly written bill several thousand miles away. The majority of Alaskans and majority of Alaksa Natives express their support for [drilling in ANWR]. It’s an issue of economic self-determination for our community,” The Inupiat live across the North Slope, including within the part of the ANWR that would soon be opened for drilling. Oil exploration already brings jobs and funds infrastructure in their communities. And the Arctic Slope Regional Corporation holds mineral rights to pockets of private land within the ANWR. If oil is discovered there, the corporation and its shareholders—roughly 13,00 members of the Inupiat tribe—could profit from the wealth. The Gwich’in people, meanwhile, live hundreds of miles south in west-central Alaska. Their regional corporation does not own land on the North Slope. But the Gwich’in are spiritually connected to the porcupine caribou, a herd of more than 160,000 creatures who migrate annually across the U.S. and Canadian tundra. The herd’s calving grounds, the most sacred space to the Gwich’in, lies within the area which could soon be open to drilling. To many of them, drilling in the calving ground isn’t just an attack on the Gwich’in way of life. It’s an attack on the Gwich’in.
Small bidders snatch up land near ANWR in state oil lease sale - Major oil companies did not bid Wednesday on state leases near the Arctic National Wildlife Refuge as Congress moves to open the refuge's coastal plain to drilling, but small bidding groups did. And new North Slope prospects generated interest in the annual state lease sale that officials said was one of the biggest of the last two decades.The state received $19.9 million in bids for the North Slope lease sale on Wednesday, making it the third-largest sale in the last two decades, said Chantal Walsh, director of the Alaska Oil and Gas Division. That was a surprise because so much of the land in the region had already been leased, she said.The amount of leased state land on the North Slope is at historically high levels, said Mark Wiggin, deputy commissioner of the state's Natural Resources department. Alaska officials opened bids for the lease sale at the Dena'ina Center in Anchorage. The state also received $1.3 million in bids for leases in state waters of the Beaufort Sea.The federal government also held a lease sale for the National Petroleum Reserve-Alaska on Wednesday afternoon. The Trump administration offered 900 tracts in the 23 million-acre reserve, the most ever. ConocoPhillips and partner Anadarko made up the only bidding group in that sale, for seven tracts totaling 80,000 acres, said Ted Murphy, associate director of the BLM in Alaska. Bids totaled $1.2 million, for acreage near ConocoPhillips' existing prospects in the petroleum reserve's eastern section, including the large Willow discovery. Alaska receives 50 percent of the bids.The companies were major bidding partners in an NPR-A lease sale last year that generated $18.8 million for 614,000 acres, the largest lease sale there in more than a decade.
Canada's Trans Mountain crude pipeline oversubscribed by 23% in December - Kinder Morgan Canada will limit crude oil nominations on its Trans Mountain pipeline system by 23% in December, meaning the line will carry 77% of nominated volumes, the company said Wednesday. December volumes on the Trans Mountain mainline system are expected to be 309,604 b/d, down from 319,571 b/d in November, Kinder Morgan said in an email. Exports from the Westridge Dock near Vancouver are expected to be 78,917 b/d, compared with 80,669 b/d in November. Throughput on the Puget Sound pipeline is expected to be 148,368 b/d, compared with 150,357 b/d in November. The Trans Mountain pipeline ships Canadian crude from Edmonton, Alberta, to the Westridge export terminal in Burnaby, British Columbia, and on to the connected Puget Sound pipeline to Seattle-area refineries.
MIT study suggests US vastly overstates oil output forecasts – Turns out, America’s decade-long shale boom might just end up being a little too good to be true. Researchers at MIT have uncovered one potentially game-changing detail: a flaw in the Energy Department’s official forecast, which may vastly overstate oil and gas production in the years to come. The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” Extrapolating from field studies Montgomery and his colleague Francis O’Sullivan conducted in North Dakota’s Bakken shale deposit, the research suggests that total U.S. oil and natural-gas production from new wells could undershoot the EIA estimate by more than 10 percent in 2020. Things would get progressively worse each year after that as wells in various sweet spots are exhausted and technology fails to close the gap. “The same forecasting methods are used in other plays in the U.S., and the same dynamic is likely to be present,” Montgomery added.
Is The EIA Overestimating The U.S. Shale Boom? -- The American shale boom may be overstated by the U.S. Energy Department, according to a new MIT study that suggests the agency may be over-attributing a rise in shale drilling to technological advances. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” MIT researcher Justin B. Montgomery told World Oil. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.”Instead, lukewarm oil prices have forced oil majors to drill only in easy-to-access areas, located mostly in the Eagle Ford and Permian basins in Texas, and the Bakken formation in North Dakota. This has led to an exaggerated increase in the number of active wells, and a hyperbolized narrative of growth in the shale industry, the study says.“The same forecasting methods are used in other plays in the U.S., and the same dynamic is likely to be present,” Montgomery added.Margaret Coleman, the Energy Information Administration’s chief of oil, gas and biofuels exploration and production analysis, said the “study raised valid points” and offered insights for more accurate analysis of domestic fossil fuel forecasting. Part of the blame can be attributed to an information gap in data available to the EIA team, she added. Many shale wells lack key pieces of data tracked down by the MIT team, meaning EIA projections over-emphasized geological and capital assumptions as well as technological developments to estimate the shale industry’s growth. Of course, there have been some advances in drill head technology, mapping software, and hydraulic fracking, but that is just one part of the puzzle. “It’s really hard to bet against the ability of the industry to improve and get more out of the rock,” . Three years of oil prices have forced oil and gas majors worldwide to get creative to lower costs and avoid bankruptcies. Mass firings and empty offices pushed multinationals to operate on a leaner human resources diet, utilizing robots and merging job descriptions to keep the companies functional.
The coming surge in US superlight crude and condensate production - Back in 2015, U.S. production of superlight crude oil and condensate had been on the rise for five years, driven primarily by boom times in the Eagle Ford shale play in South Texas. Condensate was selling for several bucks-a-barrel less than light-crude benchmark West Texas Intermediate (WTI), the U.S. government had recently approved the export of minimally processed condensate, and new condensate splitters were being built to allow refineries to use more high-API-gravity liquids. Fast forward to now, though, and production of superlight crude and conde is off by one-third — the lighter the material, the steeper the decline — a barrel of conde is selling for several dollars more than WTI and a lot of those new splitters are running at far less than full capacity. As for exports of neat conde, they’ve dropped to almost zero, and whatever superlight crude and conde that is being exported goes out as part of blended crude. But things could be about to change again, possibly in a big way. Today, we begin a new blog series on the chaotic U.S. conde and superlight crude market. Any discussion of superlight crude and condensate needs to begin with definitions, or at least attempts at definitions. First of all, crude oil isn’t a single commodity — instead, there’s a wide spectrum of crude oil types that emerge from wells, ranging from molasses-like, high-sulfur heavy crude to easily poured, sweet (or low-sulfur) superlight crude. And then there’s field (or lease) condensate, commonly called conde (rhymes with Gandhi), which is even lighter, more like cream soda. As we said in our Drill Down Report, Blinded by the Lights, crude oil and condensate are categorized by their API gravity (API standing for American Petroleum Institute), which measures (in degrees) a petroleum liquid’s density relative to water — the lighter or less dense the crude, the higher its API gravity number. We should note that each and every type of crude has value; the most complex refineries have the sophisticated equipment to break down the heaviest, sourest (highest-sulfur) crudes into gasoline, distillate and other refined products, and simpler refineries (with fewer bells and whistles) consume lighter, sweeter crudes.
U.S. shale eases into detente with OPEC as supply cut extended (Reuters) - U.S. shale oil producers and OPEC appear to have called a truce of sorts even though there is no sign the U.S. industry will do anything to help reduce the global oil supply glut. U.S. producers applauded Thursday’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia to extend output cuts until the end of 2018. Texas and North Dakota - the two largest U.S. shale-producing states - described it as a boon for their producers. Their appreciation was in contrast to a more combative style in recent years, when shale states seemed to relish openly bashing the group. “Now that it seems prices are looking to stabilize with this OPEC deal around $60 (per barrel), I think that’s going to be a very nice price environment for folks around the state,” Ryan Sitton, one of three commissioners on the Texas Railroad Commission, said in a phone interview from Austin. Unlike the last OPEC meeting in May, when frustration with shale producers boiled over into public view more than once, members in Vienna this week took a more conciliatory tone. “Shale is an important parameter, and complementing to the production of the world,” United Arab Emirates Energy Minister Suhail al-Mazroui told reporters on the sidelines of the talks. “We cannot ignore it, but we need to apply the right weight for that contributor without exaggerating the effect if it.” One reason for the change in OPEC’s tone may be a greater confidence that U.S. shale producers will never be able to match its clout especially with the global appetite currently growing by some 1.5 million barrels per day (bpd). OPEC supplies roughly a third of the world’s crude. U.S. antitrust law prevents U.S. producers from joining the group.
Asia, Europe prices to boost US LNG exports over winter: EIA -- Strong demand for power plant and home heating fuel, along with high spot prices in Asia and Europe, are expected to boost US LNG export volumes and utilization of liquefaction units this winter, the Energy Information Administration said Thursday. However, overall utilization of existing LNG liquefaction facilities in 2018 will be slightly lower, on average, than in 2017, EIA said in a report.The outlook comes as a second US exporter of LNG produced from shale gas, Dominion Energy, prepares to begin production in Maryland, joining Cheniere Energy, which shipped its first cargo from its Sabine Pass terminal in Louisiana in February 2016.None of the second wave of projects that are being proposed for US shores took a final investment decision this year amid fears of a global supply glut. Next year is expected to be a consequential one for the dozen or so developers, as several are hoping to prove viability and advance toward construction. In the meantime, the handful of LNG projects currently being built in the US will strengthen the US' position in the market."With increasing liquefaction capacity and utilization, US LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November," EIA said. "Exports from Sabine Pass began to increase in September 2017 as Train 4 ramped up to full production -- reaching 2.7 Bcf/d in November -- with an overall capacity utilization rate of 96% across four trains."Over the last two months, feedgas volumes at Sabine Pass have remained highly utilized at 98%, likely driven by increasingly favorable netbacks, data compiled by Platts Analytics' Bentek Energy show. Netbacks to the UK's National Balancing Point trading hub and in JKM, the benchmark price for spot LNG in Northeast Asia, have continued to rise, increasing $1.01/MMBtu to $3.19/MMBtu and 85 cents/MMBtu to $4.15/MMBtu, respectively, over the last two months.
Platts JKM rises above $10/MMBtu mark on north Asian LNG demand, oil price strength - Spot Asia LNG prices broke above $10/MMBtu Thursday on robust peak winter demand from Northeast Asia and recent oil price strength.The Platts JKM for cargoes delivered in January was at $10.05/MMBtu, the first time in double digits since January 2015, having surged more than 60% since the beginning of September. Spot prices have been on an upward trajectory over the past three months, almost doubling the 2017 low of $5.35/MMBtu. A similar upward trend was observed in the JKM towards the end of 2016, before prices dropped to just over $5/MMBtu by the end of March. While the price surge last winter was spurred by supply concerns, mainly at Australian and Angolan facilities, this year's rally has been underpinned by strong demand from north Asian buyers, especially from China. China's soaring demand for LNG imports this year has been driven by cold weather, coal-to-gas switching policy directives to curb air pollution, and large-scale replacement of coal-fired heating with gas-fired boilers in domestic households.The country has imported 32.7 million mt of LNG in 2017 to date, just below the 33.3 million mt imported by South Korea, according to Platts Analytics, and well above the 25.7 million mt China imported in the full year 2016.China's interest in January cargoes has been strong, with recent bids from end-users in the high-$9s/MMBtu, though the country's spot demand growth potential might be limited by high terminal capacity utilization. Terminals in the key winter demand center of northeast China, operated by state-owned importers CNOOC, PetroChina and Sinopec, have been running above nameplate capacity, according to market sources.
Argentina could become player in global gas market: analysts - Argentina could become a player in the global natural gas market by developing its giant Vaca Muerta shale play, but a number of challenges must be taken on including finding new outlets for the rising production, analysts said Tuesday. "Argentina has huge potential in gas," Daniel Montamat, an advisor to the Argentinian Energy Ministry, said at the Latin American Energy Organization's Forum on Regional Energy Integration in Buenos Aires. The country has proved oil and gas reserves of 4 billion barrels of oil equivalent and probable reserves of 9 billion boe, whereas the shale oil and gas resources total 170 billion boe, of which nearly 80% is gas, Montamat said. The size and quality of the resources have attracted companies like BP, Chevron, Dow Chemical, Total and others that, along with Argentina's state YPF, are starting to develop resources in Vaca Muerta. The play has gained comparisons to the Permian Basin in the US. Shale oil and gas production rose 26% to 75,700 boe/d in August in Neuquen, home to most of the play, according to the latest data of that province's Department of Energy, Mining and Hydrocarbons. The projects are expected to increase the Argentina's total gas output to 142 million cu m/d in 2023 and 185 million cu m/d in 2025, according to energy ministry forecasts. That would be up from 122 million cu m/d this year, its data show.
China's natural gas push is too successful, creates price dilemma: Russell (Reuters) - China’s push to use more natural gas over winter in a bid to cut air pollution is running into the harsh realities of rising prices and limited supplies of the cleaner fuel. In a signal of what may become more government intervention in the natural gas market, China’s state planner ordered eight regions to meet with natural gas producers, liquefied natural gas (LNG) terminal operators and traders. The meetings are effectively a warning by the National Development and Reform Commission (NDRC) to the various players in the natural gas sector to ensure that prices don’t rise too much even as rising demand causes supply shortages. Beijing has encouraged China’s provinces to switch from coal to natural gas for both residential heating and industrial processes over winter as part of efforts to limit the smog that has in past years choked cities, including the capital. In some ways, the move has been too successful, with the industry-heavy provinces of Hebei and Shandong warning of natural gas shortages, and Hebei forcing some users to cut consumption. It’s not only the shortage of natural gas that’s causing problems. China’s domestic LNG price has risen to its highest since 2011, topping 7,000 yuan ($1,061) a tonne in the last week of November. The spot price of seaborne LNG in Asia LNG-AS has also surpassed the high from the 2016-17 winter, reaching $9.85 per million British thermal units (mmBtu) in the week ended Dec. 1. The peak from the previous winter was $9.75 per mmBtu, hit in early January this year, and the price is some 82 percent higher than the $5.40 low reached during the low demand summer period.
Oil-hungry China imported record levels of US crude in November - Chinese crude oil imports hit the second highest level on record last month, and U.S. oil producers are reaping the benefits. U.S. crude oil imports into China hit an all-time high in November, according to figures from ClipperData. The tanker-tracking firm reports that 289,000 barrels a day of U.S. crude hit Chinese shores by the end of the month. That is a small share of the 9.01 million barrels a day that China imported in November, but it shows that U.S. producers continue to make inroads into the country two years after Congress lifted a 40-year ban on crude oil exports. The United States has been able to penetrate the market in part because OPEC, Russia and nine other oil exporters are limiting their production in order to balance an oversupplied market. That has allowed U.S. producers to capture some of China's growing crude oil demand. The price difference between U.S. West Texas Intermediate crude and international benchmark Brent crude expanded this fall after Hurricane Harvey shut down U.S. Gulf Coast refineries. That suppressed the price of WTI, making it attractive to overseas buyers. The Chinese purchases started around that time, according to Smith. The price spread between WTI and Brent has narrowed since then, but still stands at about $6 a barrel. That helped to drive total U.S. crude oil exports to an all-time high above 2 million barrels a day in October. U.S. exports to China are "really going to depend on the spread," Smith said. "We're still here at over $5 on the Brent-WTI spread and so as long as that U.S. crude is discounted it will be bought up by Asia or Europe." Market watchers shouldn't expect to see Chinese imports stay at 9 million barrels a day, but there is more growth on the horizon, s Refinery activity in China is healthy, demand is "decent," and refining margins are "phenomenal" thanks to tight supplies of diesel, she says. Meanwhile two new refineries in China are ramping up a combined 460,000 barrels a day of refining capacity and more small, independent "teapot" refineries are opening. Chinese crude oil imports are up about 900,000 barrels a day to an average of nearly 8.5 million barrels a day through November,
No significant inventory draw expected in Q1 2018, says Saudi's Falih - No significant oil inventory draws are expected in the next four months, Saudi energy minister Khalid al-Falih said Monday, meaning the global oil markets will not reach balance. "Our projection is that inventories will not draw significantly in the next four months, just as we have seen in 2017," Falih told reporters at a press conference in Riyadh following talks with his US counterpart, Rick Perry. "It won't make a dent," he added. The meeting came after Falih secured a nine-month extension to the OPEC/non-OPEC production cut deal in Vienna last Thursday, allowing the group to continue drawing down inventories. OPEC and non-OPEC producers still need to contend with supply growth, particularly from US shale producers, making a forecast of the exact rate of stock draws difficult. There was still an estimated 150 million barrels of crude oil in storage that needed to be drained, Falih said. The coalition had previously stated its aim of bringing OECD oil inventory levels down to their five-year average. OPEC estimated commercial OECD oil inventories stood 140 million barrels above that benchmark as of October. Now Falih is pushing for an even more ambitious target of reducing them by 150 million barrels. How quickly this happens will be reviewed in June. "We will wait to see it and will review in June, with the expectation, that unless something unexpected happens, we will not alter our course in the second half of the year", Falih said. "The outlook of when we will hit a balanced market will be clearer in June and we will start thinking what do we do in 2019," he added. This will mean looking at how OPEC and non-OPEC producers begin the process of exiting their supply cuts. The exit strategy, still to be devised, will certainly not include opening the taps to release 1.8 million barrels into the market overnight.
OPEC Can Drain Some Oil Barrels With a Calculator - Catching a moving target is difficult, but it's far easier if the target is moving toward you.OPEC and its associates, which extended their supply cuts on Thursday, are chasing a particularly elusive quarry known as the five-year average of commercial oil inventories in the OECD countries.This stockpile of oil held by companies (rather than government-controlled strategic stocks) is the most visible indicator of the glut weighing on oil prices and OPEC's progress in draining it. The Blob The oil glut began building in earnest in 2015 as OPEC first refused to cut supply to support prices, and draining it is a slow process Source: International Energy Agency, Bloomberg Gadfly analysis Note: Data for October 2017 are estimated, based on preliminary stock movements in the U.S., Europe and Japan. At the start of the 2017, stocks were 278 million barrels above the five-year average for that month, according to OPEC. As of October, the excess had dropped to 140 million, the group said Thursday. It aims to close that next year, with a review planned for June.The good news for OPEC is that the average itself will do some of the job.I wrote here about how the build-up of the oil glut meant five-year moving averages of U.S. inventories were also rising. Like a big meal moving through a python, a sudden increase in stocks will cause a bulge in the moving average for several years.The same is happening with OECD inventories. Based on OPEC's published data, the implied five-year average stockpile for June 2018 -- meaning the average level for that month in the years 2013 through 2017 -- is 2.853 billion barrels. The implied average for October 2017 is 2.818 billion. In other words, the average will rise 35 million barrels by the time of the next Vienna show. That means one out of every four barrels OPEC needs to disappear in order to hit its target will be drained not by demand or supply -- just math.
November OPEC oil output drops to 6-month low - Oil production from the Organization of the Petroleum Exporting Countries fell to the lowest level in six months in November, according to an S&P Global Platts survey released Thursday. OPEC output declined by 220,000 barrels a day in November from a month earlier, to 32.35 million barrels a day. The decline was driven by "steady" crude production falls in Angola, Saudi Arabia, Iraq, Venezuela, Libya and the UAE, S&P Global Platts said. Saudi Arabia's output fell by 50,000 barrels a day to a four-month low of 9.97 million barrels a day. Output from Nigeria and Algeria, however, climbed. January West Texas Intermediate crude held onto earlier gains, trading 50 cents, or 0.9%, higher at $56.46 a barrel on the New York Mercantile Exchange.
Asia turns to North America for more oil as OPEC extends output cuts - Asian refiners are losing no time reacting to a decision by OPEC and Russia to extend their agreed production cuts to all of 2018, ordering more oil from the Caribbean and Gulf of Mexico in a move that will result in lost OPEC and Russian market share. In a note to clients titled “Christmas comes early,” Barclays bank said on Friday: “U.S. crude oil exports to China could easily double next year as U.S. production and export capacity expands … (and) OPEC countries will see their market shares in Asia decline further.” “There have been many enquiries from Asia for oil tanker shipments from the Gulf of Mexico and Caribbean. Now that we know OPEC’s cuts will be extended, these enquiries are being turned into orders,” said a broker who specializes in long-haul crude oil shipments.
OPEC expects to stick to cuts in second half of 2018 - Saudi minister (Reuters) - Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday oil producers might start discussing in June when to raise output once the market outlook was clearer, even though OPEC was expected to continue output curbs in the second half of 2018. Saudi Arabia's Oil Minister Khalid al-Falih listens during a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017. REUTERS/Heinz-Peter BaderThe Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia have agreed to extend oil output cuts until the end of 2018 to clear a global glut but have signalled a possible early exit if market overheated. Falih said in Riyadh that the expectation was that “we will not alter our course in the second half of the year,” adding that this assumed there were no unexpected developments. “However, we think that the outlook for when we will hit the balanced market will be clearer in June, and we will start thinking of what do we do in 2019,” he said when asked if he sees oil producers starting to raise output in June when OPEC is set to review the supply cuts. Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts to ensure the market does not flip into a deficit too soon, prices do not rally too fast and rival U.S. shale firms do not boost output further. Speaking at a news conference with U.S. Energy Secretary Rick Perry, Falih said the kingdom and other major oil producers had plenty of supply to respond to any sudden disruptions. “We have close to 2 million barrels (per day, bpd) of spare capacity so our ability to bring back production in case of need for global supply security goes beyond the amount of cuts we have made,” Falih said. “There will be plenty of supply to respond to any need in the market.”
Funds build record bullish position in oil ahead of 2018: Kemp - (Reuters) - Hedge fund managers raised their bullish position in crude oil and refined products by another 63 million barrels to a record 1,155 million barrels in the week before the OPEC meeting.Portfolio managers were emboldened as it became clear OPEC and its allies were likely to extend production cuts for another nine months until the end of 2018 (http://tmsnrt.rs/2A0cUsJ).Fund managers have brushed aside concerns about the enormous concentration of long positions already in the market and the risk of a sharp liquidation-driven reversal.The focus has instead been on the potential for a further tightening of crude and product markets next year as oil consumption continues to grow strongly and OPEC restricts output to draw down inventories.The increase in net long positions was concentrated mostly in U.S. crude (WTI) where net length increased by 52 million barrels in the week to Nov. 28.Net length in Brent rose by 12 million barrels while there were only minor changes in U.S. gasoline (-3 million barrels) and heating oil (+2 million barrels).WTI appears to have been playing catch-up with Brent, where net long positions have been at or near record levels since the start of November.In contrast to Brent, traders have taken a much more cautious view on WTI, owing to the local oversupply of crude in the U.S. Midwest and around the WTI delivery point at Cushing. But some of that caution appears to have evaporated following problems with the Keystone pipeline that delivers crude from Canada into the region.Hedge fund managers have cut short positions in WTI to just 40 million barrels, the lowest level since February 2017 and before that July 2014 at the start of the oil slump. Across the entire petroleum complex, the imbalance between long and short positions has become extreme, which suggests that the risk of a sharp price reversal remains high in the short-term.
Oil Markets Calm After OPEC Storm -- Oil prices fell back a bit on Monday as the dust from the OPEC meeting settled. Hedge funds and other money managers still have an enormously bullish positioning, which will leave open the opportunity for profit-taking. “A lack of any significant bullishness in the weekend let the bears regain control they were looking for,” Donald Morton, senior vice president at Herbert J. Sims & Co., told the Wall Street Journal. Researchers at MIT have discovered a flaw in the EIA’s official forecast, which might mean that the agency is vastly overstating the potential growth of oil and gas production. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors, according to Bloomberg. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” The EIA has assumed technology has been behind much of the growth of shale, but the MIT researchers said recent growth is more due to the fact that low prices have forced drillers to focus only on the sweet spots. “When that’s all played out, they’re going to have to go to the tier-two acreage, which isn’t going to be as productive,” Dave Yoxtheimer, a hydrogeologist at Penn State, told Bloomberg. The conclusion from the MIT report is that total U.S. oil and natural gas production could undershoot EIA forecasts by 10 percent by 2020, a disparity that widens in subsequent years. Saudi oil minister Khalid al-Falih told reporters on Monday that the group will have a better sense of what they will do next by June. “[W]e think that the outlook for when we will hit the balanced market will be clearer in June, and we will start thinking of what do we do in 2019,” he said. However, he also said that the expectation was that “we will not alter our course in the second half of the year.” When asked about the possibility of tightening the market too much, al-Falih dismissed those claims. “We have close to 2 million barrels (per day, bpd) of spare capacity so our ability to bring back production in case of need for global supply security goes beyond the amount of cuts we have made,” Falih said. “There will be plenty of supply to respond to any need in the market.” A Bloomberg survey estimates that total OPEC production declined by 80,000 bpd in November compared to a month earlier, dropping to a six-month low. Output stood at 32.47 million barrels per day, the lowest total since May. Much of the decline was the result of a 100,000-bpd decline from Angola, due to field maintenance.
Oil slips on worries of possible shale oil surge - Houston Chronicle: Oil retreated the most in more than two weeks amid worries that OPEC's deal to extend production cutbacks may take U.S. shale activity to a whole new level. Futures closed 1.5 percent lower in New York. OPEC and partners including Russia last week agreed to keep cutting output through the end of next year. At the same time, North American explorers probably will boost spending by 20 percent in 2018, according to an Evercore ISI survey of industry budget trends. "It's been a steady climb on the production side here in the U.S., which continues to eat away at OPEC's hopes for balancing this market," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. "They are sowing the seeds for the deal unraveling just because the way it's promoting shale output." The slide comes after oil jumped about a fifth from early September as investors geared up for last week's decision by the Organization of Petroleum Exporting Countries and its allies. The producers will maintain cuts until global supply meets demand, Saudi Arabia's Energy Minister Khalid Al-Falih said. OPEC's output in November dropped to a six-month low, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. But the danger is U.S. shale activity may surge, undermining the OPEC reductions. The U.S. oil rig count was already at the highest level since September last week, according to Baker Hughes data released Friday, and U.S. output was at a record high in the latest weekly government statistics. West Texas Intermediate for January delivery fell 89 cents to settle at $57.47 a barrel on the New York Mercantile Exchange. Total volume traded was about 32 percent below the 100-day average. Brent for February settlement slid $1.28 to end the session at $62.45 on the London-based ICE Futures Europe exchange, the lowest level in two weeks. The global benchmark crude was at a premium of $4.96 to February WTI.
Goldman raises 2018 oil price forecast after OPEC deal -- A stronger than anticipated OPEC-led commitment to extend production cuts will support prices through 2018, according to analysts at Goldman Sachs. In a research note published late Monday, Goldman lifted its Brent price forecast for next year to $62 a barrel and its WTI projection to $57.50 a barrel. The revisions were up from $58 a barrel and $55 a barrel respectively. While the OPEC-led deal "leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate," Goldman analysts said in the research note. Oil prices have lost ground in the days following OPEC's deal with global producers last week. The 14-member cartel, Russia and nine other crude producers announced plans to extend their output cuts until the end of 2018. The move was heavily telegraphed ahead of the decision, but oil producers had earlier indicated they could exit the deal if they feel the market was overheating. 'Risks remain' beyond 2018 "Of course, risks remain and we see these as skewed to the upside into 2018 on the risk of an over tightening, either because of new disruptions, demand exceeding our optimistic forecast of OPEC letting the stock draw run hot," Goldman analysts said. However, Goldman said the response of shale oil and other producers to higher prices would likely incentivize OPEC and Russia to "pare back" their now greater capacity, thus leaving risks to prices skewed towards the downside over the long term.
Oil rises in anticipation of another US crude drawdown (Reuters) - Oil rose on Tuesday, supported by strong demand, expectations of a drop in U.S. crude inventories and an OPEC-led deal to extend oil output cuts. Analysts expect data on Wednesday from the U.S. Energy Information Administration (EIA) to show crude stocks fell 3.4 million barrels last week. Industry group the American Petroleum Institute said late on Tuesday that crude stocks fell by 5.5 million barrels, more than expected. But gasoline stocks were up by 9.2 million barrels, and distillate inventories rose by 4.3 million barrels, far more than expected for both categories. The EIA and API numbers do not always run in tandem. In quiet post-settlement trade, oil prices dropped. Brent crude settled up 41 cents, or 0.7 percent, at $62.86 a barrel while U.S. West Texas Intermediate crude ended 15 cents, or 0.3 percent, higher at $57.62 a barrel. After the API data, U.S. crude fell to $57.48 a barrel as of 5:08 p.m. EST.
Crude Oil Prices Settle Higher Amid Strong OPEC Compliance -– Crude oil futures settled higher on Tuesday as market participants continued to expect that ongoing strong OPEC compliance with the production-cut deal will continue to support oil prices. On the New York Mercantile Exchange crude futures for January delivery rose 15 cents to settle at $57.62 a barrel, while on London's Intercontinental Exchange, Brent gained 45 cents to trade at $62.90 a barrel. OPEC oil output fell in November by 300,000 barrels per day (bpd) to its lowest since May, a Reuters survey found on Monday, as the oil cartel maintained strong compliance with the deal to curb output. Expectations for ongoing strong OPEC compliance stoked investor hopes that rebalancing in oil markets would continue through 2018 as Goldman Sachs raised its 2018 forecasts for both Brent and WTI. Goldman Sachs raised its 2018 forecasts on Brent and WTI to $62 per barrel, and $57.50 a barrel, respectively. That is an increase from its previous 2018 Brent forecast of $58 per barrel and WTI forecast of $55 per barrel. “While the deal leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate,” Goldman Sachs analysts said in a note. The upbeat session for crude futures comes ahead of inventory data from the American Petroleum Institute on Tuesday as well as a further report from EIA on Wednesday expected to show a decrease in domestic crude inventories for the second-straight week. U.S. crude production, meanwhile, is likely to be closely monitored amid fears that U.S. producers are set to ramp up output. U.S. output rose in September to 9.5 million barrels per day (bpd), the highest monthly output since 2015, the EIA said last week.
WTI/RBOB Sink On Massive Product Inventory Builds --A relatively stable day in energy markets as many other markets turmoiled, but as tonight's data hit, both WTI/RBOB kneejerked lower after API showed massive product inventory builds (despite a big crude draw). API:
- Crude -5.48mm (-2.5mm exp)
- Cushing -1.95mm (-2.4mm exp)
- Gasoline +9.196mm - biggest build since Jan 2016
- Distillates +4.259mm - biggest build since Jul 2017
After last week's surprise product builds and huge destocking at Cushing, expectations are high for more of the latter, but Cushing's Draw was less than expected and the massive builds in Gasoline and Distillates was shocking...The initial reaction to the API data was both WTI and RBOB kneejerked lower..
Oil Prices Fall After API Reports Huge Build In Gasoline Inventories - The American Petroleum Institute (API) reported a large draw of 5.481 million barrels of United States crude oil inventories for the week ending December 1, while analysts had expected a drawdown of 3.507 million barrels. The draw may embolden oil bulls who were left wanting after the OPEC meeting failed to lift prices as many had hoped. Last week, the American Petroleum Institute (API) reported a surprise build of 1.821 million barrels of crude oil when analysts had expected a drawdown of 3.15 million barrels. A day later, however, the EIA reported a 3.4-million-barrel draw, more in line with analyst expectations.Gasoline inventories, on the other hand, saw a massive build this week of 9.196 million barrels for the week ending December 1, compared to forecasts of a much smaller 1.145-million-barrel build. This week’s unexpectedly large build in gasoline inventories is likely to put downward pressure on oil prices. Oil prices were mixed heading into today’s data, with WTI down $.02 (-0.03%) at $57.45 at 12:06pm EST, and Brent crude up $0.14 (-0.22%) at $62.59—both benchmarks down from prices just two days before the OPEC meeting last week, despite OPEC’s promise to continue the production cuts through the end of 2018. Distillate inventories, too, saw a build this week, up 4.259 million barrels, against a forecast of a 548,000-barrel build.Inventories at the Cushing, Oklahoma, site decreased by 1.951 million barrels this week.
EIA: US commercial crude oil inventories decreased by 5.6 mln barrels - Below are the key highlights from the EIA's weekly petroleum report for the week ending December 1, 2017.
- U.S. crude oil refinery inputs averaged 17.2 million barrels per day during the week ending December 1, 2017.
- U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 127,000 barrels per day from the previous week.
- U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.6 million barrels from the previous week.
- Total products supplied over the last four-week period averaged about 19.7 million barrels per day, up by 0.5% from the same period last year.
WTI/RBOB Extend Losses On Biggest Gasoline Build In 11 Months, Record Crude Production - Following last night's API-reported huge product inventory builds, bulls were hoping DOE would rescue WTI/RBOB prices but it did not as the dat confirmed a huge crude draw and even bigger product build (gasoline's biggest weekly build since January). Adding to the pain, US crude production rose to another new record. A gasoline build is likely as “refineries have been running very high, so it’s pretty natural,” James Williams, president of energy researcher WTRG Economics, says, adding that investors will also look to see the magnitude of a potential drop at Cushing. DOE:
- Crude -5.61mm (-2.5mm exp)
- Cushing -2.753mm (-2.4mm exp)
- Gasoline +6.78mm (+2.56mm exp) - biggest build since Jan 2017
- Distillates +1.667mm
Confirming API's data, DOE showed a major crude draw, big drop at Cushing but major builds in products... US Crude production rose 25k b/d to a new record high...
Oil Prices Slide On Major Gasoline Build | OilPrice.com The Energy Information Administration reported a 5.6-million-barrel draw in crude oil inventories for the week to December 1, largely in line with the American Petroleum Institute’s estimate of a 5.481-million-barrel draw that was reported yesterday. Analysts had expected a draw of 3.507 million barrels.But more notably, the API had yesterday reported a staggering 9.196-million-barrel build in gasoline inventories—when analysts had expected a small build of just 1.145 million barrels. The EIA today confirmed a large build of 6.8 million barrels.US crude oil imports averaged 7.2 million barrels per day last week—a decrease of 127,000 barrels per day from the previous week. The EIA said refineries last week processed 17.2 million barrels of crude per day, producing 9.8 million barrels per day of gasoline, down from 10.2 million bpd in the previous week. Prices have been stubbornly resistant to OPEC’s promise to extend the OPEC production cuts to the end of 2018, dropped yesterday as the API reported the surprisingly large gasoline inventory build. Both WTI and Brent crude benchmarks continued to fall in after-hours trading yesterday, settling at $57.36 and $62.60 respectively around 9:00pm EST. The benchmarks continued to fall overnight, and at 7:42am EST, they were trading at $56.90 and $62.21. Related: The 'Mega' Oil Field That Will Never Boom Despite the price drop, the extension of the OPEC and allies’ production cut deal through the end of 2018 continues to sent a stronger signal that the oil market rebalancing could speed up and send WTI oil prices to average $54.78 a barrel in 2018, up from a previous projection of $52.50, a Reuters poll of 30 analysts and economists showed on Wednesday.
Crude oil rally stalls as fuel prices soften: Kemp (Reuters) - Surging prices for refined products, especially distillate fuel oil, led crude prices higher between June and November, but now fuels are slipping and putting crude under pressure. Gross refining margins for producing distillate fuel oil from U.S. crude rose from $14 per barrel in June to more than $25 per barrel in the middle of November. The U.S. distillate market started the year in substantial oversupply, with inventories well above the long-term average (http://tmsnrt.rs/2joA5Cw ). But as a result of strong demand, primarily in export markets, the market has moved into an increasingly large deficit as the year has progressed. Distillate stocks have moved from a surplus of 33 million barrels over the 10-year average in February to 7 million barrels below the average at the start of December. Stocks have fallen by more than 33 million barrels since the start of the year compared with a ten-year seasonal average fall of 3 million barrels. As stocks have shrunk, distillate prices and margins have risen to encourage refiners to produce more of the fuel, with a clear uptrend since the end of June. U.S. refiners have responded by increasing crude processing and distillate production to unprecedented levels to meet demand. U.S. refinery crude runs have been running at record rates almost continuously since April, according to data from the U.S. Energy Information Administration. Runs in the most recent week were 800,000 barrels per day (bpd) higher than at the same point in 2016 and 1.8 million bpd above the 10-year seasonal average. At the end of November, U.S. refineries were processing crude at rates that had only ever previously been seen during the summer peak driving season. There has been a clear tilt towards maximising the production of distillate fuel oil to take advantage of higher margins than on gasoline. U.S. refineries produced a record 5.4 million bpd of distillates in the last week of November, which was 280,000 bpd higher than the year before and almost 480,000 bpd above the 10-year seasonal average. Most of this extra distillate is being exported to Latin America and other overseas markets with only a modest increase in domestic consumption.
Oil rises on threatened Nigeria strike, short covering (Reuters) - Oil prices climbed more than 1 percent on Thursday due to a threatened strike in Nigeria and as traders cover shorts after sharp losses the previous day brought on by an unexpectedly large rise in U.S. stocks of refined fuels. Short covering in the market, together with the threat of a strike by Nigeria’s key oil union, has provided some support to oil prices in today’s session,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. One of Nigeria’s two main oil unions threatened to launch a nationwide strike from Dec. 18 over what it said was a “mass sacking of workers that joined the union.” The country is Africa’s top oil exporter. Brent futures rose 98 cents, or 1.6 percent, to settle at $62.20 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 73 cents, or 1.3 percent, to settle at $56.69. The previous day, Brent settled down 2.6 percent and WTI down 2.9 percent after an unexpected rise in U.S. fuel stocks. Data from the Energy Information Administration (EIA) on Wednesday showed that U.S. crude oil inventories fell by 5.6 million barrels in the week to Dec. 1, to 448.1 million barrels, putting stocks below seasonal levels in 2015 and 2016. But gasoline stocks rose by 6.8 million barrels, well above the 1.7 million-barrel gain analyst had expected, and distillate stocks, which include diesel and heating oil, rose 1.7 million barrels. “It was a sharp correction yesterday, so it’s a bit of a pause today,” said Olivier Jakob, managing director of PetroMatrix, adding “technically, it’s still very weak.”
US drillers add oil rigs for 3rd week in a row -Baker Hughes (Reuters) - U.S. energy companies this week added oil rigs for a third week in a row, the longest string of increases since summer, as higher crude prices prompt drillers to return to the well pad after a break in the autumn. Drillers added two oil rigs in the week to Dec. 8, bringing the total count up to 751, the highest level since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. The U.S. rig count, an early indicator of future output, is still much higher than a year ago when only 498 rigs were active after energy companies boosted spending plans for 2017 as crude started recovering from a two-year price crash around the same time OPEC agreed to the production cuts a year ago. Last week, the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia agreed to extend oil output cuts of about 1.8 million barrels per day until the end of 2018 as they try to finish clearing a global glut of crude. The increase in U.S. drilling lasted 14 months before stalling in August, September and October as some producers trimmed their 2017 spending plans after prices turned softer over the summer. Energy firms started adding rigs again in November as crude prices rose. So far in 2017, U.S. crude futures have averaged over $50 a barrel, easily topping last year’s $43.47 average. This week, futures traded near $57 a barrel, just below their highest since June 2015. Looking ahead, futures were trading near $57 for calendar 2018 and $54 for calendar 2019. In anticipation of higher prices than in 2016, exploration and production (E&P) companies increased their spending on U.S. drilling and completions in 2017 by about 53 percent over 2016, according to U.S. financial services firm Cowen & Co. In addition, Cowen said 17 of the 64 E&Ps they track, including Chevron Corp, have already provided capital expenditure guidance for 2018 indicating a 17 percent increase in planned spending over 2017.
OilPrice Intelligence Report: Oil Prices Recover As Middle East Tensions Mount -- After sinking for much of the week, oil prices recovered slightly on Thursday and Friday. Analysts attributed the rise to tensions in the Middle East after the Trump administration announced the U.S. would move its embassy in Israel to Jerusalem, a move that was met with widespread protest in the region. Meanwhile, data from China showed strong crude import data for November – imports jumped above 9 million barrels per day, up from 7.3 mb/d a month earlier. Saudi oil minister Khalid al-Falih seemed to pull off an unexpected victory with the inclusion of Libya and Nigeria into the OPEC agreement – the two countries agreed to cap their output at 2017 levels – but their participation actually means very little for the oil market, consultants from Wood Mackenzie and Eurasia Group told Bloomberg. “The OPEC quota doesn’t matter,” Riccardo Fabiani, an analyst at Eurasia Group, said of Libya’s participation. “Moving beyond 1 million barrels a day in 2018 is going to be very difficult anyway.” China’s Sinopec is suing PDVSA over missed payments for an order of steel rebar. According to Reuters, Sinopec’s lawsuit is seeking $23.7 million for a breach of contract and conspiracy to defraud. The case is significant because for years China was one of the few main backers of Venezuela, offering the cash-strapped nation more than $50 billion in loans over the past decade in exchange for oil shipments. U.S. Secretary of Energy Rick Perry trumpeted the opportunity of U.S. LNG for the Middle East in a visit to Abu Dhabi this week. “We want to be in the mix of LNG suppliers for the Mideast,” Perry said at the news conference. “Creating a relationship, having these conversations is good, it gives the U.A.E. some options.” Jordan, the UAE and Egypt have occasionally purchased LNG cargoes from Cheniere Energy’s Sabine Pass facility over the past two years, according to Bloomberg. Qatar is the largest LNG exporter in the world, but the deep rift between them and other Gulf countries led by Saudi Arabia opens up an opportunity for other suppliers to fill the void.
US Rig Count Rises Amid Falling OPEC Output - - While OPEC continues to curb its in-house oil production among its members, US drillers are ramping up, adding rigs for the fifth week in a row. This week, Baker Hughes reported that active oil and gas rigs in the US had climbed by 2.The total oil and gas rig count in the United States now stands at 931 rigs, up 307 rigs from a year ago, with the number of oil rigs climbing by 2 and the number of gas rigs holding steady. The number of oil rigs stand at 751 versus 498 a year ago. The number of gas rigs in the US now stands at 180, up from 125 a year ago.The WTI and Brent benchmarks had slipped earlier in the week after the EIA and API reported a massive build in gasoline inventories. But prices had started to recover on Friday on threats of a nationwide strike in Nigeria and reports that China’s crude oil imports had hit record highs for the month of November. By 11:25am EST, the price of a WTI barrel was up $0.78 (+1.38%) to $57.47, with a Brent barrel up $1.08 (+1.74%) to $63.28. The Permian Basin added 3 rigs for the week, bringing the total count in the fastest growing shale patch to 400 compared to just 246 a year ago. Eagle Ford, Haynesville, and Marcellus all added three rigs this week as well.Along with an increase to the number of active oil rigs, US crude oil production continues to climb a weekly basis, placing further pressure on prices. US crude oil production for the week ending December 1 was 9.707 million barrels per day—another record for 2017, and the seventh straight weekly increase. At 1:08pm EST, WTI was trading at $57.26 with Brent trading at $63.19.
Oil rises nearly 2 percent on China demand, but weekly losses loom (Reuters) - Oil prices rose almost 2 percent on Friday, helped by rising Chinese crude demand and threats of a strike in Africa’s largest oil exporter. U.S. prices fell 1.7 percent on the week and Brent prices fell 0.5 percent amid concerns that rising U.S. production could undermine OPEC-led supply cuts. Brent crude settled up $1.20 or 1.9 percent at $63.40 a barrel. U.S. West Texas Intermediate (WTI) crude settled up $57.36 a barrel, up 67 cents or 1.2 percent. China’s crude oil imports rose to 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed. “We have good numbers out of China,” said John Macaluso, an analyst at Tyche Capital Advisors. “A lot of the extra imports are not from Saudi Arabia. Iran, Russia and the U.S. are some of the countries picking up the slack.” Booming demand will push China ahead of the United States as the world’s biggest crude importer this year. U.S. investment bank Jefferies forecast 2018 global oil demand growth of 1.5 million bpd, driven by almost 10 percent demand growth in China. “Generally speaking, the market is looking more healthy than sick,” said Tamas Varga, analyst with PVM Oil Associates. Varga said the threat of a strike later this month from a union in Nigeria, Africa’s largest oil exporter, was supportive. An extension to the end of 2018 of production cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers underpinned the market. The output cuts pushed oil prices higher between June and October, with Brent gaining around 40 percent. “Even if you have no bullish view ... OPEC and Russia have taken away the risk to the downside,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding it was unlikely that Brent would drop below $61 per barrel.
Angola, Saudi, Iraq drag OPEC Nov oil output to six-month low: Platts survey - OPEC oil output in November dived to 32.35 million b/d, its lowest in six months led by declines in eight of the 14 member countries, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed Thursday.November output slid 220,000 b/d from the previous month due to steady falls in Angola, Saudi Arabia, Iraq, Venezuela, Libya and the UAE. The only two countries to have a production rise were Nigeria and Algeria. The OPEC output level was 430,000 b/d above its declared ceiling of about 31.92 million b/d when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted. Last week OPEC and non-OPEC countries agreed to a nine-month extension of their production cut agreement through the end of 2018, with an option to review the deal in June. OPEC kingpin Saudi Arabia led by example again, reducing its production by 50,000 b/d to a four-month low of 9.97 million b/d, as it reduced its domestic burning of crude to a four-month low and curbed exports.The kingdom had previously indicated a sharp dip in its November and December crude export allocations. Contributors to the survey said that in place of burning crude for power generation, Saudi Arabia had increased its refining volumes as it pushes up oil product exports.
The Qatar Crisis in an Age of Alternative Facts - The Gulf Cooperation Council (GCC) holds its annual Summit in Kuwait City this week, exactly six months since three of the six GCC states—Saudi Arabia, Bahrain, and the United Arab Emirates (UAE)—cut diplomatic relations and imposed economic sanctions on a fourth, Qatar. From the start, the so-called Anti-Terror Quartet (the three GCC states plus Egypt) has pursued a disinformation campaign that portrayed Qatar as a reckless threat to regional security. The media war has sought to secure the support of the neophyte political and foreign policy operators in the White House in the first international crisis of the era of alternative facts. This attempt to drag the US government into a dispute that has pitted core regional political and security partners against one another has highlighted the dangers of picking sides in a clash in which—from an American perspective—there can be no clear winners or losers. The Qatar crisis originated in a hack of the Qatar News Agency and creation of a fake-news account of a speech in which Emir Tamim bin Hamad Al Thani allegedly praised Iran and Hamas and criticized the Trump administration. Media outlets in Saudi Arabia and the UAE seized on these fabricated remarks in a two-week onslaught that preceded the actual diplomatic rupture on June 5. Significantly, the hack came just two days after the Saudi leadership at the Arab-Islamic-American Summit in Riyadh feted President Trump and when he called on Sunni Arab states to rally against terrorism and extremism. Subsequent tweets by President Trump in June and comments in October by Stephen Bannon, by then the former White House chief strategist, drew a direct line between their talks in Riyadh on May 21 and the later action taken against Qatar on June 5, and implied a degree of forewarning and tacit approval. After years of tense relations with the Obama administration, not least over its secret negotiations with Iran that culminated in the Joint Comprehensive Plan of Action in 2015, Saudi and Emirati leaders reached out quickly to senior figures in the incoming Trump presidency. Fortified by the expectation that the administration would follow policies on Islamism and Iran that aligned closely with their own hawkish approaches, the then-Deputy Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, and the influential UAE Ambassador to Washington, Yousef al-Otaiba, established a close rapport with Jared Kushner. Their efforts to woo the inner circle paid off in May when Trump made his first international visit as president to Saudi Arabia – rather than to Canada or Mexico, as his five immediate predecessors had done – and the State Department was said to be cut out of much planning for the Riyadh Summit, which was handled instead by the White House and the Royal Courts in Riyadh and Abu Dhabi.
Kuwait Struggles for Unity at Home and in the Region - Arab Gulf States Institute in Washington As Kuwait hosts the annual Gulf Cooperation Council summit this week in yet another push to find an antidote for Gulf acrimony, stakes are rising. A zero-sum battle for Gulf supremacy – Iran versus Saudi Arabia; the self-proclaimed anti-terror quartet versus Qatar – places Kuwait in an untenable position, and threatens its model of civic accommodation. Kuwait’s relatively open politics and careful balancing of societal constituencies – Sunni and Shia, liberals and Islamists – look anomalous in today’s maximalist Gulf, and increasingly under threat. On October 24, Emir Sabah al-Ahmed al-Sabah stood before the opening session of Kuwait’s Parliament and issued a call for unity. Citing the difficult regional situation – civil wars, sectarian conflict, and Gulf disagreements – he pleaded with Kuwait’s rambunctious lawmakers to be aware of the seriousness of the current situation and act with responsibility. His appeal to domestic harmony mirrored his thus far fruitless effort to mend the yawning divisions that have opened within the GCC with the quartet of countries led by Saudi Arabia and the United Arab Emirates continuing its boycott of Qatar on accusations of its support for terrorism. Yet less than a week later, Kuwait’s Cabinet resigned in the face of opposition questioning of a royal cabinet member and an impending parliamentary vote of no confidence. A new government has yet to be appointed, a delay most believe to be due to difficult negotiations over power sharing by factions within Kuwait’s ruling family. Meanwhile, the decision of an appeal’s court to jail nearly 70 politicians and youth activists for crimes surrounding the storming of the Parliament in protest in November 2011 is roiling Kuwaiti domestic politics. The obstacles are mounting to find a formula to achieve unity at home and in the region.
Middle East Tensions Near Boiling Point -- The 38th Gulf Cooperation Council (GCC) Summit resulted in a showdown between Qatar and its Saud-led alliance counterparts.Saudi King Salman decided to send a lower diplomatic delegation in his place, chipping away at the stability in the region. Additionally, in an unexpected move, Saudi Arabia and the United Arab Emirates (UAE) announced that the two countries have formed a new economic and military partnership, separate from the GCC. Arab analysts have already indicated that this could deal a deadly blow to the role of the GCC. Officially, the decision made by UAE’s ruler Sheikh Khalifa bin Zayed Al Nayhan and the Saudi King is not linked to the ongoing Qatar crisis. However, the symbiosis currently showing between Saudi crown prince Mohammed bin Salman and Abu Dhabi’s crown prince Sheikh Mohammed bin Zayed is the main force behind this bilateral cooperation agreement.The direct impact wasn’t clear within the first few hours of the GCC meeting. Analysts speculated how the news of the fresh Saudi-Emirati military and economic cooperation would impact the six-member GCC meeting. Until the new alliance was announced, the media was primarily focused on the ongoing Qatar crisis, especially due to the fact that the Qatari Emir was in attendance. Insiders, however, already expected that the new agreement would have a detrimental effect on the GCC meeting, given the impact of the council’s two main supporters decided to create their own military, political, and economic alliance.Riyadh and Abu Dhabi have clearly been paving the way for a confrontation with Iran and Qatar for several months, while also setting up major economic projects in their own countries as they coordinate military operations in Yemen, Syria and Libya. Two weeks ago, Emirati analysts indicated that the UAE would take a primary role in regional conflicts, which has now come to the surface more clearly. Several major conclusions now need to be drawn. First of all, the Saudi-Emirati move puts immense pressure on the other GCC countries to comply to the Riyad-Abu Dhabi axis point of views with regards to Doha and Tehran. It also shows that these two leading Gulf states have decided to put their own strategy in place, which is independent from the US-allied Gulf Arab nations planned by the GCC. It’s clear that both countries are even willing to confront Washington in their strategy towards Qatar, which still holds a major U.S. military base. The Abu Dhabi-Riyadh axis puts Washington under pressure to decide its own policies towards Qatar and Iran. With the increased pressure on the Trump administration, it also asks its Arab neighbors to pull ranks.
How can the Arab world sidestep the pull of the abyss? - A series of startling events in November revealed the abysmal state of affairs in the Arab world. The Lebanese prime minister announced his resignation abroad, but reversed the statement later. A missile was launched from Yemen toward Saudi Arabia’s capital, Riyadh. Saudi Arabia’s leadership carried out a major anti-corruption campaign that affected dozens of high-profile personalities. Egypt, meanwhile, experienced its worst terrorist attack in living memory, with more than 300 civilians killed and injured. Video footage of alleged slave auctions in Libya underscored the continuing chaos there amid the complete breakdown of the Libyan state. Military victories against the Islamic State and a rapprochement between Palestinian factions in Gaza and the West Bank have done little to ease a collective sense of anxiety in the region. Nor have these positive developments inspired much confidence that the Arab world will somehow pull itself back from the edge of the abyss. Foreign interference has become routine in Syria, Lebanon, Iraq, and Yemen. And ongoing debates over identity politics and borders in the Levant are a prelude to the grave, fundamental challenges ahead. In fact, the situation in the Middle East is not surprising, given that in recent years no Arab country has led attempts to resolve the ongoing conflicts in Libya, Syria, and Yemen, let alone address the Palestine-Israel issue. In many of these conflicts, foreigners have had far more influence than Arabs. But while there are many reasons to blame foreign powers for the region’s parlous state of affairs, blaming others – or even one another – will solve nothing. After all, the Arab world has many homegrown problems, too, including inefficient and ineffective governance, unholy alliances, and undeveloped national capacities.
Pentagon: US Troops Will Stay In Syria "As Long As We Need To" - US forces plan to stay in Syria "as long as they need to” support local partners and to ensure that terrorists will not return, a Pentagon official told AFP on Tuesday. The announcement comes as the Islamic State has ceased to be a reality, and as the Syrian Army is on the cusp of final victory over ISIS in remaining pockets of eastern Syria. “We are going to maintain our commitment on the ground as long as we need to, to support our partners and prevent the return of terrorist groups,” Pentagon spokesman Eric Pahon said. “To ensure an enduring defeat of ISIS, the coalition must ensure it cannot regenerate, reclaim lost ground, or plot external attacks.” Though officials recently hinted that the Pentagon would soon formally acknowledge that it has "about 2,000" American troops in Syria, the long standing official number of 503 still hasn't changed. In late October a top military official briefly admitted to 4,000 troops on the ground in Syria during an interview, but awkwardly backtracked on his statement and said, “I’m sorry, I misspoke there, there are approximately 500 troops in Syria."
Yemen Rebels Claim They Fired Missile At Abu Dhabi Nuclear Plant -- Two days after Israel reportedly destroyed an alleged Iranian airbase in the city of al-Qiswa near Damascus in Syria, Yemen’s Houthi rebels claimed they fired a cruise missile toward the $20 bilion Barakh nuclear power plant in Abu Dhabi in the UAE (which is still under construction) which "successfully hit its target", the group’s television service said on its website Sunday, however without providing evidence.The launch was in retaliation for the closing of sea and air ports, it said without offering evidence or providing further details. The statement quoted a Houthi leader who warned against continuing the blockade, “affirming Yemenis’ right to take sensitive steps.”“The missile force announces the launching of a winged cruise missile … toward the al-Barakah nuclear reactor in Abu Dhabi,” the website said. It gave no further details. The claim comes as the United Arab Emirates, which is part of the Saudi-led coalition, celebrates its National Day.’
US-Supplied Defense System Failed To Intercept Houthi Missile Attack On Saudi Capital - A new study in the New York Times suggests that Saudi Arabia's state of the art defense system failed to intercept the ballistic missile fired by Yemen's Houthi rebels which nearly hit Riyadh's international airport on November 4th. The report contradicts the official claims of the Saudi and American governments, which both announced immediately after the incident that the US-supplied Patriot missile defense system had successfully intercepted the Houthi fired Scud. The analysis, which utilized open-source material in the form of available video and social media photos of the aftermath of the attack, was conducted by a team of missile experts, and threatens to shake confidence in the US system, which is currently implemented by American allies around the world from South Korea and Taiwan to Turkey, Israel and Japan, among others. And notably President Trump himself had announced while aboard Air Force One on the day following the attack, “Our system knocked the missile out of the air.” Trump also emphasized the importance of demonstrable success of the systems and added, “That’s how good we are. Nobody makes what we make, and now we’re selling it all over the world.” But The New York Times report begins with a flat contradiction of that claim:The official story was clear: Saudi forces shot down a ballistic missile fired by Yemen’s Houthi rebel group last month at Saudi Arabia’s capital, Riyadh.....But an analysis of photos and videos of the strike posted to social media and analyzed by a research team of missile experts appears to show the missile’s warhead flew unimpeded over Saudi defenses and nearly hit its target, Riyadh’s airport. The warhead detonat ed so close to the domestic terminal that customers jumped out of their seats.
Yemen Houthis Blow Up Ex-President Saleh's House Amid Heavy Fighting -- Fighters from Yemen's Houthi rebel movement have blown up the house of ex-President Ali Abdullah Saleh in the centre of the capital Sanaa, residents reported, as Saleh's current whereabouts remained unknown, Reuters reported. The attack came a day after Saleh said he was ready for a "new page" in ties with the Saudi-led coalition. Saleh's loyalists had lost ground on the sixth day of heavy urban combat with the Iran-aligned Houthis, his former allies in nearly three years of war with a Saudi-led military coalition. On Monday, the Houthis made gains against forces supporting the former president. According to witness reports in local media, there was intense fighting overnight, with explosions rocking the city into Monday morning. The alliance between the Houthi rebels and former Saleh recently seemed to be on the verge of a split, after on Sunday, the former leader of the war-torn country formally renounced his alliance with the Houthis, pulling a "Hariri." Saleh pledged to step up his fight with the Iranian-backed group, having re-aligned his forces with Saudi Arabia. In an earlier televised speech, Saleh said that he made the decision to cease fighting in the country, having asked Riyadh to stop attacks on Yemen in exchange for his support."I call upon the brothers in neighboring states and the alliance to stop their aggression, lift the siege, open the airports and allow food aid and the saving of the wounded and we will turn a new page by virtue of our neighborliness," he said.Until Sunday's unexpected reversal, Saleh and the Houthis had been fighting against the Saudi-backed forces of ousted President A bdrabbuh Mansur Hadi since 2015.
Ousted Yemen President Ali Abdullah Saleh killed - Yemen's ousted leader Ali Abdullah Saleh has been killed by Houthi rebels near the capital, Sanaa, a development expected to have major implications for the war in the Arab world's poorest country. The death was first announced on Monday by the Sanaa-based interior ministry, controlled by Saleh's allies-turned-foes, the Houthi rebel group. His killing was later confirmed to Al Jazeera by Saleh's political party, the General People's Congress (GPC).Footage circulating on social media appeared to display a body resembling Saleh, with one video showing how armed militia members used a blanket to move the corpse into the back of a pick-up truck. There were earlier reports that the Houthi rebels blew up one of Saleh's houses, after storming the property.Houthi sources said Saleh was killed by the rebels in a rocket-propelled grenade and shooting attack on his car at a checkpoint outside Sanaa. Yasser al-Awadi, the GPC's assistant secretary-general, was also killed. In a statement read out on a Houthi TV network, the interior ministry announced the "killing" of "Saleh and his supporters". "This is after he and his men blockaded the roads and killed civilians in a clear collaboration with the enemy countries of the coalition," the statement said.
Yemen Without Saleh - The former Yemeni President Ali Abdullah Saleh has been killed today. He was 75 years old but still very active in Yemeni politics. Video of his dead body being thrown onto the back of a pickup is making the rounds. One hears Houthi slogans shouted in the background. The pictures show a gun wound on the chest and at the side of the head. The face is easily recognizable. There are also pictures of his ID card.Though several media report his death there is no confirmation yet from his GPC party or his family. Over the last few days Houthi media had announced several times that Saleh had been killed. This morning Saleh's house was blown up. This time the Houthi news proved right. The circumstances of Saleh's death are not yet known, but it was said that he was fleeing Sanaa when fate caught up with him. As we wrote in our recap on Saturday, Saleh had suddenly made peace with the Saudis and asked his followers to take up arms against his former allies. For more than two years he had allied with the Houthi against the U.S. and UK supported Saudi invasion and proxy forces. On Friday, after several days of local clashes with the Houthi, he had called for his followers to throw the Houthi out of the Yemeni capital Sanaa. For a day his fighters, led by some 1,000 soldiers of Saleh's personal guards, were successful and the Houthi were kicked out of many of their positions. But they were not defeated. They called up more of their troops and on Sunday regained the lost ground and buildings. They occupied Saleh's media. His TV station started to transmit his enemies chants. Over the last night and throughout today they defeated Saleh's troops. It is yet a mystery why not more of Saleh's supporters came to his help. Sanaa is his home turf and whenever he had called for demonstrations in the city, hundreds of thousands attended. The Saleh family and clan is quite big and resourceful. Many of his relatives have held high military positions in the Yemeni army and keep enough money to pay for their troops loyalty. The Saudis had recently bet on Saleh to end the stalemate in their war on Yemen. Had he won out, it could have meant a pause in the war and probably its end. With the Houthi now having the upper hand in Sanaa, the war, the permanent Saudi bombing and the blockade of Yemen are likely to continue. The Houthi will continue to attack within Saudi Arabia and the fight against the Saudi proxy forces on the ground will go on. It will need another breakthrough event for the war to stop.
Exiled son of Yemen's Saleh takes up anti-Houthi cause (Reuters) - The powerful exiled son of Yemen’s slain ex-president Ali Abdullah Saleh vowed on Tuesday to lead a campaign against the Houthi movement that killed his father after he switched sides in the civil war. The intervention by Ahmed Ali Saleh, a former leader of the elite Republican Guard once seen as a likely successor to his father, gives the anti-Houthi movement in Sanaa a potential figurehead, after a week of fighting that saw the Houthis rout Saleh’s supporters in the capital. Yemen’s war, pitting the Iran-allied Houthis who control Sanaa against a Saudi-led military alliance backing a government based in the south, has brought what the United Nations calls the world’s worst humanitarian crisis. The world body says millions of people may die in one of the worst famines of modern times, caused by warring parties blocking food supplies. Saleh had helped the Houthis win control of much of the country’s north including Sanaa, and his decision to switch allegiances and abandon the Houthis in the past week was the most dramatic change on the battlefield in years. But the Houthis swiftly crushed a pro-Saleh uprising in the capital and shot him dead in an attack on his convoy. Tens of thousands of Houthi supporters staged a rally in the capital on Tuesday to show support for their leader and celebrate the death of Saleh. They chanted slogans against Saudi Arabia and its allies. Mahmoud Ali al-Houthi, head of the movement’s Revolutionary Committee, denied allegations that the group was executing members of Saleh’s party after their capture: “We have been treating some of Saleh’s sons and we haven’t executed them,” he told the crowd.
Hamas says Trump has opened 'gates of hell' over Israel - Palestinian terrorist group Hamas has said President Donald Trump's recognition of Jerusalem as Israel's capital is a 'flagrant aggression against the Palestinian people'.In a speech in Washington, Trump said his announcement marked the beginning of a new approach to the Israeli-Palestinian conflict.But Hamas, which dominates the Gaza Strip, urged Arabs and Muslims to 'undermine the US interests in the region' and to 'shun Israel.' Hamas political leader Ismail Haniyeh said the Palestinian people 'know how to respond properly to the disregard of their feelings and sanctuaries.' He added that the decision 'will not change the facts of history and geography.' President Trump recognized the disputed city of Jerusalem as Israel's capital earlier today - a historic decision that overturns decades of US policy and risks triggering a fresh spasm of violence in the Middle East. 'Israel is a sovereign nation with the right like every other sovereign nation to determine its own capital,' the US leader declared from the White House. 'Acknowledging this as a fact is a necessary condition for achieving peace.' The declaration - met by fierce regional condemnation - ends seven decades of deliberate diplomatic ambiguity about the final status of a holy city vociferously claimed by both Israelis and Palestinians. Although welcomed by Israel's Prime Minister Benjamin Netanyahu as a 'courageous and just decision,' Trump's move also left the already faltering peace process in deep doubt. Mahmud Abbas's Palestine Liberation Organization said Trump has destroyed the two-state solution, warning the United States could no longer hope to be a peace broker, while Hamas - the Palestinian Islamist movement that runs the Gaza Strip - said Trump's decision opens 'the gates of hell on US interests in the region.'
Palestinians 'ready to sacrifice' for Jerusalem -- Hundreds of Palestinians marched through Bethlehem in a "day of rage" protest against Donald Trump's recognition of Jerusalem as Israel's capital, as anger over the controversial decision continues to spread across the occupied Palestinian territories.Israeli military forces fired tear gas and rubber bullets at Palestinian protesters in Bethlehem on Thursday, and at least seven youths were injured in the clashes, including one small child. Men, women and children participated in the march, which was among several held in the West Bank, Gaza Strip and occupied East Jerusalem, as well as in major cities across the region, throughout the day.Palestinian leaders also declared a general strike across the Palestinian territories. "I am seeing people at this protest that never come out to these kinds of demonstration," Rabee Alsos, 32, told Al Jazeera in Bethlehem."Jerusalem and al-Aqsa [Mosque] means a lot to everyone here, even the children. This [US] decision is a big mistake."Trump announced on Wednesday that he was recognising Jerusalem as Israel's capital and that he would begin the process of moving the US embassy from Tel Aviv to the city, to the disbelief of Palestinians and world leaders. No country currently has its embassy in Jerusalem. West Jerusalem was seized by Israel during the 1948 Arab-Israeli war, when more than 750,000 Palestinians were expelled from historic Palestine, referred to by Palestinians as the Nakba (catastrophe) when Israel was officially founded. Israel subsequently occupied and annexed the eastern part of the city after its military victory in the 1967 war, but its control over East Jerusalem has never been recognised by the international community. Palestinians want occupied East Jerusalem as the capital of a future state, while Israel says the city cannot be divided.
‘Decades of chaos’: Arab leaders condemn US decision on Jerusalem - The Trump administration’s recognition of Jerusalem as Israel’s capital has drawn widespread condemnation across the Arab world, with political leaders, commentators and locals labelling the move as provocative and a threat to global security. The decision has been cast as the final nail in the coffin of a two-state solution to the Israel/Palestine conflict – an approach broadly recognised by Arab states – and the end of meaningful US diplomacy between both sides after almost 70 years. It has also allowed competing factions across the Middle East to refocus on a common cause that had drifted from the spotlight over the past five years, eclipsed by regional power plays, war and insurrection. Leaders in Turkey and Lebanon warned of dangerous instability in the wake of the announcement, which overtly sides Washington with Israel at a time when the US had been attempting to table a new peace initiative between Jerusalem and Ramallah. The future of Jerusalem had been central to all previous peace pushes and commentators and residents were united in their belief that negotiations could not begin if the Palestinians’ claim to the holy city was no longer on the table. Jordan’s King Abdullah said: “There is no alternative to a two-state solution, and Jerusalem is key to any peace agreement. It is imperative to work fast to reach a final status solution and a peace agreement. Ignoring Palestinian Muslim and Christian rights in the holy city could fuel terrorism.” In Beirut, Hassan Nasrallah, the Hezbollah leader, called for demonstrations on Monday to protest against the decision. “Trump had support from the Arabs or else he wouldn’t have been able to do this,” said Nasrallah. “The Arab government will scream for a few days then go on with the occupation. America has shown that it doesn’t take into account the opinion of its allies.”
Iraqi Militia Says Trump's Recognition Of Jerusalem Is A "Legitimate Reason" To Attack Americans --- In the latest sign that Trump’s decision to recognize Jerusalem as Israel’s true capital has put American lives at risk, Russia Today is reporting that Shia paramilitary group Harakat Hezbollah al Nujaba has declared that the US’s violation of the holy land status quo is a “legitimate reason” to attack American troops in Iraq.“Trump's stupid decision... will be the big spark for removing this entity [Israel] from the body of the Islamic nation, and a legitimate reason to target American forces,” said Akram al-Kaabi, the Iraqi organization’s leader, as cited by Reuters. Of course, militia leaders aren’t the only ones speaking out against Trump’s decision. Heads of state and other senior officials in the governments of Turkey, Saudi Arabia, Jordan and – of course – the Palestinian territories have denounced the declaration. Meanwhile, the embassy’s impending move to Jerusalem will probably only further infuriate much of the Muslim world. One Palestinian official said Trump’s declaration has effectively precluded the possibility of a two-state solution.
Erdogan Says U.S. Sanctions on Iran Weren’t Binding for Turkey - Turkey’s president has argued that his country did not break a trade embargo on Iran as it hadn’t committed to abide by U.S. sanctions, and there were no United Nations restrictions in place, the Hurriyet newspaper reported on Friday. The comments at a Thursday meeting of Turkey’s ruling party came hours before Erdogan was for the first time implicated in a plot to help Iran evade U.S. sanctions. The Islamic Republic was only released from UN curbs imposed over its nuclear program in January 2016, when a multi-lateral accord struck the year before was implemented. “We have not broken an embargo,” the president was cited by Hurriyet as saying. “The world does not consist of the U.S. alone.” Reza Zarrab, who’s accused of laundering billions of dollars on behalf of Iran, told a New York jury Thursday that a senior Turkish official said to him that then-prime minister Erdogan personally signed off on a plan to involve two Turkish banks in the scheme. The case began as a corruption investigation in Turkey in 2013, but Erdogan quashed it amid a purge of investigators and prosecutors. Erdogan has increasingly questioned Turkey’s alliance with the U.S. since Washington declined to extradite U.S.-based cleric Fethullah Gulen, whom Turkish authorities accuse of masterminding a coup attempt last year, a theme he also alluded to on Thursday. “There are games played against our economy,” Erdogan was quoted as saying, an apparent reference to the swings in Turkey’s currency, interest rates and bank stocks triggered by news about the trial.
John Lehman: China, Russia, Iran threaten ‘New Pearl Harbor’ | Asia Times: Former US Navy Secretary John F. Lehman has warned in an exclusive interview with Asia Times that the US faces the danger of a “New Pearl Harbor from growing cooperation between China, Russia and Iran that is marked by increased military and technology sharing. “China, Russia and Iran are doing joint naval exercises and they are sharing anti-aircraft and antisubmarine technology,” Lehman said. “They don’t have to be allies. They figure if they carry out their designs in co-ordinated fashion that this will stretch the US so thin that we can’t deal with it — and that is the worry right now.” But as the US military confronts a three-way alignment that Lehman compares to the Tripartite Alliance between Germany, Italy and Japan before World War II, Lehman says the chief danger isn’t from anti-ship missiles or supercavitating torpedoes. Rather, the main threat to American preparedness, he says, springs from a painfully slow US process for procuring new weapons systems. He also blames recent collisions involving Navy ships in Asian waters on the combined pressures of generational change, and training and budget cuts, on a smaller, peacetime Navy.
Russia Warns Korean Peninsula "On Brink Of War" --Following the launch of the "largest ever" US-South Korean aerial military drills, and Pyongyang's latest, most impressive, missile test, the Russian foreign ministry issued a warning that "the situation on the Korean Peninsula is on the brink of war," adding that "Kim seeks to raise the stakes before any talks."The US and South Korea launched their largest aerial drills yet on Monday, less than a week after North Korea tested its new Hwasong-15 missile which military observers said has the capacity to strike Washington DC, or nearly any other location in the continental US. The launched shattered nearly two months of calm as many suspected the North’s benefactors in China were making good on their promises to rein in the restive state’s belligerent behavior.As we reported Sunday, the annual US-South Korean drills, called Vigilant Ace, will run until Friday. Six F-22 Raptor stealth fighters will be deployed among the more than 230 aircraft taking part. The North has condemned the exercises as yet another provocation.F-35 fighters will also participate in the drill, which will involve the largest number of 5th generation fighters, according to a South Korea-based US Air Force spokesman quoted byReuters.Around 12,000 US troops, including the Marines and Navy, will join South Korean troops. Aircraft participating in the drills will take off from eight different US and South Korean military installations.
In "Largest-Ever" Military Drill, US Orders 16,000 Troops, 230 Jets To Simulate War With North Korea -- Just days after Pyongyang launched its most advanced ICBM, one which experts warned has the potential to hit a target anywhere on the territory of the United States, North Korea said the U.S. is “begging” for a nuclear war by planning the “largest-ever” joint aerial drill with South Korea just after concluding an exercise with nuclear-powered aircraft carriers,Bloomberg reported.“Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.The statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named “Vigilant Ace” scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media,some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind. As part of "Vigilant Ace", US and South Korean forces will be rehearsing for a full-scale war with North Korea, with Yonhap noting that "allies plan to stage simulated attacks on mock North Korean nuclear and missile targets." As the Star details, "at least 230 warplanes from both the US and the South will take part, alongside 12,000 US troops and airmen and at least 4,000 expected to represent Seoul." The drill, which lasts from December 4 until December 8, will see aircraft flying over eight airbases in across the Korean Peninsula.
North Korea says U.S. threats make war unavoidable as China urges calm (Reuters) - Two American B-1B heavy bombers joined large-scale combat drills over South Korea on Thursday amid warnings from North Korea that the exercises and U.S. threats have made the outbreak of war “an established fact.” The annual U.S.-South Korean “Vigilant Ace” exercises feature 230 aircraft, including some of the most advanced U.S. stealth warplanes. They come a week after North Korea tested its most powerful intercontinental ballistic missile (ICBM) to date, which it says can reach all of the United States. North Korea’s foreign ministry blamed the drills and “confrontational warmongering” by U.S. officials for making war inevitable. “The remaining question now is: when will the war break out?” it said in a statement carried by North Korea’s official KCNA news agency. “We do not wish for a war but shall not hide from it.” China, North Korea’s neighbor and lone major ally, again urged calm and said war was not the answer, while Russian Foreign Minister Sergei Lavrov said North Korea wanted direct talks with the United States to seek guarantees on its security, something Moscow was ready to facilitate.
"The Threat Is Real" - Millions In Tokyo Join Nuclear Strike Evacuation Drills -- Earlier this week, Hawaii reportedly tested its system of nuclear sirens for the first time since the 1960s as the state’s governor warned that he was taking North Korea’s threats of nuclear annihilation extremely seriously. Today, the Telegraph is reporting that the paranoia has spread to Japan, where millions of Tokyo residents will participate in evacuation drills meant to simulate their response to North Korean nuclear strike. And Tokyo isn’t the first city to conduct these types of large scale drills: Towns facing the Korean Peninsula have conducted similar drills in recent months.The national and city governments are to carry out a series of exercises between January and March to prepare for a potential attack on Tokyo, the Sankei Shimbun newspaper reported, the first time that a major Japanese city will have carried out responses to a simulated attack.Towns facing the Korean Peninsula have in recent months conducted similar drills, with residents instructed to seek shelter in response to sirens warning of an imminent missile strike. Prime Minister Shinzo Abe has called on local governments throughout the country to identify underground facilities or buildings that are sufficiently sturdy to withstand a missile attack and to designate those facilities as shelters.
Will Japan ‘rent’ nukes from US to counter North Korean threat? - There’s widespread debate in Japan about whether the country should go nuclear – either by developing its own arsenal, or sharing such weapons with the US under a “dual key” arrangement, popularly known as “rent-a-nukes,” to counter the growing threat from North Korea.Rather than fussing with the technology and cost of developing its own missiles and warheads, some say it’s far more sensible for Japan to negotiate a nuclear-sharing option with Washington. Such cooperation would also bind the US and Japan closer and head off future trouble in the bilateral military alliance. Masahiro Matsumura, a professor of international politics and national security at St. Andrew’s University (also known as Momoyama Gakuin Daigaku) in Osaka, is a proponent of the idea.“Nuclear sharing is the best practical option when one considers the evolving realities under existing constraints,” Matsumura told Asia Times in an email interview.Under his plan, the US would store tactical nuclear missiles and bombs at US bases in Japan. The US military would turn them over to Japan if military action, such as a strike against North Korean bases, was deemed necessary. Nuclear-tipped US Tomahawk cruise missiles and other nukes could be delivered by Japan’s extensive force of conventional submarines and warplanes.He says the US would be responsible for the security of these devices while they were stored in Japan and that adequate safety controls would be in place to prevent unauthorized arming and detonation. The US would presumably have final say on when such weapons are used.Under current policy, no US ta ctical nukes are stored at US bases in Japan or South Korea.
For Beijing, the greatest threat to China’s national security is not the Kim regime: it is the US - With every new North Korean missile – such as the one launched on Tuesday November 28 – or nuclear test, all eyes are on China. Like previous American presidents, Donald Trump believes that the road to a diplomatic solution on North Korea runs through Beijing. He holds the view that, of any country, China has the most leverage over North Korea and therefore could “quickly and easily” solve the problem with the Kim Jung-un regime – but is just not willing to do so. For Washington, North Korea has become a top national security priority, in particular because of Pyongyang’s unexpectedly fast progress in developing intercontinental nuclear capabilities that may be able to reach the US mainland. Since assuming office, Trump has made North Korea the main focus of US-China relations. His main strategy has been to use trade issues as a bargaining chip to pressure China on North Korea, convinced that exerting enough economic pressure on Beijing will eventually force China to do what he wants. While recent measures – such as closing joint ventures with North Korean entities in China – have been viewed as signs of Beijing getting tougher on North Korea, the actions of the Chinese government are unlikely to be overly tough in the future. If it really wanted to take North Korea to task, China has a number of important economic levers at its disposal that it could use. The most effective measure against Kim Jong-un’s regime would be for Beijing to completely stop its crude oil supply to its neighbour and thus cut off North Korea’s main lifeline. According to the U.S. Energy Information Administration, China is the largest oil supplier to Pyongyang and accounts for about 90% of North Korea’s total trade. This is why most experts outside of China believe that Beijing is the key to solving the North Korean problem. But why are the Chinese so reluctant to do more despite the increasingly troubling behaviour of their neighbour?China keeps Pyongyang economically viable b ecause it fears the possible implications for China of the collapse of Kim Jong-un’s regime. For a start, it would bring chaos and refugees to China’s border. It would also induce an important foreign policy shift for Beijing in north-east Asia. And such interests are all related to one main actor: the United States.
Kim Jong Un's assassinated brother apparently had vials of antidote when he was poisoned - (Reuters) - Kim Jong Nam, the murdered half-brother of North Korea's leader, had a dozen vials of antidote for lethal nerve agent VX in his sling bag on the day he was poisoned, a Malaysian court was told this week. Two women, Indonesian Siti Aisyah and Doan Thi Huong, a Vietnamese, are charged with conspiring with four North Korean fugitives in the murder, making use of banned chemical weapon VX at the Kuala Lumpur international airport on Feb. 13. The vials contained atropine, an antidote for poisons such as VX and insecticides, toxicologist Dr K. Sharmilah told the court on Wednesday, state news agency Bernama said. However, she did not know if the vials were marked in Korean, she said when cross-examined by Siti Aisyah's lawyer, Gooi Soon Seng. Kim Jong Nam, who was living in exile in Macau, had criticized his family’s dynastic rule of North Korea and his brother had issued a standing order for his execution, some South Korean lawmakers have said.
North Korea's Nuclear Tests Are Spreading 'Ghost Disease' Causing Deformations, Defectors Say -- North Korea’s nuclear test are spreading a “ghost disease” that is deforming babies and sickening civilians exposed to radiation, defectors said in a report.“So many people died, we began calling it 'ghost disease,’” Lee Jeong Hwa, a defector who used to live by a nuclear testing site, told NBC News."We thought we were dying because we were poor and we ate badly. Now we know it was the radiation." Lee, one of 30 defectors from North Korea’s Kilju county, was tested by South Korea’s Ministry of Unification for radiation contamination. Since fleeing the isolated empire in 2010, she said she suffered chronic pain as a result of living near North Korea’s Punggye-ri nuclear testing site. Another defector from Kilju, Rhee Yeong Sil, said a neighbor of hers gave birth to a deformed baby who didn’t have genitals. The North Korean government often kills deformed babies, so the parents killed the child themselves, Rhee said.There is little scientific consensus backing up defectors’ claims of nuclear radiation contamination, especially since it is impossible for outsiders to study the testing sites of the hermetic communist country. NBC noted that Lee had tested negative for radiation.But as Kim Jong Un ramped up weapons tests this year, there were reports from S outh Korea about the nuclear tests destroying the local environment and giving babies birth defects. The tests alone weren’t the only things causing catastrophes. A nuclear test in September set off a 6.3 magnitude earthquake that reportedly led to nearby buildings collapsing, including a school with more than 100 children in it, many of whom were feared dead. One month later, a collapse during construction at the Punggye-ri facility killed more than 200 people.
North Korea Won’t Be Denuclearized - Mira Rapp-Hooper does an excellent job spelling out why the denuclearization of North Korea is an impossible goal and why the administration’s refusal to acknowledge this puts the U.S. on the path to a disastrous war: By clinging to the notion that North Korea can still be denuclearized and denying that it has achieved a long-range strike capability, Trump and his team gave themselves room to develop futile, dangerous military options that guarantee regional devastation. This logic is premised on the notion that there remains a window of opportunity for action, when, in fact, North Korea has now emphatically slammed shut that very window. By denying North Korea’s nuclear and missile capabilities and insisting that there remains time and space for military action, the Trump team raises the risk of conflict on the Korean Peninsula. By threatening to start that conflict themselves, they raise the chance that Kim will miscalculate and lash out first. The Trump administration has boxed itself in on North Korea by accepting a number of shoddy hawkish assumptions about “rogue” regimes, U.S. power, and preventive war. They regard deterrence as irrelevant or outdated when dealing with a “rogue” state because they wrongly perceive such regimes to be unpredictable and “crazy.” They assume that the U.S. can achieve any goal it sets for itself despite the evidence of the last two decades, and they still believe this because of a near-mystical faith in American “leadership” and “strength.” Because they have rejected the possibility of deterrence, they consider illegal and unjust preventive war an appropriate means for achieving their goals. Finally, the biggest mistake on the administration’s part is their inability to see things from the adversary’s perspective, and that causes them to misunderstand why North Korea does the things it does.
From the Caucasus to the Balkans, China's Silk Roads are rising | Asia Times: The 19th Chinese Communist Party Congress made it clear that the New Silk Roads – aka, the Belt and Road Initiative (BRI) – launched by President Xi Jinping just four years ago, provides the concept around which all Chinese foreign policy is to revolve for the foreseeable future. Up until the symbolic 100th anniversary of the People’s Republic of China, in 2049, in fact. Virtually every nook and cranny of the Chinese administration is invested in making the BRI Grand Strategy a success: economic actors, financial players, state-owned enterprises (SOEs), the private sector, the diplomatic machine, think tanks, and – of course – the media, are all on board. It’s under this long-term framework that sundry BRI projects should be examined. And their reach, let’s be clear, involves most of Eurasia – including everything from the Central Asian steppes to the Caucasus and the Western Balkans.Representatives of no fewer than 50 nations are currently gathered in Tbilisi, Georgia, for yet another BRI-related summit. The BRI masterplan details six major economic “corridors,” and one of these is the Central Asia-West Asia Economic Corridor. That’s where Georgia fits in, alongside neighboring Azerbaijan: both are vying to position themselves as the key Caucasus transit hub between Western China and the European Union.
India-Russia Multi-Modal Transportation Route All Set to Open Next Month — The first consignment of goods to be transported via the International North-South Transportation Corridor (INSTC) will depart from India's financial capital Mumbai to St Petersburg, Russia next month. This will mark another milestone in India-Russia relations. The corridor will reduce the time for transportation of cargo from India to Russia by half. It will help India and Russia to increase bilateral trade to the targeted $30 billion over the next 10 years. The 7,200 km long INSTC comprises rail, road and sea routes that connect the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran from where it connects St Petersburg and Northern Europe. "After the Chabahar Port, the International North-South Transportation Corridor is of great significance to India as it will provide easy access to Indian goods to Eurasian markets. In a way, INSTC is India's answer to China's One Belt One Road project, which India is opposing vehemently. INSTC has both geo-strategic as well as economic significance. Apart from Russia, the INSTC will increase India's reach to Central Asia, Europe, and Eurasia. It will provide the much-needed stimulus to trade and investment between the two countries by shortening the travel time," Arun Mohanty, Professor in the Centre for Russian and Central Asian Studies in JNU told Sputnik.
Pakistan Air Force Ordered To Shoot Down US Military Drones -- The Pakistan Air Force (PAF) has just been ordered to shoot down any foreign drones that violate the country’s airspace including attack drones operated by the United States, Chief Marshal Sohail Aman said on Thursday. The announcement is a complete change from the air force’s previous view, of which foreign drone strikes on its soil were condemned but the air force never threatened to shoot them out of the sky. “We will not allow anyone to violate our airspace. I have ordered PAF to shoot down drones, including those of the US, if they enter our airspace, violating the country’s sovereignty and territorial integrity,” Air Chief Marshal Sohail Aman told an audience in Islamabad.The statement was made about two weeks after a US drone strike targeted a militant compound in Pakistan’s tribal region along the border of Afghanistan, leading to multiple casualities, The Times of India reported.This is the first time, the Pakistani government has taken a hard stance against foreign drones, especially the ones operated by US forces based in Afghanistan. The comment from Aman was shocking despite the US has been launching missiles into Pakistan and violating the country’s sovereignty since about 2004. The CIA was responsible for most US drone strikes in Pakistan until November 30, 2017, said The Times of India.It’s believed, senior members of terrorist groups have been killed over the years in drone strikes, but it has come at a cost of “hundreds of civilian” deaths in the form of collateral damage.
Why the Current Rate of Economic Growth Is a Flawed Indicator of Ground Realities - India has a large unorganised sector – 93% of total employment and 45% of total output. Data for this sector is not available in the routine because it is dispersed across the length and breadth of the country in tens of millions of small and cottage units which do not report their data to any agency. The largest component of the unorganised sector is agriculture constituting 45% of the workforce and 14% of the total output of the economy. Data for agriculture is collected for each of the growing seasons and becomes available with a short time lag, but it is not collected for each quarter.The non-agriculture part of the unorganised sector constitutes 48% of the workforce and 31% of the total output. It is the data for this part that is not available for some years. The government carries out surveys periodically for each component of the unorganised sector, like trade, manufacturing and finance. Thus, this data is not available either for each quarter or for each year. So how are these sectors accounted for in the GDP figures, whether quarterly or annually? In the year the government carries out the survey for some component of the unorganised sector (say, transport), it takes a ratio of this figure with that of the corresponding component of the organised sector. It is then assumed that this ratio in the reference year remains the same for the intervening years till the next survey is carried out. This may be alright if there is no shock to the economy. A shock to the economy typically effects the organised and the unorganised components differently so that the ratio calculated in the reference year becomes invalid. Thus, the organised sector can not any more represent the state of affairs in the unorganised sector. So for the period after November 8, 2016, due to the two shocks – demonetisation and GST – the ratio calculated earlier was no longer valid. Fresh surveys were required to capture the impact. Since no surveys were carried out either post November 8, 2016 nor after July 1, 2017, one can safely argue that the data used for quarterly growth of the economy is not capturing the shock experienced by the unorganised sector. A rough calculation based on scattered evidence suggests that the current rate of growth of the economy is less than 1% and not 6.3%.
WaPo’s One-Sided Cheerleading for Coup and Intervention in Venezuela - The only voices allowed in the Washington Post on the subject of Venezuela over the past year have been those calling for the overthrow or sanction of its government. A review of 15 opinion pieces featured in the Post shows voices even remotely sympathetic to the government of President Nicolás Maduro are omitted entirely. For the capitol’s paper of record, Venezuela joins the status of Adolf Hitler or ISIS: a settled evil without any nuance. Columns and editorials in the Post are uniformly pro–regime change, pro-intervention, pro-sanctions or outright pro-coup. Meanwhile, nations with deplorable human rights records that are in good standing with the US government, such as Saudi Arabia and Israel, are routinely given puff piece op-eds (7/14/15), softball Q & A’s (8/7/17) and framed over and over again as “reformers” of their own abuses (FAIR.org, 4/27/17). The opinion pieces on the topic of Venezuela, however, range from pro-sanction to pro-invasion:
- “Venezuela Is Lurching Closer and Closer to Chaos” (Editorial, 12/26/16)
- “In Venezuela, We Couldn’t Stop Chávez. Don’t Make the Same Mistakes We Did” (Andrés Miguel Rondón, 1/27/17)
- “The Organization of American States Decides to Have a Serious Talk With Caracas” (Francisco Toro, 3/29/17)
- “What It’ll Take for Venuezela’s [sic] Protests to Work, According to an Opposition Expert” (Amanda Erickson, 4/26/17)
- “Analysis: In Venezuela and Turkey, Strongmen Fear the Limits of Their Power” (Ishaan Tharoor, 4/27/17)
- “Beware Maikel Moreno, the Hatchet Man Who Runs Venezuela’s Supreme Court” (Francisco Toro and Pedro Rosas, 4/28/17)
- “Venezuela Is Heading Toward Cataclysm” (Editorial, 5/3/17)
- “Goldman Sachs Makes an Irresponsible Deal With the Corrupt Venezuela Regime” (Editorial, 6/4/17)
- “The Region Cannot Just Stand By as Venezuela Veers Toward Civil War” (Editorial, 6/30/17)
- “Why One Man’s Bizarre Attack on the Government Is Reverberating in Caracas” (Daniel Lansberg-Rodríguez, 6/30/17)
- “Venezuela’s Lawless Regime Staggers Toward a Coup” (Editorial, 7/27/17)
- “Venezuela Is Imploding. These Citizens Were Desperate to Escape” (Tamara Taraciuk Broner, 8/2/17)
- “The Specter of Civil War in Venezuela” (Editorial, 8/13/17)
- “Venezuela’s Warning to America: Beware the Populist-Turned-Dictator” (Federico Finchelstein, 9/18/17)
- “The Odds of a Military Coup in Venezuela Are Going Up. But Coups Can Sometimes Lead to Democracy” (Ozan Varol, 11/15/17)
The last contribution on the list, from law professor and PR consultant Ozan Varol, suggests a coup could bring about “democracy,” despite Maduro winning in 2013 by roughly 1.5 percentage points (not exactly dictatorial numbers), in an election overseen and sanctioned by international election monitors—including the US-based Carter Center. While one can debate the democratic properties of measures taken since, few doubt Maduro won the election held in April 2013 after President Hugo Chávez’s death, nor can one easily explain how, if the elections were rigged, Maduro’s party overwhelmingly lost the Assembly election two years later. Maduro will face voters again in less than a year, in October 2018.
Russia Barred From 2018 Winter Olympics - In an unprecedented move, the International Olympic Committee has banned the Russian Olympic team from participating in the 2018 Winter Games in Pyeongchang, South Korea. While individual atheltes with rigorous histories of anti-doping testing will be allowed to petition to compete as neutral athletes, Russian government officials will be forbidden to attend the games, the country's flag will not fly and its anthem will not be played, the New York Times reported. If any Russian athletes win metals as individual competitors, the Russian anthem won't be played during the medals ceremony - instead, the Olympic anthem will sound. The record books from the games will officially record that Russia won zero metals at the 2018 games. The punishment was issued Tuesday following years of deliberations after a rogue doctor blew the whistle on the program in a wide-ranging expose published in the New York Times back in 2016. That story explained how Russian officials set up a clandestine laboratory to intercept official drug tests. Russian testers also developed a method to infiltrated the supposedly tamper-proof containers used by the Olympics anti-doping officials. As the Times explained, the punishment was decided after the IOC finished its investigation. It's a major blow to Russia's national pride: The country has often used the Olympics as a display of global voice.
Europe Set to Award China `Holy Grail’ With Tariff-Rules Revamp - European industries from steel to solar are bracing for a new set of tariff rules that may make it harder to fend off low-cost imports from China and other foreign countries. European Union governments are due on Monday to rubber-stamp the biggest revamp of the bloc’s method for calculating duties aimed at countering below-cost -- or “dumped” -- imports. The move is a response to longstanding Chinese government demands for more favorable treatment while stopping short of saying those shipments are fairly priced. The overhaul will end an EU presumption that Chinese exporters and those in nine other members of the World Trade Organization operate in non-market conditions. That approach, which has allowed for higher European anti-dumping duties, is being replaced by a more opaque procedure for determining whether imports unfairly undercut domestic producers. “There’s going to be much more work for European industries to make their dumping cases,’’ “There’s a lot of discretion for EU trade authorities in the new system. The question is how that discretion is used and what the political influence will be.’’ The EU carrot to China comes as both seek to claim a global leadership role in trade amid U.S. President Donald Trump’s protectionist stance, which has shaken the post-World War II commercial order. The U.S. has taken a different tack from the EU, rejecting China’s claim of market-economy status and refusing to alter how it calculates anti-dumping duties. Europe is offering political and economic rewards to Beijing by removing China from the European list of non-market-economy countries in dumping investigations. While being the EU’s No. 2 trade partner behind the U.S., China is grouped with the likes of Belarus and North Korea in lacking market-economy designation by Europe and faces more European anti-dumping duties than any other country.
"Gnomes Of Zurich" In Panic As Saudi Corruption Crackdown Sparks Flood Of Money Laundering Inquiries -- There are two divergent views on the crackdown on corruption by Saudi Arabia’s crown prince, Mohammed bin Salman (MBS), which led to the arrest and detention of 200 princes, ministers and former ministers. On one hand, it was a masterstroke which will earn political capital with the Saudi people and catalyse an Arab Spring in which MBS is a modernizing reformer who will liberalise Islam. On the other, it was nothing other than a cynical and desperate attempt to tighten his grip on power and weaken competing clans within the ruling family (especially sons of former King Abdullah) as the nation risks splitting apart due to political and economic fissures. Last week, we noted that former head of the National Guard and senior member of the Abdullah clan, Prince Miteb bin Abdullah, purchased his freedom for a cool $1 billion.If you put yourself in the position of being a Saudi prince or wealthy Saudi official, whatever your opinion of MBS’s motivation, you would be forgiven for taking additional measures to make it harder for his henchmen to seize your wealth if you found yourself in the crosshairs.Alternatively, if you suddenly need to write a check for, let’s say $1 billion, it might require some questions, a few portfolio adjustments and lots of paperwork. Switzerland has been a popular place for wealthy Saudis to store their wealth since the 1970s and MBS’s crackdown is already rippling through the offices of Swiss-based private banks. In fact, there has been a flood of submissions regarding potential money laundering. According to the Financial Times. Switzerland’s banks have begun reporting suspicious account activity among some of their Saudi Arabian clients to the Swiss Money Laundering Reporting Office, part of the federal police service, according to people close to the situation. Lawyers acting for the banks have submitted information over the past week and expect several dozen submissions to be made in total, said two people involved in the process.
Financial markets could be over-heating, warns central bank body -- Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check. The Bank for International Settlements (BIS) said the situation in the global economy was similar to the pre-2008 crash era when investors, seeking high returns, borrowed heavily to invest in risky assets, despite moves by central banks to tighten access to credit. The BIS, known as the central bankers’ bank, said attempts by the US Federal Reserve and the Bank of England to choke off risky behaviour by raising interest rates had failed so far and unstable financial bubbles were continuing to grow. When economists talk about financial markets overheating, they are typically saying asset prices - given to shares, bonds or commodities - are rising too fast or have reached levels that don't justify the usability or profit-making capacity of the companies or goods that they represent. Overheating can occur when investors are overly confident that prices can rise further. But should that confidence evaporate, over-inflated asset prices will have further to fall than most. Claudio Borio, the head of the BIS, said central banks might need to reconsider changing the way they communicated base interest rate rises or the speed at which they were increasing rates to jolt investors into recognising the need to calm asset markets.“The vulnerabilities that have built around the globe during the long period of unusually low interest rates have not gone away. High debt levels, in both domestic and foreign currency, are still there. And so are frothy valuations. “What’s more, the longer the risk-taking continues, the higher the underlying balance sheet exposures may become. Short-run calm comes at the expense of possible long-run turbulence,” he said.
Global regulators agree on capital ‘floor’ for remaining Basel rules - After years of negotiations, a group of international financial regulators has reached agreement on the final handful of provisions in the Basel III global capital rules. The Group of Governors and Heads of Supervision — the overseeing body for the international Basel Committee on Banking Supervision, which establishes international minimum banking standards — Thursday published its final rules related to implementing the capital accords. Mario Draghi, the president of the European Central Bank and the GHOS chairman, said the agreement — which caps off almost two years of high-level, often tense negotiations between international regulators — is a major achievement, but that the work in some ways has only begun. “We are not done in the sense that lots of work has to be done in implementing the measures that have just been agreed [to],” Draghi said. “At this point in time, the key action is to put in practice what is agreed. It is unquestionable that this measure will reduce the excessive, unwanted, and unwarranted variability in risk-weighted assets. That’s the key point of this measure.” The new standards are sometimes referred to as Basel IV, but Draghi said he preferred to call them the “Basel III end-game.” They are aimed at reducing the variability between regulatory treatments of risk-weighted assets, and would set a “floor” below which a bank’s risk-weighted assets may not fall. This ensures regulators that a bank’s risk-weighted capital level is comparable across jurisdictions. The final rules would require that banks must hold at least 72.5% of the risk-weighted capital required by an internationally standardized risk-based capital approach. That means that countries may develop their own approaches for assessing risk-weighted capital, and may even approve different approaches for banks within their jurisdiction, but those approaches cannot allow banks to hold less than 72.5% of the capital that they would have to hold under the standardized approach.
Germany’s Dystopian Plans for Europe: From Fantasy to Reality? -- After Emmanuel Macron’s election in France, many (including myself) claimed that this signalled a revival of the Franco-German alliance and a renewed impetus for Europe’s process of top-down economic and political integration – a fact that was claimed by most commentators and politicians, beholden as they are to the Europeanist narrative, to be an unambiguously positive development. The integrationists’ (unwarranted) optimism, however, was short-lived. The result of the German elections, which saw the surge of two rabidly anti-integrationist parties, the right-wing FDP and extreme right AfD; the recent collapse of coalition talks between Merkel’s CDU, the FDP and the Greens, which most likely means an interim government for weeks if not months, possibly leading to new elections (which polls show would bring roughly the same result as the September election); and the growing restlessness in Germany towards the 13-year-long rule of Macron’s partner in reform Angela Merkel, means that any plans that Merkel and Macron may have sketched out behind the scenes to further integrate policies at the European level are now, almost certainly, dead in the water. At this point, the German government’s most likely course in terms of European policy – the one that has the best chance of garnering cross-party support, regardless of the outcome of the coalition talks (or of new elections) – is the ‘minimalist’ approach set in stone by the country’s infamous and now-former finance minister, Wolfgang Schäuble, in a ‘non-paper’ published shortly before his resignation. The main pillar of Schäuble’s proposal – a long-time obsession of his – consists in giving the European Stability Mechanism (ESM), which would go on to become a ‘European Monetary Fund’, the power to monitor (and, ideally, enforce) compliance with the Fiscal Compact. This echoes Schäuble’s previous calls for the creation of a European budget commissioner with the power to reject national budgets – a supranational fiscal enforcer.
German pilots ground 222 flights after refusing to deport asylum seekers - Pilots have stopped 222 deportations of asylum seekers from Germany by refusing to take off with them on board. Many of the pilots refused to take control of flights taking people back to Afghanistan, where violence is still rife following years of war and occupation by Western forces.One of the airlines involved said pilots made the decisions on a "case-by-case" basis if they believed "flight safety could be affected". Germany has deemed Afghanistan a "safe country of origin" in some cases, despite ongoing violence and repression in parts of the country. Between January and September, a total of 222 planned deportations were classified to have "failed" due to pilot refusal, according to German government figure. Most – 140 – occurred at Frankfurt airport. Others refused to fly from Cologne and Bonn. The figures were obtained by the Die Linke political party, which is commonly referred to as the Left Party. Some of the grounded flights belonged to Lufthansa and its subsidiary, Eurowings. The decision not to carry a passenger, was ultimately down to the pilot on a "case-by-case decision", Lufthansa spokesman Michael Lamberty told the Westdeutsche Allegeimeine Zeitung newspaper which originally reported the story.
Brexit: everybody gets a prize - On the day that Mrs May meets Jean-Claude Juncker to present him with the "final offer" which it is hoped will take us through to phase two, the Financial Times is claiming that the UK is on the brink of a deal.With the scent of fudge in the air, the paper could be right – but then it could be hopelessly wrong. If it is, it'll quietly forget this story but otherwise we'll never hear the last of it. As one might expect, the evidence is pretty thin, apparently based on an exchange with another of that increasingly common breed, the anonymous official. Just for a change though, this one is Irish. What's more, he (or even she) is a senior Irish official. This must mean that what he (or she) has to say must be truer than if it came from a mere official – or, heaven forefend, a junior official. Supporting the FT narrative (not), he (or she) says that they (the Irish government) were "still awaiting signs of a definitive breakthrough". That, of course, leaves the agreement "hanging in the balance", which prompts the official to say: "As we speak at the moment, this is a very fluid situation. There are intensive contacts back and forth". In terms of substance, that is all you get – which means that the story is not inconsistent with the Telegraph headline, which has: "Brexit timetable in jeopardy as Theresa May fails to reach deal on Irish border ahead of EU deadline". To an extent, this is a matter of half-empty, half full, with the Tory comic reporting: "Theresa May will go into a crunch meeting with EU leaders on Monday admitting she is yet to find a solution to the Irish border problem". But to put it on the half-empty side, this paper adds that a Cabinet minister has suggested for the first time "that Brexit might not happen".
If Brexit is going badly, it’s the fault of the Brexit elite: stop trying to blame the 48 per cent - Brexit, its supporters still seem convinced, is going swimmingly. They’ll tell you, if pushed, that none of the dire predictions of economic chaos have come to pass; that the lack of progress in the talks represents EU brinkmanship, rather than genuine failure of negotiation; and that businesses don’t care about silly things like regulatory harmonisation anyway. I’m not convinced – the lack of a plan for the Irish border that will simultaneously satisfy the Republic, the Democratic Unionist Party, the Tory Brexit elite and the laws of physics has certainly given me pause for thought – but it’s fair to say I was always primed to be negative about this whole process, so perhaps I’m wrong. Perhaps everything is going exactly to plan. Perhaps the moon is made of cheese. Just in case I’m not, though, I want to get one thing straight: none of what is happening, now or in the future, is the fault of Remainers. If Brexit does turn into the disaster that it threatens to, then the blame can legitimately be attached to David Cameron, and Ukip, and the current cabinet, and even the EU itself. But none of what is to come will be the fault of those of us who always thought it was a bloody silly idea in the first place, and our enthusiasm or otherwise as the government has failed to get a decent deal is neither here nor there. This shouldn’t need saying, of course, yet somehow it does. Ever since the vote, the 48 per cent have been exhorted to get behind Brexit, as if 27 other EU states with electorates of their own care even slightly whether Britain can put up a united front.
Brexit: No deal in Brussels after DUP torpedoes Theresa May and Jean-Claude Juncker's Northern Ireland agreement - Theresa May’s Brexit strategy is in disarray after the Irish Prime Minister dramatically accused her of reneging on an agreement that would have ended the deadlock in the talks.On a day of drama, the Prime Minister pulled the plug on a deal on the Irish border after it was rejected by the Democratic Unionist Party which props her up in power – triggering claims she is being “held to ransom”.The embarrassment left Ms May scrambling to arrange crisis talks with the DUP before she heads back to Brussels later this week, with the clock ticking on the negotiations. EU leaders have demanded she guarantee there will no hard land border in Ireland before a summit next week, if the talks are to move on to discussing future trade and a transitional deal. The unravelling of the deal also left many Conservatives questioning Ms May’s handling of the talks, amid disbelief that the DUP had not been squared off in advance.The talks broke down after Arlene Foster, the DUP leader, ruled out any move “which separates Northern Ireland economically or politically from the rest of the United Kingdom”.“We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom,” she said, speaking at Stormont. The party – despite being the Tories’ partner in government – appeared to be blindsided by the UK’s apparent concession of “regulatory alignment” on both sides of the border, to avoid checks.
Theresa May’s smoke and mirrors Brexit gambit didn’t even last an afternoon – it’s not difficult to see why - After 18 months of phoney war - of talking, positioning and negotiating behind the scenes - the rickety craft of Theresa May’s Brexit strategy briefly took flight yesterday, and then promptly nose-dived back to earth. Within hours of Ireland’s state broadcaster reporting that Mrs May had agreed that the UK would ensure “continued regulatory alignment” between Northern Ireland and the EU, political gravity had taken over.If the game of leaking the compromise was to railroad Mrs May into signing off on the deal at her lunch with Jean-Claude Juncker, it backfired spectacularly, exposing this most carefully worded of texts to more scrutiny that it could bear. Wrapped up in the language was a subtle compromise that officials had worked on for the best part of a month, and tried to be all things, to all parties.The UK had not been forced to become a rule-taker by agreeing to Ireland’s initial demand for “no regulatory divergence”, instead it was electing to use new-found freedoms after Brexit to maintain convergence.To Dublin the compromise gave clear reassurance that Northern Ireland would not diverge, obviating the need for a return to a hard border, while simultaneously giving Arlene Foster’s Democratic Unionists a promise that the “alignment” would only be in the sectors that were relevant to the Good Friday Agreement.It was at this moment that Brexit’s immutable logic took over, and inexorably over the course of the next few hours began to unravel the deal.Arlene Foster was emphatic that Northern Ireland must not be treated differently from any other part of the United Kingdom. The North, she said, could not become a regulatory exclave of the Republic, or the EU itself.But how then to square Mrs Foster’s demand for equality, with the idea that Northern Ireland was apparently being granted a soft Brexit that seemed to it part of the EU’s single market and customs union in all but name?Foster: DUP will block any Brexit deal that separates Northern Ireland from UK. Either Northern Ireland was being treated differently - which would imply an east-west border to monitor mainland Britain’s divergent trade policy after Brexit - or, contrary to everything we have been told by Mrs May, the UK was not diverging at all? It could not be both.
Ten days to save Brexit: Theresa May will spend today desperately trying to persuade DUP and her own Cabinet to resurrect EU deal after Unionists killed plan to sacrifice Northern Ireland with one phone call -- Theresa May has ten days to save Brexit talks after DUP allies blocked plans to resolve the status of Northern Ireland's border with the south.The Prime Minister had to break off from lunch with European Commission chief Jean-Claude Juncker yesterday to field an angry call from DUP leader Arlene Foster who had gone public with her concerns.Before the lunch, EU diplomats and journalists had been told to expect a 15-page document outlining details of a deal that would clear the way for trade talks to begin this month.But later in the afternoon Mrs May and Mr Juncker faced the Press in Brussels to announce that discussions on a divorce deal had been abandoned for the day. A senior Tory said the DUP had 'gone ballistic' over a proposed compromise which they feared would result in 'regulatory divergence' from the rest of the UK and an effective border in the Irish Sea. The party even threatened to pull out of a deal to prop up the Government at Westminster. 'They are seething,' the source said.DUP MP Sammy Wilson described the proposals as a 'unionist nightmare' which could lead to the break-up of the UK.But the British proposals are understood to be more subtle. Mrs May is thought to be proposing an arrangement which would require the whole UK to retain 'regulatory alignment' with the EU on a narrow range of issues that affect the Irish border. These include energy, agriculture and transport.The UK would commit to the same regulatory outcomes in these areas as the EU, but would be free to achieve them by different routes. Crucially, the UK would be free to diverge from EU rules in all other areas.The proposed compromise would allow Northern Ireland to retain the same rules as the Republic in critical areas without splitting from the rest of the UK. But it will prove highly controversial with some Tory MPs. Mrs May will spend today in talks with Cabinet colleagues and political leaders in both the north and south of Ireland as she tries to find a way through the deadlock. She is then expected to head back to Brussels tomorrow to resume talks with Mr Juncker.
Brexit’s Irish Checkmate - Yves Smith - We had stuck our necks out yesterday and said it was likely that that Theresa May would be unable to deliver a deal on the Irish border in Brussels yesterday. We also said she’d given a few days more to try to stitch up a deal but that effort would fail. Our forecast is holding up well, since as readers who have been following Brexit no doubt know, the negotiations were halted in the afternoon thanks to the DUP publicly repudiating the tentative Ireland deal based on a leak of some key language, and May has run back to the UK to try to stitch things back up. According to The Times, May has until Friday at the latest to get a deal back on track. However, we were gobsmacked to see how humiliating the day’s developments were for May and even to some degree even for EU figures like Jean-Claude Juncker and Donald Tusk, who were clearly blindsided by the Tories’ coalition partner, the DUP, going into scorched earth mode against the UK’s Irish border solution. The blow up made it acutely visible that key parties to Brexit want things that are utterly incompatible.The immediate sticking point is that the position of the Republic of Ireland and Northern Ireland on the border issue cannot be reconciled. As we stressed yesterday, the UK leaving the EU means there has to be a hard border somewhere.The Republic opposes a hard border between the Republic and Northern Ireland (NI). Normally that might not be fatal since per Article 50, a Brexit deal requires the approval of a “qualified majority,” so Ireland could not veto a pact all by itself. But the EU has committed itself to defending the Republic’s interests, and it can’t back away from that pledge (or at least not quickly enough to resolve the current impasse).NI, or more precisely, the DUP, the Tories’ coalition partner, had ruled out finesses to prevent the establishment of a hard border on land, such as having NI remaining in the single market, since they would increase the political integration of Ireland and also entail the creation of a hard border at sea. It was hard to imagine any way to come up with a solution. Politico and The Daily Mail reported that the fudge that the EU negotiators and May had agreed upon and the Republic had accepted was, per Politico:
Tory Brexit truce cracks: PM told to walk away from talks by her own Eurosceptic MPs over ‘intolerable’ demands as she cancels trip to Brussels today after failing to do deal with DUP leader -- The Tory truce on Brexit was fracturing last night as MPs warned Theresa May they would not accept further compromises with Brussels. The Prime Minister faced a backlash after David Davis confirmed some sectors of the UK economy could have to align with the EU after Brexit to resolve the Irish border issue.Former leader Iain Duncan Smith – who has acted as a bridge between No 10 and Eurosceptic MPs until now – described the proposal as 'intolerable' and suggested it was time to walk away from the talks. Eurosceptic Cabinet ministers also complained they were being kept in the dark about the extent of the compromises, both on the Irish border and the European Court of Justice. Boris Johnson and Michael Gove are said to be leading a revolt of Brexiteers who have a 'genuine fear' that Mrs May is going to push through a soft option. The Foreign Secretary reportedly confronted the Prime Minister in a dramatic clash during Cabinet yesterday over her negotiating strategy.A senior insider told The Sun: 'Cabinet is in the dark about what the PM is doing, which is a very strange state of affairs to be in.' Meanwhile the DUP, whose ten MPs prop up the Government, made it clear it would not accept the plans put forward by the Prime Minister on Monday to secure a breakthrough on a post-Brexit trade deal.Talks with European Commission chief Jean-Claude Juncker stalled on Monday after DUP leader Arlene Foster vetoed plans for a compromise on the status of the Irish border. The Prime Minister had planned to return to Brussels today to try to complete a divorce deal with the EU. But the trip was cancelled last night after Mrs Foster said she would not accept plans to retain 'regulatory alignment' between Northern Ireland and the Republic after Brexit.
DUP Humiliates May, Extends Freeze on Talks as Hard Core Brexiters Fume -- Yves Smith -- Theresa May has made such a hash of the Brexit negotiations that she has achieved the difficult task of making Jean-Claude Junkcer look statesmanlike. In a multi-party negotiation, she has managed to alienate, perhaps fatally, the DUP and the hard-core Brexit wing of her own party. But May’s flailing about may simply reflect that it’s become impossible to pretend that the Government can deliver on Brexit fantasies of a glorious Brexit, or even one where the UK gets to reclaim its vaunted national sovereignity at a very high economic cost. As we’ve said repeatedly, the UK is a small open economy. That means it has to trade. That means that large swathes of the UK economy will still have to adhere to EU regulations. The idea that the UK was going to escape Brussels rule-making was always a fantasy. Even so, May’s performance has been disastrous. Brexit negotiations collapsed yesterday when the Tories’ coalition partner, the DUP, was outraged to learn that draft language intended to finesse the need for a hard border between the Republic of Ireland and Northern Ireland had been approved by the Republic but never reviewed with the DUP. Even worse, the key phrase was that the UK would preserve “regulatory alignment” between Northern Ireland and the Republic in several economic sectors, such as agriculture and transport. This would be unacceptable to the DUP, since the party insists on a strong “unionist” position with the UK, that Northern Ireland’s legal and regulatory regime is to remain the same as the rest of the UK. The DUP was duly ripshit about the Republic and the EU being treated as insiders while the DUP was excluded from consultation about the language to be presented to the EU for review by the European Council next week. At least as bad was that the leaked terms sounded as if they were utterly at odds with the DUP’s firm position on staying joined at the hip with the rest of the UK. A DUP MP stated yesterday that the party would reject the draft language. Theresa May called party leader Arlene Foster who according to some press reports, effectively said she’d bring the government down if May persisted with the leaked language. May, with her tail between her legs, was forced to cancel the talks in Brussels. She ran back to London to try to reassure the DUP, and planned to return to the Continent Wednesday to resume the talks. That has gone off the rails. Foster has not only refused to speak to May, she’s refused even to give a time when she will allow May to ‘splain herself.
Impact assessments of Brexit on the UK 'don't exist' - BBC News: The government has not carried out any impact assessments of leaving the EU on the UK economy, Brexit Secretary David Davis has told MPs. Mr Davis said the usefulness of such assessments would be "near zero" because of the scale of change Brexit is likely to cause. He said the government had produced a "sectoral analysis" of different industries but not a "forecast" of what would happen when the UK leaves the EU. Labour called it a "shambles". The Liberal Democrats said impact assessments were urgently needed while the SNP called it an "ongoing farce". Mr Davis said a "very major contingency planning operation" was in place for Brexit.Opposition MPs have been on the trail of the "Brexit impact assessments" for months. And when David Davis told them they didn't exist, they were quick to highlight some similar-sounding studies he had referred to in the past:
UK has 48 hours to agree potential Brexit deal or talks cannot progress -- Michel Barnier, the EU’s chief Brexit negotiator, has told member states that the British government has just 48 hours to agree a text on a potential deal or it will be told that negotiations will not move on to the next stage. Barnier informed EU ambassadors that Downing Street had told him a potential solution was being worked out that could possibly satisfy both Northern Ireland’s Democratic Unionist party and the Republic of Ireland, but that it had yet to be signed off by any of those involved. Another meeting of diplomats of the 27 member states has been pencilled in for Friday evening, should the UK find an agreement with the DUP on a solution to avoiding a hard border on the island of Ireland. There were signs that progress was being made towards a deal to avoid a hard border on the island of Ireland. At a press conference the Irish prime minister Leo Varadkar said Theresa May told him she would come back with fresh proposals late on Wednesday or Thursday. If the UK fails to agree a joint position with the European commission by Friday, the member states informed Barnier that they would not have time to take it back to their capitals for scrutiny ahead of next week’s critical European council meeting. In that scenario, the leaders would once again rule that insufficient progress had been made on the opening issues of citizens’ rights, the financial settlement and the Irish border for talks on trade and a transition period to start. A failure to move talks on in December would mean that the terms of a transition period could potentially only be discussed after the next European council summit of leaders in March, by which time key businesses in the UK will have had to make decisions over their location and investments in the country. It is possible that the leaders would call an emergency summit in January or February to agree to move talks on and discuss the terms of a transition period. But the longer it takes the British government to offer certainty over trading terms after March 2019, firms will make decisions that will cost the British economy.
Brexit: 'Breakthrough' deal paves way for future trade talks - BBC News: PM Theresa May has struck a last-minute deal with the EU in a bid to move Brexit talks on to the next phase. There will be no "hard border" with Ireland; and the rights of EU citizens in the UK and UK citizens in the EU will be protected. The so-called "divorce bill" will amount to between £35bn and £39bn, Downing Street says. The European Commission president said it was a "breakthrough" and he was confident EU leaders will approve it. They are due to meet next Thursday for a European Council summit and need to give their backing to the deal if post-Brexit trade talks are to begin.The UK will then have about a year to hammer out an agreement on future relations, which will have to be ratified by the EU nations and the UK Parliament, before the UK leaves in March 2019. Northern Ireland's Democratic Unionist Party, whose opposition on Monday led to talks breaking down, said there was still "more work to be done" on the border issue and how it votes on the final deal "will depend on its contents". Mrs May depends on the party's support to win key votes in Westminster. What has been agreed?
- Guarantee that there will be "no hard border" between Northern Ireland and the Republic and that the "constitutional and economic integrity of the United Kingdom" will be maintained.
- EU citizens living in the UK and vice versa will have their rights to live, work and study protected. The agreement includes reunification rights for relatives who do not live in the UK to join them in their host country in the future
- Financial settlement - No specific figure is in the document but Downing Street says it will be between £35bn and £39bn, including budget contributions during a two-year "transition" period after March 2019
- The UK government and the EU want to maintain the free flow of goods, without border checks that they fear could threaten a return to The Troubles, but the DUP does not want Northern Ireland to be treated differently to the rest of the UK after Brexit.
- The joint EU-UK document says any future deal must protect "North-South co-operation" and hold to the UK's "guarantee of avoiding a hard border".
- The agreement also says "no new regulatory barriers" will be allowed between Northern Ireland and the rest of the UK, and that Northern Ireland's businesses will continue to have "unfettered access" to the UK internal market - a passage thought to have been added to meet DUP concerns.
- But it also sets out a fallback position if the UK fails to agree a trade deal. This could prove controversial because it says there will continue to be "full alignment" between the EU and Northern Ireland on some elements of cross-border trade, as set out in the Good Friday Agreement.
Brexit “Breakthrough”: Headfake or May Trying to Engineer Further Capitulation to EU? -- Yves Smith - Due to the late hour, and the news regarding May having gotten the DUP enough in line so as to get a green light from the European Commission on its Ireland fudge (more on that soon) being heavy on PR and light on facts and analysis, this post will be terse, with hopefully a more fleshed out take over the weekend. Initial observations:The press is greatly exaggerating the significance of this deal. Some headlines are declaring the EU and UK to have reached an “exit deal”. This is not a deal. Nothing is final. This is the UK having presented what is at best a letter of intent on the three issues that the EU had deemed necessary for the UK to have demonstrated “sufficient progress” to be allowed to talk trade. May has made contradictory promises and something or somethings will have to give. The big headfake is on Ireland, which was the apparent sticking point early this week. Nothing has been resolved here, save the DUP has chosen to stand down for the moment.This is the solution to the Northern Ireland border problem in the joint technical note… it’s basically a post-it note saying ‘fix later’ pic.twitter.com/Poqx0N0qSy— Jon Stone (@jonc stone) December 8, 2017 As PlutoniumKun said via e-mail:On the face of it, the Irish government has surrendered to the early BS British offer of some sort of magical IT tech solution to the border. I don’t know if they are aware of this, or they hope they can screw things down in more detail later. I think they have significantly weakened their position by conceding that there may be a technical solution to an open border. The DUP may have realised that if they block a deal, that could mean an election and Corbyn. They are genuinely terrified at that prospect. So I think they’ve backed away from the abyss, rather than actually agreed to anything. The contradiction is the continued pretense that the UK can have a hard border nowhere with respect to Ireland and still leave the Single Market and the EU customs union. May’s statement stressed tha there would be no hard border, which has meant land border, in Ireland. The DUP’s Arlene Foster said, per the BBC, that “…she was ‘pleased’ to see changes which mean there is ‘no red line down the Irish Sea’.” The mystery: why is the EU enabling a tentative deal that isn’t workable?
Government accused of ‘wishful thinking’ about Brexit border plans - The UK border could be left vulnerable from the first day of Brexit due to the Government’s “reckless” approach to planning the withdrawal from the EU, an influential Commons committee has said. Cross-party MPs on the Public Accounts Committee (PAC) warned the current approach to preparing for Brexit’s immediate impact was “not fit for purpose” as officials were too reliant on the possibility of a transition period to iron out problems with customs and immigration. In a critical new report, the committee found vital IT systems might not be ready in time for March 2019 – the official exit day – and there was no planning for major new physical infrastructure such a lorry parks and customs posts to cope with the coming changes. The Treasury was also told to speed up payments for Whitehall departments preparing for Brexit, as officials were still negotiating for vital cash on a case-by-case basis, the report said. Labour chairwoman Meg Hillier accused Government departments of an “over-reliance on wishful thinking”, which could leave Britain open to border chaos with enormous queues at Dover and other checkpoints, huge disruption to trade and shortages of customs staff. It comes after the spending watchdog recently published a critical report warning border officials could struggle to cope after Brexit as customs declarations are set to soar by 360% and immigration checks will rise by 230%.One of the committee’s main concerns is that officials are assuming that managing the border will not change on exit day – and they are putting their hopes on a transition period to develop new systems and infrastructure. It also found the new Border Planning Group had been stymied in preparing for challenges around the 300 crossing points at the Irish border as it needed political progress on the issue to advance. Ms Hillier said: “Government preparations for Brexit assume that leaving the EU will present no additional border risks from freight or passengers. It has acted – or rather, not acted – on this basis. “This approach, in the context of what continues to be huge uncertainty about the UK’s future relationship with the EU, might generously be described as cautious.
Factbox: What's in the Brexit divorce deal? | Reuters - The European Commission said on Friday that enough progress had been made in Brexit negotiations to allow a second phase of talks on future relations to begin. An Anti-Brexit protestor waves EU and Union flags outside the Houses of Parliament in London, Britain December 5, 2017. REUTERS/Simon Dawson The following is a summary of a joint EU-UK report showing the agreements on three key topics: Refers to British citizens, including spouses and children, living in an EU state and other EU nationals living in Britain on date of its withdrawal. It does not give British citizens a right to move from one EU state to another and retain the same rights, while rights for EU and British citizens lapse if they leave their original host country for five years. Negotiations may continue in the second phase, with Britain looking for “onward movement” rights for its citizens on the continent and the EU interested in citizens keeping permanent residence rights even after longer spells absent from the host country. Citizens with permanent residence documents should get new ones free of charge. Equal treatment will cover rights with respect to social security, health care, employment and education. Benefits will be “exportable” as they are now. Future spouses, children and other core family members can join citizens enjoying protected rights. The European Court of Justice (ECJ) is the ultimate arbiter of EU law. The agreement states that “UK courts shall therefore have due regard to relevant decisions of the (ECJ)”. The EU and Britain have agreed to set up a mechanism enabling UK courts to ask the ECJ to weigh in when necessary during an eight-year period following Brexit. Eight years is enough to build up a body of common jurisprudence, officials say. Even at present, EU courts are not obliged to allow appeals to the ECJ. In Phase Two, the sides will negotiate on how the withdrawal treaty can be enforced - for example, if the EU believes UK courts are systematically misinterpreting EU citizens’ rights. Britain promises to preserve the integrity of its own internal market and Northern Ireland’s place within it. It says it does not want a hard border between Ireland and Northern Ireland, saying it aims to avoid checks and controls there via a future EU-UK economic relationship.
Fintan O’Toole: Ireland has just saved the UK from the madness of a hard Brexit - Let’s not understate the import of what Ireland has just achieved. It has not just secured an outcome that minimises the damage of Brexit on this island. It has radically altered the trajectory of Brexit itself, pushing that crazy careering vehicle away from its path towards the cliff edge. This saga has taken many strange turns, but this is the strangest of all: after one of the most fraught fortnights in the recent history of Anglo-Irish relations, Ireland has just done Britain a favour of historic dimensions. It has saved it from the madness of a hard Brexit. There is a great irony here: the problem that the Brexiteers most relentlessly ignored has come to determine the entire shape of their project. By standing firm against their attempts to bully, cajole and blame it, Ireland has shifted Brexit towards a soft outcome. It is now far more likely that Britain will stay in the customs union and the single market. It is also more likely that Brexit will not in fact happen. Essentially what this extraordinary deal does is to reverse engineer Brexit as a whole from one single component - the need to avoid a hard Irish border. It follows the Sherlock Holmes principle: eliminate the impossible and whatever remains, however improbable, must be the solution. The Irish Government, by taking a firm stance and retaining the rock solid support of the rest of the EU, made the hard border the defining impossibility. Working back from that, the Brexit project now has to embrace what seemed, even last Monday, highly improbable: the necessity, at a minimum, for the entire UK to mirror the rules of the customs union and the single market after it leaves the EU. And this in turn raises the biggest question of all: if the UK is going to mirror the customs union and the single market, why go to the considerable bother of leaving the EU in the first place? The great surprise of the text of the joint report is that its language is actually much more favourable to Ireland that the text that was leaked on Monday as having been agreed. What we’ve actually ended up with is much firmer and clearer - and it explicitly invokes the customs union and the single market as the source of these regulations: “In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the internal market and the customs union which, now or in the future, support North-South co-operation, the all-island economy and the protection of the 1998 Agreement.”
Brexit: nothing bankable - Ostensibly committing the UK to a "soft" Brexit, the Joint Report from the EU and UK negotiators, published yesterday, actually does no such thing.As the accompanying (but less read) Communication makes clear, "the Joint Report is not the Withdrawal Agreement". And in that one terse sentence on the first full page of the document is set the essence of Friday's dramatic "breakthrough". The "dawn patrol of Mrs May and Jean-Claude Junker shaking hands on a "deal" that takes us into phase two of the Brexit negotiations may be good theatre, but that is about all it is. In the Communication, we are reminded that, only if the European Council considers that sufficient progress has been made in those negotiations will it instruct the European Commission to draw up a proposal for a Withdrawal Agreement. This will be "based on Article 50 of the Treaty on European Union" and will be drafted only "on the basis" of the Joint Report as well as "the outcome of the negotiations on other withdrawal issues". The only commitment in relation to Friday's deal, therefore, is that the final Article 50 agreement will be drafted "on the basis" of it and the outcome of the subsequent negotiations. There is nothing in the Joint Report which constitutes a formal treaty or any legally enforceable commitment. In fact, as the Joint Report takes pains to point out, "nothing is agreed until everything is agreed", a caveat that over-rides its apparent requirement that the Joint Report shall be "reflected" in the Withdrawal Agreement "in full detail". In any event, any supposed "commitments" do not, "prejudge any adaptations that might be appropriate in case transitional arrangements were to be agreed in the second phase of the negotiations". Furthermore, they are "without prejudice to discussions on the framework of the future relationship". Returning thus to the Communication, we find that the Withdrawal Agreement "will be concluded by the Council upon a proposal from the Commission" – on the basis of QMV – but only after "obtaining consent of the European Parliament". And, of course, it is "subject to approval by the United Kingdom in accordance with its own procedures".
Brexit: Michael Gove says UK voters can change final deal - BBC News: Voters can use the next general election to have their say on a final Brexit deal, Michael Gove has said. The environment secretary praised Theresa May's "tenacity and skill" in securing a last-minute deal to end phase one negotiations on Friday. But, writing in the Daily Telegraph, he said if British people "dislike the arrangement", they can change it. Reports suggest the cabinet will meet on 19 December to discuss its "end state" plans for Brexit. This is just two days before Parliament's two-week Christmas recess. Mr Gove, one of the cabinet's leading Brexiteers, said the primary agreement between the two sides had "set the scene for phase two" negotiations - where issues such as trade will be discussed. But he said that "nothing is agreed until everything is agreed" at the end of the process. After a two-year transition period, the UK would be able to pass laws with "full freedom to diverge from EU law on the single market and customs union," he added. And the British people would "be in control" to make the government change direction if they were unhappy, he said. "By the time of the next election, EU law and any new treaty with the EU will cease to have primacy or direct effect in UK law," said Mr Gove. "If the British people dislike the arrangement that we have negotiated with the EU, the agreement will allow a future government to diverge." The next general election is currently due to be held in 2022, three years after the UK leaves the EU. However, it could be sooner if the prime minister calls one, and MPs agree to it, or if the government collapses.
Brexit trade talks could still be months away despite breakthrough -- Brexit trade talks could still be months away despite Theresa May’s breakthrough deal, amid concern in Brussels that the British Government doesn’t know what it wants to get out of the separation. The Independent understands that officials close to the negotiating team believe the UK and EU should first discuss the more straightforward issue of the transition period, to give the UK Government time to think about its post-Brexit trade plans. Doubt in the upper levels of the European Commission comes as negotiators highlighted deep differences that need to be bridged, with the starting date for trade discussions likely to slide into February or March until the UK gives more clarity. It is understood that EU officials were spooked after Chancellor Philip Hammond told MPs earlier this week that the Cabinet had not yet discussed the end goal of Brexit, while Brexit Secretary David Davis revealed to another committee that the 58 studies into Brexit’s impact, which he previously claimed existed, did not in fact exist.Though the Commission has recommended that the European Council grant “sufficient progress” to move to the next phase of talks, it is likely that early discussions in the first part of next year will focus only on the transition period.As if to highlight the problems, a European Commission communiqué to the European Council, released on Friday, cast doubt on the consistency of Theresa May’s strategy to take the UK out of the single market and customs union after signing a deal to avoid a hard border in Northern Ireland. The document, intended for internal viewing, says the EU negotiators believe it will be difficult for the PM follow through on her commitment to “maintain full alignment with those rules of the internal market and customs union” across the UK while taking Britain out of the single market and customs union – something the PM says she wants to do.
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