Deutsche: The Fed Now Appears Powerless To Stop This "Unprecedented Bubble" - Has the Fed lost control of the market? This question, first posed by Goldman last May, has received growing prominence in recent months, culminating with none other than Bill Dudley earlier this month, who pointed out the paradox of 5 consecutive rate hikes resulting in record easy financial conditions in his January 11, 2018 speech, one of his last as NY Fed Chair. But if the Fed has indeed lost control of the market, that would mean that there is nothing the Fed can do until the market bubble bursts once the current melt-up finally rolls over? That is quandary analyzed by Deutsche Bank in a recent report in which the bank observes that "an unprecedented bubble emerged during 2004-2006 when the Fed hiked rates 425bp" (as shown in the 3 charts below) and warns that "the current market environment is similar, in which monetary policy (hiking the policy rate) is likely to have a limited effect in restraining risk-taking." Deutsche then lays out the three possible scenarios that could - in theory - stop, and maybe even reverse, the current asset bubble which are as follows:
- Monetary policies or communications designed to increase volatility,
- Monetary policies designed to hike long-term interest rates, and strangely
- Regulations and supervisions to curb cryptocurrency trading.
And some further thoughts on these three points.
- First, Deutsche notes that former Fed Governor Jeremy Stein advocated for a monetary policy to cope with credit spreads (see excerpts below), but little headway was made in discussing policies targeting volatility (however, Chairman Powell prefers a communication style that raises uncertainty of monetary policy.
- Second, monetary policies designed to hike long-term interest rates include tapering quantitative easing, reducing the size of the central bank’s balance sheet, twist operations, and changes to yield curve control. Yet, these policies are all predicated on inflation accelerating.
- Which leaves option three: regulating cryptocurrency trading and initial coin offerings (ICOs) which however, unlike in China, will take time in developed countries.
And yes, the irony of the Fed trying to burst one bubble, that of cryptos, to keep the equity bubble going just a little bit longer, is hardly lost on anyone, although we are surprise by Deutsche Bank's skepticism that this approach could work. In summary, the biggest German lender comes to the gloomy conclusion that: "...monetary policy and regulations/ oversight could, like in the last financial crisis, come too late to prevent an expansion of the asset bubble."
Senate confirms Powell as Fed chair — The Senate on Tuesday overwhelmingly confirmed Jerome Powell as Federal Reserve Board chair by a vote of 85 to 12, ensuring a smooth transition when current Chair Janet Yellen’s term expires Feb. 3.Powell was appointed to the Fed board of governors in 2012 to an unexpired term and reappointed in 2014 for a term expiring in 2028. His term as chair will expire in February 2022. Powell "has served as a steady voice and a thoughtful leader” at the Fed, Senate Majority Leader Mitch McConnell said in a floor statement before bringing Powell’s confirmation up for a vote. Powell has been viewed as a consensus candidate who would bring both continuity at the Federal Reserve while also considering post-crisis regulatory reforms consistent with policies supported by the Trump administration. Powell has dedicated much of his previous tenure to advancing the central bank’s payments system, and staked out a position on cryptocurrencies long before they were grabbing headlines. Some Senate Democrats have been vocal in their opposition to Powell’s nomination, however. Sen. Elizabeth Warren of Massachusetts was the only member of the Senate Banking Committee to vote against his nomination, saying that his proposals for loosening post-crisis rules amount to a giveaway to the biggest banks. “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,” Warren said ahead of the Senate Banking Committee's vote to approve Powell in December.
The intensity of Fed rate hikes as a precursor to recessions --- Between 1931 and the mid-1950s, the yield curve never inverted, and yet there were 5 recessions (1938, 1945, 1948, 1950, and 1954). In particular, the 1938 “recession within the depression” was one of the worst of the 20th century.So in a low inflation and low interest rate environment, where the yield curve may not invert, are there other signals from the bond market that are reasonably reliable?A month ago I noted that spreads between corporate bonds and government securities have a very spotting record during more deflationary eras.Today let’s approach the issue from another angle. Is there something about the *intensity* of Fed moves that correlates with recessions? Below is a graph of the YoY change in the Fed funds rate since 1955, minus 1.5%, so that a YoY increase of 1.5% in the Fed funds rate = 0: Twelve to eighteen months prior to 8 of the last 9 recessions, the Fed increased rates YoY by 1.5% or more.There were 4 false positives, two of which involved hikes of 1.5% or 1.75% (1962 and 1966), and one potentially false negative (a 1.5% increase in the Fed funds rate preceded the 1957 recession by 21 months). In the case of the false positives, there were slowdowns in GDP growth even though there was no outright recession.So, in the most generous interpretation, a YoY Fed rate hike of 1.5% or more is almost certain to be followed by a slowdown, and more often than not by a recession. That’s pretty decent even if not perfect.That suggests that the very gradual Fed rate hikes of the last several years need not give us much concern. And indeed there is one (and only one) episode in the last 60 years that seems to bear this out. In the first half of the 1960s, the Fed gradually raised rates from 1% to 5% (blue line in the graph below):
Fed Scared to Death of Causing Global Financial Crash – Nomi Prins-- Two time, best-selling author Nomi Prins says central bankers have no idea how to stop the easy money policies that they started after the financial meltdown of 2008. Prins explains, “So, when the Fed says they are going to remove assets from their $4.5 trillion book by not reinvesting the interest payment...the reality is they haven’t really done that. They have reduced their book by about $10 billion off of $4.5 trillion since they mentioned they were going to start ‘tapering.” The media discusses this as a major tightening move. Somehow all of our economies have finally worked because of central bank activity. Growth is real. It’s all positive. The markets are evidence of that because of the levels they are at; and, therefore, these central banks, starting with the Fed, are going to reverse course of these last 10 years. "The reality is if you look at the actual activity of the central banks, beyond the Fed raising rates by a little bit, there hasn’t been and there isn’t being a reversal of course because they are scared to death that too much of a reversal is going to cause a major crash throughout the financial system.Everything is connected. All the banks are connected. Money flows around the world in less than nanoseconds, and all of it has the propensity to collapse if that carpet the central banks have created is dragged from beneath the floor of all this activity.” Prins, who just finished traveling the globe to research her upcoming book, thinks there is one big thing that can take the entire system down. Prins, a former top Wall Street banker, contends: “There hasn’t been any real growth in the real economy. That is an indication of the misfire of this entire plan. There has been tremendous growth in stock markets and bond markets. At some point, there will be a mistake. There might be a tiny smidge of an interest rate hike at some central bank, probably the Fed, which ripples throughout the system as a mistake, not because real growth has happened, and that’s why interest rates have been raised. That will incur defaults throughout the system. People will incur personal defaults, and that will cause problems in the mortgage market... then it becomes a knock-on credit crisis, and then banks start not to lend... Then we have the makings of a broad crisis.”
Fed Nominee Goodfriend Fears Bubbles Are Forming, Says QE3 Was Wrong -- Fed Governor nominee Marvin Goodfriend - the negative-rate-loving, QE-hating, Carnegie Mellon professor and former Richmond Fed economist - is testifying at his Senate Banking Committee confirmation hearing this morning. “I intend to draw on my academic and professional experience to promote policies that would further increase transparency and accountability at the Federal Reserve,” Goodfriend said in prepared testimony for his hearing that was released on Monday by the Senate Banking Committee.“Marvin is going to be a counterweight to the more conventional thinking coming out of the Federal Reserve establishment,” said Vincent Reinhart.“He is coming from a different perspective. It will not exactly be seamless.” And it did not take long for his "different perspective" to peek out... Goodfriend, peppered by questions from Senate Banking Committee Democrats about his earlier warnings that low interest rates risked a breakout of inflation, said that: ...he now feels the Fed “is more or less on the right path going forward....We should get to 2 percent (inflation) in a year or so.” Amid the collapse in the dollar, SMRA notes that Goodfriend agreed "absolutely" that a stable currency is important and helps in maximizing employment. He noted that while the global economy "has become much more integrated over the past 10, 20 years", the US has a flexible exchange rate that allows it to act independently on monetary policy and price stability.However, after that initially supportive comment, Goodfriend seemed to go a little off-narrative:He agreed that the Fed should be "aiming to get back to all Treasurys" in its holdings. He said the of first two asset purchase programs, "I think it was okay to do that to save the system", but that the third round "was not called for" as a routine tool for stabilization.Seemingly agreeing with President Trump and not The Fed, Goodfriend said that"low growth is more corrosive than low inflation..."And perhaps most notably, Goodfriend warned:"can't be certain that there are no asset bubbles forming... worrying about financial stability is an equally complementary part of the Fed’s mandate..."
Dollar Tumbles After Mnuchin Endorses Weaker Currency, Ross Speaks Of Trade Wars - Caught in a relentless downward spiral which has puzzled many a trader, it wasn't as if the US Dollar needed any help in accelerating its decline, yet that's precisely what happened this morning in Davos when none other than the US Treasury Secretary Steven Mnuchin "broke with tradition" of supporting the US currency, and said that he endorsed the dollar’s decline as a benefit to the U.S. economy. "Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters on Wednesday at the World Economic Boondoggle in Davos. "But again I think longer term the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency."Well, if China's ambitions are unchallenged, the dollar's reserve currency status may not be primary for long, but we're not there quote yet.Meanwhile, the dollar tumbled on the news, with the Bloomberg dollar index sliding to its lowest level in three years, extending the recent slide amid investor concern over President Donald Trump’s protectionist agenda and a special counsel investigation stemming from his 2016 campaign. Mnuchin shocked Davos participants because while it echoed Trump's own doubts over a strong currency, the Treasury Secretary's "mini QE" came as U.S. officials confront the global elite with their "America First" agenda. As Bloomberg adds, just hours after the U.S. slapped tariffs on solar panels and washing machines, commerce Secretary Wilbur Ross, who spoke alongside Mnuchin, said more measures are in the offing. And there is no more efficient way to accelerate trade wars than to slam your own currency, making foreign exporters suffer. The only question is how will they, and everyone else, will respond. And speaking of trade wars, Wilbur Ross said that "Trade wars are fought every single day... So a trade war has been in place for quite a little while, the difference is the U.S. troops are now coming to the rampart." It’s a message Trump is likely to send in person on Friday when he becomes the first American president in 18 years to address the Davos gathering of corporate executives and investors.
Dollar Plunges Most In 10 Months - Worst Start To A Year Since 1987 (graphs) This morning's colla pse in the dollar - the biggest daily drop since March 2017 - has extended the 2018 demise to 3.2%, the worst start to a year since 1987. Despite Wilbur Ross' efforts to walk-back Mnuchin's "game-changer" weak-dollar-policy implications, the Dollar Index is in freefall.. After showing some stability for a few days, Mnuchin's comments extended the plunge that began when The Fed hiked rates in December... This is the lowest for the dollar since Dec 2014... It's notable how the broad dollar indexes tend to stay within the upper and lower Bollinger Bands, which are two standard deviations above/below the 20-day moving average. So the fact the Bloomberg Dollar Spot Index is testing the lower band this morning suggests the weakness may not get too much worse today. That doesn't necessarily mean it's a good time to go long. For one thing, that lower band is pointing decisively downward, so there's no reason to expect it to cause a rebound in the near future. For another, simply going long following breaches of the lower band and shorting breaches of the upper band has been just about the worst technical strategy this year, according to Bloomberg's backtest function. Let's see if it holds above that lower band today. If there was ever a time to suspect the lower band won't hold, it's probably the day the U.S. administration seems to have officially rejected a strong-dollar policy.
Mnuchin Backs Weak-Currency Comments After Lagarde Demands Clarification - Following speculation that Steven Mnuchin's market-moving Wednesday comments were misconstrued, with none other than Wilbur Ross saying that the Treasury Secretary did not suggest the US was now pursuing a weak-dollar policy, Mnuchin was back on the wires again this morning in a panel appearance at Davos, where he mostly repeated his previous comment, stating that "a weaker dollar is good for us as it relates to trade and opportunities," and in terms of trade imbalances, which of course is factually true although it was still unclear if equates with new US policy. For the answer, we may need Trump who just landed at Davos, to weigh on that.Addressing whether the US has a dollar target he said, "My comments have been that in the short term, where the dollar is not a concern of mine, that it will fluctuate. In the short term there’s obviously benefits and issues of a lower dollar."After that confusion "explanation", Mnuchin was confused how there could be any confusion over his remarks: "I thought my comment on the dollar was actually quite clear yesterday, I thought it was balanced and consistent with what I said before" he told reporters in Davos. He further said that "It’s a very very liquid market and we believe in free currencies. There’s both advantages and disadvantages on where the dollar is in the short term."Addressing the elephant in the room, he said that "we want free and fair and reciprocal trade. So I think it’s very clear. We’re not looking to get into trade wars. On the other hand we are looking to defend America’s interests."Mnuchin's clarification came shortly after IMF Managing Director Christine Lagarde spoke to Bloomberg at Davos and said USD value is determined by the market, while suggesting that Mnuchin should explain his comments in which he appeared to back a weak dollar, adding that U.S. tax cuts will probably cause the world’s reserve currency to rally."I really hope that Secretary Mnuchin has a chance to clarify exactly what he said,” Lagarde said. "The dollar is of all currencies a floating currency and one where value is determined by markets and geared by the fundamentals of U.S. policy."
Dollar Surges After Trump Says "Mnuchin Was Misinterpreted, Dollar Will Get Stronger" After Stephen Mnuchin failed to arrest the dollar's freefall this morning, it appears to have been left to President Trump to 'fix' it. In a brief clip from a longer CNBC interview, Trump explained "ultimately he wants to see a strong dollar" and the dollar spiked...Trump said "Mnuchin's comment was taken out of context" and added that "our country is becoming so economically strong again and strong in other ways, too... and the dollar will get stronger and stronger and ultimately I want to see a strong dollar" And the reaction was instant buying of the dollar... We do note that actually this is exactly what Mnuchin said this morning... that in the long-run we want a strong dollar... and offers no content for the short-term plunge.
Did U.S. Treasury Secretary Mnuchin Give Dollar Shorts a Wink in Davos? - Pam Martens -U.S. Treasury Secretary Steve Mnuchin opened his mouth at the base of the snow-covered mountains of Davos, Switzerland yesterday during the World Economic Forum and sent an instant chill through currency markets around the world. After Mnuchin made the highly inappropriate remark that a weak dollar would be good for U.S. trade prospects, the U.S. Dollar plunged to a three-year low.Anyone who knew in advance that Mnuchin was going to make such a comment could have cleaned up in currency trades yesterday. Two U.S. banks (JPMorgan Chase and Citigroup) and two foreign banks (Barclays and RBS) were charged with felony counts on May 20, 2015 for their roles in rigging foreign currency markets. Mnuchin is a former 17-year veteran of Goldman Sachs and should have known better than to make such a remark at an event covered by 500 journalists from around the world. After being roasted by the media on Wednesday for his imprudent statement that “Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin sought to walk it back in a forum sponsored by CNBC this morning in Davos. During that forum he said: “In the longer term, we fundamentally believe in the strength of the dollar.” There are important reasons that it is considered bad form for a sitting U.S. Treasury Secretary or sitting U.S. President to comment on the trading level of the U.S. Dollar. While a cheaper Dollar is good for U.S. exporters because it makes their products more competitively priced in foreign markets, a cheaper dollar is decidedly not good for U.S. consumers who have to pay more for imports from foreign countries with a stronger currency. Purchases made by consumers in the U.S. represent approximately two-thirds of total Gross Domestic Product (GDP). A steadily weakening dollar presents a hardship to the working class of America where the bulk of their income goes to the necessities of life. As the dollar weakens those costs increase while wages stagnate. These increased consumer costs lead to rising inflation which could force the hand of the Federal Reserve to raise interest rates faster than currently anticipated. This could cause the stock market to fall, delivering another blow to the working class as their 401(k) savings for retirement would take a hit.
Mnuchin is right about the dollar - Since the start of 2017, the US dollar has depreciated about 9 per cent against a broad basket of currencies.This is not obviously newsworthy. After all, the decline has come after a 27 per cent increase since July 2014: And the magnitude of the recent move is well within historical norms. Larger price changes in either direction have occurred quite often since the early 1970s: When asked about this, Treasury Secretary Steven Mnuchin made an anodyne and accurate statement:The dollar is one of the most liquid markets. Where it is in the short term is not a concern for us at all. A weaker dollar is good for us as it relates to trade and opportunities. Longer term, the strength of the dollar is a reflection of the strength of the US economy and that it is, and will continue to be, the primary reserve currency.Despite being straight out of international macro 101, some people took this the wrong way.Larry Summers called it a “problematic statement”, criticised Mnuchin’s “style”, and then proceeded to lecture Mnuchin that depreciation “means higher-priced imports and, therefore, less purchasing power for American incomes”. The Wall Street Journal‘s editorial board, not normally known for being on the same page as Summers, also criticised Mnuchin: Remember that these complaints are taking place at a time when the dollar is still 15 per cent more expensive than it was in the middle of 2014. Brad Setser has shown that this persistent appreciation shaved a percentage point off of American gross domestic product in 2014-2016. America’s core manufacturing trade deficit is once again at all-time highs. Thinking solely about what makes sense for America’s economic well-being, the dollar probably should depreciate much further. Yet plenty of people seem to think the recent decline requires an explanation, and apparently find it convenient to blame Mnuchin. Those who believe looser fiscal policy and monetary tightening ought to make the dollar go up are especially perplexed. (Alan Greenspan argued against that theory back in 1995 and was proved correct shortly thereafter.)
Welcome to the New Reality of Leaping U.S. Treasury Debt Sales - The world’s biggest bond market is about to get a taste of the future, with the U.S. Treasury expected to unveil bigger note sales for the first time since 2009 to fund budget deficits that are likely to deteriorate for years to come.Treasury Secretary Steven Mnuchin’s debt-management squad is scheduled to announce on Jan. 31 how it plans to finance the government’s shortfall over the next three months, and Wall Street prognosticators anticipate bigger auctions of coupon-bearing securities. Dealers forecast an onslaught of debt supply that will lead issuance to at least double this year to more than $1 trillion, the most since 2010, starting with sales of short- to medium-term maturities. The catch is that buyers may struggle to keep up: Central banks are showing signs of stepping back, and other investors may want to see higher yields before pouncing. That backdrop also contributes to forecasts for a flatter yield curve in 2018, given expectations that the Federal Reserve will hike rates further as inflation picks up.“There will always be demand, but the question is just at what price,” said Torsten Slok, chief international economist at Deutsche Bank AG. “It’s fair to say the reason why the consensus is for Treasury yields to move higher is because of this growth in supply.”The latest projections from analysts show where that clearing price may be. Forecasters see 10-year yields reaching 2.9 percent by year-end, from about 2.61 percent now. Yields have already climbed more than a half-percentage point since early September, to the highest since 2014. America was already on course to go deeper into the red to pay for rising Social Security and Medicare expenses and mounting interest costs on its debt. That trend got added fuel from the tax overhaul passed last month. Treasury also faces more borrowing as the Fed steps up its balance-sheet runoff.
Chicago Fed "Index Points to a Pickup in Economic Growth in December" ---From the Chicago Fed: Index Points to a Pickup in Economic Growth in DecemberLed by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved up to +0.27 in December from +0.11 in November. Two of the four broad categories of indicators that make up the index increased from November, and three of the four categories made positive contributions to the index in December. The index’s three-month moving average, CFNAI-MA3, ticked down to +0.42 in December from +0.43 in November. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.
BEA: Real GDP increased at 2.6% Annualized Rate in Q4 -- From the BEA: Gross Domestic Product: Fourth Quarter 2017 (Advance Estimate) Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2017, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent. The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, residential fixed investment, state and local government spending, and federal government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment that was partly offset by accelerations in PCE, exports, nonresidential fixed investment, state and local government spending, and federal government spending, and an upturn in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, turned up. The advance Q4 GDP report, with 2.6% annualized growth, was below expectations. Personal consumption expenditures (PCE) increased at 3.8% annualized rate in Q4, up from 2.2% in Q3. Residential investment (RI) increased at a 11.6% pace. Equipment investment increased at a 11.4% annualized rate, and investment in non-residential structures decreased at a 1.4% pace.
Q4 GDP Advance Estimate: Real GDP at 2.6% -- The Advance Estimate for Q4 GDP, to one decimal, came in at 2.6% (2.55% to two decimal places), a decrease over 3.2% for the Q3 Third Estimate. Investing.com had a consensus of 3.0%.Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third qurarter, real GDP increased 3.2 percent.The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 3). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 28, 2018. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.46%.Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 14.5% below trend.
The U.S. economy keeps growing - James_Hamilton - The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 2.6% annual rate in the fourth quarter. That is better than the 2.2% we’ve seen on average since the Great Recession ended in 2009, though below the historical average growth rate for the U.S. economy of 3.1%. Solid growth over the last three quarters has brought our Econbrowser Recession Indicator Index down to 2.4%. The U.S. remains clearly in the expansion phase of the business cycle. GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2017:Q3 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index, and which were sometimes not reported until two years after the date. Consumption spending, residential and nonresidential fixed investment, and government purchases all grew strongly during the quarter. However, much of the new spending went to imports, whose growth ended up subtracting two percentage points from the annualized growth rate that would have resulted if all the new spending had been on domestically produced goods and services. Some of the spending also went on goods sold out of inventory (goods sold but not produced), which subtracted another 0.7% from the annualized growth rate. Imports and inventories are the two most volatile components of GDP, often changing from one quarter to the next, and indeed estimates of these two numbers for the fourth quarter could change as we receive better data. Overall, I conclude that solid economic growth continues.
US GDP Growth Trails Estimates In Q4 But 1-Year Trend Picks Up - Economists were looking for a 2.9% rise for GDP in today’s fourth-quarter report, according to Econoday.com’s consensus forecast. The actual number, the Bureau of Economic Analysis advised, was softer than expected, decelerating to 2.6% — the slowest since the weak 1.2% gain in 2017’s Q1. The latest rise is still a decent number, although no one’s popping champagne corks over the results. On the other hand, looking through the quarterly figures suggests that the recent improvement in economic output still has upside momentum. Real GDP increased 2.5% through last year’s Q4, edging above Q3’s 2.2% annual pace and touching the best year-over-year gain since mid-2015 (black line in chart below). In fact, today’s update marks the sixth straight quarterly improvement in the annual change. The year-over-year nominal change in GDP continues to improve, too. A mid-2% trend for GDP growth is still a middling rate relative to numbers published since the recession ended in 2009. That pace also pales next to the 3%-to-4% annual gains in 2003-2006. Nonetheless, the slow-but-steady improvement in growth suggests that the economic expansion – now in its ninth year and one of the longest on record – is in no danger of ending in the immediate future. That’s also the message in this week’s profile of US business-cycle risk. “This is far from doom and gloom. Businesses are investing aggressively and consumers continue to spend at a very strong pace. We got a bit spoiled by 3 percent-plus growth in the last couple of quarters, but that streak was eventually going to come to an end.” notes Ryan Sweet, an economist at Moody’s Analytics. The crowd may have gotten ahead of itself recently in projecting sharply stronger growth, but the broad trend is still on the mend, extending the modest re-acceleration that began in the first half of 2016. Yet as recoveries go, the current rebound still ranks as moderate. On the longevity score, however, the expansion is the third-longest run, according to NBER, and is on track to move up to number-two in April. If the recovery can last through the summer of 2019, it will set a new endurance record. No one knows if it’ll last that long, but at the moment there’s still no sign that it’s about to end.
Q4 GDP Unexpectedly Misses, Rising Only 2.6% Dragged By Soaring Trade Deficit - Consensus expected a 3.0% GDP print, with whisper numbers well above that and some expecting a print as high as 5%. However it was not meant to be, and as the BEA reported moments ago, the first estimate of Q4 GDP came in at 2.6%, missing expectations and below last quarter's 3.2% GDP print, and the lowest since the first quarter of 2017, largely as a result of a surging trade deficit in the fourth quarter. What happened?First the good news: Personal consumption rose 3.8% in 4Q after rising 2.2% prior quarter. Final sales to private domestic purchasers q/q rose 4.6% in 4Q after rising 2.2% prior quarter; largest rise since Q3 2014. Spending contributed 2.58% to the bottom-line GDP print, the highest quarter since Q4 2014, however as we discussed previously, much of it was the result of a surge in credit card-funded spending while the personal savings rate dropped to levels last seen during the financial crisis.Some more good news: nonresidential fixed investment - or spending on equipment, structures and intellectual property - rose 6.8% in 4Q after rising 4.7% prior quarter. It contributed 0.84% to the annualized Q4 GDP's bottom line.However, both of these items were offset by a bigger than expected inventory destocking, as Inventories subtracted -0.67% from the final GDP number, the biggest drop since Q1. But most notable was the sharp drop in GDP as a result of surging imports which subtracted -1.96% from the final GDP number. This was the biggest hit from imports to GDP going back all the way to Q3 2010. Net of exports, trade resulted in a -1.14% drag on GDP. Needless to say, for a president who is focused on boosting exports and reducing the US trade deficit, this number will only provoke more speculation about boosting US exports and thus, the possibility of trade war. Some other observations: real disposable personal income—personal income adjusted for taxes and inflation —increased 1.1% in the fourth quarter after increasing 0.5% in the third quarter. Personal saving as a percentage of disposable personal income was 2.6% in the fourth quarter, compared with 3.3% in Q3, For inflation watchers, prices of goods and services purchased by U.S. residents increased 2.5% in the fourth quarter after increasing 1.7% in the third quarter. Excluding food and energy, prices rose 1.9% in the fourth quarter after increasing 1.6% in the third quarter. Finally, for the year 2017, real GDP increased 2.3% compared with 1.5 percent in 2016.
US GDP Grows Below-Forecast 2.6% on Trade, Inventory Drags - The U.S. economy expanded at a slower-than-projected pace in the fourth quarter on drags from trade and inventories, offsetting strength in consumer spending and business investment that signals solid momentum entering 2018. Gross domestic product rose at a 2.6% annualized rate after 3.2% in the prior period, Commerce Department data showed on Jan. 26. Consumer spending, the biggest part of the economy, rose 3.8%, the best in more than a year. Business equipment investment grew at the fastest pace in three years. While the report dashed expectations for the longest streak of 3%-or-better growth since 2005, a key measure of underlying demand delivered the strongest performance since 2014 and inflation picked up, which will help keep the Federal Reserve on track to raise interest rates in coming months. President Donald Trump’s move to cut taxes may give the economy an additional boost in 2018, though reaching his goal of sustained 3% GDP growth will prove challenging, in part because household purchases are projected to cool. Weak productivity and slow labor-force expansion will also pose hurdles in the longer term, and higher borrowing costs could crimp gains as well. “The economy continues to hum along,” said Ryan Sweet, an economist at Moody’s Analytics Inc., who accurately projected the 2.6 percent figure. “This is far from doom and gloom. Businesses are investing aggressively and consumers continue to spend at a very strong pace. We got a bit spoiled by 3%-plus growth in the last couple of quarters, but that streak was eventually going to come to an end.” Fourth-quarter GDP was dragged down mainly because the trade deficit widened, as imports rose at double the pace of exports. Net exports subtracted 1.13 percentage points from GDP growth, the most in a year. A change in inventories subtracted 0.67 percentage point, the most since early 2017. A separate report on Jan. 26 showed that the nation’s merchandise-trade gap widened in December to the biggest since 2008.
Q4 GDP: Investment The first graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy. In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue. The dashed gray line is the contribution from the change in private inventories. Residential investment (RI) increased at a 11.6% annual rate in Q3. Equipment investment increased at a 11.4% annual rate, and investment in non-residential structures increased at a 1.4% annual rate. On a 3 quarter trailing average basis, RI (red) is unchanged, equipment (green) is positive, and nonresidential structures (blue) is unchanged. Recently RI has been soft, but picked up in Q4. The second graph shows residential investment as a percent of GDP. Residential Investment as a percent of GDP increased in Q4, and has generally been increasing. RI as a percent of GDP is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next couple of years. The increase is primarily coming from single family investment and the boom in home remodeling. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories. The third graph shows non-residential investment in structures, equipment and "intellectual property products". Investment in equipment - as a percent of GDP - picked up.
Trade in the GDP accounts - Trade was a significant factor in the weak GDP report today and as usual when this happens you see many comments that do not understand why imports are a negative in calculating GDP.We do not directly calculate GDP. Rather, we calculate consumption and adjust that for trade and inventories to obtain GDP indirectly. To go from consumption to production in the US we have to subtract imports because they were not produced in the US. However, imports show up twice in the GDP accounts. They show up once in final demand –consumer spending, government spending or investments. So for example if you buy a Volvo, which are not yet built in the US, it will be recorded in both personal consumption expenditures as a positive and in trade as an import. So when you subtract imports all it does is offset the positive contribution recorded in final demand. So your buying a Volvo will have a zero impact on GDP, which is the way it should be because GDP is a measure of what is made in the US. Most people, like Larry Kudlow on CNBC do not seem to understand this and keep saying this it is a mistake to subtract imports. Their is another big difference in how trade is treated in the GDP accounts. Final demand –personal consumption expenditure, government spending and investments –is calculated as the average of the three months data that is reported monthly. But trade is calculated as the difference between what it was in the final month of the previous quarter and the final month of the current quarter– data that is not yet reported when the first estimate of GDP is released. In the GDP accounts trade and inventories are reported as the change over the quarter rather than the average during the quarter. This is an adjustment that is necessary to go from the estimate of final demand or consumption to a measure of production which is what GDP measures. It is also normally the major reason why the first and second revisions to GDP or so significant.
Q4 Real GDP Per Capita: 1.79% Versus the 2.55% Headline Real GDP - The Advance Estimate for Q4 GDP came in at 2.6% (2.55% to two decimals), down from 3.2% in Q3. With a per-capita adjustment, the headline number is lower at 1.79% to two decimal points. Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.2% below the pre-recession trend.
Lessons from today’s GDP report: Long-expected rebound in productivity finally seems to be happening, and no reason for Fed to raise rates in their next meeting - The Bureau of Economic Analysis (BEA) reported this morning that gross domestic product (GDP—the widest measure of economic activity) grew at a 2.6 percent annualized rate in the last quarter of 2017. This was down slightly from the 3.2 percent growth rate of the third quarter of 2017.Today’s data also lets us examine how the economy grew over the year that ended in December 2017. Between the end of 2016 and the end of 2017, the economy grew by 2.5 percent. This is a faster rate of growth than what prevailed in either 2015 (2.0 percent) or 2016 (1.8 percent), but it is far from unprecedented. Growth was faster in both 2013 and 2014, for example (2.7 percent growth in both of those years).Importantly, the recent pickup in GDP growth is largely the result of faster productivity growth. Employment growth actually slowed in 2017 while output growth rose, which implies a pickup in productivity (the amount of economic output generated in an average hour of work). As I wrote almost a year ago, this pickup in productivity growth should not come as a surprise—productivity growth has been extraordinarily slow in recent years but it generally reverts to long-run averages. Further, the source of recent productivity growth weakness was clear—it was a continuing casualty of the enormous shortfall of demand caused by the Great Recession and its subsequent slow recovery. As the economy worked off this demand shortfall, it was always quite likely that a rebound in productivity growth would follow. A key prediction made in that earlier paper was that the productivity rebound would likely be driven by a pickup in business fixed investment. The rebound in productivity growth is most welcome. Productivity provides the ceiling on how fast living standards can rise. Rapid productivity growth is a necessary, if not sufficient, condition for broad-based growth in incomes. Yet it is clear that there is nothing unexpected about this rebound in productivity, and it obviously was not driven by the recent GOP tax bill, the Tax Cuts and Jobs Act (TCJA). Today’s GDP report is about data collected before the TCJA was even passed, and most of the happier trends in today’s data were long-predicted. Finally, today’s GDP report is another sign that the Federal Reserve should be extraordinarily cautious about shifting monetary policy in a more contractionary direction. Core price inflation (excluding volatile food and energy prices) continues to be far below the Fed’s 2 percent target (core prices rose just 1.5 percent over the past year). The uptick in growth and productivity has been long-awaited and should be welcomed by the Fed, not tamped down with interest rate increases.
Leading components of Q4 GDP forecast continued growth in 2018 - This morning's release of Q4 2017 GDP was in line with estimates, rising 2.7% on a preliminary basis. As usual, my attention is focused less on where we *are* than where we *will be* in the months and quarters ahead.There are two leading components of the GDP report: real private residential investment and corporate profits. Because the latter will not be released until the second or third revision of the report, I make use of proprietors' income as a more timely if less reliable placeholder.So let's take a look at each. The news on real private residential fixed investment was mixed. Measured both by itself (blue), and by the more precise method of its share of the GDP as a whole (red), residential investment rose. But although it came close, it has not made a new high since three quarters ago:Proprietors' income was clearer, breaking out to another new high: Together these are pretty strong evidence that the economy will continue to expand through the rest of 2018. One final note: although the GDP reports have been good for the last three quarters, I'm not expecting any big positive breakout. This goes back to the relative flatness or restrained growth in housing. The below two graphs show the leading relationship between housing permits (using the less volatile single family measure) and GDP broken up into two roughly 30 year periods:
Happy Landings - Kunstler - The blow-off orgy in the stock markets is supposedly America’s consolation prize for what many regard as the electoral bad acid trip of the Trump presidency. Sorry to tell you, it’s just another hallucination, something you’re going to have to come down from. Happy landings! While the markets have roared parabolically up, in Technicolor, with sugar-on-top, that ole rascal, Reality, is working some hoodoo in the other rings of this psychedelic circus: namely the dollar and the bond market. The idiots on NPR’s Marketplace and the Cable TV financial shows haven’t noticed the dollar tanking the past several months or the interest rates creeping up in the bond markets. Well, isn’t that the point of living as if anything goes and nothing matters, the mantra of the age? Alas , things are connected and consequences await. It would be rich if a flash crash ripped the Dow, S & P, and the Nasdaq to shreds twenty minutes after the Golden Golem of Greatness finished schooling the weenies of Davos on the bigly wonderfulness of his year in office. In fact, it would be a crowning comic moment in human history. I can imagine Trump surrounded by the fawning Beta Boys of Banking as the news comes in. Poof! Suddenly, he is alone in the antechamber backstage, nothing left of his admirers but the lingering scent of aftershave. The world has changed. The dream is over. In the mirror he sees something that looks dimly like Herbert Hoover in a polka-dot clown suit, with funny orange wig…
The coming challenge of servicing our national debt – AEI - As the economy heats up, the federal government’s borrowing costs are set to soar. The most recent budget projections from the Congressional Budget Office (CBO) show the government’s annual interest payments on federal debt more than doubling over the next decade — from 1.5 percent of GDP in 2018 to 3.1 percent of GDP in 2027. Moreover, interest rates could easily rise more rapidly than CBO projects (the agency will be updating its projections later this year). Higher borrowing costs threaten to make the government’s already daunting fiscal challenges even more intractable. The federal government ran very large budget deficits due to the financial crash and the deep recession of 2007 to 2009. After 2009, the economy grew at a sluggish pace and federal deficits remained higher than they would have been in a stronger recovery. From 2009 to 2016, the government ran a cumulative deficit of $7.3 trillion. At the end of 2016, federal debt reached 77 percent of annual GDP — up from 39 percent at the end of 2008.The recent deficits would have been even larger if not for the extraordinary low interest rates paid by the government on the national debt. The Federal Reserve, along with other central banks around the world, drove interest rates to historically low levels in order to provide a sustained monetary stimulus to the global economy. Among other things, the Federal Reserve purchased large amounts of federal debt as part of its quantitative easing program.In 2008, the federal government made $253 billion in net interest payments on debt that was $5 trillion at the end of fiscal year 2007, for a 5 percent average interest rate on the debt. The government made only $240 billion in interest payments in 2016, although the debt had more than doubled to $13.1 trillion at the end of fiscal year 2015, for a 1.8 percent average interest rate. The era of ultra-easy monetary policy appears to be ending, as it has become clear that the economy is now growing more rapidly than at any time since 2010. The Federal Reserve is widely expected to raise short-term borrowing costs at least three times in 2018. As monetary stimulus ends, and interest rates move toward more normal levels, the federal government will be required to pay higher rates on the funds it borrows
Will there be a US nuclear sneak attack on North Korea? -- Under the cover of the pre-Winter Olympics thaw between North and South Korea and the momentary lull in the “fire and fury” rhetoric from the Trump White House, there are growing signs that the Pentagon and the CIA are pressing ahead with preparations for a preemptive war against North Korea, including the use of nuclear weapons.There have been multiple reports in the American corporate media of behind-the-scenes discussions between the US military and intelligence apparatus and the Trump administration of the feasibility of a so-called “bloody nose” attack, involving US air strikes on North Korean nuclear facilities, with the expectation—however ill-founded—that they would not provoke a full-scale war.In a rare public speech, CIA Director Mike Pompeo hinted obliquely at these plans. Speaking before the right-wing think tank American Enterprise Institute Tuesday, Pompeo warned that Pyongyang was a “handful of months” away from achieving the capability of staging a nuclear attack against the US mainland.The CIA director said that Washington was “going to foreclose that risk” and “denuclearize permanently” North Korea.While asserting that the Trump administration was committed to a “solution through diplomatic means”—a claim belied by Trump’s chiding of his Secretary of State Rex Tillerson last October for “wasting his time” by seeking negotiations with the government of Kim Jung Un—Pompeo said that the CIA was working with the Pentagon to “prepare a series of options to make sure that we can deliver a range of things so the president will have the full suite of possibilities.”He added that he would “leave to others to address the capacity or the wisdom of a preemptive strike.”The issue of “capacity,” however, is already being decided through a series of ominous actions taken by the US military.
The US Has Military Bases in 172 Countries. All of Them Must Close - In a series of panels over two days, conference speakers from every corner of the globe proceeded to describe the extraordinary cruelty and toxic lethality of US foreign policy despite King’s warning more than 50 years ago. We learned that the United States has approximately 800 formal military bases in 80 countries, a number that could exceed 1,000 if you count troops stationed at embassies and missions and so-called “lily-pond” bases, with some 138,000 soldiers stationed around the globe. David Vine, author of Base Nation: How U.S. Military Bases Overseas Harm America and the World, reported that only 11 other countries have bases in foreign countries, some 70 altogether. Russia has an estimated 26 to 40 in nine countries, mostly former Soviet Republics, as well as in Syria and Vietnam; the UK, France, and Turkey have four to 10 bases each; and an estimated one to three foreign bases are occupied by India, China, Japan, South Korea, Germany, Italy, and the Netherlands. And, apart from the bases,there are other harmful US military impacts in many countries around the globe, which uproot many communities. John Lannon, of Ireland’s Shannonwatch works to end US military use of the civilian airport at Shannon, Ireland. The United States has flown more than 3 million troops and weapons through Shannon, en route to military actions despite Ireland’s decision not to join NATO and its official policy of military neutrality. James Patrick Jordan, with the Alliance for Global Justice, reported that after 9/11 the Northern Command of the US Pentagon added the training of many troops in Latin American countries in order to send them abroad to fight in US wars in other countries.
VP Pence Confirms US Will No Longer Certify Iran Deal -- While President Donald Trump and Congressional Republicans battle to reopen the federal government, Vice President Mike Pence traveled to Israel this week to meet with dignitaries and visit a handful of historic sites - including the Holocaust Memorial.But during a speech to the Knesset - Israel's parliament - Monday afternoon (local time) , Pence surprised his audience by declaring that the US would not re-certify the Iran deal when it comes up for renewal in May, virtually guaranteeing that the US will reimpose economic sanctions against the Iranian regime. Trump re-certified the deal earlier this month "for the last time", part of a deal with Democrats to buy them some time to work out a compromise.Here's the Associated Press:Vice President Mike Pence is calling the Iranian nuclear deal a "disaster" and says the Trump administration will no longer certify it.Instead, Pence told the Israeli parliament on Monday that the administration is "committed to enact effective and lasting restraints on Iran's nuclear and ballistic missile programs."Pence has received a warm welcome in Israel, which has praised the American decision last month to recognize Jerusalem as the capital of Israel. Prime Minister Benjamin Netanyahu is among the fiercest opponents to the nuclear accord the Obama administration reached with Iran, saying it could pave a path for the Islamic Republic acquiring a nuclear weapon that could threaten Israel's existence.Pence says that the deal is not fixed and that in the coming months, the United States will "withdraw from the deal." The US bowing out of the deal would most likely lead to its collapse, as Iranian leaders have warned they would consider the whole pact - which also involves Germany, the European Union, Russia, China and France - null and void if the US were to pull out.
Up to 1,000 more U.S. troops could be headed to Afghanistan this spring -- The U.S. Army is readying plans that could increase the total force in Afghanistan by as many as 1,000 U.S. troops this spring beyond the 14,000 already in the country, senior military officials said. Defense Secretary Jim Mattis has not signed off on the proposals for the new forces, which are part of a broader strategy to bolster Afghan forces so that they can pound the Taliban during the upcoming fighting season. The possible increases have the support of the Army’s senior leadership, which has been working to determine the mix of troops required to execute a strategy centered on a new combat formation. The discussions at the Pentagon underscore the complex task the U.S. military faces as it prepares to deploy newly created combat advisory teams to some of the most violent, remote and heavily contested areas of Afghanistan. The Obama administration, as part of its plan to wind down the Afghanistan war in 2015, limited advisers to higher headquarters far from the fighting. The new strategy that President Donald Trump approved in August would push U.S. advisory teams to the battalion level, far closer to the front lines.
Trump takes Modi very seriously on Afghanistan – but also mimics his Indian accent: Washington Post --Since he took office in 2014, Prime Minister Narendra Modi had invested a significant amount of time and energy into managing foreign affairs. It seems some of that had paid of. Using accounts from officials in the United State’s government, a report in a the Washington Post details how US President Trump takes Modi’s word rather seriously when it comes to one of his country’s most intractable foreign affairs problems: the invasion and occupation of Afghanistan as part of the “War on Terror”. In 2017, Modi met Trump in the United States, telling the US President bluntly, “Never has a country given so much away for so little in return” as the United States in Afghanistan.The US President took this advice rather seriously. The Washington Post reported that Trump saw this as proof that the rest of the world saw the US invasion of Afghanistan as a mistake in which Washington was being “duped and taken advantage of”. However, even as this anecdote raises Modi’s stature as a serious global politician, it delivers another blow to Trump’s image. In meetings, Trump relays back Modi’s words while mimicking an Indian accent. US President Trump is known for a series of gaffes and out rightly offensive comments that have polarised politics in the country. Doing immigrant accents would be considered racist by many within the United States. Trump and Modi’s mutual regard for each other was on public display during Modi’s 2017 visit to the US. Trump called Modi his “true friend” while Trump’s business experience was described as “vast and successful” by the Indian prime minister. Given the right wing ideological similarities between Trump and Modi, in India, the BJP and its supporters have often used their bonhomie to drive home a political point. On Friday, the BJP’s chief minister of Uttar Pradesh claimed that Trump was even inspired by Modi’s development work in India and planned to work for the United States’ development along similar lines.
Overpriced Afghanistan helicopter upgrades amount to a subsidy for contractors | TheHill: Helicopter makers and the National Guard got nice a present for Christmas, but American taxpayers got a lump of coal. The Department of Defense (DoD) has a plan to supply American-made helicopters to Afghanistan and it’s a great deal for almost everybody but the taxpayer, who is on the hook for over $800 million for the first batch of helicopters, and that’s just for starters. DoD intends to wean the Afghan Air Force off the Russian Mil Mi-17 “Hip” transport helicopter, which has served the Afghans well, and replace it with the MD-530 “Cayuse Warrior,” a short range, lightly-armed scout helicopter, and the H-60 “Black Hawk,” a troop carrier.The U.S. military was initially disposed to keep the Hip in service, but Congress demanded contracts for U.S. firms and forced the Pentagon to cancel plans to buy Russian helicopters, so DoD devised a plan to equip the Afghans with U.S. gear. DoD returned to Congress with improbable news that an Mi-17 cost $20 million, while a refurbished H-60 could be had for only $6 million. The Pentagon also discounted the Hip’s significant cargo capacity, its ability to carry substantial armaments while ferrying troops or cargo, and its use for close air support. But $20 million for an Mi-17? You don’t want to take those DoD guys with you when you go new car shopping. You can order a new Mi-17 from the maker, Kazan Helicopters, for $14-15 million “depending on extras and avionics.” But the politics are first-class. The helicopters supplied to the Afghans will come from the National Guard, which will get new helicopters from the Army, getting the governors and adjutants general behind the effort, in addition to congressional delegations from the states supplying the airframes, avionics, and engines. The only problem is the timing. It would take too long to get the National Guard H-60s to Afghanistan via the “certified pre-owned” route so DoD will fill the gap by buying more MD-530s, which are already in Afghanistan, and which the Afghans compare unfavorably to the Russian Mi-35 “Hind” gunship, and would struggle to maintain.
Why the Pentagon Isn’t Happy With the F-35 - Efforts to improve the reliability of Lockheed Martin Corp.’s F-35 are “stagnant,” undercut by problems such as aircraft sitting idle over the last year awaiting spare parts from the contractor, according to the Pentagon’s testing office. The availability of the fighter jet for missions when needed -- a key metric -- remains “around 50 percent, a condition that has existed with no significant improvement since October 2014, despite the increasing number of aircraft,” Robert Behler, the Defense Department’s new director of operational testing, said in an annual report delivered Tuesday to senior Pentagon leaders and congressional committees. The F-35 section, obtained by Bloomberg News, outlined the status of the costliest U.S. weapons system as it’s scheduled to end its 16-year-old development phase this year. Starting in September, the program is supposed to proceed to intense combat testing that’s likely to take a year, an exercise that’s at least 12 months late already. Combat testing is necessary before the plane is approved for full-rate production -- the most profitable phase for Lockheed. Pentagon officials including Deputy Defense Secretary Patrick Shanahan and chief weapons buyer Ellen Lord have highlighted the need to reduce the F-35’s $406.5 billion projected acquisition cost and its estimated $1.2 trillion price tag for long-term operations and support through 2070. Still, the Defense Department is moving to accelerate contracting and production for the fighter despite the persistence of technical and reliability issues disclosed in the current phase of development testing.A final version of the plane’s complex software has gone through 31 iterations and has yet to be deployed because of “key remaining deficiencies,” the report found. The troubles also include more mundane issues, such as tires on the Marine Corps version of the plane, the F-35B, that are proving less than durable. The upcoming testing, “which provides the most credible means to predict combat performance, likely will not be completed until” December 2019, according to the testing office.
We toured the largest aircraft carrier in the world — which can house more than 75 aircraft but doesn't have urinals - The USS Gerald R. Ford is the US Navy's newest and largest aircraft carrier — in fact, it's the world's largest.Commissioned in July 2017, it is the first of the Ford-class carriers, which are more technologically advanced than Nimitz-class carriers.It has an improved hull design and weapons stowage, a new weapons elevator, more space on the flight deck, a new electromagnetic-powered aircraft-launch system, three times the electrical-generation capacity of any previous carrier, and a lot more. We recently got a chance to tour the behemoth as it was docked in Virginia's Naval Station Norfolk. Climb aboard for a closer look:
Trump kicked the Islamic world in the teeth today, and loved doing it - "President Trump said Thursday that U.S. aid to the Palestinians won't continue until they're willing to "sit down and negotiate peace." At a bilateral meeting with Israeli Prime Minister Benjamin Netanyahu at the World Economic Forum in Davos, Switzerland, Mr. Trump said that the Palestinians "disrespected" the U.S. a week ago by not allowing Vice President Mike Pence to see them on his trip to the Middle East. He suggested, therefore, the aid money is on the table."This was never brought up by any negotiators," Trump said, "But it's brought up by me."Mr. Trump alluded to his decision in December to recognize Jerusalem as Israel's official capital, breaking the U.S.'s longstanding policy that the city's final status should be determined by peace negotiations. "We took Jerusalem off the table so we don't have to talk about it anymore," he said Thursday. "What I did with Jerusalem was my honor."" As I have written before Trump is a total disaster in the ME. He has no policy other than that of the extreme nationalist right in Israel. He is evidently completely in thrall to his daughter and her Zionist husband. Perhaps his toady behavior toward Israel is a combination of that influence and a desire to suck up to all the people in New York City who treated him with contempt and hostility for many years.He told the world today, while sitting next to his soul mate Bibi that the Palestinians are not truly human, have no human rights and that he has "taken Jerusalem off the table" so that the Palestinians will have to settle for some portion of the Holy Land allotted to them by Bibi and company. He took the Holy City off the table? Who gave this man the right to do such a thing?
Trump Slams Erdogan Over Syria Attack, Warns of Clash With U.S - President Donald Trump warned Turkey against expanding its military offensive against U.S.-backed Kurdish fighters in northern Syria, telling President Recep Tayyip Erdogan that such action could lead to direct conflict with U.S. forces, the White House said. Trump urged Turkey “to deescalate, limit its military actions, and avoid civilian casualties and increases to displaced persons and refugees,” the White House said Wednesday in a readout of Trump’s call with Erdogan. “He urged Turkey to exercise caution and to avoid any actions that might risk conflict between Turkish and American forces.” Turkey said the readout did not accurately reflect the content of the call and that Trump didn’t share concerns over the violence. The White House’s harshly worded statement signaled the growing impatience with moves by Erdogan to crack down on Kurdish fighters who are supported by the U.S. but regarded by Turkey as terrorists. Trump also rebuked Erdogan over recent criticism of the U.S. The Turkish leader has publicly accused America of supporting terrorists by backing Kurdish fighters. The president “expressed concern about destructive and false rhetoric coming from Turkey, and about United States citizens and local employees detained under the prolonged State of Emergency in Turkey,” the White House said. Longstanding frictions between the NATO allies over Washington’s backing of Syrian Kurdish fighters escalated on Sunday when Ankara, in defiance of the U.S., sent tanks and warplanes across the border into the Afrin region, to chase the Kurdish forces from a border enclave they control. Its trigger was a plan by the U.S.-led coalition against Islamic State to set up a new armed force in an area of northeast Syria near Turkey’s border, controlled by Kurdish fighters who are working with American troops. Erdogan condemned a statement by one U.S. military official that a “border security force” was being established, and Secretary of State Rex Tillerson disowned that description. The U.S. statement comes after Erdogan vowed to extend Turkey’s offensive in northern Syria to another town, Manbij, where U.S. troops are embedded with local Kurdish fighters. When Erdogan sent his army into Afrin, Russian forces in that area pulled out, clearing the way for the Turkish advance. The White House statement suggests that U.S. soldiers may not do the same -- raising the prospect of a direct clash between the NATO armies, unless Erdogan backs down.
15 Year Old Hacker Impersonated CIA Director And Other High Ranking Officials In Massive Data Breach - A 15-year-old "hacktivist" who tricked AOL and Verizon customer support operators into believing he was then-CIA Director John Brennan, was able to crack into Brennan's accounts and access highly sensitive documents concerning US military and intelligence operations in Afghanistan and Iran, a UK court has heard. Kane Gamble, now 18, was able to access Brennan's emails, contacts, and his iCloud storage account after several successful attempts to manipulate information out of the call center employees. Brennan's emails were sent to WikiLeaks and published on October 26, 2015.Gamble used similar "social engineering" techniques to gain access to former Secretary of Homeland Security Jeh Johnson, former Director of National Intelligence James Clapper, tricked the FBI helpdesk into believing he was then-Deputy Director Mark Giuliano. It was a common misconception that the group were hackers when in fact they used “social engineering” to gain access to emails, phones, computers and law enforcement portals.“It involves manipulating people, invariably call centre or help desk staff, into permitting acts or divulging confidential information,” the prosecutor said. –Telegraph Gamble founded the five-man hacktivist group "Crackas With Attitude" (CWA) - telling a Journalist "It all started by me getting more and more annoyed about how corrupt and cold blooded the US Government are so I decided to do something about it." The 15-year old then proceeded to unleash mayhem on his victims to "fuck the gov" according to court records, by taunting them online, downloading pornography onto their computers, and even taking control of their iPads and TV screens. Gamble used similar techniques to hack the home broadband of Jeh Johnson, the Secretary of Homeland Security, and was able listened to [sic] his voicemails and send texts from his phone.He bombarded Mr Johnson and his wife with calls, asking her: “Am I scaring you?” and left messages threatening to “bang his daughter”, the court heard. Sometime in October, 2015, the 16-year-old Gamble convinced the FBI's help desk that the was Deputy Director Mark Giuliano - pretending to be the former FBI boss while using information he had obtained after accessing the FBI's Law Enforcement Enterprise Portal (Leap). From this access, Gamble gained intelligence and details of government employees and police officers. Gamble then bombarded Giuliano's family and associates with calls, forcing them to post an armed guard at their home.
Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory -- Taxes do not fund government spending. That’s a core insight of Modern Monetary Theory (MMT) whose radical implications have not been understood very well by the left. Indeed, it’s not well understood at all, and most people who have heard or read it somewhere breeze right past it, and fall back to the taxes-for-spending paradigm that is the sticky common wisdom of the left and right.[1] This, despite the fact that the truth of the proposition is obvious if you think through just a few steps about the process of money-creation. What makes it hard to see is the dense knot of conventional theory and discourse in which we are entangled, and which seems impossible to cut as cleanly as MMT suggests. But the discussion around the newly-enacted Republican tax bill has brought the issue of tax policy to the forefront again, and it’s time for the left to realize how fundamentally wrong that common wisdom is, and how continuing to argue within the phony terms of the taxes-for-revenue paradigm occludes and reproduces a persistent reactionary fiction regarding what taxes are for. The argument of the common-wisdom economic paradigm is that the government must collect taxes (or borrow money—we’ll get to that) to spend on whatever programs it wants to fund. In this paradigm, the government extracts money from an external, economically prior source, and uses it to pay for government programs. For both the left and the right in this paradigm, taxes are for funding government spending: money first flows into the government through taxes collected, and is then spent into economy in various programs and purchases. The arguments that ensue are over how much money to collect in taxes, from which sources, and which government programs to fund with the money collected. Most leftists take their stance within this paradigm. Bernie Sanders, for instance, says his Medicare-for-all plan would “raise revenue” from various taxes such as income and capital gains, and from limiting “deductions for the rich.” Dean Baker suggests a 4% increase in payroll taxes to “fully fund” Social Security and Medicare. What difference does it make politically? One can say that Social Security can be fixed by raising payroll taxes just a bit more, or one can say that Social Security can be fixed by typing a few keystrokes. Which discourse is more cogent? Both fixes might “work” in some sense, but which analysis perpetuates mistaken, obfuscating, and conservative premises and structures, and which one reveals the true conditions and radical possibilities of, the way government financing really works? To even see the second alternative, we have to abandon the household paradigm.
"Both Sides Are Dug In": Why This Government Shutdown Could Last A Long Time - Today for only the 19th time in history, the US government has found itself in a "funding gap", a technical term for shut down. One of the reasons why this event is not being taken too seriously by the financial punditry, markets or much of the media, is that looking back not only have most government shutdowns been brief affairs, lasting less than 10 days - with the occasional outliers, such as the 21-day closure in 1995 and the 16-day halt in September 2013 - they have had little to no impact on either the market or the economy. And yet, as Goldman writes, after the two political parties breached the shutdown Rubicon, there is a distinct possibility that this time the shutdown lasts "a few weeks" if not longer. The reason is one of both optics and motives: according to Goldman's political economist Alec Phillips, "both sides appear to think they could gain from a [lengthy] shutdown." He explains: Democratic leaders appear to believe that a shutdown would highlight the DACA immigration issue, which a large share of the public, including a majority of voters who supported President Trump in 2016, generally support according to most public opinion polling (87% of the public and 79% of Republicans according to a CBS News poll released January 18). Meanwhile "Republican leaders appear to believe that Democrats, who are in a good political position going into the midterm election according to generic ballot polling and other metrics, would suffer from a shutdown." In other words, "If both sides believe the other side will be blamed, neither has the incentive to avoid a shutdown."Making matters worse, there is nothing in the immediate future that will make conflict resolution an urgency: traditionally a drop in the market would serve as an incentive for political parties to reach a compromise, although as we have extensively discussed in the past year, risk assets no longer respond to political events or narrative. This means that without the market intervening as an "arbiter" - i.e., undergoing a sharp correction - the two sides are likely to dig in and avoid any tangible negotiations, let alone a compromise.As a result, while a bitter episode of fingerpointing has erupted, with both sides trying to make the other look like the villain, the US now faces the threat of a protracted shutdown with no end in sight.
Centrist senators race to strike a deal to end government shutdown -- Centrist senators racing to strike a deal to end the government shutdown expressed optimism Sunday that they were close to an agreement — but it was unclear whether they would be able to secure the support of leadership to end the impasse. With the start of the workweek for many federal employees less than 24 hours away, a bipartisan group of moderate senators huddled in hopes of reaching an accord on immigration and federal spending they hoped would pave the way to reopening the government by Monday morning. “I think that there will be a breakthrough tonight,” said Sen. Lindsey O. Graham (R-S.C.), one of the negotiators. Others involved in the meeting said they were “close”to an arrangement. “The timeline has to be today, open this place back up,” said Sen. Joe Manchin III (D-W.Va.). Their efforts came as Senate Majority Leader Mitch McConnell (R-Ky.) said he would bring up a proposal to fund the government through Feb. 8 at 1 a.m. Monday, or sooner. He blamed Democrats for the holdup and urged them to allow a vote sooner. “This shutdown is gonna get a lot worse tomorrow,” McConnell said as the Senate opened a second day of a rare weekend session. “Today would be a good day to end it.” Graham said the emerging agreement from his group was to fund the government through Feb. 8 “with an understanding that we’re going to work on all of the outstanding issues, including immigration.” Still, it was unclear whether that would be sufficient to satisfy enough Democrats, who have grown frustrated with the lack of a solution for “dreamers,” undocumented immigrants who were brought into the United States as children. Many Democrats have demanded their futures be addressed as part of any spending deal — even on a temporary basis. Outside the Senate, the pressure for a deal was building. President Trump and House Speaker Paul D. Ryan (R-Wis.) pressed senators to end the shutdown that reached its second day, with Trump lashing out at Democrats and urging Republicans to change the rules if the standoff there isn’t resolved.
Senate Republicans Reject Trump's "Nuclear Option" As Shutdown Negotiations Continue - Bloomberg is reporting that, according to an aide to Majority Leader Mitch McConnell, Senate Republicans are opposing invoking the nuclear option, something President Trump urged them to do in a tweet this morning.Meanwhile, Speaker Paul Ryan told reporters that House Republicans would support a bill that would kick the can to Feb. 8 if the Senate can pass it. While Republicans have picked up a few Democratic votes, they don't have nearly enough to overcome a filibuster, something that requires 60 votes.The first full day of the January 2018 government shutdown saw a spate of hurried but ultimately fruitless negotiations, and already the White House - which has been accused of exacerbating the problem by constantly shifting its negotiating position - has had enough: In a tweet this morning, President Donald Trump said Republicans should consider invoking “the nuclear option” to eliminate the possibility of an opposition fillibuster - allowing Republicans to pass a long-term spending bill with a simple majority (there are 51 Republican senators). Right now, the Senate can approve presidential nominees for the courts and executive branch departments with a simple majority, but traditional legislation is still subject to a fillibuster that requires 60 votes to overcome. Kicking off an early morning flurry of tweetstorm, Trump congratulated Republicans in Congress: "Great to see how hard Republicans are fighting for our Military and Safety at the Border. The Dems just want illegal immigrants to pour into our nation unchecked. If stalemate continues, Republicans should go to 51% (Nuclear Option) and vote on real, long term budget, no C.R.’s!"
Eric Trump: The government shutdown is 'good for us' politically | TheHill: President Trump's son Eric TrumpEric Frederick TrumpEric Trump charity paid Trump Organization companies 0K during election Top House Intel Dem wants to call Ivanka as witness in Russia probe Crews respond to fire on roof of Trump Tower MORE said on Saturday that he believes the government shutdown is politically good for his father and his allies. "Honestly, I think it's a good thing for us," Eric Trump told Jeanine Pirro on Fox News's "Justice with Judge Jeanine.""People see through it. I mean, people have seen a year that's incredible. It's been filled with nothing but the best for our country, 'America First' policies, and they're happy with where we are as a nation." The younger Trump said Democrats wanted to shut the government down because they wanted to stop the president's momentum. "I mean, my father has had incredible momentum. He has gotten more done in one year than arguably any president in history. How do they divert from that message? How do they save their own party when they don't have any leadership, they don't have any good candidates out there, they don't have a message of their own? How do they do that? They obstruct, they distract, they try and place blame," he said. Senate Republicans and Democrats failed to reach a midnight deadline to fund the government on Friday, resulting in the federal government shutting down.
Roughly 20 Senators Support Bipartisan Plan To Reopen Government - With Senate Majority Leader Mitch McConnell calling for a procedural vote on a senate measure that would keep the federal government running through Feb. 8 to begin at 1 am Monday, a bipartisan group of senators signaled that they're nearing an agreement to reopen the government following a Sunday afternoon meeting, the Hill reported.Georgia Senator Johnny Isakson said the group had reached a "consensus of understanding" - essentially agreeing to the broad strokes of a plan to satisfy recalcitrant Democrats and Republicans, per the Hill.As they left the meeting in Maine senator Susan Collins's office, some members expressed optimism that they will reach an understanding, if not a final agreement, that would let them move forward.South Carolina Senator Lindsey Graham predicted that the group could cobble together a deal before the 1 am vote."Yeah because if it doesn't happen tonight it's going to be a lot harder," he said, alluding to the fact that most federal agencies have elected to wait until Monday before implementing the terms of the shutdown (here's a quick guide to what departments and services will be impacted by the shutdown)...As the BBC pointed out, the closure of many federal services will be felt around the country and hundreds of thousands of federal staff face unpaid leave. According to Politico, the senators took their proposal to McConnell and Senate Minority Leader Chuck Schumer after the 90-minute meeting. The plan would reopen the government through Feb. 8 and have McConnell commit on the Senate floor to holding an immigration vote before that date.
No Deal: Government Shutdown To Continue For 3rd Day As Senate Sets Monday Noon Vote - Any hope that the 2-day government shutdown could be suddenly resolved with an early morning vote on Monday morning died moments ago when Chuck Schumer said "there is no deal" while Senate Majority Leader Mitch McConnell said he is canceling the previously scheduled 1am procedural vote and instead the Senate will vote on the stopgap spending bill at noon Eastern on Monday, with the government set to remain closed at least until the vote. McConnell also said that his intention is to resolve several issues including immigration as quickly as possible, and to move to DACA on Feb. 8 if no deal has been done by then and govt stays open. Meanwhile, the Senate Democratic Leader Chuck Schumer, objecting to earlier vote timing, said "we have yet to reach an agreement on path forward."As discussed earlier, a flurry of activity on Capitol Hill had stoked hopes that a deal to end the shutdown might be reached before furloughs for hundreds of thousands of government workers kick in on Monday. Instead, the Senate is now set to vote at noon on Monday to end debate on a measure that would fund the government through Feb. 8. Furthermore, by the looks of things...Just left the gallery seats overlooking Senate. After Schumer's objection, McConnell physically turned away from him and looked toward Flake. Schumer got up, huddled w/ Hassan, then stepped out of the Senate as Flake spoke softly across the room.— Robert Costa (@costareports) January 22, 2018... this shutdown may indeed continue "for weeks" as Goldman predicted on Friday. And while the market may not care for now, should the funding gap extend into late February and early March, just days ahead of the debt ceiling X-Date, the S&P will - sooner or later - be reacquainted with gravity.
For Investors Used to Political Drama, Shutdown Is One More Sideshow - After a year of political spectacle, a government shutdown looks like it won’t divert investors from the economic and earnings tidings that have occupied Wall Street’s minds of late.Equity investors with the first chance to trade since the U.S. government officially entered a partial closure showed little concern that the world’s largest economy will stumble. Futures on the S&P 500 Index dipped just 0.1 percent as of 12:19 p.m. in Tokyo Monday, and benchmark 10-year Treasuries were little changed, after the Senate departed without a deal. U.S. stocks jumped to a record close Friday even as the impasse deepened in Washington. “The government would have to be shut down days and weeks on end for GDP to be affected, or earnings to be affected,” Jurrien Timmer, head of global macro at Fidelity Investments, said in a phone interview Wednesday. Barclays Plc estimates that the shutdown will shave 0.1 percentage point off gross domestic product in the quarter -- not much in an economy forecast to rise by 2.8 percent, according to estimates compiled by Bloomberg. Unless the stalemate lingers, the impact may have a hard time rattling markets that have been focused on benefits from the recently passed tax overhaul, improving corporate profitability and synchronized global economic growth. “Many of the employees in the nonessential departments are put on furlough and then paid retroactively,” notes Neil Dutta, head of U.S. economics at Renaissance Macro Research. “In 2013, we saw a 16 day shutdown and fourth-quarter GDP was 4 percent. Whatever hit there is, gets made up quickly thereafter.” That calm prevailed as the shutdown certain shows how desensitized investors have become to political wrangling.
Senate adjourns without deal to end government shutdown; vote postponed until noon Monday - The government shutdown headed into its third day as Republicans insulted Democrats for rejecting the latest offer from Senate Majority Leader Mitch McConnell (R-Ky.), who said he would consider allowing a floor debate on immigration issues in mid- to late February if leaders do not strike an agreement before then. As the Senate prepared for a procedural vote at noon, President Trump went on Twitter to argue Democrats are acting at the behest of their “far left base” in demanding protections for young undocumented immigrants in negotiations to reopen the government. “The Democrats are turning down services and security for citizens in favor of services and security for non-citizens. Not good!” he wrote. In a television interview, House Speaker Paul D. Ryan (R-Wis.) called Democrats’ position “bizarre” and “just ridiculous.” “We were in bipartisan, earnest, good-faith DACA negotiations before the shutdown,” Ryan said on “Fox & Friends,” referring to talks over how to resolve the status of immigrants brought to the United States illegally as children. Lawmakers from both parties and White House officials on Jan. 21 laid out their positions in the negotiations to reopen the government. (Bastien Inzaurralde/The Washington Post) Senate Minority Leader Charles E. Schumer (D-N.Y.) said Sunday night that the two sides had “yet to reach an agreement on a path forward” after moderate senators spent the day trying to bridge the gap between the two sides. Their proposal — to link a three-week extension of government funding to the consideration of an immigration bill in the Senate — prompted McConnell to announce that he would be willing to consider debating various immigration proposals on the floor in mid- to late February if an agreement on immigration were not otherwise reached before then by party leaders. “Let’s step back from the brink,” he said. “Let’s stop victimizing the American people and get back to work on their behalf.”
Data and the #TrumpShutdown --If the shutdown doesn't end quickly, several agencies will probably not release regular government reports. For the coming week, the December new home sales, the durable goods, and advance Q4 GDP reports will probably be delayed. If the shutdown continues, the following week the January employment report will be delayed (fortunately the data has already been gathered). Private data - like the existing home sales report this week - will still be released. All Federal Reserve data will continue to be released (separate funding).Also, the DOL will continue to process unemployment claims and release the weekly initial unemployment claims report. If the shutdown lasts through this week, we should a spike in claims in the report released the following week. The following graph shows the 4-week moving average of weekly claims since January 2000 with various event driven spikes labeled. Note the spike related to the 2013 government shutdown. Weekly claims jumped 66,000 in the week following the shutdown in 2013. We will probably see a similar spike in the report released the week of January 28th (if the shutdown does not end quickly).Another impact from the shutdown will be on mortgage lending.In 2013, the IRS stopped processing 4506-T forms (the required two years of tax returns for mortgage lending). For loans ready to close, this will not be a problem. And lenders can still accept applications, but this could slow closings a few weeks depending on the duration of the shutdown. There are many other impacts from the shutdown, and hopefully it will be resolved soon.
Senate breaks budget impasse, paving way for government to reopen - The Senate voted Monday to end the government shutdown, approving a short-term spending bill after frantic negotiations broke a budget impasse with a pledge from leaders to act on immigration policy next month. The House was expected to quickly pass the measure, which would fund the government through Feb. 8, reauthorize the Children’s Health Insurance Program and roll back several health-care taxes. Senate Democrats bowed to pressure to reopen the government, joining Republicans in backing an immigration and spending compromise that was quickly denounced by liberals and immigration activists. The vote was 81-18. Roughly 60 hours after government funding lapsed, a bipartisan group of negotiators in the Senate prevailed with leadership, trading Democratic support for reopening the government for a commitment by Republicans to hold a vote resolving the status of young undocumented immigrants by mid-February. President Trump welcomed Democrats’ decision to relent and said the administration would “work toward solving the problem of very unfair illegal immigration.” “I am pleased that Democrats in Congress have come to their senses,” he added in a statement. But the resolution of the three-day stalemate exposed a growing rift between two groups of Democratic senators: those facing tough reelection campaigns in states Trump won, and those courting liberal voters ahead of possible 2020 presidential bids.
Federal shutdown ends as Democrats cave in to Trump - The US Senate and House of Representatives voted Monday to approve a short-term budget resolution, putting an end to the partial shutdown of the federal government that began midnight Friday night. The deal leaves 800,000 DACA recipients without protection in what amounts to a total capitulation by Democrats to Trump and the Republicans.The Senate passed the three-week “continuing resolution,” authorizing federal government spending through February 8, by a vote of 81-18, with large majorities of both big-business parties supporting the bill: 48-2 for Republicans, 33-16 for Democrats.The House of Representatives passed the bill an hour later, by a margin of 266-150, with 45 Democrats joining a near-unanimous Republican caucus to send the legislation to the White House for Trump’s signature.The bill incorporates only one long-term policy action, reauthorizing the Children’s Health Insurance Program, which covers nine million children in low-income families, for another six years. Both parties allowed CHIP authorization to expire when the fiscal year began October 1, and half a dozen states have already begun notifying families of significant cutbacks in the program, set to begin by the end of this month.
Trump signs bill ending shutdown, official says - President Donald Trump signed a bill Monday night ending the government shutdown, capping off a nearly three-day deadlock and reinstating funds until February 8, a senior administration official said.The House and the Senate voted Monday to end the government shutdown, extending funding for three weeks, following a deal being reached between Senate Minority Leader Chuck Schumer and Senate Majority Leader Mitch McConnell regarding assurances related to immigration.The House passed the continuing resolution 266-159, with 36 more yes votes than the four-week resolution they passed last week. The movement comes thanks in part to commitments from McConnell and other Republicans in bipartisan meetings, according to four Democratic sources.
Why the shutdown battle is only on pause - Politico - Washington will be back on the brink in less than three weeks.Lawmakers may have pulled themselves out of a debilitating government shutdown Monday, but the fight over immigration and spending that’s ground virtually all congressional business to a halt is far from over. And the fundamentals of the debate haven’t changed at all.Republican leaders are under increasing pressure from their own members to reach a long-term budget agreement by Feb. 8, when the government next runs out of money. Their defense hawks are desperate to increase defense spending, a key 2018 priority for President Donald Trump. And their members are sick of voting on short-term funding bills that they say cripple the military.But in order to strike any long-term budget accord, at least nine Senate Democrats are needed for passage. And while Democrats’ strategy of shuttering the government until securing relief for Dreamers blew up in their faces Monday, they can still withhold support for a long-term budget deal to get what they want on immigration. “We’re here to fight another day,” said Rep. Ruben Gallego (D-Ariz.). “I think we still have an opportunity to win this.”
Wall Is ‘Off the Table,’ Schumer Says, as Progress on Immigration Unravels NYT — Senate negotiators found themselves back at Square 1 on immigration on Tuesday, as the Senate Democratic leader withdrew the biggest gesture he had made to strike a deal: an offer to fully fund President Trump’s proposed wall at the Mexican border. “The wall offer’s off the table,” the leader, Senator Chuck Schumer of New York, told reporters at the Capitol a day after senators overcame an impasse to end a three-day government shutdown.Mr. Schumer’s decision to renege, made on Sunday but revealed publicly on Tuesday, marked another turn in the fluid debate over how to shield from deportation hundreds of thousands of young immigrants brought to the country illegally as children.As part of a deal to end the shutdown, Senator Mitch McConnell, the majority leader, promised what he called a “fair and open” immigration debate on the Senate floor. But just when that debate will happen, and what legislation will serve as its starting point, was unclear on Tuesday. Several bipartisan groups were meeting to try to address the fate of the young undocumented immigrants, known as Dreamers, but the withdrawal of Mr. Schumer’s offer brought a fresh round of partisan recriminations that could threaten those nascent talks.“If he wants a solution, that’s a step backward,” said Senator John Cornyn of Texas, the No. 2 Republican in the Senate.Further muddying the conversation, the White House refuses to acknowledge the offer that Senate leaders on both sides of the aisle have confirmed.“Senator Schumer is trying to rescind an offer that he never made in the first place, and misled the public about,” said Sarah Huckabee Sanders, the White House press secretary.Roughly 800,000 young people brought to this country illegally have been protected from deportation under an Obama-era initiative, Deferred Action for Childhood Arrivals, or DACA. But Mr. Trump rescinded the program in September, giving Congress six months — until March 5 — to come up with a replacement. Now the Senate has a new immigration deadline: Feb. 8, the date that a stopgap spending measure approved on Monday will expire. Mr. McConnell has said that if the fate of the young undocumented immigrants is not resolved by then, he will allow the floor debate on immigration.
Schumer Withdraws Border Wall Funding Offer, Assuring Another Shutdown - In a move that virtually assures another government shutdown on February 8, Politico reports that Chuck Schumer has taken his offer for a "spending boost" for Donald Trump’s border wall off the table, a bargaining position that would be a non-starter with the president and Congressional Republicans.The Senate minority leader, through an aide, informed the White House on Monday that he was retracting the offer he made last week to give Trump well north of the $1.6 billion in wall funding Trump had asked for this year, according to two Democrats. And now they say Trump will simply not get a better deal than that on his signature campaign promise.Schumer “took it off,” said Illinois Sen. Dick Durbin, the No. 2 Senate Democrat. “He called the White House yesterday and said it’s over.”In the now-infamous cheeseburger summit last Friday with Trump, Schumer offered a large increase in border wall spending as a condition for a broader deal to help Dreamers. But after that offer was rebuffed — prompting the three-day government shutdown — the president has now “missed an opportunity to get the wall,” one Democratic aide said.Schumer's pulling of the "offer" comes after a day of angry accusations by progressive democrats and even Nancy Pelosi accusing Schumer of being a "sellout", and caving to the White House in agreeing to reopen government.Meanwhile, key Republicans including Sen. Jeff Flake of Arizona - a key GOP immigration negotiator - had already considered using the promise of border wall funding totaling more than $1.6 billion to lure more conservative votes. A Dreamer plan written by a bipartisan group of six senators, including Flake, had included Trump’s $1.6 billion request as part of a broader, $2.7 billion border security package. “Sen. Schumer’s already indicated that he would go for more. Republicans will go for more,” Flake said. “It’s just how much more we can get from the Democrats.”Now, they won't be able to get anything, which means that the Dreamer negotiations go back to square one.
Trump To Schumer: No Wall, No DACA - President Trump fired off a Tuesday night tweet to "Cryin'" Chuck Schumer (D) letting let the New York Senate Minority Leader know that without funding for the wall - one of the president's cornerstone campaign promises, there would be no compromise on legislation to help so-called Dreamers, something we expected when we reported that Schumer was pulling his border wall funding "offer" on Tuesday. Schumer had offered and then withdrawn a deal which would secure funding for the wall in exchange for an agreement over immigration. Schumer's office confirmed on Tuesday that the offer - initially made last Friday during negotiations over the shutdown - had been withdrawn on Sunday. "Cryin’ Chuck Schumer fully understands, especially after his humiliating defeat, that if there is no Wall, there is no DACA. We must have safety and security, together with a strong Military, for our great people!" Trump tweeted. Cryin’ Chuck Schumer fully understands, especially after his humiliating defeat, that if there is no Wall, there is no DACA. We must have safety and security, together with a strong Military, for our great people!— Donald J. Trump (@realDonaldTrump) January 24, 2018Trump was of course referring to the Obama-era "Deferred Action for Childhood Arrivals" program which offers federal protection to illegal immigrants brought into the United States as children. While running for president, Trump said that he would repeal DACA on "day one" of his presidency. Nearly six months later on June 16, 2017 the Department of Homeland Security announced that it would repeal the program, with Attorney General Jeff Sessions confirming the repeal in early September. Congressional Democrats attempted to strongarm a DACA compromise out of GOP leaders last weekend, threatening to allow a government shutdown if no deal was reached. Republicans called their bluff, as Senate Minority Leader Chuck Schumer caved after three days with a stopgap funding bill that would keep the lights on in DC until February 8 following a commitment from Senate Majority Leader Mitch McConnell (R-KY) to resume immigration talks in February. As we noted on Monday, Democratic Senators with 2020 presidential aspirations naturally came out against the agreement. Trump, meanwhile, has said no DACA without a wall. "It's gotta include the wall," said the US President at a press conference in early January with Norway's prime minister. "Any solution has to include the wall, adding "We need the wall for security, we need the wall for safety, we need the wall for stopping the drugs from pouring in."
Budget talks progress, as Senate Dems drop Dreamer demand - Politico - Senate Democrats are willing to drop their demand that relief for Dreamers be tied to any long-term budget agreement — a potential boost for spending talks, but one that could face opposition from their House counterparts. The shift comes in response to the deal struck between Senate leaders Monday to reopen the government and begin debate on an immigration bill next month. Meanwhile, budget negotiators are expressing optimism that a two-year agreement to lift stiff caps on defense and domestic spending is increasingly within reach. “We’re viewing [immigration and spending] on separate terms because they are on separate paths,” Senate Minority Whip Dick Durbin (D-Ill.) said Tuesday. Senate Majority Leader Mitch McConnell’s “procedural concession means we’ve got a deadline and a process,” Durbin added. “That to me is a significant step forward. It’s not everything I wanted, that’s for sure, but it’s a step forward.” But House Democrats have signaled they are not ready to go along with a long-term budget deal without a fix to the Deferred Action for Childhood Arrivals program that President Donald Trump is ending. “We are insisting that these things be in the same negotiation,” said a senior House Democratic aide. “To us, what’s important is are these talks linked or not linked? To us, they are linked.” The division among Democrats is complicating negotiations, as lawmakers in both parties face intense pressure — and a two-week time crunch — to show progress on government funding, immigration and a raft of other issues that have resulted in the government operating on stopgap spending bills since September.
In budget talks, Senate Democrats abandon immigrant Dreamers threatened with deportation - Negotiations over the federal budget and immigration “reform” have resumed after the Democrats voted Monday to end a three-day government shutdown without protection for any of the 800,000 immigrants covered by the Deferred Action for Childhood Arrivals (DACA) program.Trump previewed the White House’s latest proposal in an impromptu press conference Wednesday, indicating that he was open to extending the end of DACA past the March 5 deadline so that a deal could be reached.While the official White House proposal, drafted by Trump’s fascistic domestic policy adviser Stephen Miller and chief of staff John Kelly, will not officially be released until Monday, the New York Times reported that it offers a path to citizenship for current DACA recipients in return for a crackdown on legal immigration and further ramping up of deportations of the undocumented.“Tell them not to be concerned. Tell them not to worry, we’re going to solve the problem,” Trump told reporters Wednesday night. “We’re going to morph into it. It’s going to happen,” Trump said about the possibility of citizenship for those with DACA status.According to the Times , the plan would allow for 690,000 so-called Dreamers and 1.1 million other young immigrants who qualified for the program but never applied to gain citizenship over a period of 10-12 years, with the condition that they must avoid any legal infractions. In exchange, the White House is demanding $25 billion to fund Trump’s proposed border wall, a dramatic increase in immigrant detentions and deportations, a crackdown on those who overstay visas, an end to laws that allow citizens and green-card holders to bring their parents to the US, and the elimination of a State Department program that encourages immigration from underrepresented countries (the “visa lottery”).During the press conference Wednesday night, Trump rejected the notion that demanding funding for the wall was a non-starter: “No. I don’t [believe the wall is off the table]. In fact, I just watched [Democratic Senator] Joe Manchin and he said Schumer does not mean that and said it very strongly.”
Trump to support path to citizenship for 1.8 million Dreamers | TheHill: The White House will endorse allowing as many as 1.8 million young immigrants to seek U.S. citizenship in an immigration plan that will be released next week, senior administration officials said Thursday. In exchange for the "Dreamer" protections, President Trump will seek billions of dollars for a border wall and sweeping changes to the immigration system. Officials who described the plan to reporters framed it as Congress’s best chance to pass a fix for immigrants who benefit from the Deferred Action for Childhood Arrivals (DACA) program, which Trump terminated last year.The White House is urging the Senate to draw up legislation based on the plan and introduce it the week of Feb. 5, days before government funding is set to expire, though officials said they do not have an assurance it will be brought up. “This truly represents a bipartisan compromise position,” said one official, who requested anonymity to detail the proposal. “We have no doubt that if this legislation were brought to the floor, it would easily garner 60 votes.” The official said Congress failed to pass immigration overhauls in the past because lawmakers considered legislation that was too big in scope and only represented “the most liberal sections of both parties.” Trump aides offered the most detailed look to date at the president’s plan on immigration, an issue that animated his campaign and has dominated the policy debate on Capitol Hill. It’s designed to break a partisan impasse on the issue before the DACA programs begin to wind down on March 5. Despite the White House’s optimism, the plan contains elements that could be unpalatable to lawmakers in both parties.
Trump To Give Path To Citizenship For 1.8 Million Dreamers In Exchange For Wall Funding - In an attempt to break the ongoing deadlock over government funding and immigration reform, President Trump will sign an immigration plan into law that would allow as many as 1.8 million undocumented immigrants brought into the US as children to seek a pathway to citizenship, in exchange for billions of dollars for Trump’s border wall and sweeping changes to the legal immigration system, senior administration officials said Thursday.The proposal would double the number of people covered by current protections from deportation.According to Bloomberg, the White House will cast the plan as a concession to Democrats as they seek to ensconce GOP immigration policies. Meanwhile, to appease his core base, Trump will ask Congress for a $25 billion trust fund to pay for construction of a southern border all as well as enhanced security at ports of entry and along U.S.-Canada border.The White House is urging the Senate to draw up legislation based on the plan and introduce it the week Feb. 5, just days before the government funding is set to expire, though officials said they do not have an assurance it will be brought up.In other words, the DACA proposal will be presented to Democrats to take or leave; should they do the latter, another government shutdown will appear inevitable.As The Hill adds, Officials who described the plan to reporters framed it as Congress’ best chance to pass a fix for immigrants who benefit from the Deferred Action for Childhood Arrivals (DACA) program, which Trump terminated last year.The official said Congress failed to pass immigration overhauls in the past because lawmakers considered legislation that was too big in scope and only represented “the most liberal sections of both parties.” It’s designed to break a partisan impasse on the issue before the DACA programs begins to wind down on March 5.
DACA Joins the Mad Rush to War – Black Agenda Report - The top Democrats in Congress have transformed DACA, the effort to protect 800,000 childhood immigrants from deportation, into a gargantuan funding measure for the Pentagon. This past weekend, Senate Democratic leader Charles Schumer offered to fully fund Donald Trump’s border wall and boost defense spending “far above” what the White House requested, in a deal to end the government shutdown. The military budget signed into law in December was already $30 billion higher than the White House asked for, and $80 billion bigger than the previous year’s war spending -- an increase as large as Russia’s entire defense budget. It is Democratic congressional leadership -- not Donald Trump and his mad generals -- that has been the driving force in this year’s military spending insanity. Back in July, House Democratic leader Nancy Pelosi pressured her party to back a defense authorization $57.4 billion bigger than the Pentagon requested. Only a minority of Democratic House members supported the measure, but a majority of the Congressional Black Caucus (CBC) followed Pelosi’s lead -- including all five of the newest members of the Black Caucus, elected in 2016. By inflating the war budget even beyond the Pentagon’s demands, these Pelosi-Schumer-CBC Democrats ensured that what remains of the social safety net will be slashed into oblivion by bipartisan forces of austerity in future Congresses. The Bernie Sanders faction of the Party is just as guilty, through its shameful silence on war. This group includes Our Revolution, whose purportedly “progressive” agenda suggests only that they would “take a hard look at the Pentagon’s budget and the priorities it has established.” The imperial fist is inexorably crushing the domestic welfare agencies of government. The Democrats’ task in this infernal process is to coax their constituents to swallow the “Satan’s Sandwiches” that emerge from Congress -- as suggested by Black Kansas City Rep. Emanuel Cleaver back in 2011, when Barack Obama was presenting his “Grand Bargain” to the Republicans. Having put “all entitlements” on the table for cutting at the start of his presidency, Obama proceeded to wage expensive wars against seven countries. His Grand Bargain offered even larger social cuts than the Republicans demanded, before finally unraveling in the morass of Capitol Hill. Democratic leadership is still seeking that “bargain” with the GOP, knowing full well that it will be paid for by more austerity for people’s programs.
Trump Successfully Infuriates Both Republicans And Democrats With "Dreamer" Proposal - Just one day after the White House reversed its position on naturalizing young illegal immigrants, unveiling a proposal late on Thursday to double the number of Dreamers the US would accept in exchange for billions in Wall funding, President Trump said on Friday that Republican senators - even those who have taken a tough approach to immigration such as Tom Cotton, John Cornyn and David Perdue - could agree to the unexpected proposal to offer citizenship within 10 to 12 years to so-called “Dreamers.”“They’ve really shifted a lot, and I think they’re willing to shift more, and so am I,” the Republican president told CNBC in an interview from Davos. “We’re going to see. If we make the right deal, I think they will.”The problem is that while a handful of republicans were happy with Trump's plan, many more were not even as the elephant in the room - or rather the donkey - remained the democrats. As we said yesterday, the fate of Trump's proposal - and by extension whether or not the government is shut down again on February 8 should there be no immigration deal - "depends on the Democrats' response which is yet to come."And, as it turns out, early indications are not looking good, because as The Hill reports, Trump's immigration plan has slammed into heavy opposition on and off Capitol Hill, suggesting the much-anticipated framework has failed to move the needle as a bipartisan group of senators try to negotiate a deal.While Trump is hoping the Senate will draft legislation based on his blueprint (it can be seen here)and introduce it by Feb. 5, just three days before funding for the government runs out, the day-old plan is already taking heavy fire from both the right and the left. In some ways, it may now be even worse than before: for the bipartisan gang of 20 senators trying to hammer out an agreement to protect the "Dreamers," it’s clear the Trump outline — intended as an olive branch to Democrats — gets them no closer to a deal. One of the key negotiators of the group, Senate Minority Whip Dick Durbin (D-Ill.), warned that Trump’s plan places the White House’s "hardline immigration agenda … on the backs of these young people."
Trump’s immigration proposal is draconian and un-American: White House framework calls for a vast increase in immigration enforcement on the backs of DREAMers, while only legalizing 16 percent of the undocumented population – EPI - Yesterday the White House one-page framework for a legislative deal to provide a permanent immigration status to DACA recipients was made public, which is in addition to the four-page memo released on January 9 that included the Department of Homeland Security’s priorities for an “immigration deal.” The new one-page memo includes a long list of far-reaching demands to “reform” the immigration system, in exchange for remedying the crisis that President Trump himself imposed on the nearly 700,000 immigrants who were brought to the United States as children by their parents, and who voluntarily availed themselves to the U.S. government after they were promised that they would be protected and not deported by the Obama administration.President Trump’s latest demands for major changes to the U.S. immigration system include additional legal authority to deport unauthorized immigrants, $25 billion in new funding for more border security and immigration enforcement agents, an end to the diversity visa program, and cuts to permanent immigrant visas for family reunification, among other things. All of this would be in exchange for putting up to 1.8 million DACA recipients and DREAM Act-eligible immigrants on a path to citizenship.It is notable that the Trump administration is willing to extend the possibility of legalization and citizenship beyond just the current 700,000 DACA recipients, but doing so would still only legalize 16 percent of the total unauthorized immigrant population (1.8 million out of 11.3 million). DACA recipients and potential DREAMers themselves have made it clear that they reject a path to citizenship if it means that their parents and the millions of unauthorized immigrants left behind will be terrorized through a vastly expanded national deportation apparatus and additional border militarization, plus sharp cuts to future immigration levels. Many of President Trump’s demands are bad ideas, rooted in racism and xenophobia, which will keep immigrants in fear and negatively impact the labor market. Including them in the context of urgently necessary legislation to protect DACA recipients—which should be clean and narrow—and after only a few weeks of negotiations, makes little sense. After making the ill-advised decision to end DACA without a permanent solution from Congress, the most pressing priority for all humane policymakers should be ensuring that DACA recipients do not become deportable or lose their ability to work and go to school. In addition, any proposal to reform the immigration system that is as broad and sweeping as president Trump’s should include legalization and a path to citizenship for all 11.3 million unauthorized immigrants.
Earmarks: The one thing Trump gets right about Congress - Brookings - When the House Rules Committee scheduled hearings for this week on bringing back the congressional practice of earmarking, it probably did not expect an assist from President Trump. The always-unpredictable president surprised congressional leaders last week by recommending they reinstate earmarks.Uncharacteristically, Trump eschewed hyperbole. He did not suggest that reviving earmarks would ring in a new age in Washington. He did suggest, correctly, that it would be a step in the right direction for our beleaguered Congress. As the Grinnell College political scientist Peter Hanson wrote recently in the Washington Post, “Earmarks offer no magic solution to the challenge of legislating in a polarized environment. But restoring them in some version could give leaders a tool to build bipartisan coalitions by attracting Democrats who might otherwise vote against GOP measures.”Earmarks are small appropriations for specific congressional districts or projects: a research grant, a runway, a post office, almost anything. They are minuscule as a share of the federal budget, but in the 2000s, members of Congress became obsessed with securing them and their number soared. In response to those and other complaints, in the late 2000s earmarks were reformed to be more transparent and merit-based. Nonetheless, in 2011 a strange-bedfellows coalition of anti-spending Tea Partiers and anti-corruption progressives succeeded in banning them altogether. Most people who favor earmarks emphasize their importance as a form of political currency. Many important congressional votes are controversial and tough; raising the debt limit, for example, is something every member wants to do but no one wants to vote for. By offering to deliver items on members’ wish lists, leaders can use earmarks to corral crucial votes. Political science research has tended to confirm what common sense suggests: in legislating, incentives matter, and earmarks and other forms of pork-barrel spending help leaders to lead by incentivizing followers to follow—whether the goal is liberal or conservative. Anti-spending conservatives who revile earmarks forget that most federal spending is on autopilot, and that efforts to (for example) rein in entitlements, reform regulations, or otherwise reorient government are difficult without legislative lubricant.
Trump Fires Latest Shot In Trade Wars - Imposes 30% Tariff On Solar-Panel Imports - President Donald Trump is once again burnishing his protectionist bona fides by slapping imported solar cells and washing machines with 30% tariffs - his most significant action taking aim at the world's second-largest economy since he ordered an investigation into Chinese IP practices that could result in tariffs. Acting on recommendations from US Trade Representative Robert Lighthizer, Trump imposed the sliding tariffs. Solar imports will face a 30% tariff for the first year, then the tariff will decline to 15% by the fourth year. It also exempts the first 2.5 gigawatts of imported cells and modules, according to Bloomberg. Meanwhile, washing machine tariffs will fluctuate on a quota-basis. The news sent shares of First Solar, Sunpower and Canadian solar - all solar cell manufacturers - rocketing higher. As the Associated Press explains, solar energy is booming in the US, but installers of solar-power systems have been worried that Trump would undercut them by ordering the tariffs, which will raise the cost of their inventory. These companies previously benefited from the global solar-panel glut, while manufacturers of solar panels outside of China suffered.One green-technology research firm estimated that tariffs could cost up to 88,000 US jobs related to installing solar-power systems.However, two US-based subsidiaries of foreign companies have argued that the glut, engineered by China, has harmed manufacturers in other parts of the world.
Trump deals blow to solar makers, industry to focus on growth away from U.S. (Reuters) - U.S. President Donald Trump’s decision on Monday to slap tariffs on solar power equipment imports will pull investments in the technology out of the United States and into Asia and other regions, as the industry tries to make up for the lost opportunity in America, industry sources said on Tuesday. Trump approved a 30 percent tariff on solar cell and module imports that will drop to 15 percent in four years. Up to 2.5 gigawatt (GW) of unassembled solar cell imports are allowed tariff-free in each year. The decision will likely curb surging growth in U.S. solar power capacity, the world’s fourth-largest after China, Japan and Germany. Globally, solar capacity has soared to almost 400 GW last year from under 10 GW in 2007, according to the International Renewable Energy Administration. China is the world’s biggest builder of solar photo-voltaic cells and the tariffs will damage Asian companies the most. The U.S. government argued that its domestic manufacturers could not compete with what it said were artificially lower-priced Asian panels. “The duty barrier will shock Asian suppliers in the near-term,” said Frank Yu, Asia-Pacific power and renewables principal at energy consultancy Wood Mackenzie. Wood Mackenzie said the tariffs are projected to reduce U.S. solar installation growth by 10 to 15 percent over the next five years. Chinese solar manufacturers including unlisted Jinko Solar and Trina Solar, the country’s two biggest solar builders, could bear the brunt of the tariff. U.S.-listed shares of Yingli Green Energy Holding Co, one of China’s top 10 solar builders, slipped 0.5 percent on Monday. Jack Feng, a vice president at Trina Solar, said panel makers would “expand their territory to a broader range in the globe,”, including Europe, China, Indonesia and India, to make up for the lack of U.S. access. “The U.S. decision will certainly affect Chinese solar panel makers,” he said, although it was no surprise given Trump’s previous statements.
Mexico criticizes U.S. move on imported washers, solar panels (Reuters) - Mexico’s economy ministry on Monday criticized a U.S. decision to slap tariffs on imported washing machines and solar panels and said it would use all legal means at its disposal to ensure the United States met its international obligations. “Mexico’s government regrets the United States’ decision not to exclude Mexico from the measures taken today,” the ministry said in a statement, noting that the United States imported some $278 million worth of washing machines from Mexico in 2016. In addition, the United States imported some $1.127 billion worth of solar panels from Mexico that year, it added. Referring to the legal measures it would make use of to ensure the United States fulfilled its international obligations, Mexico pointed to compensation envisaged under an article of the North American Free Trade Agreement (NAFTA).
China slams Trump for raising import duties on Chinese goods - China on Tuesday criticised US President Donald Trump’s decision to raise import duties on solar power components and washing machines as an abuse of trade remedies. Trump’s action could threaten the international trading system, the Commerce Ministry said in a statement. It repeated criticism that Washington is improperly responding to trade complaints under US law instead of through the World Trade Organisation. Trump acted on a recommendation by the US International Trade Commission to limit the impact on American manufacturers from a flood of lower-cost imports. “The US side once again abused its trade remedy measures,” the commerce ministry statement said. “China expresses its strong dissatisfaction with this.” Chinese officials have repeatedly accused Trump of jeopardising international trade regulation by imposing penalties under US law instead of pursuing a WTO complaint. “China hopes the United States will exercise restraint in using trade restrictions and compliance with multilateral trade rules and will play a positive role in promoting the world economy,” the statement said.
China, South Korea Vow Retaliation In Trump Trade War - When we reported earlier today that President Trump lobbed the first real shot in the global (but mostly Asian) trade war when the White House announced it would slap imported solar cells and washing machines with up to 50% tariffs - Trump's most significant trade action to date, taking direct aim at China and South Korea (full details here)- we said that "we now await China's (or South Korea's) response..."We didn't have long to wait.South Korea stormed out of the gate, with Reuters reporting that it will complain with the WTO against the U.S. for imposing anti-dumping duties on Korean washing machine and solar panel makers, a decision Trade Minister Kim Hyun-chong called “excessive” and "regrettable." Kim warned that the US safeguard decision is "excessive" and violates WTO provisions. As a reminder, the United States will impose a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50% tariff on machines above that number. The tariffs decline to 16% and 40% respectively in the third year. "The United States has opted for measures that put political considerations ahead of international standards,” Kim said in a meeting with industry officials on Tuesday. "The government will actively respond to the spread of protectionist measures to defend national interests," he said. South Korea will also consider discussing steps jointly with other countries subject to the imposition, the trade ministry said, meanwhile the South Korean government said it would help Samsung and LG in finding alternative markets for the sale of washing machines.Additionally, Bloomberg reports that South Korea will also seek to retaliate in kind by reinstating tariffs on the U.S. in what has been dubbed the "Washing Machine" row. To do that, South Korea asked the World Trade Organization to approve suspension of trade concessions, the trade ministry says in an emailed statement. Yet while S. Korea flexes its diplomatic muscle, local producers of washing machines - which may see tariffs as high as 50% - tumbled: Woongjin Energy dropped as much as 9.4%, LG Electronics slid 5.1%; Hanwha Chemical dropped 4.3% before rebounding, OCI dell as much as 3.5%, and Samsung SDI was down 1.7%.
Indian Prime Minister Slams Protectionism in Davos Speech After President Trump Raises Tariffs — Indian Prime Minister Narendra Modi warned Tuesday against a new wave of protectionism, saying that trade barriers pose a danger to the world on par with climate change and extremist attacks. Modi delivered the message in a speech just hours after the U.S. government of President Donald Trump approved tariffs on imported solar-energy components and large washing machines in a bid to help U.S. manufacturers. “Forces of protectionism are raising their heads against globalization,” he told a crowd of business and government leaders in the opening address at the World Economic Forum in Davos, Switzerland. “It feels like the opposite of globalization is happening.” “The negative impact of this kind of mindset cannot be considered less dangerous than climate change or terrorism,” Modi added, without directly mentioning Trump or the U.S. He urged governments not to turn to isolation, driving home his point by quoting Indian independence leader Mohandas Gandhi: “I don’t want the windows of my house to be closed from all directions. I want the winds of cultures of all countries to enter my house with aplomb and go out also.” Modi, the first Indian prime minister to make Davos’ opening address, was to be the gathering’s highlight until Trump decided to come as well. Trump is due to speak Friday, and the tariffs his administration approved this week will overshadow his arrival to a forum that has long been firmly in favor of free trade.
Trump says he would re-enter TPP trade deal if it's made 'substantially better' | TheHill: President Trump said Thursday he would consider re-entering the Trans-Pacific Partnership (TPP) trade agreement if the terms were more favorable to the U.S. “I would do TPP if we were able to make a substantially better deal,” Trump told CNBC during an interview at the World Economic Forum in Davos, Switzerland. Trump called the Pacific Rim trade pact a “horrible deal” as written. The comments mark the first time Trump has raised the possibility of rejoining the sweeping trade agreement, which was championed by former President Obama. It's a surprising stance for Trump, who won the 2016 election on a promise to take a more protectionist stance on trade. Trump railed against the TPP as a candidate and announced the U.S. would pull out of the agreement in one of his first acts as president. At the time, Trump said leaving the TPP is a "great thing for the American worker." But it’s unclear what, exactly, could entice Trump to re-enter the agreement. The president did not say what specific changes he wants to see made.
Team Trump Bypassed DHS Analysts to Produce Bogus Terror Report -- The document didn’t mince words. It claimed three-quarters of “international terrorism” convicts were immigrants, an assertion meant to bolster Donald Trump’s cherished Muslim-focused ban on entering the country. And the report put the claim in the mouths of an agency assembled to keep Americans safe after 9/11: the Department of Homeland Security (DHS). Working off the 549 federal international-terrorism convictions tallied by the Justice Department, the document stated: “An analysis conducted by DHS determined that approximately 73 percent (402 of these 549 individuals) were foreign-born.”But the Department of Homeland Security did not perform that analysis. DHS’ analysts did not contribute to the highly controversial report, The Daily Beast has learned.According to a government source familiar with the episode, Attorney General Jeff Sessions’ office took charge of the report’s assemblage of statistics—whichsome terrorism analysts consider highly misleading—and sent it to DHS Secretary Kirstjen M. Nielsen for her imprimatur after it was all but finalized.“The Trump administration is trying to turn counterterrorism into an immigration issue,” Career professional analysts at DHS communicated to the Justice Departmentthat the data sought for the report simply did not exist within their department. DHS, multiple sources said, does not track or correlate international terrorism data by citizenship or country of origin, and have warned the Trump administration that doing so risks a misleading portrait of both terrorism and immigration.
Trump warns Davos on unfair trade, says U.S. 'open for business' (Reuters) - U.S. President Donald Trump took his “America First” message to the world’s elite on Friday, telling a summit of business and political leaders that the United States would “no longer turn a blind eye” to what he described as unfair trade practices. Trump became the first sitting U.S. President to address the annual conclave of the rich and powerful at the Swiss ski resort of Davos for 18 years, closing the summit with a mostly upbeat speech that declared the United States “open for business”. “Now is the best time to bring your money, your jobs, your businesses to America,” he said, singling out tax cuts and curbs to regulation as boosting the investment climate. “The world is witnessing the resurgence of a strong and prosperous America.” He said he would always promote “America First”, as he expected other world leaders to do on behalf of their own countries, but added: “America First does not mean America alone. When the United States grows so does the world.” But he swiftly turned to a theme of demanding tougher enforcement of trade rules, accusing unidentified countries of unfair practices, including stealing intellectual property and providing state aid to industry. “We will enforce our trade laws and restore integrity to the trading system. Only by insisting on fair and reciprocal trade can we create a system that works not just for the United States but for all nations,” Trump said. “The United States will no longer turn a blind eye to unfair trade practices,” he said. “We cannot have free and open trade if some countries exploit the system at the expense of others.” His speech was mostly met by polite applause, although he drew some jeers and whistles during a question and answer session, when he attacked the news media: “It wasn’t until I became a politician that I realized how nasty, how mean, how vicious and how fake the press can be,” he said. While he has a record of opposing trade agreements involving multiple countries, he said the United States would seek bilateral deals with individual states. That could include members of a Trans-Pacific trade agreement from which he has withdrawn, he said, adding he would consider negotiating with them collectively if it was in the U.S. interest.
Exclusive: Trump expected to invite France’s Macron for first state visit of his presidency - NN -President Donald Trump is expected to invite French President Emmanuel Macron to Washington for an official state visit later this year, the first of his presidency, according to two diplomatic sources.While a date for the visit has not yet been officially set and the White House has not made an announcement, sources say that could come as soon as this week, while Trump attends the World Economic Forum in Davos. The White House told CNN: "We don't have an announcement to make at this time." The first lady's office did not return CNN's request for comment.The White House has hosted numerous world leaders in the first year of the Trump administration, but none were official state visits with all the trappings, pomp, circumstance and accompanying glittering state dinner. Trump is the first president in decades to not host a state visit during his first year in office. The White House has said there's no particular reason for the delay. Trump himself has been feted in grand fashion across the globe, from an elaborate sword dance in the Saudi capital Riyadh to an intimate twilight tour of the Forbidden City in Beijing. In July, Trump and first lady Melania Trump were Macron's guests of honor on Bastille Day, where the President spent hours surveying a parade of troops, tanks, and aircraft that rolled down (and above) the Champs-Élysées. The trip also included Trump controversially complimenting Macron's wife's figure, though photos showed the Trumps and Macrons appearing to enjoy themselves, even sharing a meal together atop the Eiffel Tower.
White House Leaks Draft Of Trump's $1 Trillion Infrastructure Plan --As was widely expected, the White House has leaked what appears to be a six-page rough draft of its $1 trillion infrastructure plan to Axios as it rushes to release a fully formed iteration of the plan before the end of the month. The draft, which can be viewed below, provides incentives for state and local governments - as well as private developers, metropolitan authorities, and regional authorities - to break ground on a range of different infrastructure products, including: Surface transportation, passenger rail, maritime and inland waterway ports, flood control, water supply, hydropower, water resources, drinking water facilities, storm water facilities as well as Brownfield and Superfund sites. Applicants must show how they plan to attract non-federal funding to ensure that the projects are completed. They must also explain how the projects will spur economic growth. Individual grant awards can't exceed 20% of total project costs and any individual state can't receive more than 10% of the amount available - which means most of these projects will be heavily dependent on private funding... In light of New York City's struggles with its subway, the deteriorating New Jersey Transit system - one of the most heavily used public transit systems in the world - the elements of the plan pertaining to rail and transit projects were particularly interesting... Leaked details of the Administration's "infrastructure plan". Here are the rather skinny proposals for transit and rail. pic.twitter.com/gOa9aT3ESv — Dan Ryan (@danjryan) January 22, 2018 Critics complained that the plan lacked details, appeared thrown together, and relies too much on privatization to revitalize public roads and other public services...
About that massive infrastructure plan: Trump might use it to slash enviro protections -- After the passage of the contentious GOP tax bill and a prolonged congressional stand-off on the Affordable Care Act, Trump’s proposed infrastructure plan is an initiative we can finally get behind. Our infrastructure is old, dangerous, and in desperate need of an overhaul. Nothing controversial here! What? Oh, god. Here we go again. This week, Politico and Axios published a document that the leakers claim is a draft of Trump’s infrastructure bill. The outline isn’t a final version, but it contains details that undermine one of our foundational environmental laws: the National Environmental Policy Act (NEPA). NEPA is a sweeping act that essentially requires federal agencies to evaluate the “social and economic effects of their proposed actions” before they start major development. The leaked draft indicates that the Trump administration hopes to streamline projects by allowing highway construction to begin “prior to NEPA completion” and redefining what qualifies as a major federal action so that NEPA no longer applies to investments that ring in under $1 billion (aka most projects). Trump set the stage last summer when he signed an executive order rescinding an Obama-era requirement that federally funded buildings take sea-level rise into consideration.
What Donald Trump needs to do to fix America’s infrastructure - President Donald Trump promised a $1 trillion plan within the first 100 days of his presidency to rebuild the country’s “crumbling infrastructure.” That deadline passed without a proposal. The next attempts to focus on infrastructure suffered from either horrible timing, chaos of the president’s own making, or both. “Infrastructure Week” in June, for example, coincided with former FBI Director James Comey’s Senate committee testimony.But Axios published a leaked document this week that reportedly contained the outlines of the White House’s infrastructure proposal. The plan emphasizes federal grants to pay for portions of projects, with some combination of state, local, and private funding making up the difference. It also includes a program to spur rural infrastructure development. The leaked document didn’t include any numbers, but multiple reports have suggested the administration will ask for $200 billion in grants over 10 years, attempting to leverage close to $1 trillion in total spending. The question now is whether this plan — if it’s indeed the final plan — will effectively tackle America’s gaping infrastructure challenges. Before the proposal leaked, Vox asked infrastructure experts and analysts to lay out what the federal government should prioritize in any major plan to adequately and cost-effectively upgrade, repair, and replace America’s infrastructure. It’s a bit premature to say whether Trump’s strategy will accomplish this, particularly without any final numbers. But if the leaked documented is any indication, the majority of the federal money will come in the form of limited grants, putting more emphasis on local, state, and private entities to foot the bill.
Charles Koch donated $500K to Ryan days after GOP tax plan passed | TheHill: GOP mega-donor Charles Koch and his wife donated about $500,000 to Speaker Paul Ryan's (R-Wis.) joint fundraising committee, just days after the GOP tax plan was passed. Charles Koch made the donation 13 days after the plan was passed, which lowers the corporate tax rate and cuts estate taxes, the International Business Times reported.He and his wife also gave $237,000 each to the National Republican Congressional Committee on the same day, according to the report. Charles Koch and his brother David Koch were both major advocates for the tax plan, pouring millions of dollars into efforts to get the legislation passed. The pair is also planning on spending millions more on a public relations campaign for the plan, according to The Wall Street Journal. Politico reported last year that Ryan isn't planning on running for another term, but Ryan has denied the report.
So Much For Tax Cut Benefit - Here's How Fed "Normalization" Wipes It Out -- As (some) White House-linked (or favouring) economists lament the Fed’s QE (and there are reasons to lament it), one thing is clear: the unprecedented monetary policies of the recent years have achieved two things: 1.The Fed QE has fuelled an unprecedented boom in risky assets (bonds, equities, property, cryptos, you name it); and 2. The Fed QE sustained a dangerous explosion of personal household debt . Which, taken together, means that the rich got richer, and the middle classes and the poor got poorer. Because debt is not wealth. Worse, the policies past have set the stage for a massive unraveling of the credit bubble to come, if the Fed were to attempt to seriously raise rates. Note: the figures below are not reflective of a reportedly massive jump in consumer credit in 4Q 2017. Here is the latest data on personal household debt: Year on year, 3Q 2015 growth in total household debt in the U.S. stood at 3.03%. This fell to 2.36% in 2016, before rising to 4.90% in 2017, the highest annual rate of growth for the third quarter period since Q3 2007. Aggregate household debt in 3Q 2017, relative to 2005-2007 average was:
- 11.8% higher in 3Q 2017 for Mortgages;
- 23.4% lower for HE Revolving;
- 51.9% higher for Auto Loans;
- 6.6% higher for Credit Cards;
- 201.2% higher for Student Loans;
- 6.5% lower for Other forms of debt; and
- 19.7% higher for Total household debt
In current environment, a 25 bps hike in Fed rate, if fully passed through to household credit markets, will increase the cost of household credit by USD32.4 billion per annum. The same shock five years ago would have cost the U.S. household USD 28.3 billion per annum. Now, put this into perspective: current markets expectations are for three Fed rate hikes (and increasingly, the markets are factoring a fourth surprise hike) in 2018. Assuming the range of 3-4 hikes moves to raise rates by 75-100 basis points, the impact on American households of the QE ‘normalization’ can be estimated in the region of USD98-130 billion per annum. Since much of this will take form of the non-deductible interest payments, the Fed ‘unwinding’ risks wiping out the entire benefit from the recent tax cuts for the lower-to-upper-middle class segments of population.
‘It’s the economy, stupid’: GOP prepares to sell tax law as its 2018 survival strategy - Republicans this fall will be hoping that Bill Clinton was right about at least one thing. “It’s the economy, stupid — did you ever hear that one?” President Trump asked at his rally last week near Pittsburgh, bringing cheers and laughter from the crowd at his appropriation of that famous line from the 1992 presidential campaign. While the government shutdown has dominated headlines in recent days, Republican strategists are plotting an election-year survival strategy to steer the midterms away from the dangerous terrain of Trump’s tweets and Capitol Hill dysfunction — and focus attention on pocketbook issues that could tilt voters in favor of the party in power. GOP leaders and their allies plan to talk up job growth, highlight the soaring stock market and, most of all, convince voters that the tax-cut legislation that stands as their only major accomplishment is bringing back the good times. The effort represents an all-hands deployment by top Republican officials and their allies, with extensive travel in the coming months to key districts by Trump, Vice President Pence and Cabinet officials, as well as White House aides Ivanka Trump and Kellyanne Conway, to sell the tax overhaul. And key GOP allies, including political action committees and industry groups, are planning to spend millions on advertising designed to sell the tax measure as a boon for the middle class. “Answer this question and I will tell you if we keep the House or not. In ten months, does the middle class think we cut their taxes?” said Corry Bliss, the head of the pro-Republican group American Action Network. “Every member of the Republican Party should be spending all of their time selling the tax plan. Everything else is a waste of time and money.” The plan is necessary largely because Republicans, a year after Trump’s inauguration, are carrying the weight of the president’s ongoing controversies and sagging approval ratings.
What Trump’s Tax Cut Really Means For The US Economy - Jamie Galbraith - The Trump administration’s stated economic-policy objective is to increase growth in the United States from the post-financial-crisis rate of around 2% to at least 3%. In historical terms, achieving such growth is not out of the question. Real (inflation-adjusted) GDP growth exceeded 3% in 2005-2006 and 4% in the period from 1997 to 2000; and in each of the past two quarters, the economy has grown at an annualized rate above 3%. The question is whether that pace can be sustained.Despite low headline unemployment – 4.1% as of December – the US economy is neither at full employment nor constrained by labor supply, as some have argued. The employment-to-population ratio has risen from its post-crisis low of around 58% to just over 60%, but it is still three percentage points below the 2007 level, and five points below its peak in 2000. While many workers retired during and after the post-crisis recession, some could be lured back to work for pay. And while net immigration has slowed, it would pick up, if more workers were needed.Because infrastructure investment and serious trade protection have (apparently) been removed from the agenda, the growth strategy advocated by Trump and congressional Republicans now boils down to the tax law that they rushed to enact in December. Featuring a major cut in the corporate-tax rate and accelerated expensing for capital investments, the law could have two distinct effects: a fiscal-policy effect on aggregate demand and a “supply-side” effect on the economy’s productive capacity. In the first four years, when the law’s net tax cuts will be equal to around 0.9% of GDP per year, the stimulative effect will depend on how much of the additional private income is spent in a given year, and on the fiscal multiplier applied to that spending. Assuming, generously, that 60% of the additional private income is spent each year, and that the fiscal multiplier is 1.5, the tax cut would initially add almost one percentage point to the rate of GDP growth. But that would be a one-time effect. Annual GDP would climb higher once, but the long-run growth rate would not be affected.
California Democrats Propose Business Tax Hike To Mitigate Tax Cut's Impact - The Trump tax plan is going to hammer taxpayers and small businesses in states like California and New York where curbs on so-called SALT deductions and mortgage interest deductions will likely lead to a net tax increase for many.To try and mitigate - or even negate - its impact, New York Gov. Andrew Cuomo, California Gov. Jerry Brown and a handful of other governors have mused about workarounds that would help compensate taxpayers in the state for the changes. Taking this one step further, Assemblymen Kevin McCarty of Sacramento and Phil Ting of San Francisco introduced Assembly Constitutional Amendment 22 Thursday, an amendment that would raise corporate taxes on California companies with revenues higher than $1 million. The increase would be for an amount equivalent to half what they received from the federal tax cut, according to the Los Angeles Times. "I’ve seen enough billionaire justice in the first 11 months of this presidency to last my lifetime," McCarty said in a statement. "At a time when reckless federal tax policy favors billionaires over middle-class workers, ACA 22 will help ensure that California can continue to grow and support middle-class families throughout the state."But with several high-profile state lawmakers recently felled by sexual harassment scandals, Democrats in the state assembly no longer hold a super majority.Here's the San Francisco Chronicle:...Two Assembly Democrats, Matt Dababneh of Encino (Los Angeles County), and Raul Bocanegra of San Fernando Valley (Los Angeles County) amid sexual misconduct allegations. Another Assembly Democrat, Sebastian Ridley-Thomas of Los Angeles, resigned citing health issues. In the Senate, Democrat Tony Mendoza of Artesia (Los Angeles County) is taking a leave of absence pending an investigation into sexual misconduct allegations.Because of this, McCarty and Ting are facing an uphill battle: The amendment would require a supermajority to pass. Then - assuming Gov. Jerry Brown signs the amendment - it would then need to be confirmed by voters in the fall. But in a state like California, this definitely isn't something to rule out entirely.
State Tax Workarounds Could Mean $154 Billion Lost to Treasury -- New York state lawmakers could punch a $50.6 billion hole in the federal government’s budget by revamping their state income tax. If California followed the same approach, its legislature could keep $66.8 billion out of the U.S. Treasury. And in New Jersey, state lawmakers could hold back $12.5 billion more. Their plans face obstacles, and not every state is pursuing the same strategy. But five Democratic-leaning states that are exploring ways to change their tax laws could remove roughly $154 billion from federal coffers over the next eight years, adding to anticipated deficits, according to an analysis compiled by Bloomberg in conjunction with Daniel Hemel, a professor at the University of Chicago Law School. The potential drop in federal revenue reflects a furious burst of creativity among state lawmakers and tax experts in response to the Republican-sponsored federal tax-overhaul legislation that President Donald Trump signed last month. One controversial piece of the new law caps a previously unlimited federal tax benefit that individuals in high-tax states get by deducting the state and local taxes they pay. The new cap is $10,000. Now, various states are considering circumventing that limit by switching from a state personal income tax to an employer-paid state payroll tax calibrated to produce the same amount of revenue. Employers can deduct payroll taxes fully on their federal returns.
Kimberly-Clark to use savings from tax cuts to pay for layoffs | TheHill: Kimberly-Clark — maker of brands such as Kleenex, Scott and Huggies — said the savings it receives from the new tax-cut law will help them pay for a restructuring program that includes layoffs. The company said the restructuring initiative, which the company was planning to undertake regardless of the tax law's passage, will involve reducing its number of employees by about 5,000 to 5,500 people, or 12 to 13 percent of its workforce. Kimberly-Clark also said it plans to close or sell about 10 manufacturing facilities. The announcement contrasts with other businesses, such as Starbucks and Walmart, that have said that they will increase wages or issue bonuses in the wake of the tax law. President Trump signed the law in late December. Senate Minority Leader Charles Schumer (D-N.Y) highlighted Kimberly-Clark's announcement in a floor speech Wednesday as an example of "evidence that big corporations are not turning their new tax cut into jobs for the middle class." In an earnings call Tuesday, Kimberly-Clark said it expects its effective tax rate to be between 23 and 26 percent in 2018 because of the new law, lower than in 2017."We also anticipate ongoing annual cash-flow benefits from tax reform," Kimberly-Clark Chief Financial Officer Maria Henry said on the call. "That provides us flexibility to continue to allocate significant capital to shareholders, while we also fund increased capital spending and our restructuring program over the next few years."
That Goldman Sachs Guy Is Dragging Trump and His Cabinet to Davos - Pam Martens - - To hear Gary Cohn, the immediate past President of Goldman Sachs tell it, U.S. President Donald Trump will be feted as a beloved world leader when he arrives in Davos, Switzerland tomorrow morning for the World Economic Forum. Despite Trump hurling many insults at Goldman Sachs during the Presidential campaign, Cohn, who had spent much of his adult life at Goldman, was quickly picked by Trump to be his Director of the National Economic Council just one month after the election in 2016. Yesterday Cohn shared the podium with Press Secretary Sarah Huckabee Sanders at the White House press briefing and had this to say about Trump’s trip to Davos: “The President departs tomorrow evening and arrives Thursday morning local time in Switzerland. On Thursday he will have a variety of meetings with world leaders and a quick meeting with Klaus Schwab, the founder of the World Economic Forum. On Thursday night, the World Economic Forum will host a reception with world leaders to honor the President. Later on that night, the President will host a small dinner with select European companies to share our economic success story and to encourage them to continue to invest in America.” On Friday, continued Cohn, Trump would deliver a speech at the event. The World Economic Forum is considered by many to be an elitist group of global financiers and multinational CEOs who meet annually to maintain their iron grip on the economic and regulatory policies that have elevated them into the rarefied world of the super rich while leaving the United States and other parts of the world with the greatest wealth and income inequality since the Great Depression. Trump’s former chief strategist, Steve Bannon, once characterized the elitist swamp he wanted to drain as “the party of Davos.”
When it comes to Davos, it’s inequality, stupid | Asia Times: Pepe Escobar - For billions of people, the Groucho Marx rule applies when talking about Davos. This is the exclusive club, which meets in the luxury Swiss resort each year to discuss the global business environment. In one quick-fire response, Groucho joked: “I sent the club a wire stating, ‘Please accept my resignation. I don’t want to belong to any club that will accept me as a member’.” Well, to start off with those billions of people would not get past the bouncers, because the self-defined World Economic Forum is about exclusion. Yet even if, by divine design, they were handed free passes, what would be the point? The austerity mantra holds sway over large swathes of Europe. The US remains mired in the fiscal cliff maelstrom and the Japanese are about to unleash an economic tsunami – devaluation of the yen at all costs.So, what is the point of spending the GDP of a sub-Saharan country trekking to the Alps to Davos for a mere blabber fest, when basic membership plus access to private sessions at the summit cost a whopping US$245,000? For instance, the slopes of Jackson Hole, where the annual central bank symposium is held in Wyoming, are way cooler. In comparison, Davos is essentially double-dip land. On one side, we have ‘Bad for Labor’, with millions in the West thrown into an unemployment hell or suffering from a wages freeze. On the other side, we have ‘Good for Capital’, with companies flush with cash. Yet the result is uncertainty, all over again. Quite simply, more “robust” companies are just not investing. Why? Because there is no demand. That is the “price” of the austerity mantra, and there is no evidence that the business, financial and government suits in Davos will address the drama. After all, since the 1990s, the summit has always been about hardcore globalization and its prime spin-off – the absolute marketization of everything in life.
Trump’s big choice at Davos - Larry Summers - Will he reassure his audience that the US believes in strong global institutions? Donald Trump will be attending this year’s World Economic Forum. Inevitably, attention will focus on whether the US president projects a commitment to internationalist values or reiterates his commitment to truculent nationalism in the name of making America “great again”. Attention will also focus on the question of the durability of the current economic and market upswing that has buoyed the spirits of businesses and investors around the world. While President Trump will probably try to take credit for all the economic good news, it is unlikely that he deserves it. He is president of the US, not the whole world. And the economic surprises in the rest of the world have been more favourable than those in America. The scale of upwards revisions of growth forecasts for 2017 and 2018 is higher in Europe, Japan, China and emerging markets broadly than it is for the US. Complacency about the economy can be a self-denying prophecy when it leads to excessive valuations, lending and spending. We are surely closer to such a point than we were a year ago. Sooner or later another downturn will come, perhaps because central banks overreact to what they perceive as inflationary threats, perhaps because elevated financial markets converge to more normal levels, or perhaps because of a geopolitical shock.The world will have much less room than usual to manoeuvre if and when recession comes. From a narrow economic perspective there will be much less room than the usual 500 basis points of space to bring down rates. There will also be much less room for fiscal expansions than there was when countries were less indebted. At the political level, the kind of agreement forged in London in 2009 between the G20 group of most developed countries to keep markets open, support international institutions and co-operate to stimulate their economies seems much more difficult today. And there is the real risk in many countries that recession will reinforce tendencies towards authoritarian nationalist politics.
As U.S. Trumpets ‘America First,’ Rest of the World Is Moving On — President Trump is arriving at the World Economic Forum in Davos, Switzerland, to explain his “America First” approach at a moment when the world is moving ahead with a trade agenda that no longer revolves around the United States.The world marked a turning point in global trade on Tuesday, when 11 countries agreed to join the Trans-Pacific Partnership, announcing they had finalized the pact and expected to sign a deal on March 8 in Chile. It was a remarkable moment for a beleaguered agreement that was conceived and constructed by the United States, then abandoned by Washington when Mr. Trump took office last year.As the world’s largest economy and architect of many international organizations and treaties, the United States remains an indispensable partner. But as the global economy gains strength, Europe and countries including Japan and China are forging ahead with deals that do not include the United States.Thirty-five new bilateral and regional trade pacts are under consideration around the world, according to the World Trade Organization. The United States is party to just one of them, with the European Union, and that negotiation has gone dormant. The United States is also threatening to withdraw from one of its existing multilateral agreements — the North American Free Trade Agreement with Mexico and Canada — if it cannot be renegotiated in the United States’ favor.“Maybe there was some sort of presumption on the part of the president and his team that if the U.S. said stop, this process would come to a halt,” said Phil Levy, a senior fellow at the Chicago Council on Global Affairs and an economist in the George W. Bush administration. “What this shows is that’s not true. The world just moves on without us.”
Trump Arrived in Davos as a Party Wrecker. He Leaves Praised as a Pragmatist. NYT — No one was declaring President Trump a changed man. Privately, executives and global leaders who had gathered in Davos continued to worry that the American president could yet indulge his worst instincts — and his penchant for shock on Twitter — to deliver a geopolitical crisis, open up a new front in trade hostilities or offend a vast group of people.But a rough consensus emerged over Mr. Trump’s two-day visit that his administration had shown itself to be more pragmatic than advertised. Many were inclined to view the president’s most extreme positions as just aggressive bargaining postures.“There’s a very constructive mind-set in the Trump administration to find the best path forward,” said Vas Narasimhan, global chief of drug development for Novartis, who attended a dinner Mr. Trump hosted on Thursday night with leaders of more than a dozen European companies. “I’m optimistic that, with other world leaders, most of these issues can be tackled in a productive way for the global economy and for global businesses.” During the dinner, Mr. Trump made the rounds, stopping to ask executives how they plan to increase investment in the United States, according to attendees.
World's richest 1% grabbed 82% of all wealth created in 2017, Oxfam study finds - More than $8 of every $10 of wealth created last year went to the richest 1%. That's according to a new report from Oxfam International, which estimates that the bottom 50% of the world's population saw no increase in wealth. Oxfam says the trend shows that the global economy is skewed in favor of the rich, rewarding wealth instead of work. "The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system," said Winnie Byanyima, executive director of Oxfam International. The head of the advocacy group argued that the people who "make our clothes, assemble our phones and grow our food" are being exploited in order to enrich corporations and the super wealthy. The study, released ahead of the World Economic Forum in Davos, was produced using data from Credit Suisse's (CS) Global Wealth Databook.The report also highlights the detrimental effects of gender inequality with data that show more men own land, shares and other capital assets than women. Rising inequality has been a major topic at Davos for years. Oxfam said Monday that it is time for the global elite to stop talking about inequality and start changing their ways. "It's hard to find a political or business leader who doesn't say they are worried about inequality. It's even harder to find one who is doing something about it," said Byanyima. "Many are actively making things worse by slashing taxes and scrapping labor rights," she added.
IRS Private Debt-Collection Program is ‘Indefensible’ - Using private debt-collection firms to collect debt from low-income Americans is not only morally reprehensible, but it’s also terrible business, says NEP’s Bill Black in his latest appearance on The Real News Network. You can view here with transcript.
Koch Network Asks Trump Not to Raise Gas Tax for Roads - The influential Koch political network is urging President Donald Trump to reject a proposal made by the U.S. Chamber of Commerce to increase the federal gas tax to help modernize American roads, bridges and other infrastructure.Last week, the chamber called on Congress and the Trump administration to raise federal fuel taxes by 25 cents a gallon, pass initiatives including a new federal loan guarantee program, streamline the permit process and take steps to ensure that there are enough trained workers.The White House hasn’t endorsed a gas-tax increase, but it also hasn’t ruled it out. A leaked draft of the administration’s principles for the president’s promised $1 trillion infrastructure plan became public earlier this week, and more specifics are expected in the coming weeks."Our organizations worked hard over the past year to support your efforts and the efforts of tax-cutters in Congress to provide American families much-needed and long-overdue tax relief," reads a letter being sent to the White House from executives of the Koch-affiliated Freedom Partners Chamber of Commerce and Americans for Prosperity. "But increasing the gas tax would effectively undermine recent tax cuts by clawing back hundreds of billions of dollars — roughly 25 percent of the total benefit from tax reform." The letter isn’t surprising, given the history of opposition to taxes from a political network led by billionaire industrialists Charles and David Koch. Still, it pits two of the most powerful forces in conservative American politics against each other.
Trump’s FCC Could Undermine His Promise on Rural Broadband - Most of the technology Americans have come to rely on and enjoy, from radios and televisions to smartphones and WiFi, use radio frequency spectrum to transmit data. The Federal Communications Commission is currently considering changing rules, adopted two years ago, about how a specific important slice of that spectrum is allocated. In doing so, it has united public interest groups, small rural internet service providers, and massive corporations investing in the so-called “Internet of Things” against incumbent telecommunications companies. The FCC took up the issue of re-allocating after T-Mobile and the wireless industry’s trade association, CTIA, filed a petition with the FCC last June to change the rule regarding the 3.5 GHz Spectrum band, known as the Citizens Broadband Radio Service (CBRS). The FCC adopted new rules governing CBRS in 2015, which were widely hailed as innovative and game-changing at the time. The changes to the CBRS rules, which could thwart attempts to close the rural broadband gap, are particularly noteworthy since President Trump has made rural broadband expansion a priority for his second year in office, signing an executive order on rural broadband just last week. If his FCC moves forward with the rule change, the president risks alienating voters from rural areas who overwhelmingly voted for him in 2016 and who are expecting him to deliver broadband infrastructure improvements. “We’re in a position again where a change in administration has caused a potential reversal in course, which is now very disruptive to an industry that invested in the assumption that they were going to have one set of rules,” Harold Feld, Senior Vice President of the consumer advocate group Public Knowledge, told International Business Times.
Sorry, FCC: Montana is enforcing net neutrality with new executive order - Montana will require Internet service providers to follow net neutrality principles in order to receive state government contracts. Governor Steve Bullock, a Democrat, today signed an executive order imposing that requirement beginning July 1, 2018."There has been a lot of talk around the country about how to respond to the recent decision by Federal Communications Commission to repeal net neutrality rules, which keep the Internet free and open," Bullock said. "It's time to actually do something about it. This is a simple step states can take to preserve and protect net neutrality. We can't wait for folks in Washington, DC, to come to their senses and reinstate these rules." Montana's attempt to enforce net neutrality rules could be challenged in court. But Bullock is attempting to sidestep the FCC's preemption by making net neutrality a condition of state contracts rather than a law applying broadly to any Internet service. "The order directs that, to receive a contract from the State of Montana for providing telecommunications services, the service provider must not block lawful content, throttle, impair, or degrade lawful Internet traffic on the basis of Internet content, engage in paid prioritization, or unreasonably interfere or disadvantage the users' ability to select, access, and use broadband Internet access service," Bullock's announcement said. The executive order attempts to extend the net neutrality protections to residents and private businesses in Montana. To qualify for state contracts, ISPs must not violate net neutrality principles "with respect to any consumer in the State of Montana (including, but not limited to, the State itself)," the order says.
NSA Deletes “Honesty” and “Openness” From Core Values -- The National Security Agency maintains a page on its website that outlines its mission statement. But earlier this month, the agency made a discreet change: It removed “honesty” as its top priority. Since at least May 2016, the surveillance agency had featured honesty as the first of four “core values” listed on NSA.gov, alongside “respect for the law,” “integrity,” and “transparency.” The agency vowed on the site to “be truthful with each other.”On January 12, however, the NSA removed the mission statement page – which can still be viewed through the Internet Archive – and replaced it with a new version. Now, the parts about honesty and the pledge to be truthful have been deleted. The agency’s new top value is “commitment to service,” which it says means “excellence in the pursuit of our critical mission.”Those are not the only striking alterations. In its old core values, the NSA explained that it would strive to be deserving of the “great trust” placed in it by national leaders and American citizens. It said that it would “honor the public’s need for openness.” But those phrases are now gone; all references to “trust,” “honor,” and “openness” have disappeared.The agency previously stated on its website that it embraced transparency and claimed that all of its activities were aimed at “ensuring the safety, security, and liberty of our fellow citizens.” That has also been discarded. The agency still says it is committed to transparency on the updated website, but the transparency is now described as being for the benefit of “those who authorize and oversee NSA’s work on behalf of the American people.” The definition of “integrity” has been edited, too. The agency formerly said its commitment to integrity meant it would “behave honorably and apply good judgment.” The phrase “behave honorably” has now been dropped in favor of “communicating honestly and directly, acting ethically and fairly and carrying out our mission efficiently and effectively.”
DOJ Demands Sanctuary Cities Turn Over Law-Enforcement Documents - The Trump administration's battle with so-called sanctuary cities escalated Wednesday when the Department of Justice, under the guidance of Attorney General Jeff Sessions, asked for records from 20 cities and countries, including the country's three largest, as well as California, Illinois and Oregon. The documents would reveal whether law enforcement agencies in these jurisdictions are illegally withholding information from US immigration authorities in violation of federal law, Reuters reported. Most sanctuary cities have passed local laws meant to stop municipal law enforcement from sharing an arrestee's immigration status with ICE.“If these jurisdictions fail to respond to our request, fail to respond completely or fail to respond in a timely manner, we will exercise our lawful authorities and issue subpoenas for the information,” said a senior Justice Department official, briefing reporters on condition of anonymity.Trump's battle with sanctuary cities has been raging for nearly his entire tenure in office, beginning just days after his inauguration when he signed an executive order to bar federal funding to cities that failed to cooperate with immigration authorities. This order was swiftly blocked by a federal appeals court, like so many of Trump's other immigration-related policies. As a candidate, Trump promised to deport all of the roughly 11 million undocumented immigrants living in the US. New York, Los Angeles and Chicago are each being targeted, as are Denver, San Francisco, the Washington state county that includes Seattle, Louisville, Sacramento, Albany, West Palm Beach and others, according to Reuters.Some cities, including Philadelphia, didn't make the list because of pending litigation. Last March, Attorney General Jeff Sessions made a surprise appearance at then-White House Press Secretary Sean Spicer's press briefing to announce that the DOJ would take steps to require sanctuary cities to comply with federal immigration laws, or see federal public-safety grants withheld. The DO would even try to claw back past DOJ awards, Sessions said. But the agency was quickly blocked by a flurry of lawsuits by Chicago, San Francisco and Philadelphia.
Trump lashes out at mayors boycotting White House event | TheHill: President Trump on Wednesday attacked mayors who boycotted a White House event over his administration’s crackdown on so-called sanctuary cities. "The mayors who choose to boycott this event have put the needs of criminal, illegal immigrants, over law-abiding America," Trump told a group of mayors who attended the event. "So let me tell you, the vast majority of people showed up."The president spoke after the Justice Department threatened to legally compel almost two dozen cities to show that they are cooperating with federal immigration laws. Officials from the Justice Department sent letters to leaders of New York City, San Francisco, Chicago and other major cities demanding they turn over information about citizenship and immigration status of people who have been arrested. Many of the cities are seeking law-enforcement grant money from the administration. The move prompted a swift backlash from city leaders, with many mayors joining a last-minute boycott of the White House meeting. New Orleans Mayor Mitch Landrieu (D), the head of the U.S. Conference of Mayors, announced the boycott shortly before the event, overshadowing the planned discussion on infrastructure and combating the opioid epidemic. New York City’s Bill de Blasio was the highest-profile mayor to join the boycott.
Trump Sets Records for Seating Federal Judges --Jerri-lynn Scofield - One year in, the Trump administration continues to set records for the discipline and efficiency with which it is seating federal judges– who have lifetime tenure, and will continue to serve long after the Donald is a bad memory. As David Lat writes in Above the Law, the administration well understands that the success of advancing its agenda, in the longer term, depends in significant part on the composition of the federal judiciary. Trump cannot replace sitting judges, but he can make sure, going forward, that those who share a similar ideological approach, are ruling on his initiatives and those of his successors, Many of President Trump’s initiatives might get stuck in Congress, struck down by courts, or undone by his successor — but his appointees to the federal bench, appointed for life, will be around for a long, long time (especially given the administration’s focus on youth when selecting nominees). Trump places six out of 19 presidents (starting with William Howard Taft), in their federal judicial appointments, according to an analysis conducted by the Los Angeles Times in Trump appointing judges at rapid pace. That ranking actually understates his success. He’s successfully appointed twelve appellate court judges– the second highest since 1912 when the structure of the court system was reformed– installed Neil Gorsuch on the Supreme Court, and seated ten district court judges. By comparison, his predecessor managed to see thirteen judges confirmed: one Supreme (Sonia Sotomayor), three appellate, and nine district– despite having a larger Democratic Senate majority (60) than the Republicans now enjoy (54). There’s much more damage left for Trump and Senate Republicans to do, with 145 vacancies and 43 nominations still pending. Last week, the Senate Judiciary Committee didn’t let the threat of impening government shutdown slow its work on judicial nominations, and approved 17 nominations, including three appellate, according to the Washington Examiner. Each must be confirmed by the full Senate.
Trump’s 24-year-old drug policy appointee was let go at law firm after he ‘just didn’t show’ -- A former Trump campaign worker appointed at age 23 to a top position in the White House’s drug policy office had been let go from a job at a law firm because he repeatedly missed work, a partner at the firm said. While in college, late in 2014 or early in 2015, Taylor Weyeneth began working as a legal assistant at the New York firm O’Dwyer & Bernstien. He was “discharged” in August 2015, partner Brian O’Dwyer said in an interview. “We were very disappointed in what happened,” O’Dwyer said. He said that he hired Weyeneth in part because both men were involved in the same fraternity, and that the firm invested time training him for what was expected to be a longer relationship. Instead, he said, Weyeneth “just didn’t show.” In a résumé initially submitted to the government, Weyeneth said he worked at the firm until April 2016. When an FBI official called as part of a background check in January 2017, the firm said Weyeneth had left eight months earlier than the résumé indicated, O’Dwyer said. A spokesman at the Office of National Drug Control Policy — where Weyeneth, 24, is deputy chief of staff — said Weyeneth was unavailable for comment. In replies to The Post, the White House did not address questions about Weyeneth’s work at the law firm.
Big Pharma Greets Hundreds Of Ex-Federal Workers At The ‘Revolving Door’ - Alex Azar’s job hop from drugmaker Eli Lilly to the Trump administration reflects ever-deepening ties between the pharmaceutical industry and the federal government. A Kaiser Health News analysis shows that hundreds of people have glided through the “revolving door” that connects the drug industry to Capitol Hill and to the Department of Health and Human Services. Azar was confirmed Wednesday as HHS secretary, joining other former drug industry alumni in top positions. Nearly 340 former congressional staffers now work for pharmaceutical companies or their lobbying firms, according to data analyzed by KHN and provided by Legistorm, a nonpartisan congressional research company. On the flip side, the analysis showed, more than a dozen former drug industry employees now have jobs on Capitol Hill — often on committees that handle health care policy.“Who do they really work for?” said Jock Friedly, Legistorm’s president and founder, who called that quantity “substantial.” “Are they working for the person who is paying their bills at that moment or are they essentially working on behalf of the interests who have funded them in the past and may fund them in the future?”In many cases, former congressional staffers who now work for drug companies return to the Hill to lobby former co-workers or employees. The deep ties raise concerns that pharmaceutical companies could wield undue influence over drug-related legislation or government policy.“You’ll take the call because you’ve got a friendly relationship,” said Diana Zuckerman, president of the nonprofit National Center for Health Research and a former congressional staffer. “You’ll take the call because these people are going to help you in your future career [and] get you a job making three times as much.”
Trump plans gala at Mar-a-Lago tonight, again renting a ballroom from himself - WaPo — President Trump’s posh Mar-a-Lago Club was set to host a high-priced gala on Saturday night intended to celebrate Trump’s first year in office and raise money for his reelection campaign and the Republican National Committee. Tickets started at $100,000 per couple, Bloomberg News reported. The guest of honor, however, would not be there. With the government shut down and Congress in negotiations, Trump postponed his scheduled departure from Washington. But he will still make money. By holding the event at his own club, Trump will be able to collect tens of thousands of dollars in fees for food, ballroom rental and other costs. In effect, he will have transformed his supporters’ political donations into revenue for his business. Again.
Trump asked the Guggenheim for a Van Gogh to hang in the White House — here’s what they offered instead - President Donald Trump and First Lady Melania Trump asked the Guggenheim Museum to loan them a Van Gogh painting for the White House residence, said the Washington Post on Thursday. However, the museum offered the first couple a consolation prize: A solid gold toilet called “America.” The White House reportedly asked the famous art museum if the Trumps could “borrow” Vincent Van Gogh’s painting “Landscape with Snow.”In an email, museum curator Nancy Spector said the Guggenheim could not accommodate the White House’s request.“The curator’s alternative: an 18-karat, fully functioning, solid gold toilet – an interactive work entitled ‘America’ that critics have described as pointed satire aimed at the excess of wealth in this country,” said the Post.“America” was installed for public use at the Guggenheim for a year, but that exhibit has closed and the toilet is now available, Spector said, and artist Maurizio Cattelan said he would be more than willing to offer the sculpture to the Trumps as a “long-term loan.” “It is, of course, extremely valuable and somewhat fragile, but we would provide all the instructions for its installation and care,” she wrote.
Sanjay Gupta: By all standards, Trump has heart disease | TheHill: CNN's chief medical correspondent, Dr. Sanjay Gupta, said Wednesday that he believes tests reveal that President Trump has heart disease. Gupta said dating back to 2009, Trump started to have "these tests that are actually looking for the presence of calcium in the blood vessels that lead to the heart." "Steadily, up until just this past week when he had it performed again, those numbers have gone up," he said. "When they get to a certain range ... that means he has heart disease." Gupta then talked about his interaction Tuesday with Trump's doctor, Navy Rear Adm. Dr. Ronny Jackson."It was interesting when I spoke to Dr. Jackson. At first he said he passed all the tests with flying colors," Gupta said. "When I asked him specifically about that test, he did then concede that, in fact, the president does have heart disease." "They're going to be increasing the medications, including the cholesterol-lowering medications to try and combat that, but there's no question, by all standards, by all metrics, anyway a doctor or cardiologist will look at it, the president does have heart disease." Gupta said it's controllable with medications, adding that Trump needs to have his diet under control. "But he does have heart disease," he said.
Are the Supremes About to Give Trump a Second Term? - The US Supreme Court may be about to make a second Trump term inevitable.The nine “Justices” have just heard oral arguments in an Ohio voter registration case. If their decision goes with Secretary of State Jon Husted, it would mean Republicans like him throughout the United States will be able to scrub from the voter rolls millions of citizens merely because they are suspected of wishing to vote Democrat.In Ohio alone, millions of Ohio voters have tried to vote on Election Day over the past four presidential elections, only to find their names were erased from the pollbooks.What’s technically at stake is whether the federal government has the right to demand fairness in purging voter registration rolls. Or will the secretaries of the various states be free to purge whomever they want.In other words, it’s supposedly a “state’s rights” case.But this is a country where an Attorney-General who fought for state’s rights to avoid accepting racial integration is now overriding the explicit choice of some thirty states to enjoy legal marijuana.In Ohio, secretary Husted has become infamous for his extremely aggressive partisan purges. The state has roughly 5.5 million voters. GOP secretaries of state have become experts at the selective purging game.In 2004, then-Secretary of State J. Kenneth Blackwell, stripped some 309,000 voters from the rolls and nearly all came from heavily Democratic cities – Cleveland, Cincinnati and Toledo. In Cleveland, nearly a quarter, 24.96% of all voters were removed from the voting rolls. Blackwell simultaneously served as co-chair for the state campaign to re-elect Bush/Cheney. Despite the obvious conflict of interest, Blackwell was officially in charge of running that election. The election was decided by less than 119,000 votes, giving George W. Bush a victory over John Kerry, who never said a word.
The 25th Amendment is Not a Get-Out-Of-Trump-Free Card - The media chatterati seems to be of one mind: Donald Trump is mentally incompetent and may have to be removed from office before he blows us all to hell. They say so on Vox, the New York Review of Books, CNN, The Intercept, CNBC, The Nation, Bill Moyers, Salon, and the New York Times. A new book, The Dangerous Case of Donald Trump: 27 Psychiatrists and Mental Health Experts Assess a President, concludes that “Trump’s mental state presents a clear and present danger to our nation and individual well-being.”The solution, to their minds, lies in the 25th Amendment to the Constitution, which creates a mechanism outside of impeachment to remove an “incapacitated” president. Trump’s mental state, some believe, qualifies him. Is there a case?Dr. Bandy Lee, one of the editors of The Dangerous Case of Donald Trump, says yes. Her evidence includes tweets that Trump sent threatening Kim Jong-un. She really has no other ammunition: no doctor who says Trump is insane, including Lee, has examined him. No doctor that has examined him says he is insane. All that’s presented are third-party anonymous accusations of incompetence shot through with gossip. A book written by a Hollywood trash reporter is otherwise held up as critical evidence of the inner workings of the president’s mind. So is there a case without the tweets? Not really. Lee adds that while Trump has not committed violent acts against himself or others, his “verbal aggressiveness, history of boasting about sexual assault, history of inciting violence at his rallies, and history of endorsing violence in his key public speeches are the best predictors of future violence,” and thus concludes he will destroy the world. Lee also weakly points to Trump “being drawn to violent videos.” Oh my.
Trump Groups Raised Millions, Then Paid It Out to Loyalists and a Trump Hotel — A pair of groups supporting President Trump say they raised $30 million last year, then spent tens of thousands of those dollars at the Trump International Hotel here and on payments to a few Trump loyalists like the former campaign manager Corey Lewandowski and the former Milwaukee County sheriff David A. Clarke Jr., according to new campaign finance reports and news reports.Of the millions raised, at least $1 million came from a coal company that has gained extraordinary access to the Trump administration to push for pro-coal policy changes. The campaign finance reports shed light on a network of groups that were formed to support Mr. Trump, but have spent less than other groups bolstering his agenda, while steering money to the president’s businesses and his most ardent surrogates. One of the groups — a “super PAC” called America First Action — spent nearly $33,000 at the Trump International Hotel, primarily on events for donors, and paid tens of thousands of dollars each to Mr. Lewandowski; Brad Parscale, a digital strategist for Mr. Trump’s campaign; and Katrina Pierson, a campaign spokeswoman. Those figures were revealed in a report filed on Wednesday with the Federal Election Commission, which shows that the group raised $4 million last year. An affiliated nonprofit group, America First Policies, raised $26 million last year, according to a report by Axios. That group is registered under a section of the tax code — 501(c)(4) — that allows it to shield most information about its finances, including the identity of its donors. The America First groups have been viewed as something of an enigma in campaign finance circles. While many of the Republican Party’s traditional elite donors have publicly kept their distance from the groups, the organizations have the blessing of the administration and have projected confidence in their fund-raising. But Republican operatives have grumbled that the amount the groups say they have raised have dwarfed the amount they have spent to support Mr. Trump’s political and policy goals during his first year in office.
‘Suspicious transactions’: Deutsche Bank flags Kushner deals and offers records to Mueller probe -- A German bank reportedly has evidence of “suspicious transactions” related to Jared Kushner’s family accounts and is willing to hand the information over to Russia probe special counsel Robert Mueller. The board chairman of the banking giant Deutsche Bank, Paul Achleitner, called for an internal investigation and found troubling results, German business magazine Manager Magazin reported in its print edition released on Friday.Deutsche Bank—a major lender to President Donald Trump and his son-in-law and senior White House advisor Kushner, according to Mother Jones—provided the results to the Federal Financial Supervisory Authority, which is Germany’s bank regulatory agency and referred to as BaFin.“Achleitner’s internal detectives were embarrassed to deliver their interim report regarding real estate tycoon Kushner to the financial regulator BaFin,” states the Manager Magazin story translated from German to English. “Their finding: There are indications that Donald Trump’s son-in-law or persons or companies close to him could have channeled suspicious monies through Deutsche Bank as part of their business dealings.”No details on the suspicious money transfer were reported. The bank is worried about what the results will mean for its image, according to Manager Magazin. “What BaFin will do about [the bank’s findings] is not the bank’s greatest concern,” the German magazine reported. “Rather, it’s the noise that U.S. special counsel Robert Mueller … will make in his pursuit of Trump. For he will likely obtain this information—a giant risk to [the bank’s] reputation.”
Judge rejects secrecy in suit over Kushner-owned apartments - A federal judge has rejected a bid by companies connected to President Donald Trump's son-in-law and senior adviser Jared Kushner to keep secret details in a pending lawsuit claiming that Maryland apartment complexes owned or managed by Kushner's companies collected illegal fees from tenants.Two Kushner-linked firms caught up in the suit wanted to file details on their ownership structure with the court under seal, but in a ruling Friday U.S. District Court Judge James Bredar sided with five news organizations who urged that the businesses be required to provide those details on the public record."The Defendants are no doubt correct that the presence of the Kushner (and therefore Trump) families in this case has raised its profile and attracted significant, though perhaps not 'unprecedented,' media attention," Bredar wrote. "But increased public interest in a case does not, by itself, overcome the presumption of access. In fact, it would logically strengthen it, particularly when the interest is due to the presence of important public figures in the litigation." Bredar, an appointee of President Barack Obama, ordered the limited liability companies in question to file details of their ownership and members on the public record within two weeks.
China's Cultivation of Jared Kushner As an Asset Shows He's 'Ideal Target' for Foreign Agents -- Jared Kushner has been cultivated as an asset by the Chinese government thanks to his total lack of political experience and outsized reach within the federal government, said CNN on Saturday. Anchor Ana Cabrera welcomed Adam Entous, one of the authors of a bombshell New Yorker article that said Kushner has violated protocols by meeting with China’s ambassador alone and that President Donald Trump’s son-in-law still does not have a permanent security clearance. Entous explained that the relationship between China’s ambassador and Kushner was brokered by former Sec. of State Henry Kissinger, who introduced the two men during the 2016 presidential campaign.The FBI met with Kushner during the transition to warn him about potential security risks, but Entous said Kushner’s family is heavily invested in Chinese holdings, which gives the Chinese government a possible lever of influence.CNN security analyst Samantha Vinograd said that Kushner’s lack of experience and unprecedented access to U.S. state secrets make him an “ideal foreign intelligence target.”“The Russians and the Chinese are the top of the list from a counterintelligence perspective,” said Vinograd. “Jared Kushner has the access, the influence and the inexperience that foreign intelligence services often try to manipulate.”Those agencies find people who can get them information they want and affect policy decisions. Furthermore, she said, they try to find someone with “some kind of secret that can be manipulated” like a drug addiction or “undisclosed foreign contacts or undisclosed or misreported financial transactions.” Watch the video, embedded below:
More texts turned over from FBI agent taken off Mueller team (AP) — The Justice Department has turned over to Congress additional text messages involving an FBI agent who was removed from special counsel Robert Mueller's investigative team following the discovery of derogatory comments about President Donald Trump. But the department also said in a letter to lawmakers that its record of messages sent to and from the agent, Peter Strzok, was incomplete because the FBI, for technical reasons, had been unable to preserve and retrieve about five months' worth of communications. New text messages highlighted in a letter to FBI Director Christopher Wray by Sen. Ron Johnson, the Republican chairman of the Senate's Homeland Security and Governmental Affairs Committee, are from the spring and summer of 2016 and involve discussion of the investigation into Hillary Clinton's use of a private email server. They reference Attorney General Loretta Lynch's decision to accept the FBI's conclusion in that case and a draft statement that former FBI Director James Comey had prepared in anticipation of closing out the Clinton investigation without criminal charges. The FBI declined to comment Sunday. Strzok, a veteran counterintelligence agent who also worked the Clinton email case, was reassigned last summer from the team investigating ties between Russia and Trump's Republican presidential campaign after Mueller learned he had exchanged politically charged text messages — many anti-Trump in nature — with an FBI lawyer also detailed to the group. The lawyer, Lisa Page, left Mueller's team before the text messages were discovered. The Justice Department last month produced for reporters and Congress hundreds of text messages that the two had traded before becoming part of the Mueller investigation. Many focused on their observations of the 2016 election and included discussions in often colorful language of their personal feelings about Trump, Clinton and other public figures. Some Republican lawmakers have contended the communication reveals the FBI and the Mueller team to be politically tainted and biased against Trump — assertions Wray has flatly rejected.
Republicans Have Four Easy Ways to #ReleaseTheMemo — and the Evidence for It. Not Doing So Will Prove Them to Be Shameless Frauds. The Intercept. Glenn Greenwald. -- We regard as inherently serious strident warnings from public officials alleging that the FBI and Department of Justice have abused their spying power for political purposes. Social media last night and today have been flooded with inflammatory and quite dramatic claims now being made by congressional Republicans about a four-page memo alleging abuses of Foreign Intelligence Surveillance Act spying processes during the 2016 election. This memo, which remains secret, was reportedly written under the direction of the chair of the House Permanent Select Committee on Intelligence, GOP Rep. Devin Nunes, and has been read by dozens of members of Congress after the committee voted to make the memo available to all members of the House of Representatives to examine in a room specially designated for reviewing classified material. The rhetoric issuing from GOP members who read the memo is notably extreme. North Carolina Republican Rep. Mark Meadows, chair of the House Freedom Caucus, called the memo “troubling” and “shocking” and said, “Part of me wishes that I didn’t read it because I don’t want to believe that those kinds of things could be happening in this country that I call home and love so much.” GOP Rep. Scott Perry of Pennsylvania stated: “You think about, ‘Is this happening in America or is this the KGB?’ That’s how alarming it is.” This has led to a ferocious outcry on the right to “release the memo” – and presumably thereby prove that the Obama administration conducted unlawful surveillance on the Trump campaign and transition. On Thursday night, Fox News host and stalwart Trump ally Sean Hannity claimed that the memo described “the systematic abuse of power, the weaponizing of those powerful tools of intelligence and the shredding of our Fourth Amendment constitutional rights.” Given the significance of this issue, it is absolutely true that the memo should be declassified and released to the public — and not just the memo itself. The House Intelligence Committee generally and Nunes specifically have a history of making unreliable and untrue claims. Republicans should provide American citizens not merely with the memo they claim reveals pervasive criminality and abuse of power, but also with all of the evidence underlying its conclusions.
Devin Nunes Refuses Senators' Request To Examine Bombshell FISA Memo - Virtually every member of the House has seen the mysterious four-page classified memo drafted by Intel Committee Chairman Devin Nunes.But in what CNN describes as "a sign of how closely House Republicans are guarding" the infamous FISA memo - which purports to expose DOJ wrongdoing involving surveillance during the early stages in the Russia investigation, before the transition when Barack Obama was still president - Nunes has steadfastly refused to provide copies of the document to his colleagues in the Senate. Indeed, CNN reports that the Senate Intelligence Committee Chairman Richard Burr and his staff have not been given access to the memo. Burr has famously been much softer in terms of his rhetoric regarding the Mueller probe than his counterpart in the House.Sen. James Lankford, an Oklahoma Republican who sits on the Senate committee, confirmed to CNN that the panel had not been given access to the memo.Here's CNN:According to three sources familiar with the matter, Burr's staff requested a copy of the memo and has been denied, just as the FBI and Justice Department have also been denied reviewing a copy of the document. The memo is based on highly classified intelligence that only a select group of House and Senate lawmakers have accessed.Indeed, the memo was drafted by Nunes, R-California, and his staff, as the chairman weighs whether to hold a committee vote as early as next week calling for the memo's public release.The four-page Nunes memo alleges that the FBI withheld information from the FISA court judge who approved warrants on Donald Trump's team, including former campaign foreign policy adviser Carter Page, CNN has reported.Democrats on the House Intelligence Commitee are now pushing for the release of their own memo, calling on the panel to allow the full chamber to review their document next week, saying the Nunes memo is "profoundly misleading" and an attempt to discredit special counsel Robert Mueller's investigation. But many House Republicans say the American public would be alarmed by the conclusions in the Nunes memo alleging FBI misconduct.
Comey, Rosenstein, McCabe All Named In FISA Memo, First Leak Reveals -- A bombshell four-page "FISA memo" alleging egregious surveillance abuse by the FBI, DOJ and Obama administration, specifically names FBI Deputy Director Andrew McCabe, former FBI Director James Comey and Deputy Attorney General Rod Rosenstein, according to the Daily Beast. The GOP-authored memo made waves last week after it was made available to the full House of Representatives for viewing. With over 60 GOP lawmakers calling for its release, Capitol Hill sources on both sides of the aisle tell The Daily Beast that it's only a matter of time before the general public is allowed to view the document - which is likely to stoke already-inflamed tensions between GOP lawmakers and the individuals named in the leak. Earlier this morning, I examined the classified, four-page memo from @HouseIntelComm regarding the FBI, DOJ, and the so-called #RussianCollusion. To put it simply, “WOW.” I joined the call to #ReleaseTheMemo. Americans deserve truth and transparency. pic.twitter.com/r2RJnLNaUL— Rep. Jody Hice (@CongressmanHice) January 19, 2018The facts contained in the Republican majority-authored report are said to be "jaw-dropping and demand full transparency," according to Rep. Matt Gaetz (R-FL), while the top ranking Democrat on the House Intel Committee, Adam Schiff (D-CA) dismissed the memo as "profoundly misleading" talking points drafted by Republican staffers. Several other GOP Congressmembers have weighed in. "I have read the memo," tweeted Rep. Steve King (R-IA), adding "The sickening reality has set in. I no longer hold out hope there is an innocent explanation for the information the public has seen. I have long said it is worse than Watergate. It was #neverTrump & #alwaysHillary. #releasethememo." Along with the four-page memo, Congressional investigators learned from a new batch of text messages between anti-Trump FBI investigators that several individuals within the Department of Justice and the FBI may have come together in the "immediate aftermath" of the 2016 election to undermine President Trump, according to Rep. John Ratcliffe (R-TX) who has reviewed the texts.This is particularly interesting since the memo allegedly names Deputy Attorney General Rod Rosenstein - who created Robert Mueller's special counsel after former FBI Director James Comey was fired.
As special counsel zeros in on Trump, political warfare in Washington heats up --The political conflict within the American ruling class and state over alleged Russian meddling in US politics and collusion by the Trump administration has entered a new and more explosive stage.Reports emerged this week that Special Counsel Robert Mueller, longtime head of the FBI, interviewed Attorney General Jeff Sessions and former FBI Director James Comey, and is planning to question former White House adviser Stephen Bannon and Trump himself. This triggered a frenzied counterattack from the president, Republican lawmakers and pro-Trump right-wing media outlets.Both contending factions are reactionary. Trump embodies the fascistic and militarist outlook of the US financial oligarchy. The Democratic Party, no less an instrument of Wall Street, is spearheading the campaign by sections of the military/intelligence establishment to force Trump to take a more confrontational line against Russia, or possibly remove him from office.The right-wing character of the Democratic opposition to Trump is underscored by three facts. First, the escalation of the fabricated anti-Russia campaign coincides with the Democrats’ capitulation to Trump’s assault on immigrants, signaled by their cave-in on DACA recipients and Trump’s border wall during the stage-managed three-day government shutdown.Second, the Democrats are rushing to defend the FBI, the ruling class’ premier police agency, against attacks by Republican opponents of Mueller’s investigation.Third, they are using the intensification of Mueller’s anti-Russia investigation to escalate the campaign for Internet censorship. They are charging that Russia is behind a pro-Trump social media campaign to derail the Mueller probe, and demanding that Facebook and Twitter step up their clampdown on oppositional information and opinion.Mueller is homing in on Trump’s inner circle in what has all the earmarks of an obstruction of justice case—a key charge in the impeachment drives against Richard Nixon and Bill Clinton. The special counsel’s team of FBI investigators questioned Sessions for several hours last week, making him the first Trump cabinet member to be hauled before his office.
Trump "Looking Forward" To Speaking With Mueller Under Oath, Will Say "No Collusion" - Ahead of the imminent showdown between Special Counsel Robert Mueller and President Trump which according to media reports may take place in the near future, Trump spoke to reporters and said that he is ready to speak to Mueller under oath, will say that there is no collusion, and that while no date has been set yet, his lawyers have advised him that the questioning may take place in 2-3 weeks: "I'm looking forward to it," Trump told reporters at the White House when asked whether he would submit to questioning by Mueller's team. "I would do it under oath," the president added. Trump said he expects to speak with Mueller in two to three weeks, but cautioned the specifics are being worked out by his lawyers. Separately, Trump also announced a pathway to citizenship for Dreamers over 10-12 years as part of a deal: he will be asking for $25 billion for wall and $5 billion for other border security and chain migration limits to nuclear family. The president also said that if no deal is reached, he "might" extend the DACA deadline. "I certainly have the right to do that if I want." In any case, this is the first time Trump has signaled officially that he will be interviewed by Mueller's team. The president also said he did not remember asking deputy FBI director Andrew McCabe who he voted for in the 2016 election. "I don't think so," Trump said. "I don't remember asking that question." Whether he did ask the question or not, Trump called it "unimportant." The interaction, which reportedly took place last year, may be of interest to Mueller, who is looking into whether the president sought to block the federal probe into Russia's election meddling, although in recent months virtually Mueller's probe has shifted radically, and it is no longer about Russian collusion but rather obstruction. Then again considering the deep state's own reported attempts at interference with the presidential election process in the form of dossiers (courtesy of Russians), lost text messages, "secret societies" and documented anti-Trump bias by members of the investigative team, not to mention the FBI's deplorable track record of data retention when using Samsung devices, Trump may want to do a backup recording of the interview, just in case.
Mueller Obstruction Probe Said To Be Wrapping Up Much Faster Than Anticipated - President Donald Trump said last night that he's "looking forward" to testifying under oath some time during the next two or three weeks. Well, according to Bloomberg he may just get his wish even as Republicans have so far failed in their push to convince the Justice Department to appoint a second special prosecutor to investigate the FBI.The fact that Mueller is pushing to interview Trump - and, as reports from the New York Times and NBC have revealed this week, has recently interviewed several of Trump's most-senior staffers - suggests the special counsel's investigation into possible collusion between Trump and Russia - an investigation that has since pivoted to focus on whether Trump committed obstruction of justice, as well as the financial improprieties of his associates - appears to be inching toward its conclusion much faster than anticipated, Bloomberg reports. “Clearly the names that are coming out now indicate that we’re into the obstruction of justice side of it,” said Stanley Twardy, a former U.S. attorney for Connecticut who’s now a white-collar criminal defense lawyer at the law firm Day Pitney LLP. “He’s now getting people who are closest to the president, closest to the issues.”Indeed, Jeff Sessions, Dan Coates, Mike Pompeo and Don McGahn have all testified - and Steven Bannon is expected to meet with Mueller's team later this month. According to legal experts, this suggests that the investigation is nearing its conclusion.Michael Weinstein, a former Justice Department trial attorney who’s now a white-collar defense lawyer with Cole Schotz P.C. told Bloomberg that "Traditionally when you are interviewing people at that level you are doing so at the end of the investigation," Weinstein said. “They have already established what they think are the facts and are now looking to see if these individuals are going to provide consistency with those facts or possibly take a different view of what the special counsel has.”
Trump’s attempt to fire Robert Mueller, explained - President Trump ordered the firing of Robert Mueller, the special counsel investigating the Russia scandal, last June. But top White House lawyer Don McGahn said he’d quit rather than carry it out — and Trump backed down, according to a blockbuster story by the New York Times’s Michael Schmidt and Maggie Haberman.Though it was known at the time that the president was thinking of firing Mueller, this is the first report that Trump actually gave the order — and that, remarkably, one of his own staffers defied him and prevented his wishes from being carried out.The president denied the story Friday, calling it “fake news” and “typical New York Times.” But other outlets, like the Washington Post and CNN, confirmed it.The news provides us yet another example of President Trump’s attempts to interfere with ongoing investigations — a pattern of behavior that has put him under scrutiny for potential obstruction of justice.But the firing order also represents the road not taken for the Trump presidency. If McGahn had carried it out — or if Trump had refused to back down until he found someone who would — an enormous political controversy reminiscent of President Richard Nixon’s “Saturday Night Massacre” likely would have ensued, and could well have swallowed up the rest of Trump’s first year in office.That’s what McGahn apparently feared: Schmidt and Haberman write that he told other top White House officials that the firing would “have a catastrophic effect on Mr. Trump’s presidency.” And eventually, his warnings prevailed.About seven months have passed since then, during which Mueller and his team have remained in place. They’ve indicted two Trump associates, Paul Manafort and Rick Gates, for alleged crimes unrelated to Trump or the campaign. And they’ve turned two others, George Papadopoulos and Michael Flynn, into cooperating witnesses via plea deals. Now Mueller’s team is in the midst of negotiations for a sit-down interview with Trump — an interview they reportedly intend to focus on the topic of whether the president obstructed justice in the matter of the Russia probe. Trump will be at risk of perjuring himself should he lie.
Senator says FBI lost crucial texts tied to Clinton probe (Reuters) - The Federal Bureau of Investigation has lost about five months worth of text messages between two staffers who worked on probes into former Secretary of State Hillary Clinton’s emails and possible collusion between Russia and President Donald Trump’s 2016 presidential campaign, according to a Republican lawmaker. Wisconsin Senator Ron Johnson, who chairs the Senate Homeland Security Committee, revealed in a Jan. 20 letter that the FBI’s technical system failed to preserve texts that were exchanged between Lisa Page, a lawyer, and Peter Strzok, an agent, between mid-December 2016 through mid-May of 2017. A spokesman for the FBI and a spokeswoman for the Justice Department declined to comment. Congressional Republicans have been focusing on Strzok and Page in recent weeks after learning the two had exchanged anti-Trump text messages on their work-issued cell phones. Republicans have said the texts, which referred to Trump as an “idiot” and a “loathsome human,” raised concerns the FBI is biased against Trump and may have given Clinton favorable treatment after deciding not to recommend criminal charges in connection with the probe into her use of a private email system while she was secretary of state. Strzok and Page were involved in that investigation and also were briefly assigned to work with Special Counsel Robert Mueller on the Russia investigation. After Mueller learned about the texts, Strzok was re-assigned to a different post. Page’s 45-day detail on Mueller’s team ended in July. In his letter, Johnson said he learned of the software problem from the FBI on Jan. 19, after it gave 384 texts to the committee, one of several in Congress that recently launched inquiries into how the FBI handled the Clinton investigation. “The loss of records from this period is concerning because it is apparent from other records that Mr. Strzok and Ms. Page communicated frequently about the investigation,” Johnson wrote.
GOP fuels ‘secret society’ talk with FBI text messages -- Republicans are floating the idea that FBI and Department of Justice (DOJ) officials formed a “secret society” that held meetings in which they plotted to undermine President Trump and his administration.Two FBI agents accused by Republicans of harboring anti-Trump bias exchanged text messages, one of which mentioned a “secret society” — possibly as a private joke.The message, first described by House Oversight and Government Reform Committee Chairman Trey Gowdy (R-S.C.) and Rep. John Ratcliffe (R-Texas), lacks context and the lawmakers have admitted that they don't know for sure what it means. But the term has caught fire in conservative media and Republicans have promoted the text as a potentially explosive development, implying it confirms suspicions that the FBI gave Hillary Clinton an election-year pass but remain hell-bent on bringing charges against Trump. The single message, sent the day after Trump was elected, was from senior FBI lawyer Lisa Page to Peter Strzok, the top counterintelligence officer at the FBI and a key figure in the bureau’s past investigations into Trump and Clinton.
FBI Mulled Special Counsel For Hillary Email Probe But Feared Her Wrath, New Texts Reveal -- Newly released text messages between FBI officials Peter Strzok and Lisa Page reveal that the agency's top brass was considering appointing former U.S. Attorney Patrick Fitzgerald as a special counsel in the Hillary Clinton email investigation. The idea is pitched in a March, 2016 exchange between Strzok and Page - relatively early on in their investigation into Hillary Clinton's mishandling of classified information. Of note, Attorney General Loretta Lynch or one of her deputies would have had to make the ultimate decision to appoint a special prosecutor to look into the "matter." "Thought of the perfect person [FBI Director James Comey] can bounce this off of?" Strzok wrote to Page in a March 18, 2016 text. "Pat....You got to give me credit if we go with him....And delay briefing him on until I can get back and do it, Late next week or later." "We talked about him last night, not for this, but how great he is," Page responded. "I could work with him again....And damn we'd get sh*t DONE," Strzok wrote. Strzok noted that Fitzgerald was brought in by Comey as a special counsel in the investigation into who leaked the identity of CIA agent Valerie Plame.
Is Washington’s dysfunction a systemic risk? — When the federal government closed its doors Friday evening, the financial world for the most part responded with indifference, but Washington’s political dysfunction may pose a bigger long-term risk to financial stability than the industry appreciates. The federal government shut down Friday night after the Senate voted down a short-term funding bill that would have left the government open through February, but the upper chamber voted to reopen the government on Monday afternoon. The shutdown also comes as the government is approaching the limit of its borrowing capacity — known as the debt ceiling — sometime in February or early March. Whatever the outcome of the current budget and debt ceiling fight, analysts say there is a risk in these continual battles becoming so common that banks and other institutions stop preparing for the effects of political on the financial system.. “The markets tend to price it in. But until we get really close, I think there’s a bit of a blasé attitude — of, ‘OK, here we go again.’ There’s definitely a risk in being complacent, and the current political environment is more unpredictable than what we’ve had before.” Different kinds of government dysfunction affect different markets in different ways, but the main two threats are government shutdowns and threatened defaults on U.S. sovereign debt. Aaron Klein, policy director for the Center on Regulation and Markets at the Brookings Institution, said that by far the greater of the two threats is a possible breach of the debt ceiling.The Trump administration — like the Obama administration before it — is looking for a more permanent way to avoid the anxiety that a looming credit default causes in debt markets. Treasury Secretary Steven Mnuchin said earlier this month that he and the president were working on a way to change the budget process that raises or suspends the debt ceiling at the time additional spending is authorized. “It’s somewhat of a ridiculous process, the way we do this,” Mnuchin said. “I won’t go so far as to say that we shouldn’t have a debt limit, but I do believe that when money is authorized to be spent, there is some mechanism [whereby] the debt limit is also raised to pay for it.” Chris Whalen, chairman of Whalen Global Advisors LLC, said one of the reasons the Treasuries market is relatively unfazed by political dysfunction — or the threat of credit default that may result from it — is that demand for U.S. sovereign debt remains high. But if Treasury auctions are less competitive and bid-ask spreads widen, then markets might become more volatile, as was the case in the 1970s.
Republicans and Democrats co-sponsor bill to dismantle Dodd-Frank bank regulations - Emboldened by their success in ramming through the $1.5 trillion tax overhaul late last year, Republican lawmakers are now working to further undermine the Obama-era Dodd-Frank Act passed in 2010. Whereas the GOP tax plan was met with passive resistance and superficial theatrics by Democrats, they are now working in tandem with Republicans in co-sponsoring legislation containing the most comprehensive financial deregulations since the 2007-08 collapse. The latest bill represents yet another brazen attempt to cut regulations set in place in the wake of the now decade-old financial meltdown. It is currently underway in the Senate, with Kentucky Republican Senator Mitch McConnell expected to bring it to the floor within the next month.The bill was brokered primarily by Republican banking chair committee head Senator Mike Crapo of Idaho, along with Democrats including senators Heidi Heitkamp of North Dakota, Jon Tester of Montana, Joe Donnelly of Indiana and Mark Warner of Virginia. Eleven Democratic Senators are co-sponsoring the bill, more or less rendering its passage an inevitability. The bill has garnered enough support from the Democratic Party to beat any attempt at a filibuster. It is clear that Congress does not intend to stop at passage of the bill currently underway. Rather, it will seek the full repeal of Dodd-Frank. This development has occurred at the behest of the big banks, eager to reap the benefits of Trump’s pro-corporate stance. In a letter to shareholders in April of last year, JPMorgan Chase chief executive Jamie Dimon explained that “poorly conceived and uncoordinated regulations have damaged our economy, inhibiting growth and jobs.”
Will Dodd-Frank reform get entangled in government shutdown politics? — In the current political environment, the idea that a dozen senators from the minority would join Republicans to support a limited bill to ease certain Dodd-Frank Act restrictions seems unusual. The brief government shutdown, setting up another budget battle in weeks, combined with the immigration debate and a variety of inter- and intraparty squabbles, does not bode well for bipartisan progress on substantive legislation. Yet analysts still believe the coalition of GOP supporters and moderate Democrats backing Senate Banking Committee Chairman Mike Crapo's regulatory relief bill will hold. Some, however, say the charged political atmosphere may hold up passage of the legislation. Progressives, meanwhile, are heaping pressure on Democrats to drop their support. “We still believe it will pass Congress. But acrimony in other areas isn't helpful, and we're watching that closely," said Ian Katz, a director at Capital Alpha Partners. "Passage gets more difficult if the bill hangs around without any action while the parties fight about other issues.”
Four takeaways from grilling of FDIC, Fed nominees on Hill - — Three Trump administration nominees chosen to fill bank regulatory posts faced a thorough grilling on Capitol Hill Tuesday, though Democrats reserved much of their fire for the president’s nominee to the Federal Reserve Board. Testifying before the Senate Banking Committee were Jelena McWilliams, who was tapped to chair the Federal Deposit Insurance Corp.; Marvin Goodfriend, chosen to fill a Fed board term expiring in 2030; and Thomas Workman, nominated to a voting seat on the Financial Stability Oversight Council reserved for some with insurance expertise. McWilliams, a former Republican staffer for the Senate committee as well as a former Fed attorney, is currently the chief legal officer at Fifth Third Bancorp. Goodfriend, who has spent much of his career as an economist at the Federal Reserve Bank of Richmond, is an economics professor at Carnegie Mellon University. Workman was until recently the president of the Life Insurance Council of New York, a trade group for the life insurance industry. Here are some key takeaways from the hearing:
- McWilliams is warmer to ILCs than previous FDIC officials. McWilliams — the only of the three nominees who would actually be tasked with running a federal agency — seemed to endorse industrial loan companies, or ILCs, outlining a relatively favorable opinion of the controversial charter. Her comments suggested she could direct the FDIC to move more quickly on approving ILC applications than the agency has done under current Chairman Martin Gruenberg and his predecessor, Sheila Bair.
- Cybersecurity, capital rules among McWilliams’ priorities. McWilliams also cited cybersecurity concerns as among her top priorities if confirmed to run the FDIC, promising to follow through with an October advance notice of proposed rulemaking on cybersecurity standards put out with the Office of the Comptroller of the Currency and the Fed. “I can tell you for a fact, now that I work for a regulated entity, that this is one of the foremost issues on the mind of the governing body at the bank as well as the board of directors,” McWilliams said, responding to a question from Sen. Jack Reed, D-R.I. “I believe that the regulators’ job is to provide a blueprint of how banks are supposed to handle cybersecurity breaches.” She also said she has questions about certain regulatory requirements and how they affect community banks, including the Volcker Rule and capital standards outlined by the Basel III accords.
- Goodfriend faces opposition from Senate Democrats. Democrats on the committee saved much of their most pointed questions for Goodfriend, taking exception to his past skepticism of the accommodative policies the Fed undertook in the wake of the crisis and fears that those policies would lead to rampant inflation. For example, Goodfriend's apparent concerns about moral hazard, and the need for consumers to decide for themselves, led Sen. Sherrod Brown, D-Ohio, the committee's ranking member, to ask whether the nominee thinks Congress should rescind FDIC insurance. “Does that mean that the agency [McWilliams has] been nominated to is a bad idea" and "shouldn’t exist?” Brown said.
- Workman's views are consistent with a Trump-appointed FSOC. Workman, whose sole task would be to sit as a voting member of the FSOC for its deliberations, faced relatively light questioning during the hearing, with much of the questions having been directed toward Goodfriend and McWilliams. But he did lay out his views about nonbank systemically important financial institution designation, which appear to be wholly in line with the Treasury Department’s views as described in its recent report on the process. He also said he believes that an activities-based approach to SIFI designation would be more appropriate than a company-by-company approach taken by the council in the past.
More than 10 percent of $3.7 billion raised in ICOs has been stolen: Ernst & Young (Reuters) - More than 10 percent of funds raised through “initial coin offerings” are lost or stolen in hacker attacks, according to new research by Ernst & Young that delves into the risks of investing in cryptocurrency projects online. The professional services firm analyzed more than 372 ICOs, in which new digital currencies are distributed to buyers, and found that roughly $400 million of the total $3.7 billion funds raised to date had been stolen, according to research published on Monday. Phishing was the most widely used hacking technique for ICOs, with hackers stealing up to $1.5 million in ICO proceeds per month, according to the report. The research also noted that the volume of ICOs has been slowing since late 2017. Less than 25 percent of ICOs reached their target in November, compared with 90 percent in June. The study comes amid a cryptocurrency investing craze, with young companies raising hundreds of millions of dollars online to fund their projects, with often little more than a handful of employees and a business plan outlined in a so-called “white paper”. The challenges faced by more recent ICOs in reaching their targets are partly attributable to the lower quality of projects, as well as issues that have emerged around earlier projects, said Paul Brody, global innovation leader for blockchain technology at Ernst & Young (EY). “The volume just exploded, people raised their fundraising goals and the quality just dropped,” Brody said in an interview. “We were shocked by the quality of some of the white papers, we see clear coding errors and we see conflicts of interest between the companies issuing tokens and the community of token holders.”
Regulators Are Looking at Cryptocurrency - SEC Commissioner Jay Clayton - The SEC does not have direct oversight of transactions in currencies or commodities. Yet some products that are labeled cryptocurrencies have characteristics that make them securities. The offer, sale and trading of such products must be carried out in compliance with securities law. The SEC will vigorously pursue those who seek to evade the registration, disclosure and antifraud requirements of our securities laws. In addition, the SEC is monitoring the cryptocurrency-related activities of the market participants it regulates, including broker-dealers, investment advisers and trading platforms. The SEC is devoting a significant portion of its resources to the ICO market. Through statements, reports and enforcement actions the SEC has made it clear that federal securities laws apply regardless of whether the offered security—a purposefully broad and flexible term—is labeled a “coin” or “utility token” rather than a stock, bond or investment contract. Market participants, including lawyers, trading venues and financial services firms, should be aware that we are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections.
Panicky Bitcoin investors struggle to withdraw cash from money exchanges as they look to ‘safe’ gold investments amid fears of cryptocurrency collapse - - THERE are mounting fears that Bitcoin investors will struggle to get their cash out after the cryptocurrency's value fell 40 per cent in a single month.Many are looking to put their money in gold instead, with some European gold traders reporting a "five fold increase" in demand amid fears Bitcoin could collapse entirely.Bitcoin owners are flocking to invest in gold amid fears the cryptocurrency may collapse. But it could be bad news for investors tied up in Bitconnect who fear they will lose their money after the controversial trader announced it was shutting down.It assured customers they would be able to withdraw at a "recent exchange rate" but "continuous cyber-attacks" have prevented them from doing so, Fortune reports.Concerned investors have since taken to social media to complain they fear losing anything from a few thousand dollars to their entire "family savings".Adding to fears, some panicked investors have reportedly been tricked into handing over the contents of their cryptocurrency wallets by scammers presenting themselves as Bitconnect "customer support".Many bitcoin investors report having difficulty in withdrawing their money before the currency collapsesWall Street veteran Peter Boockvar has warned of an impending "epic crash" which could slash 90 per cent off Bitcoin, currently valued at around £8,300. He told CNBC the cryptocurrency's value could fall to between $1,000 (£718) and $3,000 (£2,154) over the next year.
A Look At Who Owns Bitcoin, And Why - Bitcoin's tepid performance since the beginning of the year - it has largely consolidated around $10,000, down 50% from its all-time peak - has left cryptocurrency evangelists with egg on their face.But who exactly owns bitcoin? While nearly 60% of Americans say they've heard of it, only 5% of people own bitcoin, according to Bloomberg.At least that's what a joint study by SurveyMonkey and Global Blockchain Business Council determined... And within that group, demographics are fairly consistent. An overwhelming 71% of them are male. The majority - 58% - are young, between the ages of 18 and 34 years old. And unlike the broader US population, nearly half of them are minorities. When asked why they bought the crypto asset, .
Intel asks customers to halt patching for chip bug, citing flaw (Reuters) - Intel Corp said on Monday that patches it released to address two high-profile security vulnerabilities in its chips are faulty, advising customers, computer makers and cloud providers to stop installing them. Intel Executive Vice President Navin Shenoy disclosed the problem in a statement on the chipmaker's website, saying that patches released after months of development caused computers to reboot more often than normal and other "unpredictable" behavior. (intel.ly/2DsL9qz) “I apologize for any disruption this change in guidance may cause,” Shenoy said. “I assure you we are working around the clock to ensure we are addressing these issues.” The issue of the faulty patches is separate from complaints by customers for weeks that the patches slow computer performance. Intel has said a typical home and business PC user should not see significant slowdowns. Intel’s failure to provide a usable patch could cause businesses to postpone purchasing new computers, said IDC analyst Mario Morales. Intel is ”still trying to get a handle on what’s really happening. They haven’t resolved the matter,” he said. Intel asked technology providers to start testing a new version of the patches, which it began distributing on Saturday. The warning came nearly three weeks after Intel confirmed on Jan. 3 that its chips were impacted by vulnerabilities known as Spectre and Meltdown, which make data on affected computers vulnerable to espionage.
Mastercard Pushes Biometrics, Banks Follow -- Mastercard has set a deadline for widespread use of biometric identification for its services across the whole of thed. EU: April 2019. Mastercard Identity Check, currently available in 37 countries, enables individuals to use biometric identifiers, such as fingerprint, facial, and iris recognition, to verify their identities when using a mobile device for online shopping and banking. The technology is not mandatory for customers, but from next year it will be vigorously promoted throughout the EU and many consumers will welcome it.The impact will be felt not just by consumers but also by most European banks, since any bank that issues or accepts Mastercard payments will have to support identification mechanisms for remote transactions, alongside existing PIN and password verification. The deadline will also apply to all contactless transactions made at terminals with a mobile device.Citing research it carried out with Oxford University, Mastercard says that 92% of banking professionals want to introduce biometric ID. This high number shouldn’t come as much of a surprise given the vast untapped value consumer data holds for banks and corporations as well the preference most banks have for electronic transactions. The study also claims that 93% of consumers would prefer biometric security to passwords, which is a surprise given the array of thorny issues biometrics throws up, including the threat it poses to privacy and anonymity and its deceptively public nature.“A password is inherently private,” says Alvaro Bedoya, Professor of Law at Georgetown University. “The whole point of a password is that you don’t tell anyone about it. A credit card is inherently private in the sense that you only have one credit card.” Biometrics, on the other hand, are inherently public, he argues. “I do know what your ear looks like, if I meet you, and I can take a high resolution photo of it from afar,” says Bedoya. “I know what your fingerprint looks like if we have a drink and you leave your fingerprints on the pint glass.” And that makes them easy to hack. Or track.
Pot banking crackdown is a step backward | American Banker - Over the course of the past few years, the medical and recreational marijuana industry has threatened to become mainstream. That trend is the result of legalization by Washington, Colorado, California and Massachusetts — not to mention numerous other states in which limited marijuana use is now permitted. When combined with the promise of a new stream of tax revenue at the state level, the inevitability of this movement toward marijuana becoming a legalized, taxable vice should be assumed. However, any evolution of a verboten cultural vice toward legal acceptance is not without opposition and discord created by opponents to legalization. That was brought into focus by Attorney General Jeff Sessions earlier this month, when he rescinded prior Department of Justice guidance regarding the enforcement of federal marijuana laws, often referred to as the Cole memorandum. The Cole memorandum, adopted during the Obama Administration, established an enforcement position at the DOJ that significantly de-emphasized criminal actions for participants in the marijuana industry. While it preserved the ability of the DOJ to prosecute drug-related criminal activity associated with marijuana, the memo came to be relied upon by banks and investors who viewed providing support functions to marijuana activity as constituting a safe harbor from federal prosecution. But that comfort level changed with the revocation of the memo under Sessions, just three days after recreational marijuana became legal under California’s new licensing scheme.
‘These weasels.’ Bank of America gets ripped online for killing free accounts -- Bank of America’s decision to eliminate a free-checking account continues to anger many customers and others – and they’re taking to social media to give the bank an earful.The Charlotte-based bank this month completes a years-long phaseout of its eBanking account, which didn’t charge monthly maintenance fees if customers received paperless statements and didn’t use bank tellers for routine transactions. Bank of America has converted such customers to another checking account that requires them to keep more money at the bank to avoid fees that are higher. Critics have lashed out on Facebook and Twitter, with many saying the move hurts low-income people and that they planned to stop doing business with the bank in protest.
Bank of America Just Reminded Us of Why We Need Postal Banking - This week offered a small but vivid reminder that we can’t expect banks to serve anybody except their shareholders. On Monday, Bank of America ended a free checking service used by some of its lower-income depositors called e-banking, which it had been gradually winding down for several years. The final customers were transferred to new accounts that will require them to keep a minimum balance of $1,500 or agree to have $250 from their paycheck directly deposited into their account every month. Otherwise, they will have to pay a $12 monthly fee. Unsurprisingly, the move has gone over poorly with the public. For Americans with irregular incomes, even the modest direct deposits required to avoid getting hit with fees may be too much of a hurdle to clear. A Change.org petition protesting the move has more than 50,000 signatures at the moment. Instead, it’s probably time to stop hoping that profit hungry banks will provide affordable services to unprofitable customers. There’s been a long-running conversation about whether the United States should bring back the sort of postal banking system common across much the rest of the world, and that the U.S. had up until the mid 20th century. The U.S. Post Office could offer basic financial services, including bank accounts, to needier customers who aren’t being served today. Though it may seem a tad far-fetched in the anti-government Trump era, this is not an idea that only journalists or academics have been interested in. The post office’s inspector general released an entire report exploring the concept in 2015, and Sen. Elizabeth Warren has been a vocal supporter of it. As Baradaran said to me, Bank of America and its ilk are “not even pretending” to care about the sort of people for whom $12 a month is too much to pay for a checking account. It’s time for the government to take those customers off their hands.
Borrow $5,000, repay $42,000 — How super high-interest loans have boomed in California -- JoAnn Hesson, sick with diabetes for years, was desperate. As the Marine Corps veteran waited for approval for a special pension from the Department of Veterans Affairs, she racked up debt with a series of increasingly pricey online loans. In May 2015, the Rancho Santa Margarita resident borrowed $5,125 from Anaheim lender LoanMe at the eye-popping annual interest rate of 116%. The following month, she borrowed $2,501 from Ohio firm Cash Central at an even higher APR: 183%. “I don’t consider myself a dumb person,” said Hesson, 68. “I knew the rates were high, but I did it out of desperation.” Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders. Unlike payday loans, which can carry even higher annual percentage rates but are capped in California at $300 and are designed to be paid off in a matter of weeks, installment loans are typically for several thousand dollars and structured to be repaid over a year or more. The end result is a loan that can cost many times the amount borrowed. Hesson’s $5,125 loan was scheduled to be repaid over more than seven years, with $495 due monthly, for a total of $42,099.85 — that’s nearly $37,000 in interest. “Access to credit of this kind is like giving starving people poisoned food,” said consumer advocate Margot Saunders, an attorney with the National Consumer Law Center. “It doesn’t really help, and it has devastating consequences.” These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans. State lawmakers in 1985 removed an interest-rate cap on loans between $2,500 and $5,000. Now, more than half of all loans in that range carry triple-digit interest rates.
CFPB's Mulvaney to Warren: Breaches justified data-collection halt - Acting Consumer Financial Protection Bureau Director Mick Mulvaney has cited hundreds of confirmed and suspected data breaches as justification for his halting the bureau's data collection activities last month.In a letter sent Thursday to Sen. Elizabeth Warren, D-Mass., Mulvaney said there were 233 confirmed breaches tied to the bureau's consumer response system, plus 840 suspected breaches by financial institutions that use a company portal to send data to the CFPB. The CFPB also found, as recently as Nov. 13, that there were 101 complaint narratives with unredacted consumer or third-party names, he said. "Breaches and redaction errors undermine consumer confidence in the bureau and its ability to safely handle consumer complaints," Mulvaney, who is also White House budget director, told Warren in the two-page letter.
Misguided data freeze keeps CFPB from doing its job - Elizabeth Warren - During the fallout from the financial crisis, I worked with Congress to design the Consumer Financial Protection Bureau to stand up for consumers and hold accountable the giant corporations that had crashed the economy. Congress gave the agency a lot of tools to level the playing field — it can write rules to implement laws and sue financial institutions that break them. CFPB examiners inspect financial institutions to make sure their practices are fair and don’t cheat customers. And CFPB handles complaints that come directly from consumers. Every one of these actions is powered by consumer data. For example, CFPB bank examiners and enforcement lawyers can’t detect a mortgage scam or catch a dishonest student lender without information about consumer accounts. Likewise, if a consumer submits a complaint about an improper fee that shows up on their bank statement, the CFPB can’t help unless it knows the consumer’s name and account number. That’s why I was concerned when I saw that Office of Management and Budget Director Mick Mulvaney halted the collection of this anonymous data on Dec. 4. On Jan. 5, I sent him an oversight letter to ask for more information. His Jan. 18 response conceded that the initial stated rationale for the data freeze was bogus and that his unjustified freeze undermined CFPB’s critical work to protect consumers. Consider how the data freeze affects bank examinations. CFPB usually starts working with a financial institution months before an on-site examination to get information about its operations and compliance practices. This helps the agency look into a bank’s specific vulnerabilities and risks and saves time and money for everyone. CFPB knows what testing it needs to do, what processes it needs to follow and which employees it needs to interview, minimizing the disruption at the institution and reducing costs for the CFPB. Mulvaney’s announcement turned this sensible, orderly process on its head. In the chaotic aftermath, examiners were told to stop asking supervised entities for any information at all, effectively halting all examinations in progress without a clear timeline of when they’d restart or a plan to inform the regulated entities. Even worse, examiners were told that in the long term, they’d only be allowed to review consumer data on-site. Without information to prepare and scope the onsite examination, examiners will be flying blind, guessing at risks and scrambling to catch up. Follow-up will be impractical. As a result, examinations will be less efficient and less effective, CFPB examiners will have to stay longer on site to get less done and American families will be put at risk of financial scammers.
Mulvaney: No plans to ‘blow up’ CFPB - Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, said Friday that he has no plans to "blow up" the agency he leads and defended his request for "zero" funding from the Federal Reserve. "I've told people from the day I walked in there, I wasn't there to burn the place down or blow it up," Mulvaney, who is also director of the White House Office of Management and Budget, said in an 18-minute briefing to White House reporters about the looming threat of a government shutdown. "We will focus on the statutory mission and we have plenty of money in the bank to do that." Mulvaney was asked if he planned to reduce spending at the CFPB. He wrote a letter Wednesday to Federal Reserve Chair Janet Yellen saying he needed no additional funding for the agency because he plans to use up a reserve fund. "We've asked for no money this quarter over at the CFPB simply because we didn't think it was necessary," Mulvaney said. "The CFPB has $177 million in its reserve fund and we were able to operate next quarter off of that." Mulvaney also was questioned about the current role of Leandra English, the CFPB's deputy director. English, who was installed in her current position by former Director Richard Cordray, has waged a legal battle to unseat Mulvaney, claiming she is the rightful head of the agency. English is still employed at the bureau. "I won't speak to litigation about Ms. English," Mulvaney said.
CFPB drops probe into lender that gave to Mulvaney’s campaigns - Consumer Financial Protection Bureau has dropped a probe into an installment lender that had been accused of trying to profit from repeat borrowers.World Acceptance Corp., based in Greenville, S.C., said in a press release Tuesday that it had received a letter from the consumer agency "indicating the investigation into the company's marketing and lending practices has been completed." "The CFPB noted it does not intend to recommend enforcement action," the company said in the release. Shares of the company jumped nearly 6% in intraday trading to $92.90 a share after the announcement. The CFPB declined to comment. Yet the decision immediately drew criticism from consumer advocates, who charged that acting CFPB Director Mick Mulvaney, who is from South Carolina, had received at least $4,500 from World Acceptance's political action committee when he was a lawmaker. The news was yet another sign of the agency lightening its approach to consumer lenders since Mulvaney took over from former CFPB Director Richard Cordray late last year. The agency dropped a lawsuit last week against a group of four online payday lenders associated with an American Indian tribe. The bureau also said last week that it plans to reopen its payday lending rule. The CFPB had issued a civil investigative demand against World Acceptance in 2014, a year after ProPublica reported that the company's business model depended on convincing low-income consumers to become repeat borrowers.
CFPB's Mulvaney blasts prior leadership, charts new mission for bureau - In a strongly worded memo sent to staff of the Consumer Financial Protection Bureau Tuesday, acting Director Mick Mulvaney slammed the "mission" of the agency under his predecessor while laying out a new governing philosophy for the bureau. Mulvaney, who has steadily remade the agency since assuming his position in late November, indicated the bureau will value the concerns of companies it regulates to the same extent as consumers, prioritize rules of the road over enforcement actions and avoid what he described as his predecessor's "pushing the envelope.""When it comes to enforcement, we will be focusing on quantifiable and unavoidable harm to the consumer," Mulvaney wrote. "If we find that it exists, you can count on us to vigorously pursue the appropriate remedies. If it doesn’t, we won’t go looking for excuses to bring lawsuits." The memo was leaked and released by the investigative journalism outlet ProPublica. The Wall Street Journal published an adapted version as an op-ed authored by Mulvaney. In the memo, Mulvaney quoted comments from a December article in Politico Magazine that he attributed to former CFPB Director Richard Cordray. However, the article was instead quoting a former CFPB official, who said of the bureau under its former director, “We wanted to send a message: There’s a new cop on the beat. Pushing the envelope is a loaded phrase, but that’s absolutely what we did.” Mulvaney blasted that approach. "Simply put, the days of aggressively 'pushing the envelope' of the law in the name of the 'mission' are over," Mulvaney said. He said prior leadership believed the CFPB "were the 'good guys' and the 'new sheriff in town,' out to fight the 'bad guys.'" "That is what is going to be different," Mulvaney wrote. "In fact, that entire governing philosophy of pushing the envelope frightens me a little. I would hope it would bother you as well." Observers said Mulvaney may have meant for the memo to be viewed by the public at large. "You don't send something to all staff without knowing it would be leaked,"
Reactions to Mulvaney memo range from elation to disgust - The sweeping memo from acting Consumer Financial Protection Bureau Director Mick Mulvaney outlining a new mission for the agency has left industry insiders elated, Dodd-Frank Act proponents stunned and analysts handicapping which firms the bureau could still target. The 1,100-word memo Mulvaney sent to CFPB employees Tuesday said the bureau will aim to care as much about the concerns of the companies it regulates as it does consumers, will be clearer to companies about its expectations and will not "push the envelope" on enforcement activities the way, Mulvaney said, the agency did under former Director Richard Cordray. “The people we regulate should have the right to know what the rules are before being charged with breaking them,” Mulvaney said in the memo. Many in the industry applauded the mission statement that shifts the agency's focus away from using enforcement actions as a substitute for new rules or guidelines, which signals that the bureau will try to be more upfront about its expectations. They welcomed the sense that the CFPB under Mulvaney will work with them, not against them. "We have a regulator telling us they will provide clear notice of what's allowed and what's not, rather than telling [companies] after the fact, and will only engage in enforcement after they've exhausted all efforts," said Christopher J. Willis, a partner at Ballard Spahr. "And they're going to use data and only address consumer harm that is quantifiable." The most common response to Mulvaney's memo was frustration and anger at Cordray, who often used novel interpretations of the law in enforcement, lawyers said. Yet consumer advocates and supporters of the Cordray-led bureau said Mulvaney's comments are in direct opposition to the core idea of Dodd-Frank and the reason the CFPB was created after the calamity of the financial crisis and mortgage meltdown. They also drew links between Mulvaney's memo and news earlier on Tuesday that the agency had dropped an investigation into a lender that had given to the acting director's past political campaigns.
‘I am not trying to starve the agency,' CFPB chief reiterates - — Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, reiterated on Tuesday that his zero-funding request for the agency is not meant to drain it of resources. In a recent letter to Federal Reserve Board Chair Janet Yellen, Mulvaney requested zero additional funds for the CFPB in the second quarter of fiscal year 2018. While the request was met with suspicion by agency critics, Mulvaney has stressed that the bureau already has sufficient resources in a $177 million reserve. The bureau has projected needing $145 million in the second quarter. "I am not trying to starve the agency,” Mulvaney said in a television interview Tuesday. The reserve amount, he added, is "more than 25% of our annual operating costs."
Congress should not hold CFPB hostage in budget talks - The Consumer Financial Protection Bureau is transforming before our eyes. The independent federal agency has a new (ahem, not Senate-confirmed) leader whose goals and motivations are far removed from the agency’s mission to achieve and maintain a fair, fraud-free financial marketplace for consumers. A negative outlook for the CFPB under its new leadership is warranted. And concern for its future is even more justified if its opponents in Congress and the financial industry manage to strip the agency of its current funding source. The CFPB’s foes want to remove the bureau from under the Federal Reserve System, where it is housed and funded. They want to relegate it to the politically charged, corporate lobbyist-influenced congressional appropriations process. This move would sabotage the CFPB’s independence and its critical function to oversee the consumer finance markets.This terrible idea is one of hundreds of poison pill policy riders designed to undermine public protections that have been dropped into U.S. budget legislation. The House passed spending legislation in September that contained this damaging provision, and Senate appropriators have a similar measure in front of them. This “policy rider” method of rewriting our laws is madness, and is as reckless as the attempted scheme to rework CFPB’s own budget process. Congress must protect the bureau as budget negotiations heat up — yet again — in coming weeks. One only has to glance at other so-called independent federal agencies to see how their congressional funding arrangements damaged their ability to do their jobs. Over decades, these regulators suffered from financial neglect at lawmakers’ hands until disaster hit their sectors and harmed the public.
Court to expedite appeal in CFPB leadership fight - A federal appeals court on Tuesday agreed to expedite the appeal brought by Leandra English, the deputy director of the Consumer Financial Protection Bureau who has sought to unseat acting Director Mick Mulvaney. Last month, District Court Judge Timothy J. Kelly denied English's temporary restraining order against Mulvaney, thereby ruling that the Trump administration appointee, who also directs the White House Office of Management and Budget, was the legal interim head of the CFPB. The ruling on Tuesday by the U.S. Court of Appeals for the District of Columbia granted English's motion to expedite her appeal of Kelly's decision. The case will be heard by a three-judge panel for the D.C. Circuit, with briefs expected to be filed by Jan. 30. "It's a sign that the court sees the importance of the issue and that the issue of the interim leadership of the bureau is not settled," said Richard Horn, of Richard Horn Legal, who is a former CFPB senior counsel and special adviser. English sued President Trump and Mulvaney in late November to block Mulvaney from running the agency, arguing that she was the rightful acting director of the bureau as mandated by the Dodd-Frank Act. The lawsuit was filed by English herself, not the CFPB, which supported the Trump administration's position. The case arose after Richard Cordray abruptly resigned as director of the CFPB over Thanksgiving weekend and appointed English as acting director, claiming that Dodd-Frank allowed him to name an interim head in the director's absence. Trump named Mulvaney to the job on the same day, claiming he had broad authority to do so under the 1998 Federal Vacancies Reform Act.
CFPB seeks comment on 'civil investigative demand' process - The Consumer Financial Protection Bureau is seeking comment on its process for investigating companies that face possible enforcement actions as part of a comprehensive review of the agency. Acting CFPB Director Mick Mulvaney launched a public review last week of all of the CFPB's processes, starting with how it handles so-called civil investigative demands, which are issued to companies during enforcement investigations. The agency published a request for information on the CID process in the Federal Register on Wednesday. Mulvaney is trying to identify if any changes are needed to the process of investigating supervised entities. He wants to align the CFPB's process with that of other agencies while minimizing costs to companies.
Backers of Senate GSE plan reject claims that it’s too conservative - Supporters of an unreleased Senate bill to revamp the housing finance system are fighting back against suggestions that the latest revision has become more conservative, arguing that it’s a centrist plan that should have wide bipartisan appeal. American Banker reported last week on an outline of the plan, which would put Fannie Mae and Freddie Mac into receivership and create multiple private mortgage guarantors backed by an explicit government guarantee. That broadly tracks a Federal Housing Finance Agency blueprint for housing finance reform, but the two plans diverge on certain details including how they handle affordable housing incentives and whether to mandate a specific rate of return for future guarantors that would replace Fannie and Fred die.To some progressive groups, the Senate plan is tracking to the right, with Fannie and Freddie reincarnated as new entities that leave behind key elements of the GSEs' role. But mortgage industry representatives and other consultants who are close to the negotiations insist that’s not the case. “There is actually not that much daylight between the Senate’s thinking on this and the FHFA’s recently released position,” said Jim Parrott, owner of Falling Creek Advisors and a former housing adviser to President Obama who is close to the Senate negotiations. “To the degree it’s different, it’s not more conservative, just more of a departure from the status quo.”
FHA moves closer to allaying lenders' False Claims Act fears - The Federal Housing Administration appears to have made progress in improving how loans are evaluated for minor defects, possibly removing an obstacle to growth of the FHA single-family program.Among the factors holding back FHA growth has been lenders’ fear of liability for underwriting mistakes and other errors in the wake of high-profile enforcement actions. But the agency has earned praise for changes unveiled in May to its loan defect taxonomy, which alerts lenders to mistakes that could subject them to penalty. The prior system was criticized for flagging too many potential errors on loans, thereby discouraging lenders from participating. But the improvements, including a new automated loan review system, are seen as providing a more streamlined method for identifying defects.Scott Olson, executive director of the Community Home Lenders Association, said the new FHA automated loan review system is "clearly an improvement from our members' perspective." "As with any major overhaul, there are a lot of moving parts, so there are probably still a few minor areas where there is room for improvement. But overall, it is definitely a positive impact in providing more clarity and certainty," Olson said.The threat of liability for underwriting errors has been a hindrance to FHA growth, at a time when the Trump administration is holding back on reducing FHA premiums.Lenders’ risk of liability has been of particular concern in light of the Department of Justice’s use of the False Claims Act to penalize FHA lenders for underwriting errors since the crisis.But Secretary of Housing and Urban Development Ben Carson has been sensitive to lenders’ concerns about the FHA taxonomy and False Claims Act cases, and a more streamlined system for catching defects is seen as a step toward a correction for the compliance regime.
Blockchain tested for making mortgage securities easier to track - A group of big financial institutions wants to use the blockchain to make it easier and less costly to track home mortgages packaged into securities. Credit Suisse, U.S. Bancorp, Wells Fargo and Western Asset Management Co. said Thursday that they successfully tested the distributed ledger technology as a way to standardize the data involved in securitized home loans and make it more transparent. "Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats," David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium, said in a statement Thursday. While the group is starting with residential mortgages that aren't backed by the U.S. government, it plans to expand to other types of asset-backed securities. The next step is delivering a commercially viable product, R3 said. That industry has shrunk dramatically since nearly destroying the global banking system in 2008. Before the crisis, bundling home loans together and then selling those baskets to investors was a huge profit center for banks. But when many borrowers couldn't repay their debt and the value of the securitized loans crashed, trillions of dollars in losses resulted. There were about $823 billion of securitized private-label residential mortgage bonds outstanding in early 2017, according to the Securities Industry and Financial Markets Association, down from a peak of $2.7 trillion in 2007. Distributed ledgers consist of a network of users or companies that share access to a database to track things like Bitcoin payments or data reconciliation that's vital to securitized mortgages. "Distributed ledger technology will increasingly improve security around data, not just for capital markets but across numerous other industries," Penny Morgan, global securities operations manager at Western Asset Management, said in the statement.
Severe delinquencies associated with Harvey, Irma keep piling up -- Loans late by 90 days or more are increasingly concentrated in parts of Florida, Georgia and southeast Texas as fallout from the storms continues to weigh on the market.Florida displaced Mississippi as the state with the biggest percentage of severe delinquencies during the month as a result, according to Black Knight's First Look report for December 2017.The severe delinquency percentage in Florida was over 4% last month, while in Mississippi it was closer to 3%. Both states had severe delinquency rates above 3%, but below 4% in November 2017. A total of 726,000 properties were 90 or more days past due, but not yet in foreclosure, last month. Of those, 142,000 are attributed to damage from Hurricanes Harvey and Irma. That raises the percentage of severely delinquent loans attributed to the two storms to almost 20% from less than 13% the previous month.Overall, severe delinquencies were up by 60,000 from November 2017 and 44,000 from December 2016 due to a combination of hurricane-related fallout and seasonal factors.Shorter-term delinquencies of 30 days or more also were up in December 2017, rising 88,000 from the previous month and 164,000 from the previous year to 2,412,000. This is a high not seen since early 2016 and represents the fourth consecutive month in which the 30-day delinquency rate increased.Foreclosure starts, in contrast, fell to a post-recession low of 44,500 last month and loans in active foreclosure dropped 32% from a year ago to 152,000. The prepayment rate last month dropped more than 5% from November 2017 and more than 31% from December 2016 to 0.93%.
Black Knight: National Mortgage Delinquency Rate increased in December due to Hurricanes --From Black Knight: Black Knight’s First Look at December 2017 Mortgage Data: 90-Day Delinquencies Jump Again as Hurricane Fallout Continues
• An additional 60,000 mortgages became 90 days delinquent in December, driven by both continued hurricane-related fallout as well as upward seasonal and calendar-related pressuresAccording to Black Knight's First Look report for December, the percent of loans delinquent increased 3.5% in December compared to November, and increased 6.5% year-over-year. The percent of loans in the foreclosure process declined 2.2% in December and were down 32% over the last year.Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.71% in December, up from 4.55% in November.The percent of loans in the foreclosure process declined in December to 0.65%. The number of delinquent properties, but not in foreclosure, is up 44,000 properties year-over-year, and the number of properties in the foreclosure process is down 152,000 properties year-over-year.
• There are now 142,700 90+ days delinquent loans attributed to Hurricanes Harvey and Irma, representing 20 percent of all severely delinquent loans nationwide
• 102,500 severely delinquent loans in affected areas of Florida and Georgia can be attributed to Hurricane Irma, while another 40,200 are the result of Hurricane Harvey in southeastern Texas
• The overall delinquency rate (representing loans 30 or more days past due, but not yet in active foreclosure) also rose another 3.47 percent to its highest level since early 2016
• December’s 6.54 percent year-over-year rise marked the fourth consecutive month of annual increases to the national delinquency rate
• The inventory of loans in active foreclosure continues to improve, falling 152,000 from last year for a 32 percent annual decline
Rising uninsured storm damage share points to flood coverage gaps -- The percentage of flood damage to residential properties from Hurricane Harvey that is uninsured is turning out to be a little higher than earlier estimates. Approximately 75% of the $25 billion to $37 billion in flood damage to residential properties from Hurricane Harvey was uninsured, according to CoreLogic's annual Natural Hazard Risk Summary and Analysis report. That estimate is up slightly from the 70% CoreLogic estimated soon after the hurricanes hit in the latter half of last year. However, earlier estimates for the dollar amount of residential damage from Hurricanes Harvey and Irma remain unchanged, as does the estimate for percentage of damage from Irma that is uninsured. Most borrowers in federally designated flood zones are required to obtain flood insurance, which the government subsidizes. But maps used to determine those zones are continually being updated because they don't always match actual flooding that occurs after a storm, and borrowers may let their policies lapse. More than half of the commercial and residential properties in the Houston area hit by Hurricane Harvey were considered to have high or moderate risk of flooding, but were not in a federally designated Special Flood Hazard Areas considered to have extreme or very high flood risks.
Citigroup: The Poster Child of Bad Mortgages -- This past Sunday the PBS documentary produced by WNET, New York, about Sherry Hunt, one of my former chief underwriters (Sherry blew the whistle on Citigroup four years after I was thrown out for warning about their bad mortgages), and myself aired on KERA Channel 13, Dallas PBS. The documentary, entitled “The Whistleblower,” is the first episode in a three-part PBS series called Playing by the Rules: Ethics at Work. It has aired in New York and several other cities around the country and in Dallas this past weekend, with most of the PBS stations airing it this month. You can watch it here and on the WNET website. Sherry Hunt was a vice president and chief underwriter at CitiMortgage in O’Fallon, Missouri. Since 2005 she had flagged defects; 50 % of the loans she saw had defects, fraudulent defects. She complained and was ignored. I became her boss in 2006 and learned of her concerns which were also expressed by others. I dug deeper, and it was worse than I could ever have imagined. While we reported that 95% of our mortgages met our policies, in reality, 60 % (growing to 80 %) of the mortgages did not. And yet Citi was certifying to the purchasers of many billions of dollars of these mortgages that they met our policies. I was forced to leave in early 2008 after my continued warnings to my managers, the executive team and the board of directors, trying to tell them that a bomb was about to explode in this area. After my departure, Sherry continued to see defects and potential fraud. Yet even after the bailouts, in late 2008, nothing changed. Citigroup was the poster child for fraud when it came to credit controls, underwriting and mortgages. I lived this story, yet watching this documentary was disturbing.
No good reason for banks to offer more government-backed mortgages -- For the past five years, commercial banks have been migrating away from the market for loans guaranteed by the Federal Housing Administration and the Department of Veterans Affairs — and there’s little evidence this trend is going to reverse itself anytime soon. This is primarily because of the punitive fines imposed by the Department of Justice for errors in underwriting these loans, an ongoing problem for the industry. The most visible departure was JPMorgan Chase, which paid $614 million in 2014 for allegedly submitting false claims for FHA-insured and VA-guaranteed mortgages. Shortly after that, JPMorgan ended its participation in the FHA market, a move that was followed by a number of other commercial banks. Since 2014, the number of significant bank participants in the FHA/VA market has dwindled down to two — Wells Fargo and Flagstar — with the majority of the market now comprised of non-bank lenders. The liquidity in the FHA market, both for loans and servicing, has suffered accordingly. Indeed, during 2017, the economics of originating and servicing FHA loans deteriorated along with the broader market. Both banks and independent mortgage banks, also known as IMBs, in the market for originating and servicing residential mortgages face a rapidly changing business landscape in 2018. The increase in direct costs in all areas of the mortgage market, combined with unfavorable conditions in the secondary loan market, compel a number of lenders and servicers to reassess their business strategies and exit the market. More than half of the top ten non-bank servicers are for sale, in bankruptcy or on the verge of failure. While achieving profitability in the mortgage market overall is difficult, the FHA/VA market presents some unique challenges for depositories and IMBs alike. A number of industry observers have been predicting for some time that banks will return to the FHA market — but so far little has changed to make this a reality. The key issue that remains to be dealt with is the DOJ’s use of the False Claims Act against all mortgage lenders. Because prudential regulators have essentially told depositories to avoid headline risks involving mortgage lending, the prospect of a legal claim by the DOJ makes the FHA/VA market problematic for most commercial banks.
"Mortgage Rates Set Another 9-Month High" - From Matthew Graham at Mortgage News Daily: Mortgage Rates Set Another 9-Month High Mortgage rates pushed up to yet another 9-month high today--something that's become all too common in the past few weeks. Just as troubling is the fact that 10yr Treasury yields--the bigger, more important neighbor that shares the street with mortgage rates--are operating at their highest levels since early 2014. Mortgage rates aren't directly tied to Treasury yields, but big momentum in Treasuries tends to spill over.
Recent increased interest rates probably won't derail housing --In the last couple of weeks, long term interest rates have moved significantly higher. As of yesterday, the 10 year bond closed at roughly 2.66%, its highest yield in 3 1/2 years. If this move is sustained for a few months, I expect it to have an effect on the housing market, but how much? Here is an updated variation on a graph I have run many times over the last 5 years: the YoY change in the 10 year treasury bond, inverted (blue), versus the YoY% change in housing permits for single family homes (green). I'll explain the red line below:In general, the housing market responds first and foremost to interest rates. So when interest rates rise (shown as a negative YoY in the graph), permits historically have fallen. But in this expansion, permits have responded by decelerating increases rather than by actual declines. A decent estimate is that the demographic tailwind of the large Millennial generation arriving at home-buying age is that it has added 7.5% growth YoY vs. what we would otherwise expect. That is what is shown by the red line in the graph above.I still expect a few months of restrained *YoY* growth (not m/m, which has already increased to new highs) before improvement in that metric. But the above graph does not show the uptick in rates this month, so the below is the same graph, limited to the last year, but with daily values in treasury rates: The bottom line is that the recent increase in rates isn't enough to derail the housing market. I suspect that rates would have to go above their 2013 high of 3.03% for that to happen. Finally, there is another factor to consider, which is monthly mortgage payments. As I pointed out several months ago, monthly mortgage payments got downright cheap at the bottom of the housing market, and still are quite reasonable compared with their 2005 highs. Here's an update graph of real, inflation-adjusted mortgage payments from Core Logic:
Economic growth will lead to further rate increases - Mortgage rates rose for the third consecutive week and with expected continued economic growth, further increases are likely. The 30-year fixed-rate mortgage averaged 4.15% for the week ending Jan. 25, up from last week when it averaged 4.04%, according to Freddie Mac. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.19%. "Rates keep climbing. The 10-year Treasury yield reached its highest point since 2014 reflecting expectations of broad-based economic growth. Mortgage rates, in turn, followed the surge in Treasury yields. The 30-year fixed rate mortgage jumped 11 basis points, its highest level since March of last year," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release. "The release of the December existing home sales data confirms that 2017 was the best year for home sales in over a decade. Will 2018 home sales outpace 2017? Homebuyer affordability will be a challenge, with mortgage rates moving higher and robust house price gains across the country. The FHFA reported that house prices increased 6.5% from November 2016 to November 2017, with all regions showing positive 12-month changes." The 15-year fixed-rate mortgage this week averaged 3.62%, up from last week when it averaged 3.49%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.4%. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.52% this week with an average 0.4 point, up from last week when it averaged 3.46%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.2%. "Mortgage rates have increased decisively in two of the past three weeks, touching their highest levels since March 2017 last week, and the long-term momentum is clearly upward," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on Wednesday.
The Fate Of The US Housing Market Is In The Hands Of Indian Real Estate Agents and Satellite Photos - US home prices have never been more unaffordable.A little over a year ago, home prices finally surpassed their prior all-time highs, reached during the heyday of the housing bubble back in 2006.But with home prices in 80% of US cities are growing twice as fast as wages, working-class families across the US are finding it increasingly difficult to support their families - let alone afford a home. But fortunately, this hasn't been a problem for institutional investors like Blackstone, which are presently enjoying the luxury of a controversial valuation assessment known as a Broker Price Opinion - or BPO.As the Wall Street Journal explains, Congress prohibited the use of BPOs to underpin traditional mortgages as part of Dodd-Frank. But, fortunately for private-equity firms and their limited partners, that prohibition doesn't apply to investors buying tens of thousands of homes.Blackstone and its lender, Deutsche Bank AG, settled on a sort of drive-by valuation done by real-estate agents that are more cursory and cost far less than traditional appraisals.Congress outlawed the use of such assessments, called broker price opinions, or BPOs, to value properties for traditional mortgages. But the prohibition, enacted as part of postcrash financial regulation, doesn’t apply to investors buying tens of thousands of houses.Now these perfunctory valuations abound, underpinning tens of billions of dollars of home deals. Sometimes the process is outsourced to India, where companies charge real-estate agents a few dollars to come up with U.S. home values by consulting Google Earth and real-estate websites. That's right: Shoddy satellite photos and workers at call centers in India - thousands of miles away from the homes they're evaluating - are making up prices for homes that are then used to value collateral used in bond offerings. In fact, BPOs have been used to value collateral in the more than $20 billion of bonds sold by institutional landlord. They're also the fast-growing business of lending to individual house flippers. Banks request them when considering whether to foreclose or negotiate repayment plans with delinquent homeowners.
MBA: Mortgage Applications Increase in Latest Weekly Survey -- From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey: Mortgage applications increased 4.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 19, 2018. This week’s results included an adjustment for the MLK Day holiday... The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier to its highest level since April 2010. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 7 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.36 percent, from 4.33 percent, with points remaining unchanged at 0.54 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
FHFA House Price Index: Index Up 0.4% in November - The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for November. Here is the opening of the report: The FHFA House Price Index (HPI) reported a 0.4 percent increase in U.S. house prices in November from the previous month. From November 2016 to November 2017, house prices were up 6.5 percent. For the nine census divisions, seasonally adjusted monthly price changes from October 2017 to November 2017 ranged from -1.1 percent in the East South Central division to +0.9 percent in the West North Central division. The 12-month changes were all positive, ranging from +4.2 percent in the Middle Atlantic division to +8.9 percent in the Mountain division. [Read more] The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.
NAR: "Existing-Home Sales Fade in December; 2017 Sales Up 1.1 Percent" ---From the NAR: Existing-Home Sales Fade in December; 2017 Sales Up 1.1 Percent Existing-home sales subsided in most of the country in December, but 2017 as a whole edged up 1.1 percent and ended up being the best year for sales in 11 years, according to the National Association of Realtors®.Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1 percent in 2017 to a 5.51 million sales pace and surpassed 2016 (5.45 million) as the highest since 2006 (6.48 million).In December, existing-home sales slipped 3.6 percent to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November. After last month’s decline, sales are still 1.1 percent above a year ago. Total housing inventory at the end of December dropped 11.4 percent to 1.48 million existing homes available for sale, and is now 10.3 percent lower than a year ago (1.65 million) and has fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in December (5.57 million SAAR) were 3.6% higher than last month, and were 1.1% above the December 2016 rate.The second graph shows nationwide inventory for existing homes.According to the NAR, inventory decreased to 1.48 million in December from 1.67 million in November. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
Existing-Home Sales Fade in December, But 2017 Saw Substantial Gains - This morning's release of the December Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.57 million units. The Investing.com consensus was for 5.72 million. The latest number represents a 3.6% decrease from the previous month and a 1.1% increase year-over-year. Here is an excerpt from today's report from the National Association of Realtors. Lawrence Yun, NAR chief economist, says the housing market performed remarkably well for the U.S. economy in 2017, with substantial wealth gains for homeowners and historically low distressed property sales. “Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” said Yun. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.” [Full Report] For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2014. It can be found here.
Existing Home Sales Slump In December On Record Low Supply - December's housing data kicked off on a dismal note as Existing Home Sales slumped 3.6% MoM (after a 5.6% surge in November, which was revised lower).Against expectations of a 1.9% MoM Drop, December's 3.6% plunge is the biggest since Feb 2017. This drop was made worse by the downward revision of November's 5.6% surge to 5.1%...Overall, 2017 sales of 5.51m were up 1.1% from 2016 - the smallest gain in three years.Sales of previously-owned U.S. homes fell in December for the first time in four months, as the market struggles with record-low supply and rising prices, figures from the National Association of Realtors showed Wednesday.As Bloomberg reports, the decline, deeper than economists estimated, indicates inventory issues across the U.S. are limiting Americans’ ability to purchase despite low mortgage rates and a solid job market. Higher prices spell lower affordability, particularly for first-time buyers: The median selling price rose 5.8 percent in 2017, easily outpacing wage gains. “Inventory concerns remain with us,” with no immediate sign of a reversal, Paul Bishop, NAR’s vice president of research, said at a press briefing accompanying the report. The December figures also reflect a squeeze on affordability, even as demand continues apace due to solid job growth and low mortgage rates, Bishop said. “Price growth is going to be a little slower than it might have been without the tax reform,” and sales in 2018 are forecast to be little changed at 5.52 million, he said.
A Few Comments on December Existing Home Sales - Earlier: NAR: "Existing-Home Sales Fade in December; 2017 Sales Up 1.1 Percent" A few key points:
1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus. See: Lawler: Early Read on Existing Home Sales in December. The consensus was for sales of 5.75 million SAAR in December. Lawler estimated 5.66 million, and the NAR reported 5.57 million."Based on publicly-available state and local realtor/MLS reports from across the country released through today, I predict that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.66 million in December, down 2.6% from November’s preliminary pace"
2) Inventory is still very low and falling year-over-year (down 10.3% year-over-year in December). More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases. This was the 31st consecutive month with a year-over-year decline in inventory.
The following graph shows existing home sales Not Seasonally Adjusted (NSA). Sales NSA in December (427,000, red column) were below sales in December 2016 (437,000, NSA) and also below sales in December 2015 (436,000, NSA). This is the lowest sales NSA since December 2014. Sales NSA will be lower through February.
We will probably have to wait until March - at the earliest - to draw any conclusions about the impact of the new tax law on home sales.
New Home Sales decrease to 625,000 Annual Rate in December -- The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 625 thousand. The previous three months combined were revised down significantly."Sales of new single-family houses in December 2017 were at a seasonally adjusted annual rate of 625,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.3 percent below the revised. November rate of 689,000, but is 14.1 percent above the December 2016 estimate of 548,000. An estimated 608,000 new homes were sold in 2017. This is 8.3 percent above the 2016 figure of 561,000. The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply. The months of supply increased in December to 5.7 months from 4.9 months in November. The all time record was 12.1 months of supply in January 2009. This is in the normal range (less than 6 months supply is normal).Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973. The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).
November New Home Sales Down 9.3% in December -- This morning's release of the December New Home Sales from the Census Bureau came in at 625K, down 9.3% month-over-month from a revised 689K in November. Seasonally adjusted estimates back to September were also revised. The Investing.com forecast was for 676K. Here is the opening from the report:Sales of new single-family houses in December 2017 were at a seasonally adjusted annual rate of 625,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.3 percent (±11.0 percent)* below the revised November rate of 689,000, but is 14.1 percent (±13.0 percent) above the December 2016 estimate of 548,000.The median sales price of new houses sold in December 2017 was $335,400. The average sales price was $398,900. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.
New Home Sales Crash In December As Prices Reach Record High - Following yesterday's disastrous drop in existing home sales (due to record low supply), new home sales plunged 9.3% MoM after November saw its biggest surge since Jan 1992, revised dramatically lower.The November 17.5% spike was revised dramatically down to 15.0% spike - the highest since 1993 but December's 9.3% plunge was already worse than the expected 7.9% giveback...Biggest MoM drop since Aug 2016. In fact the downward revisions are huge... October from 624K to 599K; November from 733K to 689K. While the blame is immediately laid on weather, the regional drops show that is simply not correct: Purchases fell in all four U.S. regions, led by a 10 percent drop in the Midwest and a 9.8 percent slide in the South. Median Home Prices reached a new record high...at $335,400 As Bloomberg notes, new-home sales, tabulated when contracts get signed, account for about 10 percent of the market. They’re considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors. But the ongoing lack of supply remains the most notable aspect in the US housing 'recovery'. Alhambra's Jeffrey Snider notes critically that it’s what’s going on underneath the headline that really matters (as always). The reluctance of Americans to sell their houses has become such a contradiction to the attempt to paint the housing market, and therefore the overall economic condition, as healthy, even robust. Prices are rising, in some places quickly. Yet, inventory of available-for-sale homes continues to decline, sharply once again in December.
A few Comments on December New Home Sales --New home sales for December were reported at 625,000 on a seasonally adjusted annual rate basis (SAAR). This was well below the consensus forecast, and the three previous months were revised down significantly. On an annual basis, sales were up 8.3% in 2017 compared to 2016. This was a solid year-over-year gain. Here is a table of new home sales since the bubble peak in 2005. Sales were up 14.1% year-over-year in December.This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate). For 2017, new home sales are up 8.3% compared to 2016.And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales. Now I'm looking for the gap to close over the next several years.
December housing summary: sales and prices accelerate: With this morning's release of new home sales for December, we have a good picture of the housing market through the end of 2017, with the caveat that the Census Bureau's report on median asking rent for the 4th Quarter will not be released until next Tuesday. A quick synopsis of last week's report on December housing permits and starts is:
- single family permits (the least volatile, most forward looking metric) made another new high
- total permits were just slightly below their October high
- the three month moving average of the more volatile housing starts made a new high save for the three month average from 10 months ago.
I'll return to that shortly, but now let's take a look at the December new home sales report. This report has the advantage of possibly being the most leading of all of the housing reports. It's disadvantage is that it is extremely volatile, and heavily revised. That was shown in spades with the November number, which was originally reported one month ago at 733,000 -- nearly 100,000 above any other report since the recession! I predicted it would be revised downward, and it was -- by 44,000 to 689,000. Even so, it remains the highest number since 2007, and heavily relies upon was is still a 40% increase in a single month in the West census region.Here is the graph, showing the number of annualized sales in blue (right scale) and the YoY% change in red (left scale), averaged quarterly to cut down on volatility: You can easily see the downdraft in 2014 due to the 1.75% increase in interest rates following the 2013 "taper tantrum," and the smaller stall in mid-2017 due to the roughly 1% increase following the US presidential election. Now, with YoY interest rates no longer a drag on the market, sales have increased again. Let's show how that compares with single family housing permits (blue) and housing starts (green) in the graph below, which again shows a big stall in 2014 for all metrics, but little discernible deviations YoY in single family permits and starts in 2017, unlike new home sales. But here is the same data normed to 100 as of the beginning of 2016: This does show the slowdown q/q in permits and starts in Qs 2 and 3 of 2017 from Q1, and an acceleration in Q4. Interest rates have made new 3 year highs this month. We'll have to see if that is sustained, but even if it is, it won't begin to have an effect of any sort for a few months. Before concluding, let's look at prices for new homes, again showing the median price in blue on the right scale, and the YoY% change in red on the left:
AIA: "Architecture billings end year on positive note" - Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: Architecture billings end year on positive note: The Architecture Billings Index (ABI) concluded the year in positive terrain, with the December reading capping off three straight months of growth in design billings. The American Institute of Architects (AIA) reported the December ABI score was 52.9, down from a score of 55.0 in the previous month. This score still reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.9, up from a reading of 61.1 the previous month, while the new design contracts index decreased slightly from 53.2 to 52.7.“Overall, 2017 turned out to be a strong year for architecture firms. All but two months saw ABI scores in positive territory,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Additionally, the overall strength of the fourth quarter lays a good foundation for healthy growth in construction activity in 2018.”
• Regional averages: South (56.3), West (53.0), Midwest (52.9), Northeast (49.4)
• Sector index breakdown: multi-family residential (55.4), commercial / industrial (54.8), institutional (51.2), mixed practice (50.4)
Tax reform should attract new capital to commercial real estate -- The commercial real estate industry clearly came out on top in the tax law overhaul. In addition to preserving most of the existing tax benefits for investors, the Tax Cuts and Jobs Act provides a few new perks as well. Early drafts of the legislation limited the deductibility of interest — of key importance to a market that relies heavily on debt to fund purchases. Legislators were also looking at eliminating so-called like-kind exchanges, which allow sellers of commercial property to postpone paying tax on any capital gain if they reinvest the proceeds in a similar property. The exceptions for real property and businesses in the final bill President Trump signed into law at the end of December were lauded as a triumph at the Commercial Real Estate Finance Council’s annual conference in January, according to participants. The CRE Finance Council and numerous other real estate-oriented organizations had lobbied Congress intensively, warning that losing either provision would damage valuations and capital availability, this slowing overall economic activity.
Credit card defaults on the rise, and Chicago is worst, as holiday bills come due - Chicago Tribune: - Americans are defaulting on their credit cards at the highest rate in nearly a year, and Chicagoans are leading the pack. Chicago residents are now more likely to miss a credit card payment than residents of any other major city, including New York, Los Angeles, Dallas or Miami, according to the S&P/Experian Consumer Credit Default Indices. Chicago also holds the title for highest combined default rates across car, home and credit card loans, S&P and Experian said. Experts blame the improving economy: Consumers are feeling more confident in their overall financial situations and they’re loosening their purse strings because of it. That confidence led to higher retail sales through the holiday season, but the credit card bills are coming due, and people are leaving them unpaid at an alarming rate, according to S&P and Experian. Another factor in the uptick in default rates is the increased willingness of financial institutions to extend credit to those who may struggle to pay it back. Chicago had a default index value of 1.15 in December, which covers mortgage, auto and credit card loans and roughly translates to mean that 1.15 percent of people have defaulted on their debt, said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. There’s no obvious reason that Chicago has jumped ahead, he said, but the move can be an indication that people are increasingly uncertain about their jobs. Nationwide, the default rate is 0.91 percent.
Worthless Auto Trade-Ins Signal Riskier Loans - A growing share of the trade-ins that U.S. auto dealers and lenders accept for car-purchase financing are worthless on paper, a sign that banks and finance companies are making riskier loans to keep up revenue as vehicle sales slow. Almost a third of cars traded in last year were worth less than the loans that had been financing them, according to car-shopping website Edmunds. That’s up from about a quarter a decade earlier, said Edmunds, which looked at cars traded in as part of financing packages for new auto purchases in the U.S. The growing proportion of underwater trade-ins means that at least some borrowers are getting deeper and deeper in debt with every car they buy, said Jason Grohotolski, an analyst at Moody’s Investors Service. That could translate to bigger and bigger losses on loans for finance companies whenever the economy heads south -- just as lower down payments for homebuyers walloped lenders during the housing crisis. “It’s this cycle that just continually gets worse and worse,” Grohotolski said. “It has to stop, and it doesn’t have a favorable outcome.”
Chemical Activity Barometer Increased in January -- Note: This appears to be a leading indicator for industrial production. From the American Chemistry Council: Business, Economic Activity Show No Signs of Winter Freeze as 2018 Gets off to Robust Start The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), expanded 0.5 percent in January on a three-month moving average (3MMA) basis and 0.7 percent on an unadjusted basis. This follows an upwardly revised 3MMA gain of 0.7 percent in December and 0.5 percent in November. The CAB is up 4.0 percent compared to a year earlier, indicating a robust economy well into the third-quarter of 2018...Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
LA area Port Traffic Increases in December --Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic. From the Port of Long Beach: State of the Port Celebrates Cargo Record: The Port of Long Beach roared back from unprecedented challenges to notch its busiest year ever in 2017, moving 7.54 million twenty-foot equivalent units, an increase of more than 11 percent ... The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.On a rolling 12 month basis, inbound traffic was up 0.8% compared to the rolling 12 months ending in November. Outbound traffic was up 0.1% compared to the rolling 12 months ending in November. The 2nd graph is the monthly data (with a strong seasonal pattern for imports).
Trade Deficit Widened by $1.6 Billion in December: -The international trade deficit was $71.6 billion in December, up $1.6 billion from $70.0 billion in November, according to the U.S. Census Bureau. Exports of goods for December were $137.6 billion, $3.6 billion more than November exports. Imports of goods for December were $209.2 billion, $5.2 billion more than November imports. Wholesale inventories for December were estimated at an end-of-month level of $611.4 billion, up 0.2% from November 2017, and were up 3.3% from December 2016. The October 2017 to November 2017 percentage change was revised from up 0.8% to up 0.7%. Retail inventories for December were estimated at an end-of-month level of $620.4 billion, up 0.2% from November 2017, and were up 2.2% from December 2016. The October 2017 to November 2017 percentage change was unrevised at up 0.1%.
A Shortage of Trucks Is Forcing Companies to Cut Shipments or Pay Up - A nationwide truck shortage is forcing thousands of shippers into a tough choice: postpone all but the most important deliveries, or pay dearly to jump to the front of the line. Michelin North America Inc. cut its daily shipments of synthetic rubber from one plant by a fifth earlier this month and is at times paying double its usual price for temperature-controlled trucks, said Eric Stuch, a logistics manager at the tire manufacturer. Meal-kit service HelloFresh SE recently enlisted one of its produce suppliers to help move shipments to the airport in a snowstorm. Several factors have converged to overwhelm the trucking market. Freight volumes in December hit near-record levels for that time of year, on the back of a strengthening economy. Retailers are replenishing stocks after one of the strongest holiday sales seasons in recent years. Manufacturers are also shipping more cargo; in December, industrial production had the largest year-over-year gain since 2010, according to the Federal Reserve. What’s more, bad weather and a new federal safety rule that took effect in December have crimped the supply of available trucks. Diesel prices are near a three-year high, adding to transportation costs. In the spot market, where shippers hire trucks on short notice, there were about 10 loads waiting to be moved for every available truck in the week ending Jan. 20, compared with three in the same week last year, according to online freight marketplace DAT Solutions LLC. . Spot-market prices for dry vans, the most commonly used big rig, are up more than 20% year-over-year. Analysts expect long-term contract rates that shippers negotiate with carriers to rise by between 5% and 8% this year. Beer distributor Constellation Brands Inc. and food companies Campbell Soup Co. and the J.M. Smucker Co. have all cited rising freight costs in recent earnings calls. Trucking fleets are adding capacity, but it can take months or even years to catch up with demand. Meanwhile, they are getting pickier about which manufacturers and retailers they work with. Companies sometimes find it hard to convince truckers to pick up cargo at warehouses known for long loading times or traffic jams at the gate. Mr. Stuch, the Michelin logistics manager, said the company “hit a wall in December,” when some regular carriers didn’t want to haul its cargo because of wait times at a few plants.
US durable goods orders rose 2.9% in Dec, vs 0.8% increase expected --The Commerce Department says that orders for long-lasting manufactured goods rose 2.9 percent in December, the fastest pace since June and another sign of strength for American industry.Orders were lifted by a 15.9 percent surge in demand for civilian aircraft and aviation parts, which can bounce around from month to month. Excluding the volatile transportation sector, orders increased 0.6 percent in December.Overall orders for durable goods, which are meant to last at least three years, have risen in four the last five months.Still, a category that measures business investment — orders for nondefense capital goods excluding aircraft — dipped 0.3 percent in December. American manufacturers are benefiting from a pickup in global economic growth and a weaker dollar, which makes U.S. goods less expensive in foreign markets.
Headline Durable Goods Orders Up 2.9% in December -The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders: New orders for manufactured durable goods in December increased $7.0 billion or 2.9 percent to $249.4 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 1.7 percent November increase. Excluding transportation, new orders increased 0.6 percent. Excluding defense, new orders increased 2.2 percent. Transportation equipment, also up four of the last five months, led the increase, $6.0 billion or 7.4 percent to $87.2 billion. Download full PDFThe latest new orders number at 2.9% month-over-month (MoM) was much better than the Investing.com consensus of 0.8%. The series is up 11.5% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.6% MoM, which was slightly worse than the Investing.com consensus of 0.5%. The core measure is up 8.2% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 0.6% MoM and up 8.8% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.3% MoM and up 8.4% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.
Kansas City Fed: Regional Manufacturing Activity "Growth Strengthened Further" in January --From the Kansas City Fed: Tenth District Manufacturing Growth Strengthened FurtherThe Federal Reserve Bank of Kansas City released the January Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity strengthened further, and expectations for future activity increased. “We saw faster growth this month despite some firms noting negative effects from extremely cold weather, and several price indexes rose considerably,” said Wilkerson. The month-over-month composite index was 16 in January, higher than 13 in December and 15 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in factory activity improved at both durable and non-durable goods plants, particularly for machinery, aircraft, chemicals, and plastics. Most month-over-month indexes also increased. The shipments, new orders, and order backlog indexes all rose moderately. The employment index inched higher from 16 to 18, while the production index was unchanged. The raw materials inventory index climbed from 7 to 15, and the finished goods inventory index moved into positive territory. So far all of the regional Fed surveys have been solid in January, although only the Kansas City index has been above the December levels (most indexes suggest slower growth in January than in December).
"Fifth District Manufacturing Firms Reported Slowing Growth in January" --Earlier from the Richmond Fed: Fifth District Manufacturing Firms Reported Slowing Growth in January According to the latest survey by the Federal Reserve Bank of Richmond, Fifth District manufacturing firms saw slower growth in January, even as each of the expansion metrics remained positive. The composite index moved down from 20 to 14. This decrease resulted from a decline in the metrics for both shipments and employment [declined from 20 to 10]. The third component, new orders, held steady. However, manufacturing firms saw an increase in backlogs in January, after a decrease in December, as the index rose from −4 to 5. Firms reported that they expect growth to strengthen in the coming months. CR note: All of the regions that have reported so far for January have shown slowing, but still solid, growth.
US Composite PMI Tumbles To 8-Month Lows As Services Slump - Following mixed European PMI data (Services up, Manufacturing down), and a divergent December in the US, January flash PMIs show that divergence is expanding with Services slumping to 9-mo lows and Manufacturing up at 12-mo highs. This shift has sparked weakness overall with the Composite PMI sliding to its lowest since May 2017...signaling GDP growth way below the 3% hopes.Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“January saw an encouraging start to the year for the US economy. Business activity across the manufacturing and service sectors continued to expand, driving further job gains as companies expanded capacity. Manufacturing is faring especially well, in part thanks to the weaker dollar, providing an important spur to the economy at the start of the year.“Although the overall pace of economic growth signalled by the surveys waned to an eight-month low, the forward-looking indicators suggest the slowdown will prove transitory. In particular, business optimism about the year ahead improved markedly and inflows of new orders hit a five-month high. Growth should therefore pick up again in coming months.“Inflationary pressures meanwhile kicked higher, with January seeing the second-largest monthly increase in input costs since 2015. Higher oil prices were widely reported but, more generally, stronger demand is also helping companies push through price hikes.” Some notable sliver-lining-seeking going on in those comments.
Graph: Food Commodity Prices Flat - This commodities price chart shows how food prices have fallen or remained flat since early 2016, although non-food agriculturals have risen somewhat. Food prices have remained low due to a surplus of wheat and oil-seeds. The stocks-to-use ratio for wheat is at a nearly a 30-year high, according to The Economist. Non-food agriculturals include timber, hides, wool, rubber, and cotton. Metals have led in commodity price growth in the past two years.
Weekly Initial Unemployment Claims increase to 233,000 - The DOL reported: In the week ending January 20, the advance figure for seasonally adjusted initial claims was 233,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised down by 4,000 from 220,000 to 216,000. The 4-week moving average was 240,000, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised down by 1,000 from 244,500 to 243,500.The claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal. The previous week was revised down. The following graph shows the 4-week moving average of weekly claims since 1971.
Older workers in the US dominate employment growth – troubles ahead - Bill Mitchell - The Federal Reserve Bank of St Louis published a very interesting article earlier this month (January 15, 2018) – Older Workers Account for All Net Job Growth Since 2000 – which was written by William Emmons, the Lead Economist with the Bank’s Center for Household Financial Stability. The Center focuses on the “balance sheets of struggling American families” and was launched in May 2013 in response to the GFC. It seeks to investigate factors that impact on the fragility of household finances. The research paper finds that since 2000, workers older than 55 have captured almost all the net employment growth leaving the prime-age workers (more than a million) languishing. This abnormal pattern is not predicted to continue for much longer but that is disputable. Further, even if the domination of older workers ends within the decade, the lack of opportunities that are apparent for those who are moving through the prime-age years now spells a looming disaster in a decade or more in the form of increased poverty rates and disadvantage. Then you will hear the screams that the US government cannot afford the income support that will be needed. But at the same time, without that income support the situation will get worse. Something needs to be done now to interrupt this trend.
BLS: Unemployment Rates Lower in 6 states in December; California, Hawaii and Mississippi at New Series Lows -- From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were lower in December in 6 states and the District of Columbia, higher in 1 state, and stable in 43 states, the U.S. Bureau of Labor Statistics reported today. Twenty-five states had jobless rate decreases from a year earlier, 2 states had increases, and 23 states and the District had little or no change. The national unemployment rate was unchanged from November at 4.1 percent but was 0.6 percentage point lower than in December 2016. ... Hawaii had the lowest unemployment rate in December, 2.0 percent. The rates in California (4.3 percent), Hawaii (2.0 percent), and Mississippi (4.6 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.3 percent.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession. The size of the blue bar indicates the amount of improvement. The yellow squares are the lowest unemployment rate per state since 1976.Fourteen states have reached new all time lows since the end of the 2007 recession. These fourteen states are: Alabama, Arkansas, California, Colorado, Hawaii, Idaho, Maine, Mississippi, North Dakota, Oregon, Tennessee, Texas, Washington, and Wisconsin. The states are ranked by the highest current unemployment rate. Alaska, at 7.3%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).
Philly Fed: State Coincident Indexes increased in 37 states in December -- From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for December 2017. Over the past three months, the indexes increased in 42 states and decreased in eight, for a three-month diffusion index of 68. In the past month, the indexes increased in 37 states, decreased in 10, and remained stable in three, for a one-month diffusion index of 54. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed: The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP. Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and all or mostly green during most of the recent expansion. Recently several states have turned red.
Illinois budget impasse cost state $1 billion in late payment penalties (Reuters) - Illinois incurred $1.03 billion in late bill payment penalties last year largely as a result of the state’s unprecedented two-year budget impasse, the state comptroller reported on Monday. The first monthly debt transparency report by Democratic Comptroller Susana Mendoza found Illinois ended 2017 with $9.246 billion in unpaid bills from vendors, service providers and others. This also included invoices held by state agencies and bills totaling $2.3 billion that still lack legislative appropriation. The fuller picture of Illinois’ chronic inability to pay its bills promptly was made possible by a new law that took effect on Jan. 1. The law requires monthly instead of annual reports from state agencies to the comptroller, whose office pays Illinois’ bills. “Now we can all see a clearer picture of what Illinois owes to small businesses, universities, community colleges, social service providers and others,” Mendoza said in a statement. “The Debt Transparency Report takes the politics out of the numbers to provide meaningful data.” An impasse between Illinois’ Republican Governor Bruce Rauner and Democrats who control the legislature left the state without complete budgets for two straight years. That situation ended in July when lawmakers enacted a fiscal 2018 spending plan and income tax rate increase that overruled Rauner’s vetoes. The budget’s enactment stopped Illinois’ credit ratings, which are the lowest among the 50 states, from slipping into junk. Despite the budget stalemate, Illinois continued to operate on spending mandated by state law or by court orders, ballooning the unpaid bill backlog to a record high $16.675 billion. With the state accruing late bill payment penalties of as much as 12 percent annually, Illinois sold $6 billion of general obligation bonds in October to help pay down the backlog. The spread for Illinois’ 10-year bonds over the municipal market’s benchmark triple-A yield scale widened to as much as 335 basis points last June. The spread, which subsequently narrowed to 177 basis points at year end, stood at 185 basis points on Friday. The bond proceeds, along with $2.2 billion in federal matching funds, helped deflate the backlog to $8.835 billion, according to the comptroller’s office.
Puerto Rico Plan Leaves Almost No Money for Bond Payments -- Puerto Rico said it will have virtually no money to cover debt payments for the next five years as the bankrupt island deals with the crippling blow of Hurricane Maria, which caused tens of thousands of residents to leave and pushed the economy into its deepest contraction in more than a decade. The forecast, contained in a revised fiscal plan that the commonwealth released late Wednesday, shows that the government expects to have a shortfall, before any debt service is paid, of $3.4 billion through 2022. That marks a significant shift from the proposal released before the storm that would have left hundreds of millions of dollars a year to cover its debts. “We had to consider the significant social impact that Maria caused, due to the massive exodus that we’ve had and are expected to have in the future,” Governor Ricardo Rossello told reporters Wednesday in San Juan. The figures underscore the deep losses facing owners of Puerto Rico’s more than $70 billion of bonds, whose prices have tumbled since the Sept. 20 hurricane amid widespread expectation that even more of the government’s obligations will need to be written off in bankruptcy. The blueprint, if approved by Puerto Rico’s federal oversight board, will serve as a basis for negotiations with creditors. The September storm, which destroyed much of the island’s electricity system, cut into tax collections and prompted many residents to flee to the U.S. mainland, exaggerating the financial drain that had already pushed it to the brink. Officials project the island’s economy will contract by 11.2 percent in the fiscal year ending in June, the steepest decline since at least 2003. The economy is expected to reverse in the following years with the help of a projected $35 billion of federal disaster funds and $22 billion of insurance claims. But about 600,000 people are expected to leave the island by 2022, a 19 percent drop that would be a severe drag on any recovery.
Amazon scores two more $5+ billion bids --A non-blogging friend points me to the announcement today of Maryland’s subsidy bid that puts Montgomery County into one of the 20 finalist slots. Shockingly, Governor Larry Hogan (R-MD) put in a bid that would pay Amazon almost the entire cost of its facility, depending on what you think a proper discount rate should be now (hint: low).“HQ2,” which Amazon has stated will amount to an eventual $5 billion in investment, will receive a subsidy package worth over $5 billion in nominal value (but not necessarily present value) from Maryland. The largest element in this package is a jobs tax credit of 5.75% of wages for up to 17 years, on salaries averaging $100,000 per year (minimum $60,000, maximum $500,000). According to the story linked above, Amazon would max out this incentive with just 40,000 jobs. To simplify the math, this element would pay up to $5750 per year to Amazon X 40,000 employees X 17 years, or $3.91 billion. Other elements of the package include state and local property tax credits (local governments would be 50% reimbursed by the state for their share), a sales tax exemption on construction materials, and an unspecified amount of infrastructure. According to the linked story, there would be “billions of dollars” in transportation upgrades in the state, though the article does not indicate how much would be Amazon-specific and how much would go elsewhere in the area. Why do I say this offer is shocking? 1) It normalizes not just billion-dollar incentive packages, but multi-billion subsidy awards. Foxconn got $4 billion last year from Wisconsin, according to the Good Jobs First Megadeals spreadsheet, October 2017 update. Now, Amazon has received at least three (see below for St. Louis) offers of over $5 billion. In the European Union, a $1 billion incentive is virtually impossible even in the poorest EU regions, and absolutely impossible in cities as wealthy as the 20 finalists here. Indeed, few if any of the 20 would be allowed to offer any subsidy whatsoever. 2) What is possibly even worse, it normalizes paying subsidies greater than the cost of the investment (100+ % aid intensity, in terms of European Union state aid rules). Seriously, if a government is going to pay more than the entire cost of the investment, it should have a legitimate, large ownership stake, rather than using “investment” as a euphemism for “subsidy.” 3) Have none of these cities noticed that unemployment is at historically low levels? That’s precisely a reason not to give away the store. Let’s look at the state unemployment rate for the 20 qualifiers in November 2017:
The U.S. Can No Longer Hide From Its Deep Poverty Problem - You might think that the kind of extreme poverty that would concern a global organization like the United Nations has long vanished in this country. Yet the special rapporteur on extreme poverty and human rights, Philip Alston, recently made and reported on an investigative tour of the United States.Surely no one in the United States today is as poor as a poor person in Ethiopia or Nepal? As it happens, making such comparisons has recently become much easier. The World Bank decided in October to include high-income countries in its global estimates of people living in poverty. We can now make direct comparisons between the United States and poor countries.Properly interpreted, the numbers suggest that the United Nations has a point — and the United States has an urgent problem. They also suggest that we might rethink how we assist the poor through our own giving.According to the World Bank, 769 million people lived on less than $1.90 a day in 2013; they are the world’s very poorest. Of these, 3.2 million live in the United States, and 3.3 million in other high-income countries (most in Italy, Japan and Spain). As striking as these numbers are, they miss a very important fact. There are necessities of life in rich, cold, urban and individualistic countries that are less needed in poor countries. The World Bank adjusts its poverty estimates for differences in prices across countries, but it ignores differences in needs. An Indian villager spends little or nothing on housing, heat or child care, and a poor agricultural laborer in the tropics can get by with little clothing or transportation. Even in the United States, it is no accident that there are more homeless people sleeping on the streets in Los Angeles, with its warmer climate, than in New York.
Billionaires Earned Enough Money in 2017 to End Extreme Poverty Seven Times Over, Report Says - Last year, the world’s billionaires made over $462 billion combined—enough money to end extreme poverty around the globe seven times over. With a new billionaire added to the list nearly every two days, wealth inequality widened, according to a new report from Oxfam. Forty-two of the richest people in the world now hold as much wealth as 3.7 billion of the poorest people in the world, according to the report, released Monday by the international charitable organization. The report showed that about 82 percent of wealth created across the globe went to the top 1 percent. “Our broken economies reward wealth not hard work,” Oxfam International Executive Director Winnie Byanyima tweeted Monday. “Rich get richer, millions trapped in poverty wages or joblessness. Leaders must reverse this.” The report was released just days before this year’s World Economic Forum, from January 23 to 26. World leaders of politics and business, including Indian Prime Minister Narendra Modi, U.K. Prime Minister Theresa May and American President Donald Trump, are attending. Oxfam released similarly shocking statistics in 2017 ahead of the Davos, Switzerland, gathering.
Fur and fury at 40,000 feet as more people bring animals on planes - WaPo - When Marlin Jackson arrived at his row on a Delta flight from Atlanta to San Diego in June, the middle seat was already occupied by a man with a sizable dog on his lap. Jackson squeezed by them to his window seat, and the Labrador mix lunged at his face. The attack lasted about 30 seconds, according to Jackson’s attorney, and left him with facial wounds that required 28 stitches and scars that are still visible today.The mauling, which Delta said was inflicted by a canine identified as an “emotional support” animal, was among the thousands of incidents that just pushed the nation’s largest airline to tighten rules for passengers flying with service or comfort animals. In announcing the changes Friday, Delta said it flew 250,000 animals in those categories last year, up 150 percent from 2015, while “incidents” such as biting or defecating had nearly doubled since 2016.Delta emphasized safety concerns in detailing the increased documentation owners that will be required to provide about their animals. But its action also was spurred by a widespread perception among airlines and disability rights advocates that some fliers are fraudulently taking advantage of federal law to bring untrained pets of myriad species into crowded cabins.Though the Americans With Disabilities Act defines service animals as trained dogs or miniature horses, airlines are bound by the more liberal Air Carrier Access Act of 1986, which allows free travel for “any animal” that is trained to assist a person with a disability or that provides emotional support. Airlines can require passengers with creatures in the second category to produce a letter from a physician or mental-health professional, but the documents are easily forged or obtained from websites that provide cursory, questionnaire-style “exams.” The result, airline officials complain, has been a surge in poorly trained animals that has turned some flights into airborne menageries, with dogs blocking beverage carts, cats urinating on seats and ducks wandering the aisles.
What Not To Wear…To Court - LAST YEAR, I saw a young black man stopped at the doors of the Moultrie Courthouse in Washington, D.C. He was there to watch a trial but was told by a security officer that he couldn’t come in because he was wearing a tank top. I, a law student, was there to assist a public defender in court. When I saw the young man turned around, I wondered whose trial he might be missing — a friend, a family member, a parent? The official code of conduct for the District of Columbia Courts states that “[p]ersons wearing inappropriate attire may be excluded from the courthouse and its courtrooms.” While it gives some examples of inappropriate attire – gang paraphernalia, items with obscene messages, “provocative clothing” — it ultimately leaves what’s “suitable” up to the sole discretion of courthouse security. Nobody would think that such a dress code is the greatest injustice in our court system today. Indeed, the list of court practices that discriminate and disempower is long and mostly familiar. Still, courthouse dress codes are important to pay attention to because they limit who gets to be seen and heard in our criminal courts. And, understood as the partial courtroom closures that they are, they violate the Sixth Amendment right to a public trial, which requires that exclusion decisions be made by judges in courtrooms, not security on the steps. Especially when judgements regarding appropriate attire are so obviously susceptible to bias. A vague ban on “provocative” clothing, for example, almost encourages the policing of women’s attire. Dress codes that prohibit T-shirts and jeans can prove to be classist. Policies against “baggy” pants, durags and headscarves certainly create circumstances under which people of color, black people in particular, can be barred from courthouses.
White and far-right extremists kill more cops, but FBI tracks black extremists more closely, many worry | McClatchy - White supremacist and other far-right extremist groups have killed 51 police officers since 1990, according to a report published by the Anti-Defamation League last week. Left-wing extremist groups, including black nationalists, killed 11 during the same period. In 2017 alone, black nationalists and other leftists killed no police, while white supremacists and anti-government extremists fatally attacked a police officer and two corrections officers, the report said. But while the FBI tracks so-called “black identity extremists” as domestic terror threats — as an FBI counterterrorism report completed in August and leaked in October revealed — it doesn’t have an equivalent designation for white extremists. Experts worry that the broad labeling of black groups, and not white ones, is an indication that federal law enforcement’s targeting of certain groups is based less on evidence than on politics. That targeting can significantly affect how law enforcement chooses to police protests or events organized by specific groups. Many worry the report on black identity extremists specifically could be used to home in on members of Black Lives Matter – possibly infringing on their right to speak freely and protest peacefully.
NYPD cops reportedly furious over being given fewer 'get out of jail free' cards to hand out to friends - The Patrolmen's Benevolent Association, the largest labor union representing NYPD cops, has slashed the number of "get out of jail free" cards it hands out to 20 from 30 for current cops and to 10 from 20 for retired police officers, the New York Post reports. The cards are reportedly given to police officers, who distribute them among friends or family — or sell them on eBay. Holders can present them to the police in hopes getting out of minor infractions and avoiding legal trouble. Current and former NYPD members are reportedly furious about the change. "They are treating active members like s---, and retired members even worse than s---," a retired NYPD cop told the Post. "All the cops I spoke to were ... very disappointed they couldn't hand them out as Christmas gifts."
Kzoo doctor detained by ICE after 40 years in US — Even as the issue of immigration has been central to the government shutdown in Washington, a respected doctor at Kalamazoo’s Bronson Methodist Hospital who has been living in America for nearly 40 years finds himself in jail after U.S. Immigration and Customs Enforcement agents took him from his home in handcuffs. Lukasz Niec is an internal medicine doctor putting in long hours as a hospitalist for Bronson. His co-workers describe him as the model of what a physician should be. And now, he is sitting in a jail cell in Calhoun County with no idea of when — or if — he will be free to return to his patients and his family. “In 1979, my parents were both doctors left Poland and took two suitcases and two small children, my brother was five and I was six and they came here for a better life for their kids,” said Iwona Niec-Villaire Saturday as she sat next to her sister-in-law. Now the siblings are in their mid-40s. She is an attorney, he is a doctor — they have been in America for four decades on a permanent green card. “He doesn’t even speak Polish,” Niec-Villaire said. On Tuesday, as Niec was enjoying a day off with his girls at his lake home in an exclusive neighborhood near Kalamazoo, three ICE officers came to his home, told him he was being taken into custody and took him to jail.
Nine “No More Deaths” volunteers face prosecution for attempting to aid immigrants - Nine members of the humanitarian organization No More Deaths (NMD) are facing federal prosecution for the “crime” of attempting to provide water and medical help to immigrants in the Arizona desert. The first hearing of the case took place on Tuesday, January 23 in Tucson, Arizona.The misdemeanor charges against the nine stem from three different incidents in June, when the volunteers drove into Cabeza Prieta National Wildlife refuge, about 125 miles outside of Tucson, in order to help those who were trying to cross the border through particularly unfriendly terrain.The volunteers explained to the Border Patrol that they were trying to locate three people who were lost in the desert. However, they were charged with various misdemeanors, including entering the wildlife refuge without proper permits, driving a vehicle in the wilderness, and abandonment of property for leaving food, water and toiletry items in the desert. Based on the charges, each could face up to six months in prison and a fine of $400.One of the volunteers, Scott Warren, an instructor at Arizona State University, also faces a felony charge after being arrested by Border Patrol last week for harboring two people “suspected of being in the country without authorization.” Warren, who was providing the two immigrants food and water in an NMD safehouse, could face up to five years in prison.
A mom in Florida is caring for 1,250 children of illegal immigrants in case their parents are deported (AP) — The 29-year-old Mexican farmworker was stressed and afraid. Her husband had just been detained by immigration authorities as he left a South Florida construction site and was about to be deported. She feared the same would soon happen to her. What would become of her two kids? So she called Nora Sandigo, an immigration activist who has accepted responsibility for 1,250 children, becoming an essential part of emergency planning for people who are in the U.S. illegally and now face an increasing prospect of being caught amid a crackdown under President Donald Trump. Hundreds of immigrant parents have signed a document known as a power of attorney that enables Sandigo to care for their children if they are detained, at which point it might be too late to make such an arrangement. “People are desperate to do this to protect their kids,” she said after hanging up with the woman from Mexico. “Once they are detained there’s very little that can be done for them.” The power of attorney allows Sandigo to sign documents on behalf of children at schools, hospitals and court. She can help the minors pursue legal residency if they are not citizens or travel abroad to be reunited with their families. At least once a week, Sandigo, a 52-year-old mother of two daughters, drives south to the city of Homestead and drops off donated clothing and food for some of them, mostly people from Mexico and Central America who work on nearby farms. Every two weeks, many of the families gather at her home on the rural southern fringe of Miami. Sometimes several hundred show up. She hands out donated supplies to the adults while the kids play with a menagerie of animals on the five-acre property, including ponies, a goat, pigs and a peacock.
Homeschooling could be the smartest way to teach kids in the 21st century — here are the reasons why - Homeschooling isn't what it used to be. What largely started in the 1980s and '90s as a way for Catholic parents to infuse religion into their kids' education now has more mainstream appeal. Homeschooled kids have the same access to online learning, friendships, and extracurricular activities as the typical public school student — but without many of the drawbacks, like standardized lesson plans and bullying. Here are a handful of reasons homeschooling makes sense in 2018. The core idea of homeschooling is the idea that kids need to learn at the speed, and in the style, most appropriate for them. In the education world, enthusiasts call the approach "personalized learning," and it's in place in a number of schools already.Bill Gates and Mark Zuckerberg are big fans of personalized learning, since it tends to use technology as a way to tailor lesson plans to students. In a recent blog post, Gates pointed to research that personalized learning helps boost scores in reading and math.Homeschooling parents can take the method a step further. As parents, many are in the best position possible to know, and provide, the right kind of instruction. Without formal curricula to guide their education, homeschoolers get the chance to explore a range of topics that might not be normally offered until high school or college. They can study psychology in fourth grade, or finance in eighth grade.Some parents are capable enough to pass on this knowledge themselves. But many parents Business Insider has spoken with rely on online learning platforms like Khan Academy or workbooks. Some take their older kids to local community colleges.While many homeschool families do teach English, math, science, and history, education is by no means limited just to those subjects.The most common misconception about homeschoolers is that they lack social skills. Before the internet, there was some truth to the stereotype.But today's students have just as much opportunity to see kids their own age as those in private or public schools, and often without as much distraction. Homeschoolers still use apps like Snapchat, Instagram, and Facebook — which may foster unhealthy and even addictive relationships to tech — but also lets them meet up with other homeschoolers or those from traditional schools. "They're doing just as well or better," Brian Ray, a homeschooling researcher at the National Home Education Research Institute, told Business Insider.
Trump officials dismissed discrimination complaints from transgender students: report | TheHill: The Education Department has dismissed complaints from transgender students over discrimination, claiming the issue no longer falls under its jurisdiction, according to a new report. The department’s Office for Civil Rights has told at least three transgender students that it is no longer required to handle matters related to alleged discrimination, HuffPost reported Tuesday. The move comes after the department rescinded an Obama-era guidance that said transgender students should be allowed to use the restroom facilities that match their gender identity. The Trump administration says those decisions should be made at the local level.After rescinding the guidance, OCR officials told staffers to rely on “Title IX and its implementing regulations ... in evaluating complaints of sex discrimination against individuals whether or not the individual is transgender.”
Google has conquered American classrooms — now Microsoft is striking back with cheap PCs and a Minecraft upgrade -- Google has all but captured the market for American classrooms — analyst firm Futuresource estimates that in the third quarter of 2017, Google's low-cost Chromebooks accounted for 59.8% of the laptop market for K-12 education, compared to Microsoft Windows devices' 22.3% share. But Microsoft would be quick to remind you that this doesn't tell the whole story: That 22.3% share is up from 18.4% the quarter before, and Microsoft says, up 4% from the same period in 2016. And, worldwide, Windows still reigns supreme: In that same third quarter of 2017, Windows accounted for 66.5% of global K-12 classroom PC shipments. Now, Microsoft is striking back against Google's domestic dominance, with a series of announcements designed to make Windows PCs, Microsoft Office 365, and even the Minecraft video game sensation more appealing for education customers at home and abroad. Chief among those announcements: New laptops for the classroom, priced between $189 and $299, manufactured by partners Lenovo and JP. These laptops will run Windows 10 S, a version of the operating system streamlined for better battery life and performance — at the big tradeoff of only being able to install apps from the Microsoft Store. Microsoft Corporate VP Yusuf Mehdi tells Business Insider that Microsoft is trying to undercut the price advantage of Chromebooks, which often sell for under $299. But because these PCs can run the full versions of Windows software, including Microsoft Office and Minecraft, they offer "none of the compromises of a Chromebook."
Thousands of students stranded as Ohio cyber charter school suddenly shuts down - One of the largest K-12 cyber charter schools in the US, Electronic Classroom of Tomorrow (ECOT), suddenly shut down last Friday, January 19, leaving up to 12,000 Ohio students stranded in the middle of the school year. Of these young people, 2,100 are reportedly seniors set to graduate, but who must now find a school which accepts their credits. ECOT was a wildly profitable online-only school. It was operated by William Lager, a software developer best known for his tight connections with state power brokers and lavish political contributions. He is a crony of Ohio’s Republican Governor John Kasich and a darling of US Secretary of Education Betsy DeVos and school privatization advocate Jeb Bush, the former governor of Florida and brother of George W. Bush.The abrupt closure left thousands of young people and their parents scrambling for a new school just days before the January 22 deadline for the new semester. Students and their parents learned about the closure, not from ECOT staff members, but from television and newspapers. The majority of ECOT students, about 72 percent, are lower income and include a large number with disabilities.“If this is really about the kids, they will not close the school in the middle of the school year,” Anna Aquino angrily said to the Columbus Dispatch. Aquino’s two children have disabilities and are ECOT students. Many former students signed a petition demanding legal action against the shutdown, explaining they attended ECOT due to problems like autism, bullying, extreme allergies and other disabilities. The immediate trigger was the loss of the charter school’s oversight sponsor, the Educational Service Center of Lake Erie West, which said that ECOT was running out of money. Last summer the state ordered the school to begin paying back almost $4 million per month in school funds, which ECOT claimed it was unable to do.
Students Hold "Bleed-In" To Demand Free Menstrual Products -- University of Florida students walked around campus Tuesday with fake menstrual blood on their pants to protest the lack of free feminine hygiene products on campus. On January 15, a student government committee rejected a proposal to provide free menstrual products to female students through the mandatory Activity and Service Fee, expressing concerns about applying mandatory fees paid by all students towards “funding that would only benefit the female half of the UF student body.” A student group called “Gatters Matter, Period.,” which began circulating a petition in support of the proposal last fall, responded by organizing a “bleed-in” protest during which roughly two-dozen students stained the back of their pants red, according to The Alligator.“This is a part of reproductive justice,” Shannon Matthew, who was among the first students to join the protest, told the Alligator. “I’m not ashamed of my period, and I don’t think anyone should be.”A Facebook event page for the “Are You Seeing Red?” demonstration explains that participants wore “washable dye on our bums, as if we didn’t have a pad and the blood bled through.” The organizers provided “supplies” for those in need of them, but encouraged students to “bleed-in how ever [sic] you want as well.”
Graduate Student Unions Are Growing — and Fighting for Social Justice - Not surprisingly, when graduate students heard that the Republican tax bill included a provision to tax tuition waivers, most became both upset and angry. But rather than despair, they organized. On campus after campus, in city after city, they mobilized to protest the 2017 bill. Their concerns extended beyond the injustice of taxing in-kind financial aid incentives as income, to include a broader progressive agenda: opposing racism, sexism, classism and homophobia; denouncing corporate tax giveaways; fighting the growth of anti-intellectualism; and countering attacks on publicly funded education. Austin A. Baker, a Ph.D.-level philosophy student at New Jersey's Rutgers University, joined students from Drexel University, the University of Pennsylvania and elsewhere to oppose the proposed measure. "If the tuition waiver portion of the tax bill had gone through -- thankfully, it did not end up in the final draft -- it would have made Ph.D. programs completely out of reach for working-class students and students from low-income communities," Baker said. "We could not let this happen. Those of us who are required to teach undergraduates as part of our training understood that our students deserve to have mentors who are racially, sexually and class diverse. This is something we're committed to." Although Baker knows that protecting campus diversity will be an ongoing struggle, she and her peers see union membership as the best way to support progressive pedagogy and improve working conditions for graduate students and university staff. Rutgers is not anomalous. According to Shannon Ikebe, a spokesperson for the Coalition of Graduate Employee Unions, more than 40 graduate student unions currently exist in the US, and the number is growing. In fact, between September 1, 2016, and May 31, 2017, seven bargaining units representing 7,439 employees -- at American University, Brandeis University, Columbia University, Grinnell College, The New School, Portland State University and Tufts University -- were certified by the National Labor Relations Board (NLRB). Members each belong to one of four unions: the AFT, AAUP, Service Employees International Union (SEIU) or United Auto Workers (UAW).
Young college graduates aren’t moving like they used to - Economists Robert Kelchen and Doug Webber have an excellent new research brief looking at how recent college graduates move around the country after they leave school. The authors measure the share of young adults (ages 22 to 24) with a bachelor’s degree who moved between states in the previous year. They find that interstate mobility among young, college-educated adults has fallen over the past several years. College graduates aren’t moving like they used to. Curiosity about how college-educated young adults stack up against their peers without college degrees led me to examine mobility trends for young adults of all education levels. Though still the most mobile group, college-educated young adults have experienced the biggest drop in mobility over the past fifteen years (see chart). In 2001, 16% of young adults with a bachelor’s degree moved to a different state in the previous year. But in 2016, only 12% moved. Though mobility rates have slipped down across the board, college-educated young adults have seen by far the biggest dip.. Geographic mobility is a crucial component of a well-functioning economy. Though mobility has declined for recent college graduates, rates of moving among this group are still respectable. Kelchen and Webber show that states vastly differ regarding how many college graduates they “export” or “import.” Recent graduates flock to southern and western states such as Colorado, North Carolina, California, and Texas—many of which have booming economies or specialized industries, such as Silicon Valley. Northern states such as Montana, Rhode Island, and Vermont are the biggest net losers of college graduates.
GE's $31 billion pension nightmare - John Flannery, the man hired to fix General Electric, inherited a $31 billion ticking time bomb when he replaced longtime CEO Jeff Immelt last year. Like other companies, GE (GE) has accumulated a significantly underfunded pension. But like most things lately at GE, its pension shortfall is much worse. Not only does GE have the largest pension deficit among S&P 500 companies, that deficit is $11 billion worse than the next closest company, according to Dow Jones S&P Indices. (The $31 billion figure is from the end of 2016. Fresher numbers haven't been released.) GE's pension nightmare is the result of years of inattention, and of historically low interest rates that have driven up pension liabilities around the world. This is not just a math problem: More than 600,000 current and former GE employees are relying on these crucial retirement benefits. The pension shortfall is yet more evidence of GE's financial troubles, which forced the iconic company to slash its dividend last year for just the second time since the Great Depression. GE shares closed below $17 on Thursday for the first time in six years. "GE's balance sheet is a mess," said Gautam Khanna, an analyst for Cowen & Co. "They don't generate a lot of cash, and they have a severely underfunded pension plan."
Recent Report Shows California Had Highest Per Inmate Health Costs Among 49 States - In October 2017, the Pew Charitable Trusts released a report comparing how much each state spends on inmate health care, including medical, mental health, and dental care. The report relied on state surveys completed based on data from 2014‑15. A total of 49 states responded to the survey. The report cautions that each state self-reported data, which makes it difficult to determine whether all states collected data the same way. Despite this, the report provides some insight into how California compares to other states with respect to inmate health care costs.. As shown in Figure 1, California averaged the highest health care costs per inmate in 2014‑15 at $19,796 per inmate. The national average was $6,352 per inmate. (We note that these amounts did not include facility costs or health care costs for inmates supervised in contract facilities.) When Pew previously conducted this survey in 2009‑10, California also had the highest health care costs per inmate of reporting states.In addition to having the highest inmate health care costs, California’s costs (on a per inmate basis) grew significantly faster since 2009‑10 than the national average—25 percent versus 3 percent nationwide. While 26 other states reported an increase in inmate health care costs, Louisiana was the only state whose costs increased at higher rate than California. We note that 19 states actually reported a decline in per inmate health care costs.
Bernie Sanders talks universal Medicare, and 1.1 million people click to watch him - With more than 1 million people watching at home, and hundreds watching from the studio audience, Sen. Bernie Sanders (I-Vt.) leaned across his desk with a crucial health-care question. “What’s the quality of the Norwegian system?” Sanders asked Meetali Kakad, an Oslo-based health researcher. “Is it good?” In her view, it was: “Far better than Canada.” Sanders’s “town hall on Medicare for All,” an event he’d organized after becoming convinced that it would never be produced by the mainstream media, never got more combative than that. Over 100 minutes, Sanders and nine guests — three at a time, taking turns — discussed the need to bring about single-payer health care, its benefits to business and its implementation around the world. (Kakad’s Canada joke was aimed at Danyaal Raza, there to defend his country’s system.) “It’s a discussion you’re not likely to see on the mainstream news,” Sanders said at the outset. “This event will not be interrupted by commercials for the drug companies.” Cable news has been relatively generous to Sanders, as compared to the usual relationship between corporate America and democratic socialists. To strong ratings, he’s appeared in town halls on MSNBC and “debate nights” on CNN. Last year, the senator appeared more on Sunday shows than any member of the Senate’s Democratic caucus. In an interview last fall, he revealed his approach to cable news: “I usually don’t answer the question that they asked.” On Tuesday night, it was Sanders asking the questions, and getting answers he liked. In the room — the Congressional Auditorium, where in 2010 President Barack Obama revved up House Democrats ahead of their Affordable Care Act vote — Sanders’s audience alternated between rapt attention and grateful applause as experts explained how higher tax rates could replace America’s health-care system with universal Medicare.
Death Panels Next? FDA Approves A.I. Model That Predicts Your Chance Of 'Sudden Expiration' - The Food and Drug Administration (FDA) has approved the very first artificial intelligence (AI) computer that monitors a patient’s vitals to help forecast sudden death up to six hours before the grim reaper shows up.Excel Medical, a medical device data company in Florida, developed the deep learning algorithm called WAVE Clinical Platform for the eradication of unexpected hospital deaths.WAVE automatically calculates the risk of the patient through subtle changes in vitals, which provides hospital staff with critical information of when the patient is expected to kick the bucket. The algorithm monitors the patient on a continuous basis, a task that is very challenging for hospitals, as the demographic crisis strains the U.S. healthcare system.Stephen McBride of Mauldin Economics describes the situation: “Few investors understand the magnitude of the looming demographic crisis and its ramifications. The first Baby Boomers turned 70 last year. At the same time, the US fertility rate is at its lowest point since records began in 1909. This disastrous combination means by 2030, those aged 65 and older will make up over 20% of the population.” In realtime, on top of the patient’s vitals, the algorithm also factors in digital medical records, past medical history, family history, medications, age, and vital signs. Below is an example of the alert system interface. Speaking to Digital Trends, ExcelMedical’s Chief Strategy Officer Mary Baum said, “We do not have enough physicians or nurses, and we have an aging population who are sicker and who need more resources and services.” According to IFL Science, It has also just become the first AI platform of its kind to be cleared by the US Food and Drug Administration (FDA). This decision was based on a series of studies at the University of Pittsburgh Medical Center that showed the AI platform could prevent unexpected deaths in hospitals. Another more recent study, using similar technology by Stanford University, outlined on the preprint server arXiv, explains how a deep-learning algorithm can correctly predict an otherwise-unexpected death in 90 percent of cases.
Deadly flu season particularly rough on kids — and won’t peak anytime soon - CBS - Fourteen thousand new flu cases were reported last week, bringing the total for the season to more than 74,000. And pediatric deaths are on the rise. The Centers for Disease Control reports 30 children have died from influenza since October, and the number of states hit with high flu-like illness is now up to 32. "The dominant flu virus out there is one we call H3N2 – it's a more severe virus," said Dr. William Schaffner of Vanderbilt University Medical Center. Schaffner said this year's flu vaccine is about 20 to 30 percent effective.With the flu vaccine, "even if you've gotten the flu, despite having the vaccine, you're likely to have a less severe case. You're less likely to have complications like pneumonia, having to be hospitalized and dying," Schaffner said. This season's H3N2 flu virus is spreading. This epidemic means extreme measures across the country. A few California hospitals built tents outside to cater to patient overflow. Some churches are telling parishioners to skip holding hands during prayer to avoid germs – and all schools in Bonham, Texas closed for a week, after flu cases there soared.
Brazil declares yellow fever emergency in Minas Gerais - BBC News: Brazil's south-eastern state of Minas Gerais has declared a public health emergency following a deadly outbreak of yellow fever. At least 15 people have died there since December. Many areas, including the state capital Belo Horizonte, have been affected. A mass vaccination programme is in place in three southern states. But queues have formed outside clinics in Rio and Sao Paulo amid concerns that vaccines could run out. In neighbouring Argentina, there have also been long queues for the vaccine in Buenos Aires and other cities as thousands of prospective tourists prepare to travel to Brazil for carnival. On Tuesday the WHO recommended that travellers to Sao Paulo state get a yellow fever vaccine before visiting. Minas Gerais has been the hardest-hit Brazilian state. In the year up to June last year, 475 cases were confirmed in the state and 162 people died. The health emergency will be in place for six months and will allow local authorities to commission special services and buy in emergency materials.
Hundreds of children sickened, dead in Papua health crisis - Some 800 children have been sickened by a measles-and-malnutrition outbreak in Indonesia's remote Papua province, officials said Thursday, with as many as 100 other people, mostly toddlers, feared to have been killed. The latest figures mark an escalation of a health crisis first made public in mid-January that underscores the severe lack of medical care and other basic services in a far-flung island region shared with Papua New Guinea. Indonesian President Joko Widodo has ordered military and medical teams to bring supplies to remote villages, amid a low-level separatist insurgency largely driven by resentment over conditions in the impoverished region. Doctors at an overloaded and under-equipped hospital in Agats were struggling to cope Thursday, as crying, rake-thin children wandered smelly hallways where some patients lay on rickety gurneys, an AFP reporter witnessed. Local officials were shocked by the spike in measles cases, which is being blamed partly on weakened immune systems due to lack of food. Many parents travelled for hours to seek care for their children in Agats, which has the only hospital in the outbreak-hit Asmat region, a swampy area criss-crossed by rivers. "We received information (about the outbreak) too late so that has led to the high death toll," hospital director Richard Mirino told AFP. Dozens of patients are being treated at a local church due to lack of space at the 80-patient hospital, which sits on stilts like most structures in the area.
Fake medicines flourish in Africa despite killing thousands -- There's nothing covert about Roxy -- a huge market in Abidjan selling counterfeit medicine, the scourge of Africa and the cause of around 100,000 deaths annually on the world's poorest continent. Located in the bustling Adjame quarter of Ivory Coast's main city and commercial hub, the haven for fake medicine has been targeted time and again by authorities and stockpiles burnt. But it resurfaces every time. "The police hassle us but they themselves buy these medicines," said Mariam, one of the many mainly illiterate vendors who hawk everything from painkillers and antibiotics to anti-malaria and anti-retroviral treatments. "When we are harassed we always come to an arrangement with them to resume our activities," she said. Fatima, another hawker, said: "Many people come here with their prescriptions to buy medicine, even the owners of private clincs." She said there was a "syndicate" controlling the sector that held regular meetings to fix prices and supply levels. Fake medicines bring about some 100,000 deaths a year in the continent, according to the World Health Organization (WHO). The illicit sector has a turnover of at least 10 percent of the world pharmaceutical business, meaning that it earns tens of billions of dollars a year, the Switzerland-based World Economic Forum estimates, adding that the figure has nearly tripled in five years.
Superbug Risk Rises as Big Pharma Fails to Disclose Antibiotic Waste Leaked From Factories - Many of the world's leading drug manufacturers may be leaking antibiotics from their factories into the environment, according to a new report from a drug industry watchdog. This risks creating more superbugs .The report surveyed household-name pharmaceutical giants like GSK, Novartis and Roche as well as generic companies which make non-branded products for the NHS and other health systems.None of the 18 companies polled would reveal how much antibiotic discharge they release into the environment, according to the independent report from the not-for-profit body, the Access to Medicine Foundation. Only eight said they set limits for how much could be released in wastewater .Only one disclosed the name of its suppliers—a move which is seen as important as it would make companies accountable for their environmental practices.Commenting on the report, Dr. Mark Holmes, a veterinary scientist at the University of Cambridge, said, "Antibiotic resistance is complex but if we are to deal with this challenge every sector must do their bit. The pharmaceutical industry has been a key player in improving public health but a failure to address environmental impacts of antibiotic pollution could undo much of their good work." Changing Markets, an NGO which has campaigned on the issue of pharmaceutical waste, said, "Pharmaceutical companies have a clear responsibility to tackle pollution in their supply chains, not least because of the considerable human health impacts associated with untreated waste from pharma manufacturing, prime among the creation of drug-resistant bacteria. From our own research in India and China, where most of the world's generic drugs are made, we know this is an ongoing problem and that very little progress is happening on the ground.
How a tropical pathogen came to reside in the Pacific Northwest - Cryptococcus gattii is an encapsulated yeast found primarily in tropical and subtropical climates like Brazil, Australia or New Guinea. C. gattii is just one of several species of Cryptococcus. It is considered a pathogen and some strains of the fungus have proven to be especially virulent, with a mortality rate reaching 25 percent. C. gattii can cause pulmonary cryptococcosis (lung infection), basal meningitis, and cerebral cryptococcomas. Occasionally, the fungus is associated with skin, soft tissue, lymph node, bone, and joint infections, and all-in-all is a rather nasty disease. Cryptococcus infections were initially only seen in people with compromised immune systems, but C. gattii made its debut in North America with some fanfare when an outbreak of the deadly fungus occurred on Vancouver Island, British Columbia, Canada in 1999. Old forest in Vancouver Island, British Columbia, typical environment where the spores of the tropical and sub-tropical fungus species Cryptococcus gattii may be found.From 1999 through 2003, the cases were largely restricted to Vancouver Island, then in between 2003 and 2006, the outbreak expanded into neighboring mainland British Columbia and then into Washington and Oregon from 2005 to 2009. There has been speculation the tropical fungus may have migrated to North America due to climate change, and global warming may have been a factor in its emergence in British Columbia, according to a study published in 2004. The authors suggested the disease's presence on Vancouver Island came about through either the importation and/or changing climatic conditions that allowed distribution and thriving of C. gattii propagules into new ecological niches. Now, a new study by researchers at the Flagstaff, Arizona-based Translational Genomics Research Institute (TGen) is suggesting the deadly fungus in the Pacific Northwest may have arrived from Brazil via the Panama Canal in what they are describing as “The Teddy Roosevelt effect."
Video: Inside America's Deadly Opioid Crisis - Every day in the United States, some 140 people die from taking opioids - addictive opiate-based drugs. They’ve become the leading cause of death among the under-50s, ahead of road accidents and firearms. France24's US correspondents take a look at the deadly opioid crisis.Opioids are neither viruses nor bacteria, but painkillers. In the United States, they are prescribed in abundance and are perfectly legal for a small injury or a tooth extraction. Opioids are analgesics, highly powerful painkillers, derived from opium. But many patients become addicted to the drug in just a few days and today this medication, which can cause fatal overdoses, actually kills more people than it cures. The death of celebrities such as Prince and Michael Jackson put the painkiller addiction epidemic in the spotlight, a scourge that permeates every US region and all social classes. As soon as we began reporting, we became aware of the magnitude of the problem. Millions of patients have become addicted to opioids unintentionally, simply because their doctor prescribed them painkillers after an injury or an operation. Many people have played a role in this health scandal: the government and its agencies, influenced by pharmaceutical lobbies and unable to regulate themselves; the pharmaceutical companies, which concealed the danger of certain drugs, eyeing tens of billions of dollars in profits; and some unscrupulous doctors. The situation has been exacerbated by dangerous political decisions. A recent Washington Post investigation revealed that in April 2016, at the height of the opioid crisis, and under pressure from pharmaceutical lobbies, Congress passed a series of laws easing the rules on painkiller distribution. Donald Trump vowed to act on this overdose epidemic. On October 26, 2017, he declared the opioid crisis a "national health emergency". But several months after his announcement, nothing has changed, as the funds have still not been released. Another scandal was Donald Trump's appointment of Tom Marino to deal with the opioid crisis. Marino is the Republican Congressman who was tasked with helping pass the laws that favoured the pharmaceutical industry in the first place. After filming this report, it's incredibly frustrating to realise that although everyone is talking about the crisis, nothing changes. Every day, thousands of Americans continue to put their lives in danger, without even knowing it.
There Is More Than One Opioid Crisis - Sarah Hargrove didn’t expect to be on the front lines of a national emergency after getting a master’s degree in forensic science. But the opioid crisis has put her there. A Chicago native, she moved to Louisville, Kentucky, in 2012 to work as an autopsy technician in the office of the state’s chief medical examiner. In the past few years, Hargrove has been given a puzzle that officials across the country are finding difficult to solve. Her work has been overwhelmed by Kentucky’s opioid epidemic, to the point that she is now helping a state-backed research institute try to find a solution. By the end of her time as an autopsy technician, Hargrove said, it wasn’t abnormal to see one or two overdose deaths each day. “Every single death we see is terrible,” Hargrove said. “But the drug overdose cases, you just got so immune to seeing them — it was just over and over and over again.”You may think of politicians, first responders and physicians as the people best-equipped to stop the opioid crisis. And they do have an important role to play. But so do coroners and medical examiners. The government and media generally quantify the nation’s opioid problem on only one dimension: how many people have died. Hargrove and Kentucky are working to provide an additional dimension: exactly which drugs — either prescription opioids or illicit ones like heroin and synthetic fentanyl — led to a death. Armed with even that one extra bit of data, a state can fight its opioid crisis in a new way. The opioid epidemic continues to ravage the country. Official numbers from the federal Centers for Disease Control and Prevention show that overdoses from drugs — legally prescribed or otherwise, including opioids, hallucinogens and other narcotics such as cocaine — killed about 63,600 people nationwide in 2016, a 21 percent increase from the year before. Of those, over 42,000 — roughly 66 percent of the total — involved some kind of opioid.1 In some areas, coroners are overwhelmed by how many people are dying, and morgues are running out of space.
1 Son, 4 Overdoses, 6 Hours - NYT — The first time Patrick Griffin overdosed one afternoon in May, he was still breathing when his father and sister found him on the floor around 1:30. When he came to, he was in a foul mood and began arguing with his father, who was fed up with his son’s heroin and fentanyl habit. Patrick, 34, feeling morose and nauseated, lashed out. He sliced a love seat with a knife, smashed a glass bowl, kicked and broke a side table and threatened to kill himself. Shortly after 3, he darted into the bathroom, where he shot up and overdosed again. He fell limp, turned blue and lost consciousness. His family called 911. Emergency medical workers revived him with Narcan, the antidote that reverses opioid overdoses. Throughout the afternoon his parents, who are divorced, tried to persuade Patrick to go into treatment. His father told him he could not live with him anymore, setting off another shouting match. Around 4, Patrick slipped away and shot up a third time. He overdosed again, and emergency workers came back and revived him again. They took him to a hospital, but Patrick checked himself out. Back at his mother’s house and anxious to stave off withdrawal, he shot up again around 7:30, overdosing a fourth time in just six hours. His mother, frantic, tried pumping his chest, to no avail, and feared he was dead. Rescue workers returned and administered three doses of Narcan to bring him back. At that point, an ambulance took him to the hospital under a police escort and his parents — terrified, angry and wrung out — had him involuntarily admitted. The torrent of people who have died in the opioid crisis has transfixed and horrified the nation, with overdose now the leading cause of death for Americans under 50. But most drug users do not die. Far more, like Patrick, are snared for years in a consuming, grinding, unending cycle of addiction.
Chinese labs use mail to send opioid fentanyl into US, Senate report finds - Illegal shipments of the powerful and addictive opioid fentanyl are pouring into the United States by mail from China and the US Postal Service must step up the use of hi-tech detection methods to fight the problem, according to a congressional report unveiled on Wednesday. A year-long investigation by a Senate homeland security and government affairs investigations subcommittee found there is easy access for buyers in the United States to purchase fentanyl, often in relatively large quantities, through the internet. The drugs are mailed by “labs” in China to individuals who consume them or to middlemen who dilute them for resale. Show Hide Almost 100 people are dying every day across America from opioid overdoses – more than car crashes and shootings combined. The majority of these fatalities reveal widespread addiction to powerful prescription painkillers. The crisis unfolded in the mid-90s when the US pharmaceutical industry began marketing legal narcotics, particularly OxyContin, to treat everyday pain. This slow-release opioid was vigorously promoted to doctors and, amid lax regulation and slick sales tactics, people were assured it was safe. But the drug was akin to luxury morphine, doled out like super aspirin, and highly addictive. What resulted was a commercial triumph and a public health tragedy. Belated efforts to rein in distribution fueled a resurgence of heroin and the emergence of a deadly, black market version of the synthetic opioid fentanyl. The crisis is so deep because it affects all races, regions and incomes.
More on the Opiate Abuse Epidemic: Where Again Does the Finger Point? -- In a recent blog post we pointed to conservatives’ efforts to implicate Medicaid funding as somehow causative of, or at least promoting, the opiate “crisis.” After all, funding for medications means people will use, and sometimes abuse, those medications. Meds they might otherwise ill be able to afford. (Implied solution: cut Medicaid.) We also alluded to some of the logical fallacies in such thinking. Here, though, let’s take it to another level: the blame game, where does it lead? Where does the finger point? Those who agree with Ronald Reagan that government is the problem, not the solution, fall into the trap of blaming public action and civic institutional development for the ills of our society. . Take the state-by-state data. True, West Virginia is among the top states, as it happens, for both Medicaid and addiction rates. But then look at New Hampshire. With Ohio, it is a close second for addiction but affluent enough to be near the bottom of states receiving Medicaid/CHIP. Somehow the great conservative logicians seem to miss data like this. And private actors, once in the, well, let’s say billionaire realm, can manage to protect their brand even while working behind the scenes to ruin–allegedly–people’s health through false advertising. Turns out New Hampshire doctors prescribe opiates at about double the national rate, responding not to government but to private (Big Pharma) signals.Such private matters have been the case, allegedly, with the family that brought you all the flavors of the pharmacologic gift that keeps on giving: oxycodone. We know this is the case especially, more recently along with fentanyl, with this drug in its most controversial form, Oxycontin. Oxycontin was brought to your local pharmacy by the still barely-known Sackler family. It’s a dramatic story of a family out of Brooklyn by way of the medical schools of Glasgow and then the boardrooms and development offices of some of this nation’s most prestigious citadels of culture. Two recent discussions of the Sacklers point to their possible culpability in spreading a false gospel of SOAP: a Safe Opiate Administration Policy. Last fall we considered blogging on the first of those discussions in The New Yorker. But it’s hard to access some literature hidden behind paywalls, so we held off. Now, however, a shorter and in a number of ways more accessible piece on the Sacklers now emerges in The Guardian.
USDA Proposes Significant Cuts in Pork Processing Regulation - Food safety concerns have been ratcheting up lately: major outbreaks of salmonella, listeria and other food-borne bacteria seem to be on the rise . Given that, you might expect any changes in federal oversight to work toward fixing that. Not so fast! On Jan. 19, the USDA announced a proposal to "modernize swine inspection." There are a few different elements to this "modernization," many of which seem designed to maximize profit and efficiency for pork producers. One part of the proposal wants to remove limits on line speed—the number of animals that can move through the slaughterhouse in an hour—calling this an "unnecessary regulatory obstacle to innovation." That could mean an increase in the number of hogs processed by 30 percent, according to Organic Authority . Those limits are for safety reasons; capping this removes the temptation for processors to race through hogs as quickly as possible, which could result in sloppy work. Another major element would be a new, voluntary inspection program, called the New Swine Slaughter Inspection System. If a plant chooses to opt-into NSIS, as the USDA insists on abbreviating it (shouldn't it be NSSIS?), they'll find inspection responsibilities shifted from a USDA employee to one of their own employees, who would be tasked with removing unfit or unsafe animals from the line. The rationale? Government inspectors would have more time to perform "offline" tasks, like checking sanitation compliance. (Offline, in this instance, meaning away from the processing line, rather than away from the internet.)
At Trump’s EPA, once-public chemical safety reviews go dark - The U.S. Environmental Protection Agency (EPA) appears to no longer be releasing preliminary assessments of potentially hazardous new chemicals or new uses of existing chemicals, according to documents reviewed by E&E News. The development means the public has no way to know whether the agency has initial concerns or has granted companies preliminary authorization to begin manufacturing new chemicals or using them in novel ways. During the Obama administration, EPA would note whether new chemicals or new chemical uses were "not likely to present an unreasonable risk" to human health or the environment. That meant companies "may commence manufacture upon notification by EPA's Chemical Control Division by letter, notwithstanding any remaining portion of the applicable review period," an archived page on the agency's website says. Other interim status designations the Obama EPA assigned to new chemicals or uses indicated they were set either for "standard review," as unable to be reviewed because of "insufficient information available" or as possibly presenting "unreasonable risk of injury." The agency would then render a final verdict within 90 days of receiving relevant documents from companies behind the substances. Public health advocates paid particularly close attention to chemicals EPA flagged as potential concerns but later approved for manufacturing or new uses. Under Administrator Scott Pruitt, however, EPA seems to have moved to curtail public access to information about chemical reviews.
DuPont vs. the World: Chemical Giant Covered Up Health Risks of Teflon Contamination - Democracy Now! - video - Broadcasting from the Sundance Film Festival, we are joined by three guests who personally battled with DuPont and are featured in the new documentary called "The Devil We Know," that looks at how former DuPont employees, residents and lawyers took on the chemical giant to expose the danger of the chemical C8, found in Teflon and countless household products—from stain- and water-resistant apparel to microwave popcorn bags to dental floss. The chemical has now been linked to six diseases, including testicular and kidney cancers . We speak with Bucky Bailey, whose mother worked in the Teflon division of a DuPont plant in West Virginia while she was pregnant with him, and who was born with only one nostril and a deformed eye and has undergone more than 30 surgeries to fix the birth defects; Joe Kiger, lead plaintiff in a class action lawsuit against DuPont, and a school teacher in Parkersburg, West Virginia, who suffered from liver disease; and Rob Bilott, the attorney that brought DuPont to court.
Kentucky residents told it may take a decade to get clean, safe water -- Officials from the Martin County Water District Board on Saturday informed residents of the eastern Kentucky county that it could take a decade to repair and upgrade the area’s infrastructure before they could have access to safe, clean water. Working class residents of the former coal mining area have had no water or only intermittent service for weeks after the county’s antiquated and understaffed treatment plant, which was built in the 1960s, and its poorly maintained pumps and pipe system failed due to freezing and bursting lines. The district is currently losing half of its clean water due to leaks. Residents who do have service are complaining of contaminated and smelly water, and the spread of rashes, bringing to mind the public heath disaster that erupted due to the lead poisoning of the water supply in Flint, Michigan. To add insult to injury, the county is implementing a 49 percent increase in water rates. “Without clean water, you can’t live, you can’t have businesses, kids can’t go to school. It’s flu season and the kids need to wash their hands every time they can. You can’t drink from the water fountains and they are giving out bottled water. Don’t take for granted if you have clean drinking water for your family, because there are a lot of people who don’t. “There are hardly any coal mines left, people are out of work and they can’t afford the water bills that they have now.” A week ago, Gary Michael Hunt, a former miner, was accosted by a state trooper and removed from a water district meeting for criticizing officials and demanding clean and safe water for the area’s residents. A video of the trooper grabbing Hunt by the throat and threatening him with arrest has been viewed and shared a quarter of a million times.
Supreme Court agrees to hear case involving endangered frog | TheHill: The Supreme Court on Monday agreed to hear a challenge to whether the government can designate private land used for timber operations in Louisiana as critical habitat for the endangered dusky gopher frog found in Mississippi. The case stems from the U.S. Fish and Wildlife Service (FWS) decision to designate 1,544 acres in Louisiana as a critical habitat for the frog that lives underground in open-canopied pine forests. Though the dusky gopher frog hasn’t occupied the land in decades, the government said it’s considered a historic breeding site.Weyerhaeuser Company, which planned to use the land for residential and commercial development, as well as timber operations, challenged the designation. The 5th Circuit Court of Appeals sided with FWS in upholding the classification despite the landowners' argument that it will prohibit them from future development and result in lost property value. "Misconceptions exist about how critical-habitat designations impact private property," the court said." Critical-habitat designations do not transform private land into wildlife refuges." The court also said the designation does not force private landowners to introduce endangered species onto their land or to make modifications to their land. “In short, a critical-habitat designation alone does not require private landowners to participate in the conservation of an endangered species,” the court said.
Monarch butterfly migration was off this year and researchers are worried -- Thanksgiving was right around the corner, and a sizable number of one of America’s most famous migrants could be seen still sputtering south. Not across the Texas-Mexico border, where most monarch butterflies should be by that time of year. These fluttered tardily through the migratory funnel that is Cape May, N.J., their iconic orange-and-black patterns splashing against the muted green of pines frosted by the season’s first chill. This delayed migration is not normal, and it alarmed monarch researchers across the country. The Cape May stragglers were only a sliver of the record number of monarchs reported in the Northeast in November and December — news that sounded good initially to conservationists. But seeing butterflies so far north so late in the year suggested that few of these latecomers would reach their Mexican wintering grounds. Scientists fear that climate change is behind what they’re calling the latest monarch migration ev er recorded in the eastern United States, and they worry that rising temperatures pose a new threat to a species that saw its population hit record lows in recent years. “Migration conditions are a Goldilocks sort of thing. Weather, like porridge, can be too hot, too cold or just right,” said Chip Taylor, who heads the University of Kansas’s Monarch Watch, the country’s most comprehensive monarch research program. “What a warm fall does is often delay the migration in various ways. Late monarchs just don’t get to Mexico as well as early monarchs do. The difference is quite striking.”
Trump Administration Rolls Back Protections for Migratory Birds, Drawing Bipartisan Condemnation --The Trump administration’s environmental rollbacks have sparked a lot of outrage. But one recent action by the Interior Department drew unprecedented protest from a bipartisan group of top officials who go all the way back to the Nixon administration: a new legal opinion that attempts to legalize the unintentional killing of most migratory birds. Under the new interpretation, the Migratory Bird Treaty Act forbids only intentional killing — such as hunting or killing birds to get their feathers — without a permit. The administration will no longer apply the act to industries that inadvertently kill a lot of birds through oil drilling, wind power, and communications towers. Critics fear that these industries might now end the bird-friendly practices that save large numbers of birds.A letter sent by 17 former wildlife officials on Jan. 10 urges Interior Secretary Ryan Zinke to suspend the “ill-conceived” opinion, saying it makes it nearly impossible to enforce a 100-year-old law protecting migratory birds. The former officials’ message is clear: The Trump team’s assault on environmental regulations is not just the normal pendulum swing between Democratic and Republican administrations. Rather, Trump’s rollbacks are attacking fundamental principles of conservation supported by both Republican and Democratic administrations for many decades.
222 Bird Species Worldwide Now Critically Endangered - What do the southern red-breasted plover, ultramarine lorikeet and Rimatara reed warbler have in common?Here's the unfortunate answer: They're just a few of the bird species newly listed as critically endangered in the latest update of the IUCN Red List of Threatened Species . The update, released last month by BirdLife International , cites climate change and overfishing as causes of the population declines of many species, particularly seabirds.All told 222 bird species worldwide are now considered critically endangered, putting them one step above extinction. In fact, some of those species may already be gone: 21 species haven't been seen in years and are actually listed as "critically endangered, possibly extinct."The yellow-breasted bunting ( Emberiza aureola ) could join that list of extinct species before too much longer. Previously considered to be of least concern, this once-common Asian species has experienced a catastrophic 80 percent population decline over the past 13 years and is now listed as critically endangered. The brightly colored bird is commonly trapped and sold as food on China's black market, despite being legally protected in that country.In addition to the critically endangered list, another 461 bird species are now listed as endangered, with another 786 considered vulnerable. Fully 13 percent of the world's bird species are now considered threatened.BirdLife didn't reassess every bird species this year, but it did publish new data on 238 of them. Among the most striking examples:
- Snowy owls ( Bubo scandiacus ), previously listed as of least concern, are now considered vulnerable, with threats ranging from illegal hunting to climate change.
- Nesting black-legged kittiwakes ( Rissa tridactyla ) are having trouble feeding their chicks as overfishing and climate change have robbed them of their food, a situation echoed with several other seabird species. The Cape gannet ( Morus capensis ), for example, has resorted to following fishing vessels in search of food and now relies on the discards thrown off the boats—essentially low-nutrition "junk food" that lowers the survival rates of newborn chicks.
- Similarly, the kea ( Nestor notabilis ), a parrot from New Zealand, has been listed as endangered because tourists keep feeding them unhealthy food like bread and potato chips.
China Is Decimating Southeast Asian Wildlife - The Chinese were among the first foreigners to do trade with the island of Sumatra. Six hundred years ago, villages would have been but infinitesimal specks in an inconceivably vast and sublime rain forest. In 1416, a Chinese report on Sumatra noted that “There are in the forests immense quantities of wild rhinoceroses, which the king lets catch by men.” The rhinos, the author goes on to explain, would be sent to China as “tribute” to the emperor. There are still rhinoceroses in Sumatra today, perhaps as few as 30, and they are still hunted. According to that 15th century Chinese account, as well as the testimony of early European visitors and explorers, rhinoceroses once swarmed on the island. Yet their population has all been but wiped out. What happened? The answer is pretty straightforward: They were hunted and slaughtered for their horns. Many of those horns were sent to China, where they were used in so-called traditional medicine. The trend continues to this day, and it will continue until the last rhino has been hunted out of Sumatra’s protected areas. Once found from northeastern India to the Indonesian island of Java, the one-horned Sumatran and Javan rhino species are now reduced to three or four forested pockets on Sumatra, Java, and Borneo. And it is the Chinese — as well as Vietnamese — demand for rhino horn (which is, in fact, nothing but keratin — the same substance as your fingernails) that is driving the ghastly poaching trend that has all rhino species on the path to extinction. The last Javan rhino of Vietnam was poached for its horn in Cat Tien National Park in 2011, and Javan rhinos are now found only in one national park in far western corner of Java. Rhinoceroses are almost certainly extinct in Sarawak today, and the last one of Sabah state in Borneo is ill.
Ghost Cat Gone: Eastern Cougar Officially Declared Extinct - Say good-bye to the "ghost cat." This week the U.S. Fish and Wildlife Service officially declared the eastern cougar (Puma concolor couguar ) to be extinct and removed it from the endangered species list . The big cats, once native to New England, were last verifiably observed back in 1938. The service first concluded that the species was extinct back in 2011, and then proposed removing its protected status in 2015 . This latest step, taken after extensive scientific review and public comment, completes the eastern cougar's long journey into the night. Eastern cougars—also known as "ghost cats," catamounts, panthers and, of course, mountain lions—disappeared after decades of overhunting on multiple fronts. The large predators were seen as threats to livestock, which resulted in the cats being actively hunted and bounties placed on their heads. On top of that, the cats also ran out of their primary prey, deer, which were themselves hunted into near-extinction. "White-tailed deer were nearly eradicated from the eastern U.S. in the late 1800s," service biologist Mark McCollough told me in 2011 . "The few cougars that survived [after that] would have had very little food to support them."
First monkey clones created in Chinese laboratory - BBC - Two monkeys have been cloned using the technique that produced Dolly the sheep.Identical long-tailed macaques Zhong Zhong and Hua Hua were born several weeks ago at a laboratory in China.Scientists say populations of monkeys that are genetically identical will be useful for research into human diseases.But critics say the work raises ethical concerns by bringing the world closer to human cloning.Qiang Sun of the Chinese Academy of Sciences Institute of Neuroscience said the cloned monkeys will be useful as a model for studying diseases with a genetic basis, including some cancers, metabolic and immune disorders."There are a lot of questions about primate biology that can be studied by having this additional model," he said. Zhong Zhong was born eight weeks ago and Hua Hua six weeks ago. They are named after the Mandarin term for the Chinese nation and people. The researchers say the monkeys are being bottle fed and are currently growing normally. They expect more macaque clones to be born over the coming months.
How can we halt the feminisation of sea turtles in the northern Great Barrier Reef? - In the northern part of Australia’s Great Barrier Reef, the future for green sea turtles appears to be turning female. A recent study has revealed that climate change is rapidly leading to the feminisation of green turtles in one of the world’s largest populations. Only about 1% of these juvenile turtles are hatching male. Among sea turtles, incubation temperatures above 29ºC produce more female offspring. When incubation temperatures approach 33ºC, 100% of the offspring are female. Cooler temperatures yield more males, up to 100% near a lower thermal limit of 23ºC. And if eggs incubate at temperatures outside the range of 23-33ºC the risk of embryo malformation and mortality becomes very high. As current climate change models foresee increases in average global temperature of 2 to 3ºC by 2100, the future for these turtles is in danger. Worryingly, warmer temperatures will also lead to ocean expansion and sea-level rise, increasing the risk of flooding of nesting habitats. Green sea turtles’ sensitivity to incubation temperatures is such that even a few degrees can dramatically change the sex ratio of hatchlings. Sea turtles are particularly vulnerable because they have temperature-dependent sex determination, or TSD, meaning that the sex of the offspring depends on the incubation temperature of the eggs. This is the same mechanism that determines the sex of several other reptile species, such as the crocodilians, many lizards and freshwater turtles. Research has revealed that most nesting beaches studied to date have sand temperatures that favour female hatchling production. But this female bias is not immediately a bad thing, because male sea turtles can mate with several females (polygyny). So having more females actually enhances the reproductive potential of a population (i.e. more females equals more eggs). But given that climate change will likely soon increase this female bias, important questions arise. How much of a female bias is OK? Will there be enough males? What is the minimum proportion of males to keep a sustainable population?
Rising sea swamps island along Bengal coast -- The living drown and the dead float out from their graves as a rising sea engulfs Baliara village in Mousuni, an island facing the Bay of Bengal. Every third or fourth day, the high tide enters homes and leaves farms a wasteland. The village burial ground has been engulfed by salt water and skeletons keep floating up out of the earth. At one edge of the Sundarbans – the world’s largest mangrove forest – Mousuni used to have an embankment along Baliara to hold back the rising sea. That collapsed during the 2009 Cyclone Aila. Since then, there have been three attempts to build sea walls, all of which have collapsed against the power of the sea. Scientists say seas around the world are rising due to climate change, but the Bay of Bengal is rising twice as fast as the global average. I had first visited Baliara in 2009, two months before the cyclone hit. Badruddin Sarkar, retired headmaster of the village school, had then stood on top of the 18-foot embankment and pointed out the homes he used to have – the first was overtaken by a rising sea in 1991 and the second in 2004. All that could be seen of the second was the trunk of a coconut palm – it used to be part of the foundation. Two months after I met him, a storm surge from Cyclone Aila topped the embankment, ruined Sarkar’s paddy fields and freshwater fish farms with salt water, killed his livestock, and forced him to migrate to Kolkata, the capital of the Indian state of West Bengal, over 100 kilometres away. Now, Abdul Hanan, 61, retired headmaster of the school’s primary section, pointed out the effects of the rising seas. There is no sign of the original embankment, girders from subsequent attempts to build a sea wall lie overwhelmed and abandoned, dead coconut and date palms dot a landscape of saline pools where nothing can grow.
Sea levels off Dutch coast highest ever recorded in 2017 -- Storm surges and tidal cycles caused record sea levels along the coast of the Netherlands last year, a Dutch marine institute has found. "The level has been rising gradually since 1890 by about 0.2 cm per year due to the melting of the ice and the warming up of the ocean," expert Fedor Baart, of the research organization Deltares, said in a statement Friday. "That means that, as a rule, you expect the sea level to be higher every year." Sea and water levels are carefully watched in the Netherlands, as much of the country lies below sea-level and is protected from flooding by a series of defenses such as dikes, sand dunes, windmills to pump away water and sophisticated barrages. In 2017, the institute measured the average sea levels along the Dutch coast to be four inches higher than normal water levels in Amsterdam, a gauge known as the NAP. The previous highest reading was in 2007 when the water was about 3.5 inches above the NAP. The institute said in 2017 "there were several storm surges in a single year for the first time since 2007," which had contributed to the high water levels. Bad storms can temporarily push water levels up by a meter, which accounts for an average rise of about one centimeter (.4 inches), Baart explained. The institute also highlighted that every 18.6 years the seas rise and fall by two centimeters (.75 inches) on a tidal cycle. "The last peak was in 2004, and the level is now rising again to the next peak in early 2023," Deltares said in a statement. It stressed however that "the Dutch coast can cope with extreme water levels" and said, "the sea level on the Dutch coast is rising by 20 centimeters (7.8 inches) every century."
Special Report: How the government ignored the cost of pollution and undermined its clean air rules - Scroll.in -- The residents of North India live and work in toxic air conditions with the levels of pollution in the winter months often rising to 20 times the limits considered safe by the World Health Organisation. But the government of India has decided that the financial costs of the thermal power industry adopting cleaner technologies outweighs the health costs for millions of Indians breathing toxic air.On December 11, 2017, the Central Pollution Control Board, which reports to the environment ministry, wrote letters to more than 400 thermal power units in the country, allowing them to release pollutants in violation of the limits set by the government for upto five more years. These limits were part of the regulations notified by the environment ministry in December 2015. The aim was to control the emissions of hazardous nitrogen and sulphur oxides and tiny particulate matter which can enter human lungs, cause respiratory diseases and bring down lifespans.Older power stations were given two years to move to cleaner technologies, with December 7, 2017 set as the deadline for meeting the new norms. New power stations commissioned after January 1, 2017 were expected to adhere to the norms from the start.But the thermal power industry resisted the regulations. Within a month of new norms being notified, the Association of Power Producers, an industry body representing thermal power station owners, wrote to the Central Pollution Control Board, asking it to exempt older power plants, citing technical difficulties and financial costs.In response, the Central Pollution Control Board said in February 2016: “Improvement in environmental conditions by adopting cleaner and best available technologies cannot be linked with financial aspects.” It also pointed out that thermal power stations contribute about 90% of industrial emissions in terms of nitrogen and sulphur oxides and particulate matter.But as the deadline for power stations to meet the new norms approached, the environment ministry buckled in, accepting a plan submitted by the power ministry for a phased adoption of new technologies by power stations. It undermined its own regulations that could have given Indians some respite from toxic air.
EU Makes Limited Move on Plastics: Too Little, Too Late? -- The EU adopted its first-ever European Strategy for Plastics in a Circular Economy on January 16.The goal of the new strategy is to “transform the way plastic products are designed, used, produced and recycled in the EU. Better design of plastic products, higher plastic waste recycling rates, more and better quality recyclates will help boosting the market for recycled plastics. It will deliver greater added value for a more competitive, resilient plastics industry,” according to the summary found at European Strategy for Plastics. Under the plan, all plastic packaging on the EU market must either be reusable or recyclable in a cost-effective manner by 2030, half of all plastics waste for all applications should be recycled, again by 2030, consumption of single-use plastics will be reduced, and use of microplastics restricted. In this post, I will focus on critiquing the general approach, rather than on minutiae outlined in the overall strategy document.These moves may seem to be a step in the right direction– especially compared to the situation in the US, where the fracking boom has caused major fossil fuel companies to ramp up their future plans for plastics production, as I discussed in this previous post, Fracking Boom Further Spurs Plastics Crisis. The EU measures fall short of the magnitude of the plastics crisis, however. And in that they provide the appearance that the EU is confronting the problem, they may actually do more harm than good.
Each EU Citizen Creates 31kg Of Plastic-Waste Per Year (But The Irish Are Worst) - Plastic packaging waste is a huge problem around the world. Despite efforts in some European countries such as plastic bottle deposit schemes or having to pay for plastic bags in the supermarket, Statista's Martin Armstrong notes that the average EU citizen creates 31kg of plastic waste per year. Eurostat figures show that the UK lies above this average, with its citizens responsible for 35kg of waste. The worst country by a long way though is Ireland. 61kg of packaging is thrown away by the average Irish person, 9kg more than the second most prolific country, Luxembourg. The least is created in Bulgaria where a more acceptable 14kg is disposed of over the year.
Jet Stream Changes Since 1960s Linked to More Extreme Weather - Increased fluctuations in the path of the North Atlantic jet stream since the 1960s coincide with more extreme weather events in Europe such as heat waves, droughts, wildfires and flooding, reports a University of Arizona-led team. The research is the first reconstruction of historical changes in the North Atlantic jet stream prior to the 20th century. By studying tree rings from trees in the British Isles and the northeastern Mediterranean, the team teased out those regions' late-summer weather going back almost 300 years — to 1725."We find that the position of the North Atlantic jet in summer has been a strong driver of climate extremes in Europe for the last 300 years," said Valerie Trouet, an associate professor of dendrochronology at the UA Laboratory of Tree-Ring Research. Having a 290-year record of the position of the jet stream let Trouet and her colleagues determine that swings between northern and southern positions of the jet became more frequent in the second half of the 20th century, she said."Since 1960 we get more years when the jet is in an extreme position," Trouet said, adding that the increase is unprecedented. When the North Atlantic jet is in the extreme northern position, the British Isles and western Europe have a summer heat wave while southeastern Europe has heavy rains and flooding, she said. When the jet is in the extreme southern position, the situation flips: Western Europe has heavy rains and flooding while southeastern Europe has extreme high temperatures, drought and wildfires.
Water Scarcity Threat to India and South Africa - Water scarcity is now a real threat in two developing countries at the forefront of efforts to reduce climate change , India and South Africa. This is not the tragically familiar story of extreme weather , stunted crops and foreshortened lives. It is a different sort of threat: to urban life, to industrial development and to attempts to end poverty. More than 80 percent of India's electricity comes from thermal power stations, burning coal, oil, gas and nuclear fuel. Now researchers from the U.S.-based World Resources Institute (WRI), after analyzing all of India's 400+ thermal power plants, report that its power supply is increasingly in jeopardy from water shortages . The researchers found that 90 percent of these thermal power plants are cooled by freshwater, and nearly 40 percent of them experience high water stress. The plants are increasingly vulnerable, while India remains committed to providing electricity to every household by 2019. Between 2015 and 2050 the Indian power sector's share of national water consumption is projected to grow from 1.4 to nine percent, and by 2030, 70 percent of the country's thermal power plants are likely to experience increased competition for water from agriculture, industry and municipalities. "Water shortages shut down power plants across India every year," said O P Agarwal of WRI India. "When power plants rely on water sourced from scarce regions, they put electricity generation at risk and leave less water for cities, farms and families. Without urgent action, water will become a chokepoint for India's power sector." Between 2013 and 2016 14 of India's 20 largest thermal utility companies experienced one or more shutdowns because of water shortages. WRI calculates that shutdowns cost these companies over INR 91 billion ($1.4 billion) in potential revenue from the sale of power. It says water shortages canceled out more than 20 percent of the country's growth in electricity generation in 2015 and 2016.
It’s True: Cape Town’s Water Supply Is Three Months Away from a Shutdown -- Three years of unforgiving drought in Cape Town, South Africa, have led to the once-unthinkable: A great world city is about to turn off the tap to its municipal water supply. The long-feared “Day Zero”—the point when the reservoirs serving Cape Town drop below the minimum levels needed to provide water safely—will arrive April 21, according to recent projections from the Western Cape Water Supply District. Because we’re now in the midst of the Southern Hemisphere summer, it’s the dry season for Cape Town. There is very little chance that winter rains will kick in soon enough to prevent a few days or even a few weeks without municipal water. The city’s impressive water conservation efforts to date haven’t done the trick, and even a few stopgap desalination plants being rushed to completion are unlikely to avert Day Zero. At this point, the hydrologic hole dug by intense drought is simply too deep. “Day Zero is the day that the water resource system runs out of water,” said Mark New, the AXA Research Chair in African Climate Risk at the University of Cape Town, in an email. What does this mean? “No water coming out the taps. Toilets cannot be flushed. Fire services cannot get water out of the fire hydrants. People will have to walk to water tankers to fill up drinking water bottles.” And there will be knock-on effects, such as schools considering whether they can operate with no water on campus.According to New, there are three main strategies—over and above the extreme water restrictions already in place—to try and forestall Day Zero:
- Drilling and tapping emergency groundwater supplies
- Bringing several portable desalinization plants on line
- Cutting off water to neighborhoods for periods of each day, to reduce demand even further.
“It is not clear whether the groundwater and desalination options will be operating in time, and with sufficient quantity, to make a difference,” he said. Even then, the supply could still run short, as evident in Figure 2 below.
Low Snowpack in the Colorado Rockies Sparks Concern - The latest numbers are in, and they’re not good. Snow levels are currently at 59% of normal. And levels are only 39% compared to where they were at the same time last year. Some areas are reporting the driest start to a winter in over thirty years. This has created some concern, because winter snow, becomes spring runoff, which is how Colorado gets its water supply. A snowy winter, also lessens the danger of wildfires during the dry summer months. Snowpack in the Colorado, Wyoming, and Utah mountains also feeds the Colorado River basin. All of the Colorado River’s upper basin streams empty into Lake Powell. This reservoir, on the Utah-Arizona boarder, serves as a vital water supply for seven states, including Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming. It’s water irrigates 1.8 million acres of farm and ranch land. The river basin also provides the water supply for 40 million people in the southwestern U.S. The Glen Canyon Dam holds back the water of the Colorado River to form Lake Powell. Water flow through this dam provides electric power to Native American reservations and towns throughout Utah, Colorado, Arizona and New Mexico. The dam also provides critical water supply for agricultural operations, allowing the arid Southwest to become fertile agricultural land for fruit and vegetable crops. You can see in the map below, how the Green, Yampa, Gunnison, and Colorado rivers all flow into Lake Powell. And all of these rivers flow because of snow-melt from the Rockies. The Four Corners region needs moisture, and it needs to rebound strong in the second-half of the winter to make up for a lack-luster first-half. However, the prognosis is not good. Most of the region is already in a moderate to severe drought, and the situation will only worsen if rain and snow don’t arrive in abundance. Most of the rain and snow this season have been in the northwest. Washington, Oregon, Idaho, and Montana have seen plenty of moisture this winter. Why is this? One reason may be La Niña, which is characterized by unusually cold ocean temperatures in the Equatorial Pacific. This change in ocean temperatures can drastically alter weather patterns across the U.S.
Maize, rice, wheat: alarm at rising climate risk to vital crops leading to widespread famine - Governments may be seriously underestimating the risks of crop disasters occurring in major farming regions around the world, a study by British researchers has found.The newly published research, by Met Office scientists, used advanced climate modelling to show that extreme weather events could devastate food production if they occurred in several key areas at the same time. Such an outcome could trigger widespread famine.The scientists, led by Chris Kent, of the Met Office, focused their initial efforts on how extreme weather would affect maize, one of the world’s most widely grown crops. Heat and drought were the prime risks, although flooding was also included in the analysis.The group found there is a 6% chance every decade that a simultaneous failure in maize production could occur in China and the US – the world’s main growers – which would result in widespread misery, particularly in Africa and south Asia, where maize is consumed directly as food. “The impact would be felt at a global scale,” Kent told the Observer. “This is the first time we have been able to quantify the risk. It hasn’t been observed in the last 30 years, but the indications are that it is possible in the current climate.”An example of the kind of disaster that could occur is provided by the maize harvests that failed last year in Africa. Communities in Zambia, Congo, Zimbabwe, Mozambique and Madagascar were affected and six million people were left on the brink of starvation. A joint failure of China and America’s maize harvest would have a far greater impact.Having studied the risks facing maize production, the group is now following up this work by studying climate impacts on the world’s other staple crops – in particular rice, wheat and soy beans – in order to assess how weather extremes could affect their production. According to the UN Food and Agriculture Organisation, maize, rice and wheat together make up 51% of the world’s calorie intake. Billions of people rely on these crops for survival. Any disruption to their production would have calamitous consequences.
A ‘marine motorhome for microbes’: Oceanic plastic trash conveys disease to coral reefs - For coral reefs, the threat of climate change and bleaching are bad enough. An international research group led by Cornell University has found that plastic trash - ubiquitous throughout the world's oceans - intensifies disease for coral, adding to reef peril, according to a new study in the journal Science. "Plastic debris acts like a marine motorhome for microbes," said the study's lead author, Joleah Lamb, a postdoctoral research fellow at Cornell. She began collecting this data as a doctoral candidate at James Cook University in Australia. "Plastics make ideal vessels for colonizing microscopic organisms that could trigger disease if they come into contact with corals," Lamb said. "Plastic items - commonly made of polypropylene, such as bottle caps and toothbrushes - have been shown to become heavily inhabited by bacteria. This is associated with the globally devastating group of coral diseases known as white syndromes." When plastic debris meets coral, the authors say, the likelihood of disease increases from 4 to 89 percent - a 20-fold change. The scientists estimate that about 11.1 billion plastic items are entangled on reefs across the Asia-Pacific region, and that this will likely increase 40 percent over the next seven years. Coral are tiny animals with living tissue that cling to and build upon one another to form "apartments," or reefs. Bacterial pathogens ride aboard the plastics, disturbing delicate coral tissues and their microbiome."What's troubling about coral disease is that once the coral tissue loss occurs, it's not coming back,"
Rising CO2 affecting freshwater three times faster than saltwater -- As carbon dioxide (CO2) levels in the atmosphere rise, more CO2 is absorbed into our oceans, making them more acidic. We know the problems this has caused in the saltwater environment. Now, rising CO2 levels are also affecting some freshwaters, too. Rising CO2 levels in the atmosphere being absorbed into the world's oceans have created a wide range of well-documented problems for marine animals and ecosystems. Now, researchers reporting in Current Biology on January 11 present some of the first evidence that similar things are happening in freshwaters too. The study was conducted by aquatic biologists at Ruhr University Bochum in Germany. They found that some freshwater ecosystems have become more acidic with rising pCO2 levels (Partial pressure of CO2 is a measure that reflects the carbon dioxide exchange between the lake and its environment), using data spanning 35 years, from 1981-2015. Four freshwater reservoirs in Germany were used in the study. Analysing the data covering 35 years, they confirmed there had been a continuous rise in pCO2 levels at all four freshwater bodies. A rise in CO2 levels causes a decrease in pH levels, the measure of how acid the water has become. Just remember, the lower the pH level, the greater the acidity. With the continuous rise in pCO2 levels in the four reservoirs, there was also a 0.3 decrease in the pH level. This is actually three times what has been measured in oceans since the industrial revolution. The researchers found that while lakes may be absorbing some CO2 from the atmosphere, like the oceans, they are getting much more of the greenhouse gas from emissions settling in the soil and washing into freshwater.
New study shows freshwater input route from melting ice led to rapid cooling -- Scientists have long known that a reduction in Atlantic Ocean currents bringing warm water to the Northern Hemisphere from the tropics created abrupt cooling known as the Younger Dryas cold period nearly 13,000 years ago, but the cause of this phenomenon has not been proved. Now a team of scientists from the United States and Canada think they have the answer – input of fresh water from the Laurentide Ice Sheet retreating from the Lake Superior basin, creating a river through the lower Great Lakes to the Gulf of St. Lawrence and the North Atlantic. The findings are important because it could happen again, a result of both the Greenland Ice Sheet melting and a significant rise in fresh water from the Arctic through increased rain and snow. The study also highlights how sensitive the Atlantic current is to changes in the input of fresh water. "It has been well-documented that the Atlantic meridional overturning circulation, or AMOC, slowed because of fresh water, but there has been little agreement as to how," . "Some scientists have argued for years that it has been this freshwater path, but others say the region was still iced in when the cooling period begun. "Some people have even speculated that a comet caused the cooling period. We found convincing evidence, however, that it was fresh water – a river the size of the Mississippi that flowed into the North Atlantic."
Long-term warming trend continued in 2017: NASA, NOAA - Earth’s global surface temperatures in 2017 ranked as the second warmest since 1880, according to an analysis by NASA. Continuing the planet's long-term warming trend, globally averaged temperatures in 2017 were 1.62 degrees Fahrenheit (0.90 degrees Celsius) warmer than the 1951 to 1980 mean, according to scientists at NASA’s Goddard Institute for Space Studies (GISS) in New York. That is second only to global temperatures in 2016. In a separate, independent analysis, scientists at the National Oceanic and Atmospheric Administration (NOAA) concluded that 2017 was the third-warmest year in their record. The minor difference in rankings is due to the different methods used by the two agencies to analyze global temperatures, although over the long-term the agencies’ records remain in strong agreement. Both analyses show that the five warmest years on record all have taken place since 2010. Because weather station locations and measurement practices change over time, there are uncertainties in the interpretation of specific year-to-year global mean temperature differences. Taking this into account, NASA estimates that 2017’s global mean change is accurate to within 0.1 degree Fahrenheit, with a 95 percent certainty level.
Last three years hottest on record: UN: The last three years were the hottest on record, the United Nations weather agency said Thursday, citing fresh global data underscoring the dramatic warming of the planet. Consolidated data from five leading international weather agencies shows that "2015, 2016 and 2017 have been confirmed as the three warmest years on record", the World Meteorological Organization (WMO) said. It added that 2016 remains the hottest year ever measured due to the warming effect of El Nino, while 2017 was the warmest non-El Nino year, beating out 2015 by less than one hundredth of a degree. "The long-term temperature trend is far more important than the ranking of individual years, and that trend is an upward one," WMO secretary-general Petteri Taalas said in a statement. The 21st century has so far been a period of the hottest weather, accounting for 17 of the 18 warmest years on record. "And the degree of warming during the past three years has been exceptional," Tasslas added. The WMO also highlighted the intensification of weather and climate related disasters, which hit record levels in the United States last year, while multiple countries were devastated by cyclones, floods and drought. The WMO findings were based on data provided by the US National Oceanic and Atmospheric Administration, US space agency NASA, Britain's Met office, the European Centre for medium range weather forecasts and the Japan Meteorological Agency. Using those inputs, the UN said that the average global surface temperature last year was 1.1 degrees Celsius (1.98 degrees Fahrenheit) above pre-industrial levels.
Southeast Australian heatwaves signal a horror fire season --In stark contrast to freezing conditions in the northern hemisphere, southeastern Australia started the year with record-breaking heatwaves that foreshadow a severe summer fire season over the next two or three months.On January 6, Penrith, a western suburb of Sydney, experienced 47.3 degrees Celsius or 117 degrees Fahrenheit, making it the hottest place on the planet for that day—just below the hottest temperature ever recorded in Sydney.The scorching conditions extended across the southeastern corner, where the great majority of the Australian population live. The states of South Australia, Victoria and New South Wales (NSW) all experienced temperatures over 40 degrees C. That heatwave was followed by another on January 18–19 with similar temperatures,Many areas were subject to power outages, including on the NSW Central Coast, where more than 4,000 properties were affected. Approximately 3,000 properties were cut off in Sydney, along with thousands of homes in Melbourne. As in other heatwaves, there is likely to have been a spike in deaths, with the elderly, infirm and young children the worst affected.Fire is an ever-present danger as southeastern Australia is one of the most bushfire prone areas of the world. High temperatures, especially when accompanied with strong winds, create the perfect conditions for fire storms fuelled by highly-flammable eucalyptus vegetation. On January 6, several homes were destroyed by fires that swept through 12,100 hectares of scrub and farmland at Sherwood in South Australia’s southeast. In Victoria, 139 fires broke out across the state, including in Carrum Downs on the outskirts of Melbourne. One of the worst fires was fanned by 90 km/hr winds at Glenormiston in the state’s west. Beginning on January 19, a bushfire has burned over 59,000 hectares (about 146,000 acres) of the Pilliga State Forest in northwestern NSW. Fire crews from across the state continue to battle the blaze.
2017 Was the Hottest Year on Record for Oceans - Last year wasn't just one of the hottest years on Earth's surface, as it was the hottest year on record for the global ocean , according to a new study from the Institute of Atmospheric Physics (IAP)/Chinese Academy of Science . Researchers Lijing Cheng and Jiang Zhu found that the top 2,000 meters of ocean waters are hotter than ever recorded, at 19.19 × 10^22 J. Heat energy is measured in Joules (J). That's quite the jump from 2015, the previous record-breaking year for ocean heat, which was recorded at 17.68 × 10^22 J. "For comparison," the study states, "total electricity generation in China in 2016 was 0.00216 × 10^22 J, which is 699 times smaller than the increase in ocean heat in 2017." Ocean heat in 2016 was cooler than both 2015 and 2017 due to a large El Ninõ event that year, which takes heat out of the ocean. As thermal sciences professor Dr. John Abraham explained in the Guardian , "During an El Niño, the Pacific Ocean tends to have very warm waters at the surface, which causes heat loss to the atmosphere (so the ocean cools and the atmosphere warms). Conversely, during a La Niña, the reverse process occurs." Despite the 2016 drop, the last five years were still the five warmest years in the ocean on record.
- 2017: 19.19 × 10^22 J
- 2015: 17.68 × 10^22 J
- 2016: 17.18 × 10^22 J
- 2014: 16.74 × 10^22 J
- 2013: 16.08 × 10^22 J
This chart makes the rise in ocean heat since the 1950s much more clear. The research highlights how measuring ocean heat is key to tracking the impacts of climate change : "Owing to its large heat capacity, the ocean accumulates the warming derived from human activities; indeed, more than 90 percent of Earth's residual heat related to global warming is absorbed by the ocean. As such, the global ocean heat content record robustly represents the signature of global warming and is impacted less by weather-related noise and climate variability such as El Niño and La Niña events. The year 2016 was cooler than both 2015 and 2017 owing to the huge El Niño, which took some of the heat out of the ocean. According to the IAP ocean analysis, the last five years have been the five warmest years in the ocean. Measurements of ocean heating are a more reliable indicator than atmospheric measurements for tracking the vital signs of the health of the planet."
Climate Code Red: What we learned about the climate system in 2017 that should send shivers down the spines of policy makers - Much of what happened in 2017 was predictable: news of climate extremes became, how can I put it … almost the norm. There was record-breaking heat on several continents, California’s biggest wildfire (extraordinarily in the middle of winter), an ex-tropical cyclone hitting Ireland (yes, Ireland) in October, and the unprecedented Hurricanes Harvey, Irma and Maria that swept through the Atlantic in August. The US government agency, the NOAA, reported that there were 16 catastrophic billion-dollar weather/climate events in the USA during 2017.
And 2017 “marks the first time some of the (scientific) papers concluded that an event could not have occurred — like, at all — in a world where global warming did not exist. The studies suggested that the record-breaking global temperatures in 2016, an extreme heat wave in Asia and a patch of unusually warm water in the Alaskan Gulf were only possible because of human-caused climate change,” Reuters reported. At both poles, the news continues to be not good. At the COP23 in Bonn, Pam Pearson, Founder and Director of the International Cryosphere Climate Initiative, warned that the cryoshere is becoming “an irreversible driver of climate change.” She said that most cryosphere thresholds are determined by peak temperature, and the length of time spent at that peak, warning that “later, decreasing temperatures after the peak are largely irrelevant, especially with higher temperatures and longer duration peaks.” Thus “overshoot scenarios,” which are now becoming the norm in policy-making circles (including all 1.5 °C scenarios) hold much greater risks. So what did we learn about the climate system in 2017? Here’s three that stand out, that should send shivers down the spines of policy makers.
- 1. 2017 was the second hottest year on record and the hottest non-El Nino year on record
- 2. It is likely to get hotter than we think - Two significant pieces of work released towards the end of 2017 suggest that warming is likely to be greater than the projections of the Intergovernmental Panel on Climate Change (IPCC), on which climate policy-making and carbon budgets are generally based. This is because what is called Equilibrium Climate Sensitivity (ECS), an estimate of how much the planet will warm for a doubling in the level of greenhouse gases, is higher than the median of the IPCC’s modelling analysis.
- 3. Climate models under-estimate future risks
Study blames sandwiches for global warming -- According to a new study, there may be an unlikely new scapegoat for global warming: sandwiches.Scientists at the University of Manchester in England say their “in-depth audit of various sandwiches,” shows that the lunchtime staple is responsible for carbon emissions equal to 8.6 million cars in Britain alone. One of the biggest offenders are breakfast sandwiches filled with egg, bacon and sausage. The researchers estimate that an “all-day breakfast sandwich” emits the equivalent of carbon emissions created by driving a car for 12 miles, The Guardian reported. The study suggests including information about the “carbon footprint” on nutritional packaging for sandwiches in hopes of changing consumer behavior.
Weather from the Ground Up: How Biodiversity Can Help Shape Local Climate - We generally don’t think we can do much about the weather. Expert prediction and analysis, such as that from Weather Underground, help us prepare for storms, cold and hot spells, errant jet streams, and the like. But the weather seems to insist on having a will of its own. On a local level, however, there’s much we can do to affect a number of weather factors—temperature, for example. Consider this suburban front yard pictured in Figure 1 below. The ambient temperature is 90°F. What do you think the difference in land-surface temperature is between the coolest (under the bushes) and warmest (asphalt) spots? The answer is at the end of this article. What makes the temperature difference is water, shade, and ground cover. Nature’s rule is that healthy soils are never bare—asphalt is the equivalent of very bare soil, made worse by its low albedo, i.e., low reflectivity and increased heat absorption. Here’s one place where water comes in: it’s a great temperature buffer. It’s the lack of water that causes day-night temperature extremes in deserts, for example. With abundant and strategic use of soils, plants and biodiversity to capture and cycle water, local temperatures, including heat-island effects in cities, may be significantly moderated. There is growing evidence that we humans may have far more control over the meteorology above our heads than we think. We can create weather more to our liking—and beneficial for our survival and that of many species—by paying attention to the soils, plants and other living creatures underfoot and all around us. Answer to front yard quiz: 60°F difference from under the bushes (68°F) to the asphalt (128°F). Get out your thermometer and try this experiment yourself!
Geoengineering Carries ‘Large Risks’ for the Natural World, Studies Show - Reducing the impacts of human-caused climate change through the use of bioenergy with carbon capture and storage—better known as BECCS —could have major consequences for wildlife, forests and water resources, a new study shows.The large-scale conversion of existing land to BECCS plantations could cause global forest cover to fall by as much as 10 percent and biodiversity "intactness" to decline by up to 7 percent, the lead author told Carbon Brief.And the introduction of solar geoengineering could also threaten wildlife, a second study shows. The new research finds that implementing—and then not sustaining—such a technology could cause global temperatures to rebound rapidly, leaving many species unable to cope with the sharp change in conditions.The two studies reiterate the need to fully consider the possible consequences of implementinggeoengineering technologies if they are used to lessen the effects of global warming, the authors of both studies tell Carbon Brief. The findings also highlight "the solution to global warming is mitigation," one author concludes. "In order to achieve climate goals, it is now essential to immediately reduce CO2 emissions, instead of using harmful technologies to compensate for a more leisurely pace," another author said.
Artificially cooling planet may pose threat to plants, animals (Thomson Reuters Foundation) - Spraying chemicals into the earth’s upper atmosphere to reflect more sunlight away from the planet could be one means of coping with runaway climate change, some scientists say. But employing the controversial “geoengineering” technique carries a range of risks - including that if such spraying was unexpectedly stopped, a rapid surge in heat on the planet would have “devastating” effects on plants and animals, according to a study published Monday. ”If geoengineering ever stopped abruptly, it would be devastating. So you would have to be sure that it could be stopped gradually, and it is easy to think of scenarios that would prevent that,” said co-author Alan Robock of the Department of Environmental Sciences at Rutgers University-New Brunswick. Those might include war, a terrorist attack on facilities that carry out the spraying or political changes of heart, the study noted. “Imagine large droughts or floods around the world that could be blamed on geoengineering, and demands that it stop. Can we ever risk that?” the climate scientist added. Research into “geoengineering” - technologies that could potentially deal with runaway climate change by artificially modifying how reflective the earth is, or sucking excess carbon dioxide out of the atmosphere - is on the upswing as the world edges closer to moving beyond what are seen as relatively safe levels of climate change. But unless national plans to curb emissions are ramped up quickly, the Earth is expected to warm by at least 3 degrees Celsius by the end of the century - a level expected to melt much of the world’s ice and spur worsening crop failures, extreme weather and sea level rise. Spraying sulphur dioxide and other particles into the planet’s upper atmosphere would create a cloud of sulphuric acid that reflects some of the sun’s rays, cooling the planet, researchers say. The largely untested technology mimics the effects of volcanic eruptions, and could be deployed with modified airplanes, balloons or other delivery devices, they say. But critics warn that it could change fundamental earth processes in hard-to-predict and potentially hugely problematic ways, such as shifting the focus of Asia’s monsoons.
What happens if we start solar geo-engineering—and then suddenly stop? - Supporters of solar geo-engineering say it’s logical: Since humans have already made the Earth better at trapping heat by releasing greenhouse gases like carbon dioxide, then maybe humans can futz with another variable—how much heat enters the planet in the first place—and release a different gas that will repel sunlight back into space. The gas most likely to get the job done is sulfur dioxide, a transparent substance that reflects light and that is naturally released by volcanic eruptions. Sulfur dioxide helped cool Earth after the 1991 eruption of Mount Pinatubo in the Philippines, for instance. Aspiring solar geo-engineers imagine a fleet of planes, spraying the skies with multiple Pinatubos’ worth of sulfur every year, in order to preserve the planet’s cooler climate for as long as possible. But Robock is skeptical. In a paper released this week in Nature Ecology and Evolution, he and his colleagues make one argument for why solar geo-engineering could be worse than climate change itself. If humanity were to start solar geo-engineering—and then, decades later, suddenly stop—animals, plants, and ecosystems might suffer more than they would under climate change as usual. In other words, solar geo-engineering has the potential to harm Earth’s biodiversity more than letting global warming run its course. For ecosystems, everything depends on how quickly climate change occurs. If climate change slowly warms the globe over the course of decades, then animals and plants will have those decades to adjust. This will still be destructive—and, from a geological standpoint, it will count as speedy climate change. The Earth’s natural climate changes—such as the onset of an ice age—take thousands of years to set in.
How engineering earth’s climate could seriously imperil life - TRAVEL WITH ME to the year 2100. Desperate to stop the warming, scientists deploy planes to spray sulfur dioxide in the stratosphere, where it converts into a sulfate aerosol, which reflects sunlight. Thus the planet cools because, yes, chemtrails. A study out today in Nature Ecology & Evolution models what might happen if humans were to geoengineer the planet and then suddenly stop. The sudden spike in global temperature would send ecosystems into chaos, killing off species in droves. It’s just that among the many theoretical problems with geoengineering, we can now add its potential to rip ecosystems to shreds. The models in this study presented a scenario in which geoengineers add 5 million tons of sulfur dioxide to the stratosphere, every year, for 50 years. Then, in this hypothetical scenario, the sulfur seeding just stops altogether—think if someone hacks or physically attacks the system. “You'd get rapid warming because the aerosols have a lifetime of a year or two, and they would fall out pretty quickly,” says study co-author Alan Robock, a climate scientist at Rutgers University. “And then you'd get all this extra sunlight and you'd quickly go back up to what the climate might have been without the geoengineering.” We’re talking a rise in land surface temperatures of almost a degree per decade. “Even if you do it over five years, you're still going to get this rapid warming,” he says. Now, species haven’t survived on Earth for 3.5 billion years by being wilting flowers; if the climate changes slowly, species can adapt to withstand extra heat or cold. But suddenly blast the planet with a massive amount of solar energy that quickly, and you’re liable to catch a species off-guard. And it’s not just temperatures they’d have to adapt to. Dramatic shifts in precipitation would force species to quickly move to new climes or face destruction. Species like amphibians, which are sensitive to temperature and precipitation changes, would have a tough go of it. And of course, not all species have the option of fleeing. Populations of trees and clams and corals would be pretty much kaput.
Huge volcano eruption in the Philippines forces mass evacuation - The most active volcano in the Philippines spewed fountains of lava and massive ash plumes in a new eruption today that forced more than 50,000 villagers to evacuate. Fountains of lava fountains gushed 700m up above Mount Mayon’s crater and ash plumes rose up to 3km, according to the Philippine Institute of Volcanology and Seismology. An explosive eruption at noon local time on Monday was the most powerful since the volcano started acting up more than a week ago. Authorities warned that a violent eruption may occur in hours or days, characterised by more rumblings and pyroclastic flows – superheated gas and volcanic debris that race down the slopes at high speeds. After Monday’s explosion, officials raised Mayon’s alert level to four on a scale of five, and the danger zone was expanded 8km from the crater, requiring thousands more residents to be evacuated, including at least 12,000 who returned to their homes last week as Mayon’s rumblings temporarily eased and then scrambled back to the emergency shelters this week. At least 56,217 people were taking shelter in 46 evacuation camps on Tuesday and army troops and police were helping move more villagers from their homes, officials said.
Siberia's 'Doorway to the Underworld' is growing at an alarming rate - Back in the 1960s, the rapid removal of forest in a part of Eastern Siberia resulted in a loss of shade during summer months. Sunlight warmed the ground, a condition that was compounded by the loss of the tree’s cold “sweat” that also once helped the ground to stay cool.As the surface of the ground warmed, so did the layers beneath it – the permafrost began to thaw, the ground began to slowly collapse. As more ground collapsed, more ice was exposed to warmer temperatures … and thus the Batagaika crater was born.Fast forward and the crater – officially known as a “megaslump” or “thermokarst,” though known to the local Yakutian people as the “doorway to the underworld” – is not only the biggest crater in the region, but the biggest of its type in the world.And it’s getting bigger, every day. Located 410 miles northeast of the region's capital city of Yakutsk, researchers say that the .6-mile long and 282-feet deep crater is expanding rapidly. The wall of the crater has ballooned by some 33 feet a year on average over the last decade of observation – however, just looking at the warmer years reveals a dramatic growth of up to 98 feet per year. The side of the crater will likely reach a nearby valley as summer approaches, which could further hasten its collapse."On average over many years, we have seen that there's not so much acceleration or deceleration of these rates, it's continuously growing," researcher Frank Günther from the Alfred Wegener Institute told the BBC, "And continuous growth means that the crater gets deeper and deeper every year." And aside from the obvious inconveniences of, you know, the surface of the planet collapsing on itself, it has further reaching consequences as well: It may expose carbon stores that have been tucked away in the permafrost for millennia.
Full text: China's Arctic Policy - Xinhua | English.news.cn: Global warming in recent years has accelerated the melting of ice and snow in the Arctic region. As economic globalization and regional integration further develops and deepens, the Arctic is gaining global significance for its rising strategic, economic values and those relating to scientific research, environmental protection, sea passages, and natural resources. The Arctic situation now goes beyond its original inter-Arctic States or regional nature, having a vital bearing on the interests of States outside the region and the interests of the international community as a whole, as well as on the survival, the development, and the shared future for mankind. It is an issue with global implications and international impacts.A champion for the development of a community with a shared future for mankind, China is an active participant, builder and contributor in Arctic affairs who has spared no efforts to contribute its wisdom to the development of the Arctic region. The Chinese government hereby issues this white paper, to expound its basic positions on Arctic affairs, to elaborate on its policy goals, basic principles and major policies and positions regarding its engagement in Arctic affairs, to guide relevant Chinese government departments and institutions in Arctic-related activities and cooperation, to encourage relevant parties to get better involved in Arctic governance, and to work with the international community to safeguard and promote peace and stability in, and the sustainable development of, the Arctic.
EPA loosens rules on some ‘major’ air pollution sources | TheHill: The Environmental Protection Agency (EPA) loosened regulatory compliance standards Thursday for certain sources of air pollution previously considered "major." William Wehrum, head of the EPA’s air office, put out regulatory guidance repealing the “once in, always in” policy, in which facilities like power plants or factories considered “major” sources of hazardous air pollutants were always regulated as such, even if the facilities’ owners took measures to reduce pollution. “This guidance is based on a plain language reading of the statute that is in line with EPA’s guidance for other provisions of the Clean Air Act,” Wehrum said in a statement. “It will reduce regulatory burden for industries and the states, while continuing to ensure stringent and effective controls on hazardous air pollutants.”The previous standard had been enforced since 1995. “Major” air pollution sources are subject to much stricter rules for what they must do to reduce emissions such as mercury compounds and benzene. The EPA argued that the “once in, always in” standard disincentivized companies from reducing pollution and targeted it as part of the Trump administration’s overarching goal of cutting regulatory burdens. “Nothing in the structure of the [Clean Air Act] counsels against the plain language reading of the statute to allow major sources to become area sources after an applicable compliance date,” Wehrum wrote in his guidance. The Natural Resources Defense Council slammed the move, saying it will cause the biggest increase in air pollution in United States history.
Trump EPA Withdraws Clean Air Policy Opposed By Fossil Fuel Companies - The U.S. Environmental Protection Agency ( EPA ) is withdrawing the "once-in always-in" policy for the classification of major sources of hazardous air pollutants under the Clean Air Act . As Reuters pointed out, the move on Thursday is "part of President Donald Trump 's effort to roll back federal regulations and was sought by utilities, the petroleum industry and others." Environmental groups warned the action will "allow hundreds of U.S. industrial facilities to dramatically increase their emissions of the most toxic air pollutants regulated by the Clean Air Act." Under the EPA's new guidance, sources of hazardous air pollutants previously classified as “major" sources, such as coal -fired power plants and factories, can be reclassified as "area" sources when the facility limits its emissions below mandated thresholds. "Area" sources (such as dry cleaners, gas stations, auto body paint shops) are sources that emit less than 10 tons of a single toxic air pollutant or less than 25 tons of multiple toxic air pollutants in any one year. Notably, “area" sources are subject to less strict pollution control standards than "major" sources. The "once-in always-in" policy, established in 1995, states that once a major facility fails to meet certain emission thresholds, it will permanently be required to comply to those standards, even when such a facility makes changes to reduce their pollution levels below the thresholds. In a memo, the Trump EPA criticized the policy as "a longstanding disincentive for major sources of pollution to implement voluntary pollution abatement and prevention efforts, or to pursue technological innovations that would reduce emissions." But the Natural Resources Defense Council (NRDC) called the decision "among the most dangerous actions that the Trump EPA has taken yet a gainst public health" and intends to fight the decision.
The greenhouse gas Pruitt worries about - Scott Pruitt is one of the Trump administration's most aggressive critics of climate change science, but lately he's been talking about the dangers of greenhouse gas. Well, one greenhouse gas in particular: methane.Like other conservatives in Washington, the EPA administrator has questioned basic climate science and said he plans to organize a debate on it this year, something many researchers fear will sow public confusion on an issue where there's already scientific consensus. Pruitt acknowledges the Earth is warming but casts doubt on the exact extent of humanity's influence. Shortly after being installed as the EPA administrator, he questioned whether humans are the primary drivers of climate change, rejecting the position of the vast majority of scientists.But when it comes to methane, Pruitt has found common ground with climate scientists and environmentalists by calling the greenhouse gas a dangerous air pollutant.It's an unexpected position coming from the administration official who was a driving force behind President Trump's decision to withdraw the United States from the Paris climate accord. It's also one that straddles the interests of climate activists and the energy industry, which loses billions of dollars annually as a result of methane leaks. During a December hearing in front of the House Energy and Commerce Committee, Pruitt told Rep. Scott Peters (D-Calif.) that he "absolutely" believed methane is a dangerous air pollutant."On March 9, you said that carbon dioxide is not a primary driver contributing to recent climate change and that, said differently, you said CO2 is not the only contributor to climate change," Peters said. He asked the EPA boss, "Do you agree that methane, nitrous oxide and other greenhouse gases are air pollutants?" Pruitt's response: "Absolutely, absolutely." He added, "And are more potent, actually, than CO2. Methane is more potent than CO2, as you know, in that regard."
Wind expected to surpass hydro as largest renewable electricity generation source – EIA - As one of the first technologies used to generate electricity, hydroelectric power has historically provided the largest share of renewable electricity generation in the United States. However, this year EIA expects wind power to surpass hydroelectricity, based on forecasts in the latest Short-Term Energy Outlook. Different factors lead to uncertainty about the forecast level of electricity generation from each energy source.Because few new hydro plants are expected to come online in the next two years, hydroelectric generation in 2018 and 2019 will largely depend on precipitation and water runoff. Although changes in weather patterns also affect wind generation, the forecast for wind power output is more dependent on the capacity and timing of new wind turbines coming online. Both hydro and wind generation follow seasonal patterns. Hydro generation is typically highest in the spring when precipitation and melting snowpack increase water runoff. Wind generation is typically highest in the spring and fall, reflecting the capacity-weighted mix of seasonal patterns in wind across the country. Hydro often has slightly higher annual capacity factors, or utilization rates, averaging 38% in 2016 compared with wind’s 35%. EIA’s hydroelectric generation forecasts over the next two years are mostly based on projections of water runoff. After a relatively wet year in 2017—when hydro provided 7.4% of total utility-scale generation—hydro generation is expected to be slightly lower at 6.5% of total utility-scale generation in 2018 and 6.6% in 2019. EIA expects significant levels of new wind capacity to come online in 2018 and 2019, similar to the trend in recent years. EIA’s most recent Preliminary Monthly Electric Generator Inventory survey shows wind capacity increasing by 8.3 gigawatts (GW) in 2018 and 8.0 GW in 2019. If these new generating units come online as scheduled, they would add 9% to U.S. utility-scale wind capacity by the end of 2018 and another 8% by the end of 2019. Because much of the new electric capacity comes online in the final months of each year, these capacity additions affect the subsequent year’s electricity generation values. EIA expects wind to provide 6.4% and 6.9% of total utility-scale electricity generation in the United States in 2018 and 2019, respectively, up from 6.3% in 2017.
Trump imposes 30 percent tariff on solar panel imports | TheHill: Trump on Monday imposed tariffs of 30 percent on imported solar panel technology in a bid to protect domestic manufacturers while signaling a more aggressive approach toward China. The move is a major blow for the $28 billion solar industry, which gets about 80 percent of its solar panel products from imports. The Solar Energy Industries Association predicted the tariffs would increase prices and kill 23,000 jobs. The group represents manufacturers as well as installers, sellers and others in the field. “While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs,” Abigail Ross Hopper, the group's president, said in a statement. Suniva and SolarWorld Americas, the bankrupt companies which requested the tariffs, say tariffs would boost domestic manufacturing and add more than 100,000 jobs. The tariffs unveiled Monday apply to all imported solar photovoltaic cells and modules, the main technology on panels that convert solar energy into electricity. While the action is targeted at imports from China, Trump’s tariffs apply to all imports, since Chinese manufacturers have moved operations to other countries. “The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers and businesses in this regard,” U.S. Trade Representative Robert Lighthizer said in a statement Monday announcing the decision along with a decision to impose tariffs on imported washers. SolarWorld Americas, a unit of a German company, said in a statement that it was grateful for Trump’s work, but it is still reviewing whether the tariffs are high enough. It had sought 50 percent tariffs.
Trump Slaps Tariffs on Solar Panels in Major Blow to Renewable Energy - In the biggest blow he’s dealt to the renewable energy industry yet, President Donald Trump decided on Monday to slap tariffs on imported solar panels. The U.S. will impose duties of as much as 30 percent on solar equipment made abroad, a move that threatens to handicap a $28 billion industry that relies on parts made abroad for 80 percent of its supply. Just the mere threat of tariffs has shaken solar developers in recent months, with some hoarding panels and others stalling projects in anticipation of higher costs. The Solar Energy Industries Association has projected tens of thousands of job losses in a sector that employed 260,000. “Developers may have to walk away from their projects,” Hugh Bromley, a New York-based analyst at Bloomberg New Energy Finance, said in an interview before Trump’s decision. “Some rooftop solar companies may have to pull out” of some states.”
Trump’s Tariffs on Solar Mark Biggest Blow to Renewables Yet - President Donald Trump dealt his biggest blow to the renewable energy industry yet. On Monday, Trump approved duties of as much as 30 percent on solar equipment made outside the U.S., a move that threatens to handicap a $28 billion industry that relies on parts made abroad for 80 percent of its supply. The tariffs are the latest action by Trump to undermine the economics of renewables. The administration already decided to pull the U.S. out of the Paris Agreement on climate change, sought to roll back Obama-era regulations on power plant-emissions and signed sweeping tax reforms that constrained financing for solar and wind. The import taxes are the most targeted strike on the industry yet and may have larger consequences for the energy world. “We are inclined to view it as posing greater trade risk for all types of energy, particularly if other nations establish new trade barriers against U.S. products,” Washington-based research firm ClearView Energy Partners LLC said Monday. U.S. panel maker First Solar Inc. jumped as much as 9 percent to $75.20 in after-hours trading in New York. The Tempe, Arizona-based manufacturer stands to gain as costs for competing, foreign panels rise.Just the threat of tariffs shook solar developers in recent months, with some hoarding panels and others stalling projects in anticipation of higher costs. The Solar Energy Industries Association projected 23,000 job losses this year in a sector that employed 260,000. Trump approved four years of tariffs that start at 30 percent in the first year and gradually drop to 15 percent. The first 2.5 gigawatts of imported solar cells are exempt for each year. The duties are lower than the 35 percent rate the U.S. International Trade Commission recommended in October after finding that imported panels were harming American manufacturers. The idea behind the tariffs is to raise the costs of cheap imports, particularly from Asia, and level the playing field for those who manufacture the parts domestically.
China surges with 52 Gigs of new Solar as Trump kneecaps US sector with 30% Tariffs - Clean Technica reports that China blew the top off expectations for its solar installations in 2017, It put in 52.83 gigawatts. The incredible 2017 solar surge in China brought its total solar installed capacity up to 130 gigawatts. As a cursory look at these statistics makes obvious, in one year China increased its solar by nearly 70 percent. In short, it wasn’t so far from doubling its ability to generate electricity from solar sources. The US is a midget in the solar generation game, in contrast. Seven percent of China’s electricity now comes from solar. Note that not long ago, 80% of China’s electricity came from burning coal, the deadliest and most polluting of the fossil fuels. Not only has solar generation increased enormously, but every gigawatt from that source takes coal offline and vastly reduces carbon dioxide emissions, which produce global heating and catastrophic climate change. Even corporate media, which typically have big investment portfolios in the fossil fuel companies–which influences them to be skeptical of renewables and to avoid reporting on climate change, admitted in shock that global investors put $333 bn. into the renewable energy sector in 2017, an increase of 3 percent. Some 40% of that investment came from China alone, now the world renewables leader. In the US, there has been a relatively successful corporate resistance to renewables, which is reinforced by measures such as Trump’s support for coal and his recent slapping of a 30% tariff on inexpensive Chinese solar panels, as well as by state legislatures’ obstructionism, paid for by ALEC and the Koch brothers. Renewables only account for 15% of US electricity generation, with a lot of that being hydro, despite a massive and expensive crisis of extreme weather and sea level rise.
Solar Import Tariff: Pain Without Benefit --The new 30% import tariff just imposed on imported solar panels and solar cells is a protective tariff without benefit.It will not revive the declining U.S. silicon solar cell industry. It will harm U.S. workers in factories manufacturing solar panels using imported solar cells. It will hurt the rapidly expanding U.S.solar industry, slowing down the rapidly growing adoption of solar across the U.S.economy and costing jobs. It will slow the reduction of green house gases and the replacement of coal and natural gas plants with cheaper, zero pollution energy.In Jacksonville, Florida the city council has just voted for a $23 million dollar subsidy for Chinese company Jinko Solar to build an 800 worker modular production plant which itself will be subject to the tariff on solar cells. Similarly, the tariff will affect the Tesla giga-factory in Buffalo that uses imported cells.The tariff will slow, but not stop, the expansion of U.S. solar. According to Green Tech Media there will be an 11% net reduction of solar installations over the next five years. This means the installation of 61.3 gigawatts instead of a projected 68.9 gigawatts, a 7.6 gigawatt shortfall. That’s the bad news, if the projection is correct.7.6 gigawatts of solar if it displaced fossil fuel generation would save, according to the EIA, 1.64 pounds of carbon dioxide per kilowatt hour, or 7.3 million tons of carbon dioxide per year based on New England solar production per megawatt. That’s the projected ecological consequence of the solar tax.The good news is that solar is now big and rapidly growing. 61.3 megawatts of new solar in next five years is equal to the capacity of 61 one thousand megawatt nuclear plants. Total U.S.nuclear capacity is 99 gigawatts and declining as nuke plants shut down, unable to compete while solar rises. The 30% tariff on cells or modules is scheduled to decline by 5% a year to 15% in 2021, the last year of the tariff. The first 2.5 gigawatts of imports are exempt, as will be a blend of other specialized modules that are applying for exemption from the tariff as are a number of developing nation producers limited to a total of 9% of imports.
Kentucky Legislature Tries to Shut Down the Sun - The future of American solar energy is being threatened. President Trump announced on Monday that he would impose tariffs on imported solar panels. Meanwhile, on the same day, the Kentucky House of Representatives announced the bones of House Bill 227 that will be a punishing job killer and a potential dagger in the future of Kentucky’s solar energy production. Solar energy sounds so simple, but there are hurdles—practically and politically. The president’s 30% tariff will be a body blow. It won’t cripple solar energy, but it will slow it down. Solar panels account for 30-35% of the cost of a solar installation. But it’s striking that the President chose solar to be his whipping boy, along with imported washing machines. You don’t suppose the coal industry had something to do with this, do you? Coal has been in decline while natural gas has become cheaper. So why did the coal and power companies, with their vast network of political influence, decide to pick on solar energy? Solar represents about 1% of Kentucky’s total energy. Why aren’t the power companies lobbying Frankfort to put a surcharge on LED lights? The nearby E.W. Brown electric generating station has plans to shut down two of three smokestacks. One reason: LED lights. So the bitter coal industry, mad that they’re losing a game they once ruled, is clawing back and picking on solar. They’re employing a familiar bag of tricks—peddling influence and funneling money to political action committees that buy off the politicians who live by campaign contributions. A Kentucky State Senate bill to alter solar net metering was tabled last year after a huge public outcry. The Senate sub-committee was impressed with the growing solar industry that now outstrips coal industry employment.This year, the Natural Resources and Energy Committee will try to ram House Bill 227 through the House. They want to avoid the calls, emails and rooms full of protestors that the Senate sub-committee encountered last year.
Trump Solar Tariffs Reverberate in India, China's Biggest Buyer - President Donald Trump imposing duties on foreign-made solar equipment comes as India considers its own protections from overseas supplies after becoming China’s biggest solar panel export market last year.India’s finance ministry this month pitched a 70 percent safeguard duty on cells and modules shipped from China and Malaysia, citing “threat of serious injury” to the domestic industry. As the proposal winds its way through India’s bureaucracy, U.S. President Donald Trump on Monday slapped duties of as much as 30 percent on solar equipment made abroad. The move “may nudge the Indian government in the decision for tariffs,” said Vinay Rustagi, managing director at solar research firm Bridge to India. “A few weeks down the line when Indian policymakers decide on this, they will have the comfort in the back of their minds that a developed country, with which they have aligned more, having done it,” he added. China delivered 9.28 gigawatts of panels to India last year, up 75.6 percent from a year earlier, according to data provided Tuesday by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. The South Asian nation bought about 31 percent of Chinese solar panel exports. Japan slipped to second, with 5.17 gigawatts, followed by Australia and the U.S. India could gain from the U.S. duties by deciding not to impose its own tariffs and take advantage of possible lower prices as suppliers seek new markets, according to energy researcher and consultant Wood Mackenzie Ltd.
Scientists sue EPA over its policy on advisory boards -- A group of scientists is suing the Environmental Protection Agency (EPA) for blocking scientists who receive agency funding from serving on the EPA's advisory boards. The nonprofit Protect Democracy, representing the Union of Concerned Scientists, filed a lawsuit against the Trump administration on Tuesday, claiming the policy violates the Federal Advisory Committee Act and “is an attack on science itself.” “By accusing academic and non-profit grant-funded scientists of having a conflict of interest, [EPA Administrator Scott] Pruitt seeks to portray legitimate, independent scientists—who provide accurate, evidence-based information backed by verifiable, peer-reviewed research in order to inform environmental policy—as just another interest group seeking to advance an agenda,” Protect Democracy wrote in a blog post.“A policy that excludes the nation’s most eminent scientists not only silences key, unbiased voices in EPA policy development, but signals government disapproval of the former committee members’ work—including, for example, critical climate change research,” the group wrote. The Union of Concerned Scientists slammed the policy as a way “to make it easier for Pruitt to delay, rollback, or dismantle the EPA regulations that are designed to protect clean air, water, and public health.” “Under the guise of improving advisory board balance, Pruitt is using this directive to populate advisory boards with industry-funded scientists and state government officials who have made a career fighting federal regulations,” Josh Goldman, a senior policy analyst, wrote about the lawsuit.
Perry: US ‘not just exporting energy, we’re exporting freedom’ | TheHill: Energy Secretary Rick Perry characterized the Trump administration’s energy agenda as a world-changing development that spreads freedom around the globe. Perry framed exports of fossil fuels like oil, natural gas and coal as a central part of President Trump’s “Energy Dominance” agenda, in which the administration is aiming to dramatically increase the domestic production of fossil fuels. “The United States is not just exporting energy, we’re exporting freedom,” Perry said on Fox Business’s “Mornings with Maria” in an interview from the World Economic Forum in Davos, Switzerland. “We’re exporting to our allies in Europe the opportunity to truly have a choice of where do you buy your energy from. That’s freedom. And that kind of freedom is priceless.” The former Texas governor further cited the estimate from numerous sources, like the International Energy Agency, that the United States will become the world’s top oil producer this year. It is already the top natural gas producer. “I'm not sure anything since World War II has been any more dynamic, from my perspective, than the shift in energy supply, energy control if you will,” Perry said of the domestic oil and gas boom of the last decade. “The United States isn’t about controlling a country with this energy. It’s about literally freeing up our allies around the world, letting them know that we’re going to be there for them. There’s no strings attached when you buy American [liquid natural gas]. So that’s world-changing.” Perry said that the United States has an “amazing” supply of oil and natural gas, citing Trump’s offshore drilling plan and Congress’s plan to open the Arctic National Wildlife Refuge to drilling.
Germany may have to buy way out of EU climate goal -- Germany will likely miss its binding EU target of cutting emissions from sectors not included in the EU’s emission trading system (ETS), and will have to buy emission rights from other countries, according to an internal paper from the German environment ministry, seen by Clean Energy Wire. Buying its way out of the EU’s climate goal is a highly unusual move that only the tiny island nation of Malta has used so far, Tagesspiegel Background reports. According to newspaper taz, Germany could buy allowances from countries that have not used their entire CO2 budget, such as Hungary or Croatia. At current ETS prices of between 5 and 7 euros per tonne, the bill could amount to up to 350 million euros.
UK government accused of hypocrisy as it fights EU recycling targets --TreeHugger Katherine says that plastics are the hottest environmental topic out there right now. Sami says that single use plastics are having their coal moment. I asked Is China's import ban a "Sputnik Moment" for the plastics and recycling industry? So many moments. But alas, it might all be wishful thinking. In the USA, the oil companies are investing $180 million in plastic feedstock facilities to soak up all of their oil and gas. And in the UK, the Prime Minister talked a good game when she announced "wide-ranging measures to tackle ocean plastic pollution" but, in fact, will not even support the targets set by the European Union to recycle 65 percent of urban waste by 2035. According to the Guardian:“The UK cannot support a binding target of 65% for 2035,” said the record, compiled by officials from one member state and confirmed by others. Furthermore, the UK said its opposition meant it would not support the overall waste agreement. The recycling target had already been watered down from the 70% by 2030 initially sought by the European parliament.The opposition, which doesn't like Europe telling the UK what to do anymore than the government does, stands with Europe.“This Conservative government must be judged on what they do, not on what they say,” said Sue Hayman, shadow environment secretary. “It comes as no surprise that the government are trying to scupper progress on recycling behind the scenes." The fact is that without making significant changes in the way we live, all of these targets are unachievable. The UK can't even get to the current target of 50 percent by 2020 because recycling has been stuck at 44 percent for years.
Why A Cold Week In January Shows Batteries Cannot Do It All - Britain is a windy island with a long coastline that makes it a prime location for fleets of wind turbines dotted around the country. Recent cost reductions achieved in the wind industry have made this an even more attractive proposition - but the wind does not always blow. An energy system highly reliant on a weather-dependent technology will always be vulnerable to extreme weather events or even just a cold snap in winter. This concern is particularly relevant this month. In the second week of the month, British windfarms generated around six gigawatts of electricity almost continuously (about 10% of total peak electricity demand), but in the following week this fell by a factor of six. If the UK decides to pursue 100% renewable energy it will need a strategy to meet demand in a cold week in January. There are a number of storage options, none of them ideal. Battery technology gets the most attention when in comes to electricity storage, but batteries are most suited to providing fast bursts of energy to meet short spikes in demand or for storing solar energy during the day for use at night. They are not suitable for long-term large-scale storage. For example, we would need 200 million Tesla Powerwalls to provide 20 gigawatts (about 50% of average winter demand) continuously for five days. At current prices this would cost £1 trillion, an unacceptable burden for energy bill payers. Large centralised battery facilities could bring down the cost a bit and individual battery prices will decline over time as the technology improves and manufacturers become more efficient. But there is still a long, long way to go before using batteries for large-scale long-term energy storage can be considered a good idea.
Britain risks losing green protections after Brexit - A coalition of leading environmental groups says there is a “significant risk” that British environmental protections will be reduced after Brexit, despite the government’s positive rhetoric. Greener UK, which represents 13 campaign groups including WWF, National Trust, RSPB, Friends of the Earth, Green Alliance and the Wildlife Trusts, says there are “serious concerns” that the government will not cooperate with the European Union after Brexit on environmental issues which need international agreement. Although the environment secretary, Michael Gove, has made several recent announcements, such as the 5p levy on plastic bottles, Greener UK believes there may be a “lack of willpower to ensure high standards across the UK”.Shaun Spiers, the chairman of Greener UK and executive director of Green Alliance, praised Gove as a “highly engaged and effective environment secretary” and welcomed the prime minister’s promise to put the environment at the centre of government policy.“Yet these green aspirations have not carried over to the government’s narrative on Brexit,” Spiers said. “There are serious concerns about the level of future co-operation between the UK government and the EU, and the impact this will have on issues such as climate change and air quality. We also fear there is a lack of willpower to ensure high standards across the UK when we lose the common frameworks currently provided by the EU.” The warning comes as a rebel Conservative MEP told the Observer the UK was no longer working effectively with the EU on environmental issues. Julie Girling had the Tory whip withdrawn when she supported a European Parliament resolution saying the UK had not made sufficient progress in talks with the EU.
LaGarde says cryptocurrency mining is consuming too much power - Mining cryptocurrencies is far too energy intensive and is consuming as much electricity as a G-20 economy, International Monetary Fund Managing Director Christine Lagarde said. “The Bitcoins mining, which is this accelerated and augmented use of computers to actually determine the value and incentive the functioning of the mechanism, is energy angry,” Lagarde said in Bloomberg TV interview with Francine Lacqua and Tom Keene at the World Economic Forum’s annual meeting in Davos, Switzerland. “And we figure that in 2018 if it continues that system will actually consume as much electricity as Argentina.” The electricity needed by the global network of computers running the blockchain technology behind Bitcoin has more than tripled in the last year to more than 37 gigawatt-hours a day, according to Bloomberg New Energy Finance. That’s equivalent to about 30 1.2-gigawatt nuclear reactors running at full capacity.While higher prices have spurred more mining, it’s impossible to know where the market is headed, according to BNEF analyst Isabelle Edwards. If prices remain high, energy consumption will do the same. But the amount of electricity needed to mine Bitcoins could fall if there are improvements in computing technology. “In times of climate change and when we look at how much coal is being used in some Chinese provinces to actually mine Bitcoin it’s a big concern,” Lagarde said.
Nigeria moves closer to energy overhaul with new oil bill-- Nigeria’s House of Representatives passed a bill governing the country’s energy sector after the Senate did so in May, taking Africa’s top oil producer one step closer to a much-awaited overhaul of the key industry. The Petroleum Industry Governance Bill now awaits President Muhammadu Buhari’s signing to become law. The bill will “promote openness and transparency in the industry by clarifying the rules, processes, and procedures that govern the oil and gas sector,” Senate President Bukola Saraki said in a statement Thursday. “After nearly two decades of back-and-forth, near-misses and ‘near-passages’, the 8th National Assembly finally reached a milestone.” Delays in passing the new laws created a climate of uncertainty that has cost the country as much as $15 billion a year in lost investment, the Petroleum Ministry has said. Lawmakers still need to pass two more pieces of legislation to complete an overhaul that will replace current laws. One focuses on new oil taxes and the other seeks to address longstanding grievances by oil-producing communities in the Niger River delta. Saraki promised to pass those “very soon.” He said in June that they would be enacted by last month. However, the two remaining draft bills will be more difficult to pass, according to Cobus de Hart, an analyst at NKC African Economics near Cape Town. Disagreements over how oil proceeds should be disbursed among Nigeria’s different states represent “one of the reasons why the original petroleum industry bill failed,” he said in emailed note. “Abuja will have to tread carefully with changes to the fiscal regime so as not to discourage investment in a sector which is already plagued by elevated security risks.” Nigeria, Africa’s top oil producer, holds an average 55 percent stake in joint ventures run by Royal Dutch Shell Plc, Exxon Mobil Corp, Chevron Corp., Total SA and Eni SpA. These account for about 80 percent of total oil production, which generates at least two-thirds of government revenue.
India restricts use of imported petcoke in Delhi region (Reuters) - India’s environment ministry has placed restrictions on the use of imported petroleum coke in the capital Delhi and its surrounding region, in the latest effort to curb rising air pollution. As the world’s largest consumer of petcoke, India imports over half its annual petcoke consumption of about 27 million tonnes, mainly from the United States. Local producers include Indian Oil Corp, Reliance Industries and Bharat Petroleum Corp. “Only consented and registered industrial units of NCR States shall be permitted to directly import pet coke and consignment shall be in the name of user industrial units for their own use,” the ministry of environment, forest and climate change said in a notification issued late on Friday. Cement plants and other industries approved to use petcoke in the region would also need to obtain permission from the state pollution control board to continue operations, it said. The ministry has also banned imports of petroleum coke for trading purposes in the capital region, the notice said, adding that even industrial units allowed to use petcoke will not be allowed to store more than three months worth of their consumption. India will also track the trade of the commodity, and has asked both sellers and consumers to submit monthly reports on petcoke-related transactions. India is the world’s biggest consumer of petroleum coke, which is a dark solid carbon material that emits 11 percent more greenhouse gases than coal, according to the Carnegie–Tsinghua Center for Global Policy. India’s government is in favor of imposing a wider ban on the import of petcoke, according to a government affidavit filed with its top court in December, a ruling on which is expected next month.
Japan 2017 thermal coal imports hit record -- Thermal coal imports rose 4.3 percent from a year earlier to 114.5 million tonnes in 2017, surpassing the 113.8 million tonnes imported in 2015, preliminary Ministry of Finance data showed on Wednesday. The costs of the imports rose 45 percent from a year earlier. Imports of LNG inched up 0.4 percent to 83.632 million tonnes the first annual increase since 2014, helped by a 5.4 percent rise in December imports as utilities stocked up purchases to prepare for colder weather. The figures underscore Japan’s continued reliance on imported fossil fuels for power generation, as it slowly embraces renewable energy, while the majority of the country’s nuclear reactors remain shut following the Fukushima disaster nearly seven years ago.
Russia to invest $250 million in uranium exploration, production in Argentina - Russia and Argentina signed Tuesday a memorandum of understanding to advance uranium exploration and production in the South American country, which already generates 5% of its electricity with three heavy-water nuclear reactors.The deal, sealed during a visit by Argentine President Mauricio Macri to Moscow, could bring up to $250 million in investments into the country’s sector, according to Argentina's foreign ministry official statement (in Spanish).Currently, Argentina imports uranium from countries such as Russia and Kazakhstan for its own use, and for export.
The agreement includes Russia’s state nuclear agency Rosatom commitment to build a nuclear power station in Argentina, which had already revealed plans to build other two new nuclear reactors in the second half of this year. The $13 billion-plan will be financed mostly by Chinese organizations.Argentina, Brazil and Mexico are the only three Latin American countries with functioning nuclear power plants.Russia and Argentina vowed to apply an extraction method known as “in-situ recovery” (ISR), developed by Canada’s Uranium One, a wholly owned subsidiary of Rosatom, and the world's fourth-largest uranium producer. It involves the extraction of uranium-bearing water that is then filtered through resin beads and, according to Argentina's foreign ministry, is the most cost-efficient technique, which also has a minimum environmental impact, as it doesn’t require soil removal.
Puerto Rico to sell off crippled power utility PREPA (Reuters) - Puerto Rico’s governor said on Monday he intends to sell off the U.S. territory’s troubled power utility to the private sector, saying the process could take roughly 18 months to complete. The Puerto Rico Electric Power Authority (PREPA) has yet to recover fully from the devastation wrought by Hurricane Maria, which in late September knocked out power to the entire island, leaving all 3.4 million residents in the dark and killing dozens of people. “The Puerto Rico Electric Power Authority has become a heavy burden on our people, who are now hostage to its poor service and high cost,” Governor Ricardo Rossello said in a statement. “What we know today as the Puerto Rico Electric Power Authority does not work and cannot continue to operate like this.” Less than 64 percent of homes and businesses are receiving power, according to the latest data from the U.S. Department of Energy. PREPA had promised that most of the island would have power by the end of December. The new plan calls for 30 percent of power generation to be from renewable sources. Rossello described how the process for breaking up the company would occur in three phases, calling it a move toward a “consumer-centered model.” Phase one consists of defining the legal framework via legislation. Phase two will be evaluating bids, and phase three will be “the terms of awarding and hiring the selected companies that meet the requirements for the transformation and modernization of our energy system will be negotiated.” Given PREPA is currently trying to work its way through bankruptcy and all of the island’s financial dealings must go through the federally appointed Financial Oversight and Management Board for Puerto Rico, selling off PREPA’s assets could be a long process. Rossello highlighted how the island’s electrical grid, which was severely dilapidated prior to the storms, was obsolete and working off of a generation system that was 28 years older than the average electric power utility in the United States. Proceeds from the sale of assets and contracts would be “used to capitalize the retirement funds of employees,” Rossello said.
Dominion will put 9 fossil fuel units in 'cold reserve' - The head of Dominion Energy's generation unit announced Wednesday the company intends to place nine generation units at five plants in Virginia into "cold reserve," where they would not run but could be restarted if necessary. The units are mostly coal-fired or converted coal plants that now run gas, according to the Associated Press. At three of the five affected plants, there will be no units running after they are put into reserve. Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 25,700 megawatts of electric generation. Renewable generation — either under development or in operation — is almost 2,000 MW spread across nine states. The units Dominion is powering down and putting in reserve represent just a fraction of its fleet — less than 1% of its generation, AP reported — but they illustrate the direction the utility's fuel mix is heading. Nuclear makes up a third of the utility's power mix, with natural gas making up another third. Coal composes just 25% and renewable energy is a small but growing slice — a little more than 5%. Of the energy it delivers to utility customers, a third is nuclear, a third is gas and about a quarter is coal-fired generation. Renewables are a small slice, more than 5%, but it is growing. In November, Dominion said it would relicense two units at the North Anna Power Station in Louisa County, Va. That announcement came on the heels of the company putting on hold expansion plans at the facility after it secured a combined operating and construction license from the Nuclear Regulatory Commission.
Mid-Atlantic ports benefit from 2017 coal-export revival (AP) — Nearly 20 ships were anchored off Cape Charles early last week — most, if not all, of them colliers waiting to pick up coal destined for ports all over the world. Just a couple of years ago, you might have seen only a few vessels at a time in the same location. Not anymore. They're back. Hampton Roads is the biggest coal-exporting port in the country. Baltimore is right behind it. And they're both in the vanguard of what appears to be a U.S. coal-export revival. Between 2016 and 2017, coal exports from Hampton Roads have surged by 58.8 percent, according to data from Norfolk-based T. Parker Host Inc., the largest ship agent in the nation for vessels carrying dry-bulk cargoes. Baltimore saw a 42.8 percent increase. All three of Hampton Roads' coal terminals - Norfolk Southern Corp.'s Pier 6 at Lamberts Point, and Kinder Morgan's Pier IX and Dominion Terminal Associates, both in Newport News - reported significant spikes last year from the year before, led by DTA with a 71.2 percent increase in exports. Lamberts Point saw a 55.7 percent gain and Pier IX was up 46.1 percent. "I think, if anything, the story has sort of solidified," said Jim Thompson, Knoxville, Tenn.-based senior director of U.S. coal for IHS Markit, a global research firm, in an interview last week. "I think strong exports are baked in at least through the first half of the year."
Cold Snap Showed Grid Resilience, Lawmakers are Told -- The recent cold snap and “bomb cyclone” weather event that chilled much of the Mid-Atlantic and Northeast this month appears to have showed the reliability and resilience of the electric grid as currently operated, energy officials said Tuesday at congressional oversight hearing. But it also showed some of the vulnerabilities to the grid, especially as they relate to energy infrastructure, including natural gas pipelines, as wholesale market consumers saw high prices in response to record demand. That could inspire Capitol Hill lawmakers to renew their efforts in earnest to streamline some of the permit review timelines for key energy infrastructure projects, many pending before the Federal Energy Regulatory Commission, to make it easier for the private sector to build pipelines and transmission lines to prevent similar price hikes. “That is all good news,” Senate Energy and Natural Resources Chairwoman Lisa Murkowski, R-Alaska, said about the grid reliability during the event. “The bad news is that we have not addressed the more difficult and fundamental challenges for electric and gas infrastructure.” “We must ensure that our nation’s natural gas supply — a boon to our economy and to our national security — can be reliably delivered to a changing marketplace,” she added.
Saudi Arabia Getting Ready for Nuclear Power -- Saudi Arabia, the world’s biggest oil exporter, plans to award contracts in December for the construction of its first nuclear-power plants, according to a government official involved with the project. The kingdom has received requests from five bidders from China, France, the U.S., South Korea and Russia to perform the engineering, procurement and construction work on two nuclear reactors, Abdulmalik al Sabery, a consultant in the business development department at King Abdullah City for Atomic and Renewable Energy, said in an interview in Abu Dhabi. “By April we will sign a project development agreement with two to three selected vendors,” al Sabery said Monday. “We are going to have only one winner that will be building the two reactors.” The government expects construction to start next year and is “shooting for” commissioning the facilities in 2027, he said. Each of the Saudi nuclear reactors will be able to produce as much as 2.2 gigawatts to 3.3 gigawatts, depending on the technology they use.
Australia has ‘missed the boat’ on nuclear power -- The man who once famously called for 50 nuclear reactors across Australia, nuclear physicist and NBN chairman Ziggy Switkowski, says “the window for gigawatt-scale nuclear has closed”. A lack of public support and any actual proposals for a nuclear plant had resulted in government inertia, he said on Thursday. “Government won’t move until a real business case is presented and none has been, to my knowledge, and there aren’t votes in trying to lead the debate,” he said, adding that renewables were now a more economically viable choice. “With requirements for baseload capacity reducing, adding nuclear capacity one gigawatt at a time is hard to justify, especially as costs are now very high (in the range of $5 billion to $10 billion), development timelines are 15+ years, and solar with battery storage are winning the race.”
UK to offer £1m a year to any community that will host a radioactive waste facility The UK government has launched a public consultation today to help it decide where to develop a new radioactive waste storage site, offering communities up to £1m a year to host the facility. A so-called geological disposal facility would involve placing radioactive waste created by Britain's nuclear plants at least 200 meters underground in a specially engineered facility. About a fifth of the UK's electricity is generated by nuclear plants, but the waste created has to be stored for thousands of years, and currently only temporary storage facilities are used. The government said the facility will create up to 2,000 skilled jobs and bring at least £8bn to the economy over its lifetime, but energy minister Richard Harrington said planning consent would only be given to sites that secure local support. According to the consultation plans, communities could receive up to £1m per year in funding during initial land testing if they agree to host the waste site. The figure could rise to £2.5m a year for those that allow boreholes to test whether their community’s land is suitable.
Austria to sue EU over allowing expansion of Hungary nuclear plant -(Reuters) - Austria is planning to sue the European Commission for allowing Hungary to expand its Paks atomic plant, it said on Monday, not viewing nuclear energy as the way to combat climate change or as being in the common European interest. The country, which shares a border with Hungary, prides itself on supporting environmentally sound energy. It has for decades opposed nuclear power, which triggers huge disagreements about cleanliness, safety, and renewability. The anti-nuclear position was reiterated in a coalition agreement struck last month between Chancellor Sebastian Kurz’s conservatives and the far-right Freedom Party. “We in the government have agreed that there are sufficient reasons to sue (the Commission),” a spokesman for Austrian Sustainability Minister Elisabeth Koestinger said. “EU assistance is only permissible when it is built on common interest. For us, nuclear energy is neither a sustainable form of energy supply, nor is it an answer to climate change.” EU state aid regulators approved last March Hungary’s plan to build two new reactors at its Paks nuclear site with the help of Russia’s Rosatom, saying Hungarian authorities had agreed to several measures to ensure fair competition. The two new reactors will double the plant’s nominal capacity of 2,000 megawatts. Hungary aims to start construction on the reactors this year, with the first facility expected set for completion in 2025. “The Paks nuclear plant is the guarantee for providing a cheap, reliable and safe supply of electricity to Hungarian people and businesses,” Hungarian Prime Minister Viktor Orban’s office said in a statement. “Therefore, the Hungarian government will stick to its plan to ensure the maintenance of capacity at the Paks plant,” it said, adding that the lawsuit would not affect work on the project. The deadline for filing a suit to challenge the executive EU Commission’s decision at the European Court of Justice is Feb. 25, the spokesman for Austria’s Koestinger said.
Davis-Besse, Perry nuclear plants could close as FirstEnergy inks deal with hedge funds - Four high-powered private investor groups have agreed to sink nearly $2.5 billion into FirstEnergy for 18 months in exchange for helping the company shed its money-losing power plants, or get them returned to regulation and protection from competition.FirstEnergy Solutions owns the Davis-Besse, Perry nuclear power plants in Ohio and the two-reactor Beaver Valley nuclear power plant in western Pennsylvania. The company also owns two large coal-fired plants on the Ohio River.The hedge funds will advise the company on how to re-organize itself and its unregulated subsidiary FirstEnergy Solutions or help transform it, if FirstEnergy Solutions files for bankruptcy protection as expected, the company said.The Akron-based utility Monday announced that the four private investment groups would buy $2.5 billion in FirstEnergy shares -- $1.62 billion in preferred stock and $850 million in common stock. After 18 months, the investors must convert their preferred stock into common stock, which they may sell.The Akron-based utility Monday announced that the four private investment groups would buy $2.5 billion in FirstEnergy shares -- $1.62 billion in preferred stock and $850 million in common stock. After 18 months, the investors must convert their preferred stock into common stock, which they may selThe private funds include affiliates of New York-based multi-billion dollar Elliott Management Corp., Dallas-based Bluescape Resources Co., Singapore-based GIC Private Limited (formerly the Government of Singapore Investment Corp.) and New York City-based Zimmer Partners LP. The announcement sparked a surge of buying on the New York Stock Exchange and FirstEnergy's share price closed up 10.4 percent or $3.05 a share, at $32.45. FirstEnergy Solutions both generates and sells power but cannot always compete with the price of power generated by wind and natural gas.
FirstEnergy executive: Davis-Besse plant headed for premature closure — A FirstEnergy Corp. executive confirmed Thursday what many people have feared for months: The utility’s Davis-Besse nuclear plant is headed for a premature closing. The outlook for FirstEnergy’s coal-fired power plants and its other nuclear plants — its twin-reactor Beaver Valley nuclear plant west of Pittsburgh and its Perry nuclear plant east of Cleveland — is just as bleak, said James Pearson, FirstEnergy’s chief financial officer. While no date has been set for the permanent closing of Davis-Besse or other plants yet, Mr. Pearson said their days under FirstEnergy ownership have become numbered and they are “probably impossible to sell in today’s market,” especially in states such as Ohio and Pennsylvania that have deregulated electricity markets. Both of those states embraced deregulation in 1996, a decade before a global fracking boom brought on by a revolutionary horizontal drilling technique resulted in record-low natural gas prices. That, along with growing investments in wind and solar power that dropped prices for the renewable energy sector, made nuclear and coal non-competitive. “Those units cannot generate enough cash to cover costs,” Mr. Pearson said of FirstEnergy’s nuclear and coal-fired plants. FirstEnergy is one of several utilities heavily invested in nuclear and coal that lobbied government officials on the state and federal levels for special consideration, claiming those industries have unique attributes. Most efforts have been defeated, one of the biggest being a Federal Energy Regulatory Commission ruling earlier this month that denied Trump administration efforts to help out nuclear and coal-fired power plants. Now, with an April 2 deadline looming for a $100 million debt-principal payment, FirstEnergy Solutions has its back against a wall.
It's Official! The Risk Of Nuclear Annihilation Is At An All-Time High - Don't Panic. It's only the end of the world... On Thursday, the Bulletin of Atomic Scientists raised the likelihood of an apocalyptic nuclear catastrophe to its highest level in the clock's 70+-year history, the Washington Post reported. The clock was moved from two-and-a-half minutes to midnight to two minutes to midnight - like the classic Iron Maiden song... During a press conference announcing the escalation, the group of scientists comprising the Bulletin offered a "grim assessment" of the factors that preceded the increase: These factors included North Korea's nuclear program, tensions between India and Pakistan and Russia's and China's incorporation of nuclear drills into its military exercise.President Donald Trump's mercurial tweets were also cited in the report. The group which includes 15 Nobel Laureates said the risk of nuclear annihilation in the present day has surpassed previous highs witnessed during World War II, and during the most intense periods of the Cold War.The organization - which has 15 Nobel Laureates on its board - now believes “the world is not only more dangerous now than it was a year ago; it is as threatening as it has been since World War II,” Bulletin officials Lawrence M. Krauss and Robert Rosner wrote in an op-ed published Thursday by The Washington Post.“In fact, the Doomsday Clock is as close to midnight today as it was in 1953, when Cold War fears perhaps reached their highest levels.”The last time the clock advanced so far, the United States had just tested its first thermonuclear device, and the Soviet Union had tested a hydrogen bomb.Today, Bronson said, “to call the world’s nuclear situation dire is to understate the danger and its immediacy.”With President Trump's now infamous "Fire and Fury" remark reverberating in their ears, the committee said it also "considered at length" the unpredictability of US nuclear policy, which one member said "an unpredictability that is embodied in statements and tweets, by the US.
Kucinich wants to eliminate oil and gas drilling in Ohio - Columbus Dispatch - Dennis Kucinich promised a “major announcement” today in Columbus, and he delivered a promised moratorium on fracking and outright ban on injection wells if he is elected Ohio governor.Kucinich told reporters his goal is to eliminate all oil and gas wells — not just those from fracking, or hydraulic fracturing — in Ohio by the end of his four-year term."We’re talking about a brand new day here in Ohio," he said at a press conference on Capital Square.The former congressman and Cleveland mayor said such a radical move is necessary to protect the state’s most precious resource: its water.Under his sweeping plan, Kucinich would order the State Highway Patrol to stop and inspect all trucks hauling fracking waste for disposal in Ohio, and turn them back.He would order free public health screenings for all Ohioans living close to or downstream from fracking sites.And Kucinich would assemble a panel of physicians, scientists and economists to gather data on the impact of fracking and injection wells on Ohio and file a class-action suit against drilling companies and others responsible for pollution and contamination."Those who have poisoned Ohio's people and their land will be made to pay," he said."Ohio taxpayers are facing a future of billions of dollars of debt and destruction as a result of the virtually unregulated nature of this industry. As Ohio’s governor, I will end the corrupt influence of these interests in the state capital. "No longer will Ohio be the designated dumping ground for frack waste from here and other states with unregulated processing facilities operating for private profit at public expense."
Dennis Kucinich calls for end to oil and gas drilling in Ohio - cleveland.com -- Democratic gubernatorial candidate Dennis Kucinich on Thursday unveiled a series of proposals designed to bring a complete end to oil and gas drilling in Ohio.At a news conference in downtown Columbus, the liberal former congressman and presidential candidate said that as governor, he would use eminent domain to acquire and close all existing traditional and fracking-style oil and gas wells in the state. Kucinich pledged to block any new drilling permits and order a statewide injection-well ban.In addition, Kucinich would direct the Ohio State Highway Patrol to stop, inspect, and turn away vehicles found with fracking waste. The state would offer free health screenings to Ohioans living near fracking sites and collect data with an eye toward filing a class-action lawsuit against fracking companies on the scale of the multi-billion-dollar legal settlement that states reach with tobacco companies 20 years ago.Asked whether his proposals were unrealistic given that Republicans dominate the state legislature, Kucinich said he has a history of working with conservatives when he served in the state Senate."If the governor can't take a stand for the health and safety of this state, then why even run?" he asked.Kucinich said he would work to ensure that landowners who have leased land for drilling would receive a separation fee and all royalties they are due. As for the jobs that would be lost from the end of Ohio's oil and gas industry, Kucinich said Ohio would be in a position to "catch a wave" of alternative-energy development. Mike Chadsey, a spokesman for the Ohio Oil and Gas Association, said in a statement that Kucinich is "still out of touch," given the billions invested in and thousands of people working for Ohio's oil and gas industry."For being the person who touts himself as the candidate for the average guy, he sure is anti-worker and anti-union," Chadsey said. "These bold and unrealistic statements show how desperate his hopeless campaign is."
Democratic Gubernatorial Candidates Weigh In On The Future Of Fracking In Ohio - The Statehouse News Bureau --One of the Democrats running for Governor is calling for an end to oil and gas drilling in Ohio. While his four primary opponents aren’t embracing that idea, they agree that more needs to be done to protect the environment. Dennis Kucinich says wants to use eminent domain to shut down fracking wells and initiate a class action lawsuit to make fracking companies pay for damage to the environment. “Those who have poisoned Ohio’s people and the land will be made to pay.” Connie Pillich disagrees with Kucinich’s approach. “It is rash. It is naïve. It will take years and will be marred with legal battles and taxpayers are going to have to pay those legal fees.” Bill O’Neill also takes issue with Kucinich’s suggestion. “Ending fracking is not the right answer and initiating another class action lawsuit is clearly not the right answer.” Joe Schiavoni says fracking is important to parts of Ohio but believes the state needs to be a better watchdog. “You put a lot of emphasis on making sure you have people on the ground at ODNR and Ohio EPA.” Richard Cordray agrees strict enforcement is key. “As you know, Jo, when I was Ohio Attorney General, I prosecuted polluters who did not engage in responsible practices.” Republicans dominate Ohio’s legislature so if a Democrat is elected as governor, they’d have to work with conservatives who embrace fracking to make big changes.
Ohio again asks FERC to block drilling for Rover natural gas pipeline project - (Reuters) - Ohio environmental regulators again asked federal energy regulators to order Energy Transfer Partners to cease drilling operations on the Rover natural gas pipeline project under the Tuscarawas River over concern about the potential for a spill. Rover has reported a loss of approximately 200,000 gallons of drilling fluids from the hole ETP is drilling under the Tuscarawas River in Stark County, Ohio, the Ohio Environmental Protection Agency said in a filing with the U.S. Federal Energy Regulatory Commission, which was made available on Wednesday. The Ohio EPA said Rover has ceased operations at the site and is seeking approval from FERC on a plan submitted on Jan. 22 to continue horizontal drilling. “This plan only provides temporary solutions and only suggests ways Rover may minimize expected losses if allowed to proceed,” the Ohio EPA said, noting “Ohio cannot support the plan” and wants FERC to require ETP to cease drilling operations and abandon the drill. That is the same site as a spill last April of 2 million gallons of mostly clay and water used to lubricate drilling blades, which led FERC to temporarily ban ETP from new horizontal drilling in May. Pipeline companies use horizontal drilling to cross under large obstacles like highways and rivers. “We have ceased operations at the Tuscarawas site. However, we are continuing our construction activities at all other locations,” said Alexis Daniel, a spokeswoman for ETP, in an email. The company said it expects to finish Rover by the end of the first quarter and added that it was in compliance with the FERC-approved horizontal drilling plan. Since asking FERC to ban ETP from all horizontal drilling in Ohio in November, the state EPA has already asked FERC a few times in January to stop the company from drilling under the Tuscarawas River. Once finished, the $4.2 billion Rover pipeline will carry up to 3.25 billion cubic feet of gas per day of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Ontario in Canada. One bcfd can supply about 5 million U.S. homes.
FERC Again Orders Drilling Halt on Rover Pipeline Site After Another Spill - The Federal Energy Regulatory Commission (FERC) has again ordered Energy Transfer Partners to halt horizontal directional drilling under the Tuscarawas River in Ohio at its troubled Rover pipeline project pending additional review. The move came after Ohio regulators requested FERC order a cease of all drilling on the project after nearly 150,000 gallons of drilling fluids were lost down the pilot hole for the pipeline earlier this month."While our understanding is that no fluid has reached the surface, and no impacts on sensitive resources have been documented, the difficult geology at the crossing warrants investigation into other approaches prior to advancing the [horizontal directional drilling] pilot drill as well as before subsequent reaming passes," FERC Director of Energy Projects Terry Turpin wrote in a letter.The spill occurred at the same site as a spill last April of 2 million gallons of drilling fluid. That incident also led FERC to temporarily ban Energy Transfer Partners from new horizontal drilling.The 713-mile pipeline project, which will carry fracked gas across Pennsylvania, West Virginia, Ohio, Michigan and Canada once complete, is currently under construction by the same Dallas-based company that built the controversial Dakota Access pipeline . In September, Energy Transfer Partners was fined $2.3 million for numerous water and air pollution violations across Ohio. Over the last two years, the Rover pipeline has racked up more "noncompliance incidents" than any other interstate gas pipeline.
Kinder Morgan opens new ethane pipeline in Ohio - Kinder Morgan on Tuesday placed into service a 270-mile transnational pipeline system that capitalizes on Ohio's productive Utica shale play. The Houston-based pipeline operator developed the $500 million Utopia system to deliver ethane products from eastern Ohio to Windsor, Ontario. The company has a long-term contract with Canada's NOVA Chemicals Corporation, which will use the products as feedstock for plastics production. The system, which now carries 50,000 barrels per day, could be expanded to transport as many as 75,000 barrels daily. Kinder Morgan, which recently reported lower fourth-quarter earnings thanks to a one-time tax charge, is also eyeing the West Texas shale boom. The company plans to build a $1.7 billion gas pipeline from the Permian basin to the Corpus Christi area in partnership with two other pipeline companies.
Record Ohio gas production spurs new natural gas processing and generation facilities –EIA - In October 2017, Ohio’s natural gas production reached a new high of 5.5 billion cubic feet per day (Bcf/d), doubling its May 2015 values. Most of Ohio’s natural gas production growth has come from the development of the Utica shale play, and Ohio currently represents 6% of total U.S. production. As the state’s natural gas production expands, Ohio’s natural gas processing capacity and natural gas-fired electric generation capacity have grown as well. With additional projects scheduled to come online in the coming years, growth in capacity for making use of Ohio’s natural gas and its products is expected to continue. At the end of 2017, Ohio had about 4.2 Bcf/d of natural gas processing capacity, up from nearly 3.4 Bcf/d in 2014. According to data from IHS and Bentek Energy, two projects are schedule to come online in 2018 and will add an additional 0.4 Bcf/d to Ohio’s natural gas processing capacity. Both projects have capacities of 0.2 Bcf/d, one being developed by MarkWest Energy Partners and Energy and Minerals Group and the other being developed by Utica East Ohio Midstream LLC. Currently, most of Ohio’s electricity is generated with coal and natural gas. As of October 2017, coal accounted for 16,273 megawatts (MW) (50%) of nameplate electric generation capacity in Ohio, while natural gas provided 12,121 MW (37%). From July 2015 through October 2017, 2,587 megawatts of natural gas generation capacity was added in the state. Two additional natural gas-fired combined cycle electricity generation plants are slated to enter service in 2018. Construction of the 700-MW Carroll County Energy Center was completed at the end of 2017 and is now undergoing startup and commissioning testing. NTE Energy is currently constructing the Middletown Energy Center, a 475-MW natural gas-fired electric generating facility in Middletown, Ohio, which is expected to start up in 2018.
Natural gas production in Pennsylvania, Ohio, West Virginia growing faster than demand – EIA - Significant growth in natural gas production over the past decade—primarily from the Marcellus and Utica shales in the Appalachian Basin—have increased gross natural gas output in Ohio, Pennsylvania, and West Virginia. Production in these three states increased from a combined 1.4 billion cubic feet per day (Bcf/d) in 2008 to nearly 24 Bcf/d in 2017, with their combined share of total U.S. natural gas production reaching 27%, up from just 2% in 2008, based on data through October 2017. Over that same period, natural gas consumption in these three states has also grown but to a much lesser extent. Almost all of the recent growth in natural gas consumption in these states has been in the electric power sector. Natural gas consumption for electricity generation in these states grew from 0.5 Bcf/d in 2008 to 1.9 Bcf/d in 2017, based on data through October. Additions of natural gas-fired electricity generating capacity, higher utilization of existing natural gas-fired plants, and retirements of coal plants have contributed to greater use of natural gas for electricity generation in the region.Prior to 2011, natural gas production in these states was lower than demand, and interstate pipelines moved natural gas into the area primarily from production areas in the Gulf Coast. In recent years, however, increased supply has been able to meet demand within these states and in neighboring states. Existing pipelines have been modified to transport natural gas out of, instead of into, Appalachia, and new pipelines have been announced to link Appalachian supply to downstream markets. Overall, Appalachian production has been displacing Gulf Coast supply, freeing additional U.S. production for export by pipelines and as liquefied natural gas (LNG). Direct pipeline interconnections are planned for Appalachian natural gas to reach Dominion Energy’s Cove Point LNG Terminal, which is undergoing commissioning on the Maryland coastline. Cove Point is designed to process an average of 0.75 Bcf/d of liquefied natural gas for export and expects to commence service in early 2018. The petrochemical industry is another growing consumer of natural gas in the region. Marcellus and Utica natural gas is rich in liquids, including ethane, making the region attractive for chemical manufacturers. Ethylene crackers, for example, convert hydrocarbon feedstocks such as ethane to olefins, the building blocks for plastics and resins. The only operating ethylene cracker in Appalachia, located in Calvert City, Kentucky, consumes an estimated 20,000 barrels per day (b/d) of ethane. Three new ethylene crackers have been proposed for the region, one each in Pennsylvania, Ohio, and West Virginia. The Shell Chemicals facility, currently under construction in Monaca, Pennsylvania, is planned to consume 90,000 b/d to 100,000 b/d of ethane when completed in the early part of the next decade.
Nonprofit Legal Firm Ordered to Pay for its Defense of Anti-Fracking City Ordinance - Nonprofit Quarterly - Rolling Stone reported earlier this month that a federal judge has issued what could be a groundbreaking sanction on a nonprofit law firm. The Community Environmental Legal Defense Fund (CELDF) was ordered in early January to pay $52,000 to an oil and gas exploration company for defending a rural township’s ban on underground injections of waste from fracking. The Pennsylvania General Energy Company (PGE) and the Pennsylvania Independent Oil and Gas Association sought the sanctions after a six-year battle with Grant Township, a rural Pennsylvania township.CELDF has defended the township’s efforts to pass ordinances preventing an industrial site build. The township’s residents drafted a Community Bill of Rights ordinance in 2014 prohibiting the dumping of toxic frack waste within the community. After a lawsuit by PGE, a federal judge overturned parts of the ordinance that banned frack waste. The township passed a new law, this time through its local constitution. In 2017, Grant Township was again sued, this time by the Pennsylvania Department of Environmental Protection, which said the township rules interfered with state policy. This isn’t the first time that CELDF has tried using community charter laws to help a municipality ban fracking—nor the first time it’s failed. The organization helped Broadview Heights, a city in Ohio, pass a city charter ordinance in 2012. The ordinance was overturned in 2015, with an Ohio court ruling that only the state had the power to permit and regulate oil wells. That case cited another 2015 Ohio case, which firmly laid the authority for gas drilling regulations at the feet of the state.But, while the failure of city ordinances to stand up to state laws isn’t surprising, the sanctions slapped on CELDF have activists worried. The ruling declared CELDF’s lawsuit’s legal argument “frivolous,” and the court wrote that Grant Township “seeks to disavow constitutional rights afforded corporations so as to prevent PGE from the lawful exercise of its right to pursue gas extraction related activities within its borders.” A piece in EcoWatch suggests that, in an era when cities are threatened with sanctions for “sanctuary city laws” and other displays of municipal power, sanctions for fighting oil companies could set a precedent that carries into other legal fields.
FERC approves PennEast gas line (Argus) — The US Federal Energy Regulatory Commission (FERC) has approved the 1 Bcf/d (28mn m³/d) PennEast natural gas pipeline project, despite one commissioner's dissent and statements of concern from two other commissioners. Following the approval, the project's developers released a new in-service date of 2019, with construction beginning this year. The line was originally expected to begin service in 2017 but has been delayed multiple times throughout the regulatory approval process. The 120-mile (193km) pipeline project is designed to deliver Appalachian natural gas to Mercer, New Jersey. It has garnered thousands of public comments after it applied for FERC approval, and was denied a crucial wetlands crossing permit from the state of New Jersey last year. Democratic FERC commissioner Richard Glick dissented on the PennEast approval, saying he does not believe the commission's order properly concludes that the project is needed or that the commission has successfully found that the line's benefits outweigh its harms. . FERC's approval of PennEast is not a guarantee that the line will be built, the New Jersey Conservation Foundation said. The group's campaign director Tom Gilbert pointed to a recent US Second Circuit Court of Appeals ruling that upheld a decision by the New York State Department of Environmental Conservation to deny a water permit for the Constitution pipeline. . PennEast's developers said the need for the pipeline is clear, and that access to additional natural gas supplies will reduce the cost of gas in eastern Pennsylvania and New Jersey, where prices can spike during times of high demand. During the a cold snap earlier this month, natural gas prices spiked 31 times higher in New Jersey than supplies in the Pennsylvania production areas because of "pipeline constraints and inadequate supply to meet demand," PennEast said.
FERC Approves PennEast Pipeline: Opponents Look to Clean Water Act to Stop 'Dangerous and Unneeded' Project --A controversial natural gas pipeline project with a proposed route through New Jersey can move forward, the Federal Energy Regulatory Commission (FERC) ruled Friday. Owners of the proposed $1.2 billion PennEast Pipeline, which would carry shale gas from Pennsylvania through New Jersey, said they are planning to begin construction this year following the certificate of public convenience granted by FERC on Friday. Opponents of the project say the pipeline still needs to clear several hurdles at the state level, and point to New Jersey Governor Phil Murphy, who campaigned on an environment and clean energy agenda and spoke out against PennEast on the campaign trail. Activists along the nearly 120-mile route vowed to continue fighting against the pipeline, and protests are planned in New Jersey Monday in response to the decision. "FERC is basically working for the pipeline companies rather than for the people they are supposed to represent," Jeff Tittel, New Jersey Sierra Club director, said in a statement. "It's shameful that FERC can approve a pipeline without even applications for state or federal permits. FERC is the 'Federal Expedited Rubberstamp Commission.' "Now the fight begins," he added. "We will organize to stop this pipeline that people vigorously approve. PennEast has a long way to go and many permits to get. We also have a new Governor who opposes the project. We won't stop until we stop this dangerous and unneeded pipeline." As reported by NJ Spotlight : "'Now, the real environmental review begins—the ones that FERC did not do,' said Tom Gilbert, campaign director of ReThink Energy NJ and the New Jersey Conservation Foundation . He particularly cited the state's authority in issuing a 401 permit under the Clean Water Act. 'We don't see any way this pipeline can be built and meet those standards,' said Gilbert, noting the route of the project crosses 38 C-1 streams, the most pristine in the state. 'If they enforce regulations, this project won't pass muster.'"
Opponents mount protests after major natural gas pipeline moves forward. --The Federal Energy Regulatory Commission granted the PennEast Pipeline its certificate of public convenience and necessity on Friday, which also allows the company to acquire land through eminent domain.The proposed $1 billion pipeline would run nearly 120 miles from Pennsylvania to New Jersey and transport up to 1 billion cubic feet of natural gas a day. Its opponents say it would threaten the health and safety of nearby communities and endanger natural and historic resources. Proponents maintain that the pipeline is an economic boon that will lower energy costs for residents.After getting the OK from FERC, the company moved up its estimated in-service date to 2019, with construction to begin this year. But it won’t necessarily be an easy road ahead. The pipeline still needs permits from the State of New Jersey, Army Corps of Engineers, and the Delaware River Basin Commission. And while Chris Christie was a big fan of the pipeline, newly elected Governor Phil Murphy ran a campaign promising a green agenda and has already voiced opposition. Pipeline opponents are demonstrating this afternoon and taking the developers to court. “It’s just the beginning. New Jersey doesn’t need or want this damaging pipeline, and has the power to stop it when it faces a more stringent state review,” Tom Gilbert, campaign director of the New Jersey Conservation Foundation, said in a statement
Anti-pipeline group vows to 'monitor' project — An anti-pipeline organization said Monday it is launching a campaign to "monitor" the upcoming construction of the Atlantic Coast Pipeline. The project is being spearheaded by the Allegheny-Blue Ridge Alliance, a coalition of more than 50 organizations in West Virginia and Virginia. The objective of the Pipeline Compliance Surveillance Initiative, as the monitoring effort is called, is to "ensure strict application of environmental laws and regulations" for the ACP. About 55 miles of the West Virginia-to-North Caroline pipeline will traverse Augusta County. Lew Freeman, a Highland County resident and executive director of the Allegheny-Blue Ridge Alliance, said the group lacks confidence that regulators involved in inspecting the construction will do an adequate job. The surveillance will involve hundreds of volunteer observers in Virginia and West Virginia. Freeman said a portion of those monitoring will be property owners directly affected by the pipeline's construction. "This is an additional layer of surveillance," Freeman said. "We want this pipeline to be built as safely as possible. But we have grave doubts." Freeman said a major focus of the monitoring will be the mountainous areas of the pipeline construction route. "That is where the watersheds begin and where water quality is in the greatest danger," he said. It's not clear how close to the actual construction the group hopes to get its monitors. Due to safety and liability concerns, even relatively small construction sites are off-limits to everyone but workers, foremen and official inspectors and regulators. And a work site of the pipeline's size and scope is sure to have even greater restrictions in place to prevent unauthorized personnel from accessing the site and its immediate surroundings.
January’s cold weather affects electricity generation mix in Northeast, Mid-Atlantic ›The bomb cyclone weather event in early January 2018 resulted in record levels of U.S. natural gas demand and elevated wholesale natural gas and power prices around the country as reported in a special EIA analysis. A constrained natural gas pipeline network led to a significant increase in oil-fired and dual-fuel generation in New England and New York, and, to a lesser extent, in the Mid-Atlantic.Day-ahead daily average peak-period power prices for January 5, 2018, one of the coldest days of the weather event, reached $247 per megawatthour (MWh) in New England and New York and $262/MWh in the Mid-Atlantic, compared with $30MWh–$50/MWh average prices in the preceding six weeks. Power markets in the Northeast and Mid-Atlantic have become more reliant on natural gas over the past several years following the retirement of electricity generators that use fuels other than natural gas. However, the relative moderation in power price spikes during this year’s cold snap—despite higher natural gas prices—reflects a host of market rule changes and winter preparedness actions taken by the region’s grid operators to improve winter reliability.In New England, retirements of the Vermont Yankee nuclear plant, the Brayton Point coal plant, and the Salem Harbor coal- and oil-fired plant (which is currently being converted to natural gas), as well as expansions of the natural gas pipeline network, have led the region to become more reliant on natural gas over the past couple years. The Independent System Operator of New England’s (ISO-NE) Winter Reliability Program has provided incentives for generators to procure adequate onsite fuel supplies for winter and spurred 1,774 megawatts (MW) of natural gas-fired generators to add dual-fuel capability, which allows them to switch fuels or co-fire multiple fuels simultaneously. More than one-third of New England’s natural gas capacity has dual-fuel capability with oil as their secondary source, while about 40% of oil capacity can switch to natural gas and about 50% of coal capacity can switch mainly to oil. During the 12-day span from December 28, 2017, to January 8, 2018, oil and coal made up, on average, 29% and 6%, respectively, of ISO-NE’s generation mix. Natural gas dropped at one point to a low of 17%. One of the region’s three nuclear plants, Pilgrim, experienced an unexpected outage for six days during that period. During the 12-day period from December 28 to January 8, dual-fuel generators burning oil and natural gas accounted for, on average, 30% of New York ISO’s (NYISO) generation mix, while coal and oil-only generators together averaged 5%. The breakout by fuel for dual-fuel generators is not currently reported. Nuclear generators accounted for about 30% of total generation, and dedicated natural gas and renewables accounted for the remaining 35%.
Gas from Russian Arctic to warm homes in Boston - A tanker was crossing the Atlantic on Sunday to warm New England households with natural gas whose sources are thought to include a project in the Russian Arctic under US sanctions. The US has never before imported LNG from Russia, according to government records. The Gaselys left the UK’s Isle of Grain terminal with a cargo of liquefied natural gas two weeks ago. Engie, the French energy group that owns it, said the tanker was headed for its LNG import terminal at Everett, Massachusetts. The cargo will replenish storage facilities depleted by a record winter cold spell. Some of the gas originated from Russia’s new Yamal LNG export terminal, which was opened formally by President Vladimir Putin last month, analysts said. Yamal was hit by US sanctions in 2014 following Russia’s annexation of Crimea. Shipments of Russian oil and gas are not subject to sanctions, but “US persons and those in the US” are prohibited from financing Novatek, the lead company in Yamal LNG. Engie said it purchased the cargo on a spot basis to supplement supplies coming from Trinidad and Tobago. The transaction complied with US trade laws, it added. Thanks to the shale boom, the US eclipsed Russia as the world’s largest gas producer and since 2016 has exported LNG to states including Russian neighbours Lithuania and Poland. The $27bn Yamal project is, meanwhile, central to Russia’s efforts to stay competitive in global markets.
The World’s Most Innovative Gas Field - Appalachian gas production has surged over eighty five percent (from 13,837 bcf/d to 26, 027 bcf/d) since 2014. The region has one the most productive and economic gas acreage in the country, and today it produces more gas than all other shale plays in the United States combined. Now, with the slate of pipeline projects coming on-line in 2018 Marcellus and Utica molecules can finally reach end consumers in larger markets creating a more adequate price equilibrium throughout the United States regions. During cold winter months this will translate into thousands of dollars saved on energy bills for consumers in Midwest and Atlantic Seaboard. Appalachian gas today is well positioned to change long established regional dynamics of gas pricing and flow while transforming the United States energy economy for years to come. It is worthwhile to have another look into why Appalachia matters today more than ever to the United States energy economy. If there was one defining characteristic of Appalachian gas production, it would be technological innovation and constantly evolving costs. In 2015, an unexpected diversion occurred between rig count and total gas output from the region. As number of operating rigs continued to decline, production per well continued to increase and last month it reached the record high level of 26,027 mcf/day. It defined skeptics who argued that Marcellus and Utica shale operators had exhausted the best rock in the region and output was bound for downward trajectory. Contrary to that argument, a new Marcellus gas well today yields almost twice as much gas as the same well with similar latitude/ longitude in Haynesville field, East Texas (the second largest producing gas region in the United States). See table 1.
Exclusive: Philadelphia Energy Solutions to file for bankruptcy - memo (Reuters) - Philadelphia Energy Solutions LLC, the owner of the largest U.S. East Coast oil refining complex, announced to its employees on Sunday that it plans to file for Chapter 11 bankruptcy, according to an internal memo reviewed by Reuters. The bankruptcy would come six years after private equity firm Carlyle Group LP (CG.O) and Energy Transfer Partners LP’s Sunoco Inc rescued Philadelphia Energy Solutions from financial distress, in a deal that was supported by tax breaks and grants that saved thousands of jobs. Following an agreement with its creditors, the company has secured access to $260 million in new financing, and said it expected the bankruptcy filing to have no immediate impact on its employees, according to the memo, which was confirmed by a spokeswoman for Philadelphia Energy Solutions. The spokeswoman declined to comment further. Philadelphia Energy Solutions owns two refineries, Girard Point and Point Breeze. It can convert about 335,000 barrels of crude oil per day to products such as gasoline, jet fuel and diesel. It employs about 1,100 people. Part of the refiner’s financial troubles stem from a costly biofuels law called the Renewable Fuels Standard, which is administered by the Environmental Protection Agency and requires refiners to blend biofuels into the nation’s fuel supply every year, or buy credits from those who do. Since 2012, Philadelphia Energy Solutions has spent more than $800 million on credits to comply with the law, making it the refiner’s biggest expense after the purchase of crude, according to the memo.
U.S. refiner PES pins bankruptcy plan hopes on biofuel costs (Reuters) - Philadelphia Energy Solutions, owner of the largest U.S. East Coast refinery, said on Monday its plan to get out of bankruptcy hinges on whether it can shed existing biofuel costs under the country’s renewable fuel laws. The plan revives a debate between U.S. refiners and ethanol producers over the nation’s renewables policy, and could spur actions from other struggling refiners should the U.S. Environmental Protection Administration allow PES to reduce its biofuel obligations. The Trump Administration could also wade deeper into the fray should the Pennsylvania refinery, which has some 1,100 workers, face closure. PES told its employees on Sunday it would file for Chapter 11 bankruptcy, pinning its financial difficulties on renewable fuel laws, Reuters reported. In its bankruptcy filing on Monday, the company said it does not have enough cash to comply with the laws for 2016 and 2017. But PES has also seen its debt grow after its backers took out a $550 million loan used largely for dividend-style payouts to investors along with capital improvements to the plant. The company also invested in a new rail terminal to help take advantage of discounted crude out of the Bakken oil play in North Dakota. PES said its biofuels obligation for 2016 and 2017 totals about $185 million. The company also plans to sell $150 million worth of credits to help emerge from bankruptcy. Regulatory liabilities are hard to shed through bankruptcy. The U.S. Renewable Fuel Standard (RFS) is a Bush-era law that requires refiners to blend biofuels like ethanol into their fuels or buy credits from those who do. Those credits used to trade at a nominal price of just a few cents, but have soared in recent years. “The EPA will look closely to make sure this is not a sham to leave them holding the bag,” said Lubben. He said a debtor that cannot comply with such rules usually has to liquidate. “If you want to restructure, the business coming out the other side has to comply.” The plan would be in jeopardy if the bankruptcy court forces the company to comply with its existing RFS obligations, PES warned.
Md. should say no to fracked gas pipeline - Gov. Larry Hogan and his Maryland Department of the Environment (MDE) appear poised to approve a TransCanada fracked gas pipeline that would run through three miles of Maryland, including beneath the Potomac River, which serves as the drinking water supply for residents in the D.C. metro area. This administration, the same one that supported a ban on fracking in Maryland, recently issued a fact sheet about this fracked gas pipeline entitled “What You Need to Know.” But it omitted what they apparently don’t want us to know: the possible harms to public health of constructing this pipeline. As a commissioner on Gov. Martin O’Malley’s Marcellus Shale Safe Drilling Initiative, I observed how state and federal regulatory agencies ignore or minimize public health threats from the oil and gas industry. There are four major omissions to the information presented by MDE in its fact sheet, which minimizes the risk this pipeline poses to Marylanders.
- First, the agency never identifies that the owner operator of this transmission line would be TransCanada. Columbia Gas Transmission, listed as the applicant, might be a friendlier name for Marylanders, but TransCanada purchased Columbia Gas and is an operator with a very troubling track record.
- Second, MDE states that material safety data sheets “indicate” that drilling fluids do not include toxic compounds. Unstated is whether data sheets exist for all compounds that will be used to horizontally drill 114 feet below the Potomac River bed. Chemicals without safety data sheets could be used to drill under a critical drinking water supply for Maryland; in fact, toxicity of one-third of chemicals used by the oil and gas industry in drilling have not been researched, and we do not know their harms.
- Third, with respect to drinking water, MDE “understands that there may be some private wells in the area of the proposed pipeline regulated by the local health department.” Unmentioned are hundreds of drinking water wells in the Potomac River watershed that could experience contamination, and that these wells draw from groundwater aquifers which communicate with and would affect the Potomac River, which is regulated by MDE.
- Fourth, MDE states that the “presence of karst geology in the area is not definite.” Unstated is that karst is a network of dissolving rock, with sinkholes, caves and underground drainage systems known to exist in most areas of this proposed pipeline. The reason that presence of karst “is not definite” is because groundwater mapping west of Hagerstown has not been conducted by the state, TransCanada’s own borehole assessment in the Potomac River watershed points to possible routes of groundwater contamination of both the Potomac and the C & O Canal and the lack of “any relevant groundwater table information.”
Offshore Drilling Still on the Table for Florida - Interior Sec. Ryan Zinke 's controversial decision to take Florida out of his proposed plan to greatly expandoffshore drilling is causing clashes within the administration, according to multiple reports. The head of the Bureau of Ocean Energy Management, which manages offshore leasing, told a Congressional subcommittee Friday that it had "no formal decision" on Florida and that the bureau is keeping Florida in its upcoming review of offshore resources. Axios reported Sunday that Zinke's "rogue" decision on Florida has opened the administration to legal trip wires with its plan and greatly upset President Trump . Trump isn't the only one ticked off at Zinke this week: the Washington Post reported that several coastal governors are impatiently waiting to meet with the interior secretary on his drilling plans following initial phone calls to discuss the matter.As reported by the New York Times :"In a statement, Representative Raúl M. Grijalva of Arizona, the senior Democrat on the subcommittee, which is responsible for energy and mineral resources, criticized the confusion caused by what he called 'an out-of-control administration with incompetent top leadership.''Instead of carefully following laws and regulations, this administration writes policy on a napkin, announces it on social media and calls it a day,' Mr. Grijalva said.The Trump administration's handling of offshore drilling appeared to follow a pattern of seemingly spontaneous decisions that have left policies vulnerable to legal challenges, as has been the case with immigration and the shrinking of national monuments . With his unilateral announcement to exempt Florida from new offshore drilling, Mr. Zinke appeared to be bypassing the public and scientific review of potential offshore resources and environmental impacts that must follow any plan to commence offshore leasing."
Florida waters remain in Trump's five-year oil, gas leasing plan, for now: BOEM - Federal waters off Florida's coast remain in the Trump administration's draft proposed offshore oil and gas leasing plan, the acting head of the agency that developed the plan said Friday.Florida waters "are still part of the analysis until [Interior Secretary Ryan Zinke] gives us an official decision otherwise," Walter Cruickshank, the acting director of the US Bureau of Ocean Energy Management, told a House Natural Resources subcommittee.Following a meeting with Florida Governor Rick Scott, a Republican, on January 9, Zinke announced that he was "removing Florida from consideration for any new oil and gas platforms," in regards to the draft proposed program his agency released the week before. That proposed plan called for 47 sales in federal waters, including 12 sales in the Eastern Gulf of Mexico, three in the South Atlantic and one in the Straits of Florida, over a five-year period. Zinke, who announced his decision in a tweet, has not taken a "formal action" on Florida, Cruickshank said."The secretary's statement stands on its own," Cruickshank said. "We are following the process and the secretary's decisions will be reflected in the proposed program decision."Cruickshank may be stating that Florida waters are still in the Trump administration's 2019-2024 lease sale plan due to a technicality. These waters will likely be removed when the plan moves to its next stage of approval later this year. But House Democrats seized on Cruickshank's comments Friday as evidence that Zinke's decision on Florida, which was announced on Twitter, circumvented federal law and was done for political purposes.Zinke's claims that Florida was out of the offshore plan were "not true," said Florida Representative Darren Soto, a Democrat. "Instead of carefully following laws and regulations, this administration writes policy on a napkin, announces it on social media and calls it a day,"
Bayou Bridge Pipeline begins construction in Louisiana amid protests, legal challenges -- Construction on the Bayou Bridge pipeline has begun, even as opponents pursue multiple legal challenges to block the 163-mile line across southern Louisiana and some have promised to stand in the way of the bulldozers and backhoes. Hailed by oil industry advocates as a needed link in the state’s industrial infrastructure during a boom in the petrochemical sector, the pipeline will carry crude oil between a hub in Lake Charles and a terminal in St. James Parish but also cut through the environmentally sensitive Atchafalaya Basin. The Bayou Bridge pipeline, a controversial crude oil line proposed through the heart of the Atchafalaya Basin, cleared key permitting threshol… "We are excited to be able to conclude the more than 2 year permitting and have begun construction activities," Energy Transfer Partners spokeswoman Alexis Daniel wrote in a Wednesday morning email to The Advocate. The company is the majority shareholder of Bayou Bridge LLC. Energy Transfer has said the line will be an economic powerhouse for Louisiana that will create 2,500 construction jobs and that investors have already paid property owners $106 million for property to build Bayou Bridge. The $750 million project will link an existing section of the Bayou Bridge line that cuts through Texas and far southwestern Louisiana to the Mississippi River. The Bayou Bridge pipeline, which will be able to move up to 480,000 barrels per day when finished, will end up in a section of western St. James Parish that’s already home to oil tank farms and other major crude oil lines that service river and rail traffic, the Louisiana Offshore Oil Port and refineries along the river. It also sends some that oil back toward the nation’s midsection and even Canada.
Forward Gas Prices Key To Sustaining Haynesville Recovery --After six years of output declines, Haynesville Shale natural gas production surged 25% in 2017, with the lion’s share of the increase coming in a remarkable second-half growth spurt. Preliminary 2018 guidance indicates that producers intend to keep the pedal to the metal, either sustaining or boosting the investment that has brought the play’s output to nearly 8 Bcf/d. Such increased activity indicates that producers have found new advantages in the region. But even though new drilling and completion techniques and producer strategies have significantly enhanced the economic viability of the dry gas Haynesville, it is much more highly dependent on natural gas prices than liquids-rich plays. Today, we continue our series on the rebounding Haynesville play with a look at RBN’s production forecast for the region. . We highlighted the signs of resurgence in this play in April 2017 in Don’t Call It a Comeback, pointing out that new drilling technology and burgeoning Gulf Coast gas markets had changed the dynamics for the “Greater Haynesville” — a region we think of as the Haynesville, Bossier and Cotton Valley formations in northwestern Louisiana and East Texas. The application of horizontal drilling and hydraulic fracturing drove production from less than 4 Bcf/d in 2008 to more than 10 Bcf/d in 2011-12, when the region briefly reigned as the top U.S. gas producing play. But a plunge in gas prices and the lack of natural gas liquids (NGLs) in the production stream led producers to move on to plays rich in NGLs and/or crude oil. The Haynesville rig count fell from a peak of 160 in 2011 to just 11 rigs in April 2016. Then, remarkably, this Lazarus of shale plays suddenly arose from the dead in 2017, with the rig count tripling by April 2017. Three months later, as we detailed in Don’t Call It a Comeback, Part 2, pipeline flow data showed that output from the Haynesville Shale was beginning to rise for the first time in six years, and the rig count continued to increase to 47, the highest total since mid-2012.
EIA forecasts natural gas to remain primary energy source for electricity generation - EIA’s January 2018 Short-Term Energy Outlook (STEO) forecasts that natural gas will remain the primary source of U.S. electricity generation for at least the next two years. The share of total electricity supplied by natural gas-fired power plants is expected to average 33% in 2018 and 34% in 2019, up from 32% in 2017. EIA expects the share of generation from coal, which had been the predominant electricity generation fuel for decades, to average 30% in 2018 and 28% in 2019, compared with 30% in 2017.The mix of energy sources used for producing electricity generation continues to shift in response to changes in fuel costs and the development of renewable energy technologies. Since 2015, the cost of natural gas delivered to electric generators has generally averaged $3.50 per million British thermal units (Btu) or less, and it is expected to remain near this level through 2019. EIA expects the cost of natural gas for electricity generation to remain relatively competitive with coal-fired electricity over the next two years. The average cost of natural gas delivered to generators in 2018 is forecast to fall 2%, while the forecast delivered cost of coal rises 5%. These relative price changes should increase the share of natural gas generation in 2018. The costs of both natural gas and coal in 2019 are expected to remain relatively unchanged from this year’s forecast prices. Power plant operators are scheduled to bring 20 gigawatts (GW) of new natural-gas fired generating capacity online in 2018, which, if realized, would be the largest increase in natural gas capacity since 2004. Almost 6 GW of the capacity additions are being built in Pennsylvania, and more than 2 GW are being built in Texas. In contrast, about 13 GW of coal-fired capacity are scheduled to be retired in 2018. These changes in the generating capacity mix contribute to the continuing switch from coal to natural gas, especially in southern and midwestern states.
NYMEX Feb natural gas futures up 2.8 cents on storage prospects - After settling 0.4 cent lower at $3.185/MMBtu Friday, NYMEX February natural gas futures rose overnight ahead of Monday's open as the market drew support from near- to longer-range storage expectations. At 7:15 am ET (1215 GMT) the contract was 2.8 cents higher at $3.213/MMBtu. Following a record-high drawdown for the week to Jan. 5, the EIA said if draws matched the five-year average for the rest of the heating season, working gas stocks would end the titular withdrawal season on March 31 at 1,320 Bcf. But the next storage report showed draws slow as warmer weather replaced the freeze. The EIA showed a 183 Bcf pull from stocks for the week ended Jan. 12, a downside miss against consensus estimates as well as against both the 203 Bcf five-year average drawdown and a 230 Bcf year-ago draw. It took total working gas stocks to 2,584 Bcf, or 368 Bcf below the year-ago level and 362 Bcf below the five-year average of 2,946 Bcf.
NYMEX Feb natural gas extends gains on storage outlooks, up 8.4 cents at $3.308/MMBtu - NYMEX February natural gas futures extended gains ahead of Tuesday's open on expectations of bullish storage data. At 7:05 a.m. ET (1205 GMT) the contract was 8.4 cents higher at $3.308/MMBtu, a level not seen since May. For the week to January 19, traders and analysts are calling for a drawdown around the 260s Bcf, above five-year average and year-ago withdrawals. With the EIA projecting working gas stocks ending the titular withdrawal season on March 31 at 1,320 Bcf, or below the five-year average 1,697 Bcf, should storage draws match the five-year average for the remainder of the heating season, a pull within the range of this week's estimates would pose some concern over end-of-season inventories. Weather continues to dampen bullish sentiments though, as warmer conditions dominate outlooks and suggest diminished heating demand, allowing for the pace of storage erosion to ease again.
US natural gas bears caught by return of winter: Kemp (Reuters) - U.S. natural gas prices have bounced sharply from their lows in December after a sustained spell of exceptionally cold temperatures pushed stocks near to the bottom of their five-year range.Futures prices for gas delivered to Henry Hub in February have risen more than 25 percent since Dec. 21. Prices for deliveries in July are up 10 percent.The tightening calendar spread, with prompt prices rising much faster than those for deferred contracts, is consistent with a market that is undersupplied and trying to conserve remaining stocks.Rising near-term prices should discourage gas consumption by electric generators in favour of coal while sending a signal to gas producers to increase drilling and output (http://tmsnrt.rs/2E1ZV8Q).Gas stocks have been tightening progressively for 10 months, turning a surplus of 400 billion cubic feet (bcf) to the five-year average in March 2017 into a deficit of 200 bcf by the end of the year.Tightening stocks were not enough to support prices, which fell steadily between May and the week before Christmas.Hedge funds and other money managers became steadily more bearish about the outlook even as prices continued to decline.Hedge fund managers cut a net long position in futures and options equivalent to more than 3,900 bcf in May to just 394 bcf by Dec. 19.The ratio of hedge fund long to short positions dwindled from 5:1 in May to just over 1:1 by the middle of last month.The mild start to the winter heating season seemed to encourage increasingly aggressive hedge fund shorting of futures contracts.Hedge fund short positions climbed from a low of 943 bcf in May to peak at 3,204 bcf in the middle of December.The blast of cold weather at the start of January seems to have shaken the market out of this rather complacent view.Gas stocks have fallen by 860 bcf since mid-December, including a record draw of 359 bcf in the first week of January, reflecting temperatures far below normal across the eastern and central United States.In reality, the winter so far has been colder than the previous abnormally warm winters in 2015/16 and 2016/17 but heating demand has been in line with the long-term average.Stocks, however, are now 360 bcf below the five-year seasonal average and close to the bottom of the five-year range, making the market its tightest in over three years. Even this understates the tightness, because structural demand is increasing due to exports of liquefied natural gas and the growing number of gas-fired power plants entering service to replace old coal units.
U.S. natgas futures fall after EIA storage report (Reuters) - U.S. natural gas futures fell on Thursday despite federal data showing a bigger-than-expected storage withdrawal. Front-month gas futures for February delivery on the New York Mercantile Exchange eased 7.6 cents, or 2.2 percent, to $3.433 per million British thermal units at 10:46 a.m. EST. U.S. utilities pulled 288 billion cubic feet of gas from storage during the week ended on Jan. 19, the U.S. Energy Information Administration reported on Thursday. That was higher than the record 272 bcf draw analysts estimated for that week in a Reuters poll. [EIA/GAS] The withdrawal compares with a year-earlier decline of about 137 bcf and a five-year average decrease of about 164 bcf for that period.
Weekly Natural Gas Storage Report - Two Record Draws In One Month - The EIA reported a -288 Bcf change in storage, bringing the total storage number to 2.296 Tcf. This compares to the -137 Bcf change last year and -164 Bcf change for the five-year average. Going into this storage report, a Reuters survey of traders and analysts pegged the average at -272 Bcf with a range of -248 Bcf to -287 Bcf. We expected -276 Bcf and were 4 Bcf above the consensus. We were off by 12 Bcf on this storage report.As you can see in the forecast track record above, consensus and our estimate have been in a repeat cycle of: overestimation > underestimation > overestimation > underestimation.There is probably a good chance that next week's storage report will see our forecast overestimating the draw reported.Nonetheless, this week was another record draw week for this time of the year, and with the record storage draw week we saw at the start of Jan, this puts two record-breaking draws in the same month.For those watching natural gas prices, the spike in price two days ago was because polar vortex that we wrote about here moved up from the second week of February to the first week of February. You can see this from a tweet from Commodity Wx Group: There are still issues with regard to just how intense the polar vortex is in the first week of February. Are we looking at a monster developing or a paper tiger? For now, most models are showing a very high probability of cold weather spread out from Central to Northeast US. Our preliminary estimate for next week's EIA natural gas storage report is -90 Bcf.
Cheniere's Sabine Pass terminal sees strong winter LNG exports - US LNG exports are stronger so far this winter compared with a year ago, thanks to global demand and two more production trains in use at Cheniere Energy's Sabine Pass terminal in Louisiana, Platts Analytics' Bentek Energy data showed. The figures show the importance of US supplies in meeting peak demand, not only domestically but also in other countries that rely on imports. A handful of other US export terminals are under construction, while a dozen more have been proposed. Dominion Energy's Cove Point terminal in Maryland has yet to ship its first export cargo.With the ramp up of Train 3, and the onset of Train 4, feedgas volumes to Sabine Pass have nearly doubled compared with this time a year ago. Over the course of the winter season thus far, feedgas volumes have averaged 2.9 Bcf/d, getting as high as 3.3 Bcf/d, which represents full utilization of the facility, Platts Analytics data showed. Since November, 59 ships totaling 204 Bcf of LNG have left Sabine Pass, compared with 28 ships and 91 Bcf of LNG over the same time last year. A Cheniere spokesman declined to comment on the increase in activity.Global LNG demand has been on the rise, increasing global gas prices and creating favorable netbacks to the US Gulf Coast. This, in turn, has supported the full utilization of Sabine Pass exports. More specifically, systematic market changes in Asia have continued to increase prices at JKM, pushing netbacks as high as $5.24/MMBtu in late December. Much of this has been driven by growth in LNG imports in China as the country attempts to battle air pollution, in part, caused by burning coal for home heating.
When will the Permian need new gas takeaway capacity? - Natural gas production from the Permian Basin is expected to grow considerably over the next several years, taxing existing takeaway capacity. Nearly 8.0 Bcf/d of takeaway capacity expansions are proposed to help address impending transportation constraints from the region. When will new pipeline capacity be needed and will it be built in time to avert constraints? In today’s blog, we assess the timing of potential constraints based on production growth, existing takeaway capacity and potential future capacity additions. This is Part 4 of our series on emerging takeaway constraints in the Permian and the pipeline projects planned to alleviate them. We started in Part 1 of this series with a look at the factors behind the increasingly tight transportation capacity out of the region, namely rapidly rising crude oil and liquids-rich associated gas production from the basin. Given that breakeven costs in the Permian are some of the lowest in the country, production is expected to only grow from here. In anticipation of rising supply from the region, there are numerous crude and gas takeaway projects that are proposed to be built, with the bulk of the new capacity targeting completion in the 2019-20 time frame. On the oil side, there is about 550 Mb/d of oil takeaway capacity due online in early to mid-2018 — 450 Mb/d from Enterprise Product Partners’ Midland-to-Sealy Pipeline and another 100 Mb/d from Phase I of Energy Transfer Partners’ Permian Express III project. After that, EPIC Pipeline is slated to add 550 Mb/d of crude takeaway capacity in first-quarter 2019. Other projects, detailed in Part 1, are also progressing, but as we discussed in Part 2 of this series, uncertainty lingers in the timing of some of these projects, particularly farther out in the timeline, introducing the risk for constraints prior to new capacity additions coming online.
'Pretty much everything is on fire': Five people missing and 17 rescued after series of explosions rip through an Oklahoma oil rig : Five people are missing after a fiery explosion ripped through an eastern Oklahoma drilling rig on Monday, sending plumes of black smoke into the air and leaving a derrick crumpled on the ground. More than 20 employees were at the natural gas well site when the blast was reported around 8.45am, Pittsburg County Sheriff Chris Morris said. Aerial footage shows several fires were still burning by midday on the rig and other equipment; the derrick, a towering metal structure above the well, collapsed onto the ground. Emergency crews were pulled away after other explosions at the site, where several tanks are also located, Pittsburg County Emergency Management Director Kevin Enloe said during an afternoon news conference. 'Pretty much everything that is on location is on fire,' Enloe said. The explosion occurred west of the town of Quinton, about 100 miles (161 kilometers) southeast of Tulsa. Enloe said firefighters were letting the blaze burn and weren't putting water on it to keep from spreading possible hazardous materials at the site. Enloe said about 17 workers were pulled from the site following the blast, including one who suffered minor burns and was treated at the scene.
Oklahoma gas explosion: Five people remain missing - Five people remain unaccounted for following a gas explosion Monday at a drilling rig in Oklahoma. The explosion happened shortly before 9 a.m. Central time in northeast Pittsburg County, Sheriff Chris Morris said at a news conference. Twenty-two employees were drilling a gas well at the site when the explosion occured; 17 of whom were able to get out safely. One person was flown to a hospital, while others had minor or no injuries, officials said. Images and videos taken by local media show several fires burning as thick black smoke blanketed the facility. The explosion, which happened near the town of Quinton, about 140 miles southeast of Oklahoma City, sent black smoke to nearby farmlands.What exactly happened is not yet known. The Occupational Safety and Health Administration, or OSHA, is investigating the incident and interviewing employees. Three of the missing are employees of Houston-based Patterson-UTI Energy Inc., which owns the drilling rig. The company said it has reached out to those people’s families. “At this moment, no one knows with certainty what happened and it would be unwise to speculate,” the company’s president and chief executive, Andy Hendricks, said in a statement. “Well control experts and emergency responders are on site and we will conduct a thorough investigation when the incident is fully contained.” Fires were still burning by Monday afternoon, though they’re no longer spreading, Kevin Enloe, Pittsburg County’s emergency management director, told reporters. Officials plan to let the fire run its course instead of placing fire crews close to hazardous materials, he said. “The fire is pretty much containing itself right now,” Enloe said. “There’s some fire that is jumping off location because of the flame size. It’s getting some gas fires started . . . all we’re doing is combating any fire that leaves the location.”
Authorities Investigating Oklahoma Rig Explosion, Deadliest U.S. Drilling Accident In Years - Federal and state authorities are investigating the cause of the deadly explosion and fire at a natural gas drilling rig in southeastern Oklahoma on Monday. Five workers died in what appears to be one of the country’s deadliest onshore drilling accidents. The well site, located near the town of Quinton, 100 miles south of Tulsa, was operated by Oklahoma City-based Red Mountain Energy. Patterson-UTI Energy, of Houston, owns and operates the drilling rig, which exploded and caught fire about 8:45 a.m. The cause of the explosion and fire is not yet known. The Occupational Safety and Health Administration and the Chemical Safety Board are investigating, as is the Oklahoma Corporation Commission, the state’s oil and gas regulator. A day after the explosion, Oklahoma’s Supreme Court struck down a portion of the state’s workers compensation law, ruling 8-0 that oil and gas companies can be sued when workers are injured or killed. Oklahoma law holds operators responsible for well site safety, not contract drillers or oil-field service companies. A preliminary report from a commission investigator found the fire that engulfed the rig was fed by an “uncontrolled gas release.” A rig worker attempted to activate a device known as a blowout preventer to shut off the well but was unable to, the inspector reported. The fire at the wellhead kept emergency crews at bay for hours and created a black plume of smoke visible for miles. One worker who escaped with burns was taken by helicopter to a hospital and later released; sixteen other workers who fled the burning rig were uninjured.
Driller in Oklahoma Explosion Has History of Deadly Accidents, Safety Violations - The drilling company involved in Monday's natural gas rig explosion in Pittsburg County, Oklahoma that killed five workers has a long record of deadly accidents and numerous safety violations.Ten workers have died within the past ten years at well sites linked to Houston-based Patterson-UTI Energy, the Associated Press reported, citing data from the Occupational Safety and Health Administration.The accidents occurred at drilling sites in Colorado, New Mexico, North Dakota, Pennsylvania and Texas.Patterson-UTI has also been fined nearly $367,000 in the last decade for more than 140 safety violations, including many serious ones.According to the AP:"A 2008 report from a U.S. Senate committee described Patterson-UTI as one of the nation's worst violators of workplace safety laws. The report devoted an entire section to the company and 13 employees who died in Texas rig accidents over a nearly four-year period."A separate AP analysis published in 2008 showed at least 20 Patterson-UTI employees died on the job between 2002 and 2007. No other oil and gas company had more than five fatal accidents during that span."The rig explosion this week appears to be the deadliest since the 2010 Deepwater Horizon explosion in the Gulf of Mexico claimed the lives of 11 men. “Patterson-UTI has embraced a culture of continuous improvement in safety, training and operations," the company responded to the AP about its safety record. "In recent years, we have invested millions of dollars on training and protective equipment and worked to instill a company-wide culture where safety is the top priority of each employee."The U.S. Occupational Safety and Health Administration is investigating the explosion near the town of Quinton. The U.S. Chemical Safety Board will also consider launching a larger investigation. An initial report indicates an uncontrolled gas release led to the blast. A worker at the scene tried unsuccessfully to shut the well down.
Keystone oil pipeline still at reduced pressure: spokesman (Reuters) - TransCanada Corp’s Keystone crude pipeline is still operating at 20 percent reduced pressure, a spokesman for the company said on Tuesday, more than two months after a leak forced the line to be shut. Calgary-based TransCanada shut the 590,000 barrel-per-day pipeline, one of Canada’s main crude export routes linking Alberta to U.S. refineries, on Nov. 16 after the leak was detected. The pipeline was restarted about two weeks later, but the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) ordered TransCanada to operate at reduced pressure after the 5,000-barrel oil leak in South Dakota. Energy data provider Genscape said on Thursday the pipeline flow averaged an estimated 524,000 bpd last week. The reduced flows have contributed to inventory declines at the Cushing, Oklahoma storage hub and pressured Canadian crude differentials, traders said. PHMSA did not immediately comment on when the line would be allowed to return to full capacity.
Keystone Is Doable Even With New Route, TransCanada CEO Says -- Keystone XL is feasible, though a touch more costly, even after Nebraska regulators imposed an alternative route. That's the message from TransCanada Corp.'s CEO in the latest hint the company is leaning toward building the pipeline that will ship more crude from the oil sands to refineries in the Gulf of Mexico. It doesn't mean the Calgary-based pipeline giant has made a decision. TransCanada's evaluation after the ruling to allow the alternate route was mostly about its legality, he said. "We're comfortable that they came to a decision that was within their jurisdiction and within the law," Chief Executive Officer Russ Girling said in response to questions during a presentation at a Canadian Imperial Bank of Commerce conference in Whistler, British Columbia. "That was what our primary concern was." The alternate route doesn't present major issues for construction, Girling said. The additional cost will be about C$100 million to C$200 million ($80 million-$160 million), and it will add five to 10 miles of pipe, he said. That's a small addition to an $8 billion, 1,200-mile project. "The actual routing, construction and costs, those aren't major issues," he said. TransCanada will now focus on acquiring land along the new path and obtaining the other permits it needs, he said. The company still hasn't made an official decision on whether to build the project, he added.
ONEOK's plan to boost Bakken and Niobara/DJ Basin NGL takeaway capacity - There has been growing concern regarding NGL pipeline takeaway capacity out of the Williston Basin and the Niobrara — particularly the DJ Basin — over the past year, with one of the major pipes through those regions now running full. Finally, ONEOK has announced plans for the Elk Creek Pipeline, which will have an initial capacity of 240 Mb/d and be expandable to 400 Mb/d. The new pipe will transport mixed, unfractionated NGLs from eastern Montana to the Conway/Bushton fractionation hub in central Kansas, and provide long-term relief for a lot of Bakken, Powder River and Denver-Julesburg (DJ) Basin producers. But with an end-of-2019 in-service date, will the new capacity come soon enough to avert NGL takeaway constraints? Today, we discuss the Elk Creek project, the flows on existing NGL pipes to Conway/Bushton, and the growing significance of ethane as pipelines fill. It has been a while since we blogged about Bakken and Rockies NGL pipeline takeaway capacity. Back in December 2015, we published the first of our Spotlight reports (a joint venture between RBN and East Daley Capital Advisors) and discussed the report’s highlights in No Sleep Till Bushton – Strong Fundamentals Position ONEOK To Leverage Bakken Assets. And way back in 2013, we wrote The Race Is On And It Looks Like ONEOK – Bakken NGLs Production Growth, when ONEOK announced completion of the initial phase of the Bakken NGL Pipeline.Before getting into the potential takeaway issues that might occur between now and late 2019 when ONEOK’s new Elk Creek Pipeline is due to come into service (and possible solutions to handle those issues), let’s look at the project itself, and some of the existing NGL pipes in the broader region.
Oil and Gas Company Sues Environmental Activist for Libel over Facebook Comments -- On November 17, 2016, a Colorado environmental activist named Pete Kolbenschlag used Facebook to leave a comment on a local newspaper article, the kind of thing more than a billion people do every day. However, most people don’t get sued for libel over their Facebook comments. (Although some do.)The Post Independent story that Kolbenschlag commented on was about oil and gas extraction on federal lands near his home, in western Colorado’s North Fork Valley. It announced that the Obama administration’s Bureau of Land Management was canceling all oil and gas leases on the iconic Thompson Divide, a large, rugged swath of Forest Service land.In retaliation, the article reported, a Texas-based oil and gas company called SGI Interests (SGI), which owned 18 leases in the Thompson Divide area, was planning legal action against the federal government. The decision to cancel Thompson Divide leases was one of Obama’s last while in office.SGI claimed it had obtained documents that “clearly show” that the decision to cancel the leases “was a predetermined political decision from the Obama administration taking orders from environmental groups.”Kolbenschlag, who has opposed drilling in the region and engaged in environmental advocacy for some 20 years, responded to SGI’s allegations by posting the following comment:“While SGI alleges “collusion” let us recall that it, SGI, was actually fined for colluding (with GEC) to rig bid prices and rip off American taxpayers. Yes, these two companies owned by billionaires thought it appropriate to pad their portfolios at the expense of you and I and every other hard-working American.” Shortly thereafter, SGI sued Kolbenschlag for libel (which generally refers to defamatory written statements). Kolbenschlag’s comment was in reference to a settlement SGI and Gunnison Energy Company (GEC), another oil and gas firm active on federal lands in the region, signed with the U.S.Department of Justice in 2012.
Trump is tearing up fracking rules on federal lands. Be alarmed. - WaPo Editorial Board -- THE TRUMP administration announced late last month that it was tearing up rules on hydraulic fracturing — better known as fracking — on federal lands. The change satisfies drillers who have long opposed federal regulations on the controversial oil and gas extraction process. But it should alarm everyone else. Though drillers operating on public lands have in recent years fracked extensively, pumping a cocktail of water and chemicals into wells at high pressure to fracture rock formations and free trapped fuel, the Interior Department has not updated its rules in decades. So President Barack Obama’s Interior Department spent several years developing new regulations, ultimately releasing them in 2015, well into Mr. Obama’s second term. The lengthy process resulted in standards that struck a thoughtful balance between economic opportunity and environmental safety. For example, the Obama administration’s rules would have required drillers to test carefully the cement they use to seal off their wells, which would help prevent leakage into the subterranean environment. They would have stipulated careful treatment of wastewater flowing back out of the ground after injection, insisting that it be stored in aboveground storage tanks rather than in pits. Given that many of the most disturbing fracking accidents occurred in the handling of wastewater, the need for rules such as these was glaring. The Obama regulations also would have obliged drillers to disclose publicly the chemicals they added to the water they pumped underground. At the time, these standards failed to enthuse some on the environmentalist left, who want regulations that crack down so hard as to hobble the industry or effectively ban fracking. Instead, the Obama administration insisted that the rules would pose little challenge to the industry, because compliance costs would be extremely cheap — a relatively tiny $11,400 per well. The Environmental Protection Agency underscored the importance of a well-balanced fracking policy in a major report on fracking’s safety profile that the agency released at the end of 2016. The EPA found only scattered evidence of harm to drinking water, which is remarkable given the staggering number of wells drilled in the past decade. The agency nevertheless identified several ways in which fracking jobs could go wrong if improperly managed, along with real-world examples of harm.
Hess-Targa Gas Plant to Curb Bakken Flaring -- Hess Midstream Partners LP and Targa Resources Corp. have formed a 50/50 joint venture to build a new 200 million standard cubic feet per day dry gas processing plant near Targa’s existing Little Missouri facility in McKenzie County, North Dakota, Hess Midstream announced Thursday. According to Hess Midstream, Targa will manage construction of the approximately $150 million Little Missouri Four (LM4) plant and operate the facility. Hess TGP Operations L.P. – owned on a 20/80 basis by Hess Midstream and Hess Infrastructure Partners LP (HIP), respectively – will hold Hess Midstream’s 50-percent stake in the gas plant, the company added. In addition to contributing a total of $75 million to the plant’s construction, Hess Midstream said the two Hess units will invest approximately $100 million toward new pipeline infrastructure to gather volumes to LM4. North Dakota Gov. Doug Burgum called the investment “a huge step in the right direction toward continuing to meet our flaring reduction goals and encouraging responsible energy development and infrastructure investment.”. “This processing plant will provide much-needed capacity at a time when North Dakota’s oil production nears record levels and associated natural gas continues to climb.”
Smaller operators push Bakken output outward -- For years, large public companies have produced crude oil in North Dakota largely in an area known as "the core of the core" of the Bakken shale play. Faced with low, stagnant oil prices, the big producers have focused largely on drilling in McKenzie and Dunn counties, Fort Berthold Indian Reservation and other acreage within the southern portion of the Nesson Anticline. But rising prices, along with the start of the Dakota Access Pipeline and well productivity improvements, have pushed new companies, mainly smaller operators backed by private equity firms, into acreage long ignored by the state's prominent producers. While NYMEX WTI prices have nearly doubled over the past two years to around $65/b Wednesday, Bakken differentials have also been on the rise, especially over the past year. Bakken at the wellhead has averaged WTI minus $1.43/b so far in January, compared with discounts of close to $5/b back in January 2016, S&P Global Platts data shows. Better prices have given drillers the opportunity to expand.
California to sue Trump administration for repeal of fracking rules (Reuters) - California’s attorney general on Wednesday said the state plans to sue the Trump administration over its repeal of Obama-era rules meant to address public safety concerns in hydraulic fracturing, or fracking, on federal lands. The suit, which Attorney General Xavier Becerra said would be filed on Wednesday, marks the latest in a string of court challenges by California against the administration of Republican U.S. President Donald Trump’s policies on a range of issues from immigration to the environment. The federal government’s Bureau of Land Management (BLM) in 2015, under Democratic President Barack Obama, issued rules that would have required companies to provide data on chemicals used in fracking and to take steps to prevent leakage from oil and gas wells on federally-owned land. Fracking involves the injection of large amounts of water, sand and chemicals underground at high pressure to extract oil or natural gas trapped in rock formations. Most fracking takes place on private lands. However, the rules for federal and tribal lands were never implemented because oil and gas industry groups sued to block them, arguing that they were unnecessary and would slow the country’s path to energy independence. That litigation ended when the Trump administration repealed the regulations last year. On a conference call with reporters, California’s Becerra said the new litigation “is going to stand on its own.” “They did nothing at BLM to undo the rule with any justification or factual basis. There is plenty of reason to doubt that the fracking repeal engaged in by the Trump administration would withstand scrutiny in a court,” he added. Several of the environmental groups involved in that earlier litigation, including the Sierra Club, Earthjustice and the Center for Biological Diversity, also planned to file a lawsuit on Wednesday. A BLM spokeswoman declined to comment on the threat of litigation.
California sues Trump administration over fracking rule: (AP) — California's attorney general is suing the Trump administration for rolling back a fracking rule that he says is designed to protect public health and the environment. Attorney General Xavier Becerra (HAH-vee-air Bah-sehr'-ah) announced the lawsuit as he celebrated his first year as California's top law enforcement official. He says his office has filed 25 lawsuits against President Donald Trump's administration. The latest suit challenges the federal Bureau of Land Management's rollback of a major rule last month governing fracking, which cracks open underground oil and gas deposits with pressurized water, sand and chemicals. The rule would require drilling companies to disclose the chemicals they use for fracking. Advertisement Becerra says the administration broke the law by not following required procedures including getting public comment.
Alaska earthquake could threaten over 500,000 b/d of ANS crude oil shipments -- A 7.9 magnitude earthquake early Tuesday in the Gulf of Alaska has prompted a tsunami warning issued for the coast, which could threaten shipments of Alaska North Slope crude from the Port of Valdez. According to the Alaska Earthquake Center, the quake occurred 166 miles southeast of Kodiak. The Port of Valdez is the southern terminus of the trans-Alaska oil pipeline, through with 548,293 b/d of crude was transported in December, according to the Alyeska Pipeline service company. Neither the Port of Valdez or Alyeska Pipeline could not be reached for comment. ANS crude is consumed largely by US West Coast refiners, and at times has been exported to Asia. The closure of the Port of Valdez or the trans-Alaska pipeline for an extended period would push USWC refiners to seek alternative waterborne exports.
US Coast Guard Adds Cruise Missiles To Ice-Breakers As Battle For The Arctic Begins -- The United States Coast Guard is preparing to equip icebreaker vessels operating in the Arctic region with high-tech cruise missiles for the first time as Washington escalates geopolitical tensions with Russia. Coast Guard Commandant Paul Zukunft confirmed last week that the Coast Guard’s newest fleet of heavy icebreakers would be designed to carry cruise missiles, the Washington Times reported. In recent times, the Coast Guard has suggested that it would adopt heavy weapon systems for its vessels operating in the Arctic, but with the latest announcement from Zukunft, he has now confirmed the weapons race between Washington and Moscow has begun in the fight for the Arctic. “If you look at what Russia is doing, there’s almost a mini arms buildup going on in the Arctic,” USCG Vice Adm. Fred Midgette told CBS in December. Russia operates at least 40 icebreakers with six heavy icebreakers, CBS News reported in December. Former Navy Capt. Jerry Hendrix, a senior associate at the Washington-based Center for a New American Security, said, “this is not just about [new] icebreakers; this is part of a broader competition just below the surface.” Opponents believe the Coast Guard is trying to take advantage of the rising tensions between Washington and Moscow so that it can arm its icebreakers with unnecessary amounts of expensive high-tech weaponry. Zukunft has denied these claims, arguing that natural resources underneath the water are a national security threat if waterways open up allowing other countries to tap into cheap energy.
U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World -- New forecasts from the International Energy Agency say the United States is on track to overtake Saudi Arabia as the second-largest oil producer in the world, just behind Russia, according to the organization’s report on Friday."This year promises to be a record-setting one for the US," the IEA wrote in its monthly market report. "Relentless growth should see the US hit historic highs above 10 million barrels per day, overtaking Saudi Arabia and rivaling Russia during the course of 2018 – provided OPEC/non-OPEC restraints remain in place.”OPEC players have been wary of the strength of the American shale market as the nation’s products reach new countries every month."US growth in 2017 beat all expectations ... as the shale industry bounced back, profiting from cost cuts, (and) stepped up drilling activity," the IEA added. "Explosive growth in the US and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico. The big 2018 supply story is unfolding fast in the Americas.”Oil prices are currently at levels at which U.S. production could substantially increase. According to the Q4 Dallas Fed Energy Survey published at end-December, 42 percent of executives at 132 oil and gas firms expect the U.S. oil rig count to substantially increase if WTI prices are between $61 and $65 a barrel.EIA’s latest Short-Term Energy Outlook (STEO) from last week estimated that U.S. crude oil production averaged 9.3 million bpd in the whole of 2017, and 9.9 million bpd in December alone. This year, U.S. crude oil production is seen averaging 10.3 million bpd in 2018, beating a record dating back to 1970. For 2019, the EIA expects U.S. production to increase to an average of 10.8 million bpd, and to surpass 11 million bpd in November next year.
EIA expects 2018 and 2019 natural gas prices to remain relatively flat -- In its latest Short-Term Energy Outlook (STEO), EIA expects the Henry Hub natural gas spot price to average $2.88 per million British thermal units (MMBtu) in 2018 and $2.92/MMBtu in 2019, slightly lower than the 2017 average of $2.99/MMBtu. Lower prices in 2018 and 2019 reflect EIA’s expectation of increased natural gas production and relatively flat consumption. The confidence interval range for natural gas prices shown in the figure above is a market-derived range that reflects trading in New York Mercantile Exchange (NYMEX) futures and options markets and is not directly dependent on EIA's supply and demand estimates. The values for the upper confidence interval increase during the winter months compared with the rest of the year, reflecting the higher probability of an increase in natural gas consumption for space heating as a result of colder weather. EIA expects natural gas consumption will increase slightly in both 2018 and 2019. On an annual basis, EIA expects combined residential and commercial natural gas consumption to increase by 1.3 billion cubic feet per day (Bcf/d) in 2018 because of colder weather closer to the recent historical average after a very warm early 2017, then remain nearly the same in 2019. In 2018, the STEO forecasts increasing use of natural gas for electric power generation because of low natural gas prices. Natural gas-fired power generation is also expected to increase in 2019 because of growth in total electricity generation—fueled in part by increased natural gas-fired capacity—and anticipated coal-fired retirements. EIA forecasts dry natural gas production to increase in both 2018 and 2019, exceeding domestic consumption of natural gas for the first time since 1966. EIA projects production growth to be concentrated in Appalachia’s Marcellus and Utica regions and in the Permian region, where oil production results in associated natural gas production. Increasing pipeline takeaway capacity out of the Appalachia region, expected to increase by 8.4 Bcf/d by spring 2018, will deliver natural gas to end-use markets. Greater pipeline connectivity reduces spot market discounts to Henry Hub, the main price benchmark for natural gas, and is expected to result in higher wellhead natural gas prices and production growth.
E&P profitability deteriorates despite higher oil prices, but what about 2018? - The U.S. exploration and production (E&P) sector roared out of the starting gate in 2017 with a new optimism that fueled a more than 40% surge in capital investment. First-quarter results were strong, but an ebb in oil prices and some operational headwinds significantly lowered results in subsequent quarters. When final 2017 results are tallied in the next few weeks, the industry is on track to record its first profitable year since 2013 after posting more than $160 billion in losses in the 2014-16 period. The critical question is whether E&Ps are regaining the momentum that could drive a steady increase in profitability in 2018. Today, we analyze the clues contained in third-quarter 2017 results. We have been intensely tracking the financial performance of a representative group of U.S. E&Ps for more than a year now. In our in-depth Piranha! study, we examined the strategies that our universe of 43 top U.S. oil and gas producers adopted to thrive in a world of lower oil and gas prices. We reviewed the promising results of those strategies in the first quarter of 2017 in Recovery and subsequent blogs focused on our three peer groups: Oil-Weighted, Diversified, and Gas-Weighted E&Ps. We tracked the disappointing second-quarter performance of those companies in another blog series beginning with Roller Coaster. And last month, in Ready To Run, we updated our forecasted 2017 capital spending and production projections based on the companies’ third-quarter earnings releases and reviewed announcements by 13 E&Ps of their preliminary 2018 capital spending budgets, which indicated that oil and gas producers are likely to boost spending once again. Today’s review of third-quarter results from all 43 of the companies in our universe will provide insights into whether that continued optimism is justified.
Sharp Rise in Oil, Gas Industry Confidence in 2018 - There has been a sharp rise in industry confidence in 2018, according to a new study by DNV GL, a technical advisor to the oil and gas sector.DNV GL’s latest industry outlook report, which surveyed 813 senior industry professionals and executives globally, found that 63 percent of poll participants were confident about growth in the industry this year. This figure stood at 32 percent in DNV GL’s report a year ago.Europe had the most improved outlook for the oil and gas sector, according to DNV GL’s research, up from 25 percent last year to 64 percent, with Latin America at 77 percent (46 percent in 2017) and Asia Pacific at 57 percent (30 percent in 2017). Confidence in North America rose from 49 percent to 57 percent.“A combination of two things have brought confidence back to the industry,” Maria Moræus Hanssen, the newly appointed CEO and chairman of the management board of DEA Deutsche Erdoel AG (DEA), was quoted as saying in the report.“The first, of course, is oil and gas prices. Short-term prices seem to drive a lot of sentiment about longer-term perspectives for the industry – it’s always been like that. And second, costs have come down, both running costs and investment costs,” Hanssen added.The report highlighted that two thirds (66 percent) of respondents said their company will maintain or increase capital spending in 2018, compared to 39 percent last year, and that 62 percent expect their organization to maintain or increase headcount in 2018, compared to 43 percent in 2017.Strict discipline is expected to remain in the oil and gas sector, however, with half of respondents suggesting they were steadfast in their efforts to increase cost control measures in 2018. This was consistent with 2017 (51 percent). Close to two-thirds (62 percent) believe that these are permanent changes, mirroring the results from last year’s survey (63 percent).
Big Oil flush with cash again, but no party yet (Reuters) - The world’s top oil companies are expected to generate more cash in 2018 than at any other time this decade after three painful years of cuts, but it isn’t party time yet. The shift in sentiment has been rapid as crude prices have risen by more than 50 percent over the past six months to reach $70 a barrel, a level not seen since the crash year of 2014, thanks to global supply cuts led by OPEC. Only a year ago, many investors still fretted over the sustainability of the sector’s lavish dividend payouts in a weak energy market. Now the focus on company boards is gradually switching from slashing jobs and investment to boosting shareholders’ returns and growth. With memories of the 2014 price collapse still fresh and oil forecast to recover only slowly, frugality remains high on the agenda of boards and investors to ensure that the energy majors produce enough cash to pay dividends while reducing debt that ballooned during the downturn. “The companies will need to demonstrate over time that lower capital spending can be sustained and that their dividends will remain fully covered,” s “We are cautiously optimistic on their ability to do this, given the dramatic cost reductions in the industry.” Oil majors responded to the crisis by transforming their businesses, nearly halving spending, culling tens of thousands of jobs and diluting share value. In 2017, most companies showed they can adapt to a world of lower prices and even generate thin profits with oil at $50-$55 a barrel, without borrowing. This year, when prices are expected to hold around $60 a barrel, the majors will generate more cash than they did in 2011 when a barrel of crude traded at an average of $112, according to BMO Capital Markets analyst Brendan Warn. Dutch Shell appears the strongest performer among the group in terms of organic free cash flow - money available to return to shareholders in dividends and share buybacks after deducting capital spending, excluding revenue from disposals.
More oil and gas firms expect to hike capital spending in 2018 (Reuters) - More global oil and gas firms expect to increase capital spending this year as confidence picks up after crude prices climbed above $70 a barrel in January for the first time in the three years, according to a survey by DNV. DNV, a technical adviser to energy industry sector, reported that 66 percent of the 813 senior oil and gas professionals surveyed said their company would maintain or increase capital spending this year, compared to 39 percent last year. Confidence that the industry would grow rose to 63 percent this year from 32 percent last year, the survey found. Many companies, including oil majors BP and Shell, cut capital expenditure and costs in 2016 after the price of Brent oil fell to a 12-year low of under $30 a tonne. Capital expenditure in global oil production fell to $200 billion in 2016 from an all-time high of around $520 billion in 2014 as companies tried to save cash, according to consultancy firm McKinsey. The price of Brent, the global benchmark, has slowly recovered since then, helped by output curbs by the Organization of the Petroleum Exporting Countries, Russia and others. The pact began in January 2017 and expires at the end of 2018. “Our research indicates that the oil and gas industry is becoming more confident that its successful focus on cutting costs and building new efficiencies into the value chain will last,” DNV Oil & Gas Chief Executive Liv Hovem said. “Intentions to increase capital and innovation spending in 2018 come alongside a clear signal that oil and gas industry costs will not return to pre-2014 norms,” she said in a statement. Half of the survey respondents said they would maintain efforts to increase cost control measures this year, and nearly two thirds believe these changes would be permanent. Just 37 percent of those surveyed said the oil price was a barrier to growth this year, compared to 64 percent a year ago, the DNV survey found.
Fast-growing global trade is boosting fuel demand: Kemp - (Reuters) - Freight movements in the United States and around the rest of the world are growing at some of the fastest rates this decade, which should provide a big boost for diesel consumption in 2018. In the United States, the volume of freight moved by road, rail, pipeline, barge and air between September and November was around 6 percent higher than in the same period a year earlier. Freight volumes are growing at some of the fastest rates since 2011, according to the freight transportation services index compiled by the U.S. Bureau of Transportation Statistics (http://tmsnrt.rs/2DB9aLY). Freight movements are being driven by an increase in coal deliveries to power plants, as well as increases in oil and gas drilling. U.S. businesses have also finally managed to get their inventories of raw materials, unfinished work-in-progress and finished items under control. The ratio of inventories to sales has fallen to 1.33, down from a peak of 1.46 in April 2016, and the lowest for three years, according to the U.S. Census Bureau. The continued draw down in inventories is unsustainable and has left manufacturers, distributors and retailers boosting new orders to stop the erosion of their stock levels. One result is a nationwide shortage of trucks and a scramble by shippers to secure enough freight capacity. Freight rates and shipment backlogs have been rising sharply as spare capacity inherited from the slowdown in cargo movements in 2015 and 2016 is used up. The pattern is being repeated worldwide, with global trade growing at the fastest rate since 2011, according to the Netherlands Bureau of Economic Policy Analysis.The global economy is experiencing the strongest synchronised growth since the start of the decade with all the advanced economies in a cyclical upswing.The rise in oil and other raw materials prices is also starting to produce an upswing in the commodity-dependent developing countries that were hit hardest when commodities prices started tumbling in 2014. The current global expansion is expected to continue throughout 2018 and into 2019 which should support further rapid growth in freight volumes. Since almost all freight is moved by trucks, railroads, barges, ships and aircraft that use diesel or jet fuel made from middle distillates, the economic expansion should provide a big boost for distillate demand in 2018.
The Dark Side of America’s Rise to Oil Superpower - The last time U.S. drillers pumped 10 million barrels of crude a day, Richard Nixon was in the White House. The first oil crisis hadn’t yet scared Americans into buying Toyotas, and fracking was an experimental technique a handful of engineers were trying, with meager success, to popularize. It was 1970, and oil sold for $1.80 a barrel.Almost five decades later, with oil hovering near $65 a barrel, daily U.S. crude output is about to hit the eight-digit mark again. It’s a significant milestone on the way to fulfilling a dream that a generation ago seemed far-fetched: By the end of the year, the U.S. may well be the world’s biggest oil producer. With that, America takes a big step toward energy independence.The U.S. crowing from the top of a hill long occupied by Saudi Arabia or Russia would scramble geopolitics. A new world energy order could emerge. That shuffling will be good for America but not so much for the planet. For one, the influence of one of the most powerful forces of the past half-century, the modern petrostate, would be diminished. No longer would “America First” diplomats need to tiptoe around oil-supplying nations such as Saudi Arabia. The Organization of Petroleum Exporting Countries would find it tougher to agree on production guidelines, and lower prices could result, reopening old wounds in the cartel. That would take some muscle out of Vladimir Putin’s foreign policy, while Russia’s oligarchs would find it more difficult to maintain the lifestyles to which they’ve become accustomed. President Donald Trump, sensing an opportunity, is looking past independence to what he calls energy dominance. His administration plans to open vast ocean acreage to offshore exploration and for the first time in 40 years allow drilling in the Arctic National Wildlife Refuge. It may take years to tap, but the Alaska payoff alone is eye-popping—an estimated 11.8 billion barrels of technically recoverable crude. It sounds good, but be careful what you wish for. The last three years have been the hottest since recordkeeping began in the 19th century, and there’s little room in Trump’s plan for energy sources that treat the planet kindly. Governors of coastal states have already pointed out that an offshore spill could devastate tourism—another trillion-dollar industry—not to mention wreck fragile littoral environments.
Saudi Arabia's energy minister says IEA overhyped US shale boom - Saudi Arabia’s energy minister took a rare sideways swipe at the International Energy Agency on Wednesday, accusing the body of overhyping the impact of US shale growth on the oil market. In a retort to remarks by IEA head Fatih Birol, Khalid Al Falih said at an energy panel in Davos that the agency was failing to put the scale of US production increases into context. “I was not disputing the amazing revolution of shale . . .[but] in the overall global supply demand picture it’s not going to wreck the train,” said Mr Falih. “We should not be scared,” he added, at the World Economic Forum’s annual conference on Wednesday. “That’s the core job of the IEA, not to take it out of context.” Mr Falih appeared alongside his Russian counterpart Alexander Novak and US energy secretary Rick Perry, who together now represent countries pumping more than a third of the world’s crude. The appearance of a US representative on a panel of traditional producer nations illustrates the transformative effect the shale boom has had on global energy markets.The IEA said last week US crude production was on course to overtake Saudi Arabia and rival Russia, with the body revising 2018 growth forecasts for the US higher to output of more than 10m b/d. The Saudi minister said US output would be “absorbed” just as rising supplies in the 1980s were eventually needed by the market. His comments may raise eyebrows because the boom in North Sea and Alaskan output at that time led to two decades of relatively low prices and is seen as a major factor behind the eventual collapse of the Soviet Union.
KunstlerCast 299 — What Happened to Peak Oil — a Chat with Art Berman --Kunstler - http://traffic.libsyn.com/kunstlercast/KunstlerCast_299.mp3 Arthur Berman has been an independent oil analyst for 17 years after an earlier 20 year career with the Amoco Oil Company. He’s a regular commentator at NBC, CNN, CBC, BNN, OilPrice.com, Bloomberg, Platt’s, Financial Times, and New York Times. He is a Director of ASPO-USA (Association for the Study of Peak Oil & Gas USA). He was a Managing Director and frequent contributor at The Oil Drum, and is an associate editor of the American Association of Petroleum Geologists Bulletin. He was past editor of the Houston Geological Society Bulletin (2004-2005) and past Vice-president of the Society (2008-2009). He has published more than 100 articles on geology, technology, and the petroleum industry during the past 5 years. His blog commentary can be found at http://www.artberman.com/blog/.
Rising Canadian production, takeaway constraints and WCS price discounts - The recent collapse in the price of Western Canadian Select (WCS) versus West Texas Intermediate (WTI) and the 12-day shutdown of the Keystone Pipeline in November 2017 put the spotlight on a major issue: Alberta production is rising, pipeline takeaway capacity out of the province has not kept pace, and pipes are running so full that some owners have been forced to apportion access to them. Storage and crude-by-rail shipments have served as a cushion of sorts, absorbing shocks like the Keystone outage and the apportionments, but with more production gains expected in 2018-19, that cushion seems uncomfortably thin and unforgiving. With all this going on, we decided that it’s time for a deep-dive look at Western Canadian production, takeaway options and WCS prices — the whole kit and caboodle. Today, we begin a new series on Canadian crude and bitumen production, the infrastructure in place (and being planned) to deal with it, and the effects of takeaway constraints on pricing. Western Canadian crude oil production has grown from about 2.5 MMb/d in 2011 to almost 4.0 MMb/d by the end of 2017. Despite these gains — most of which came from Alberta’s oil sands region — times are tough in the Canadian oil patch. While other North American producers have been enjoying the gradual rise in WTI pricing over the past year, Canadian producers have suffered through declining prices for WCS, the Canadian heavy blend crude benchmark — especially over the past few months. Figure 1 shows that WCS maintained a pricing discount to WTI of around $10/bbl through most of 2017 (all in U.S. dollars). Beginning in late summer, however, the WCS discount to WTI began to grow, initially to around $11-12/bbl during September and October, and then crashing during November and December to around $25/bbl.
Canadian city argues Trans Mountain pipeline route harmful (Reuters) - The proposed route of Kinder Morgan Canada’s C$7.4 billion ($5.9 billion) Trans Mountain pipeline expansion will pass through a conservation area in Burnaby, British Columbia, potentially harming sensitive ecosystems, the city argued on Tuesday. The Vancouver suburb also questioned, in an often testy exchange during its first day of route hearings in front of Canada’s national energy regulator, the company’s efforts to consult with the city prior to choosing its final path. “There’s been absolutely no consultation here,” Burnaby’s lawyer, Gregory McDade, told reporters outside the hearings, adding: “At the very least, we shouldn’t allow the pipeline company to come in and steal our parks and green spaces as the easy way to build their pipeline.” In response, Kinder Morgan said Trans Mountain would run between an existing rail line and highway adjacent to the conservation area, adding it had done extensive in-person and online consultation in the city. “What we’ve chosen is the route that we think is the least disruptive for the community,” spokeswoman Ali Hounsell told Reuters. Burnaby, a city of 233,000, is a staunch opponent to the proposed twinning of the Trans Mountain oil pipeline and is hoping to use the National Energy Board (NEB) route hearings to block the construction of the project. While the expansion was approved by the Canadian government in 2016, the hearings are to help determine the exact route of the 1,147-kilometer (712 mile) pipeline. The project entails building a second pipeline largely along the route of the existing one, though it will follow a new path through the Vancouver area, which has grown more dense in the decades since the original line was built. Burnaby has been sparring with Kinder Morgan for years over the project, which would nearly triple capacity to 890,000 barrels per day on the line from Alberta’s energy heartland to a marine terminal in the city. The city has repeatedly used its municipal permitting power to delay work related to the project. Last week, Kinder Morgan pushed back the startup of the expanded line to December 2020, adding another three months to a previous nine-month delay it has blamed on the permitting difficulty.
Earthquakes Linked to Completion Volume and Location of Hydraulic Fracturing -- The volume of hydraulic fracturing fluid and the location of well pads control the frequency and occurrence of measurable earthquakes, new Alberta Geological Survey and UAlberta research has found. Ryan Schultz has been studying earthquakes in the Fox Creek, Alberta area since they started in December 2013. The seismologist—who works at the Alberta Geological Survey (a branch of the Alberta Energy Regulator) and with the University of Alberta—wanted to better understand what was causing the quakes. Schultz and his colleagues found that when increased volumes were injected in susceptible locations (i.e., in connection with a nearby slip-ready fault), it transmits increased pressure to the fault line, leading to more numerous measurable earthquakes. It's not as simple as more volume equals more earthquakes, though-a link that scientists have long identified in the history of induced seismicity, dating back to the 1950s. There is another factor at play in the Fox Creek area, and it's all about location, explained Schultz. "If there is a pre-existing fault, but you're not connected to it by some sort of fluid pathway, you can hydraulically fracture the formation, and you're probably not going to cause a significant earthquake," said Schultz. "It's conceptually quite simple, but actually determining those things underground is really hard to do in practice." Since 2013, there has been a marked increase in the rate of earthquakes near Fox Creek, ranging up to magnitude 4s. While other research has pointed to industry activity as contributing to the quakes, this study is the first to identify specific factors causing the seismic activity.
Rail Workers Acquitted in Trial on Deadly Lac-Mégantic Oil Train Disaster - The train engineer and two additional rail workers who faced charges for the deadly July 2013 oil train accident in Lac-Mégantic, Quebec, were acquitted on Friday after the jury deliberated for nine days. If convicted of all charges, they potentially faced life in prison.The end of the trial of these three employees for their role in the Canadian oil train disaster that resulted in 47 deaths and the destruction of much of downtown Lac-Mégantic appears to have brought some closure to residents of the still-recovering town — although most are still waiting for justice.As the trial began, the BBC reported the sentiments of Lac-Mégantic resident Jean Paradis, who lost three friends in the accident and thought the wrong people were on trial.“It’s clear to me the main shareholder, MMA, are not here. Transport Canada is not here. Transport Canada have let cheap companies run railroads in Canada with less money for more profit…” Paridis told the BBC. Transport Canada is the Canadian regulatory agency with rail oversight. Another resident, Jean Clusiault, who lost his daughter in the disaster, told the CBC that after the decision, “I felt relieved because these are not the right people who should be there.”
Oil's Heavy Hitters Line Up to Dive Into Mexico's Deep Waters - If you’re a super-major oil explorer, Mexico says it’s got a bargain for you. The once-giant crude nation whose output plunged in the past decade is enticing the world’s richest explorers with cut-rate prices for drilling rights to its most coveted offshore fields. The Jan. 31 auction for access to 29 deep-water tracts comes as $70-a-barrel crude lifts foreign drillers from the worst market slump in decades.Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. are among the 21 entrants registered to bid next week, the National Hydrocarbons Commission, known as CNH, announced Thursday in a webcast. The sale will be Mexico’s biggest, in terms of fields and expected investment, since government-controlled Petroleos Mexicanos’s monopoly ended in 2013. Mexico’s demand for low upfront bonus payments probably accelerated interest in the auction, Horacio Cuenca, an analyst at Wood Mackenzie Ltd., said in an interview in Rio de Janeiro. The blocks also don’t require large initial investment commitments. “Mexico has done all it could to attract companies,” he said. “It’s going to drive interest. The blocks are very cheap.” Pemex, as the state-owned oil producer is known, is set to bid individually and as a partner in six groups with companies such as Chevron and Shell. Malaysia’s Petroliam Nasional Bhd also qualified as a lone bidder and as a part of five consortium groups with partners such as Cnooc Ltd. and Repsol SA. “This is good news,” Hector Acosta, CNH commissioner, said during Thursday’s webcast. “The fact that we have so much variety in the integration of the consortium groups -- 17 bid groups and nine individual bidders -- seems like good news and that we will have a good presentation of offers for the different blocks.”
Mexico's Drug Cartels Steal Billions In Oil, Threaten To Collapse Nation's Refineries - In a new mind-numbing report from Reuters, Mexico’s drug cartels are increasingly diversifying beyond narcotics and have recently entered into the petroleum business.Cartels have jumped into the fuel theft game stealing billions of dollars worth of oil from pipelines controlled by the state oil company Pemex, which at current rates could paralyze the country’s top refineries. Organized crime gangs are taking advantage of Mexico’s deteriorating oil infrastructure that is suffering from years of underinvestment and declining production by tapping into pipelines to steal tremendous amounts of crude products. If that fails, cartel members resort to bribing and or threatening Pemex employees for critical information about operations. Some Pemex employees have fled the country following unbearable death threats, while others have been found mutilated for not complying. While President Enrique Peña Nieto has been unable to govern the country amid the out of control cartel violence, fuel theft is turning into a national security threat draining revenue from the federal government. Reuters reports that fuel thefts have cut more than $1 billion in annual revenue from state coffers, along with creating an unfriendly environment that is deterring foreign investment to revamp the aging refineries. Its been reported that the federal government generates about one-fifth of its income from Pemex. Serious issues are emerging as the declining oil revenue could lead to funding concerns for the government, therefore jeopardizing the fight against cartels. The Federal Police, under the authority of the Secretariat of the Interior, recently launched offensives across the country that toppled drug kingpins turning 16% of the states into a Level-4 classification via the U.S. State Department, meaning that the areas are on par with a war-zone in the Middle East. Cartels have been fractured but are still cash-strapped as their decision to enter the petroleum business is cheap and it implies less risk than drug trafficking. “The business is more profitable than drug trafficking because it implies less risk,” said Georgina Trujillo, a ruling party congresswoman who heads the lower house energy commission. “You don’t have to risk crossing the border to look for a market,” she added. “We all consume gasoline. We don’t all consume drugs.”
Great Groningen: Politics may trump economics at giant Dutch gas field - For the residents of the surrounding region, the production of gas from the Dutch Groningen field has turned into a never-ending nightmare, with the continued threat of serious earthquakes creating a climate of fear. “It was like a bomb going off,” one resident said following the 3.4-magnitude earthquake that hit Groningen on January 8. The quake — like those that came before it — was triggered by gas production from the giant onshore field that has been supplying gas to households and industry in the Netherlands and elsewhere in Northwest Europe since 1963. The biggest since 2012, the quake made gas extraction at Groningen the most pressing challenge for the coalition government that has only held the reins of power since October. The starkest reaction to the quake — which has already led to more than 3,000 insurance claims for damage to property — has come from Prime Minister Mark Rutte who said that the safety of residents was “the only thing” to take into account when deciding a new policy. Economy minister Eric Wiebes was more circumspect, pointing out that citizens could not be left to freeze and companies go bust — security of supply and jobs in the Dutch gas sector had to be considered. But it is difficult to see how the government can come up with a policy that works for everyone. Another big quake, with the potential to cause loss of life, for example, would be a major political blow to the government, so a “do-nothing” policy is out of the question. But forcing a significant reduction in production at Groningen would hurt the Dutch treasury, whose revenues from gas production have fallen to under Eur2 billion in 2017 from an estimated Eur13 billion in 2013, and leave the Netherlands (and its neighbors which are supplied with Groningen’s low-calorific gas) scrambling for alternative sources of supply. And let’s not forget — there are no guarantees that reducing production will mean no more earthquakes. The January 8 quake came despite the fact that Groningen output was slashed to just 24 Bcm/year in 2017 from as much as 54 Bcm as recently as 2013.
Britain to tighten financial checks on fracking firms - (Reuters) - Britain is tightening controls on firms hoping to carry out hydraulic fracking in parts of the country by adding a financial health check to the application process, the government said on Thursday. Substantial amounts of shale gas are estimated to be trapped in underground rocks and the British government wants to exploit them to help offset declining North Sea oil and gas output, create jobs and boost economic growth. No fracking - which involves extracting gas obtained from rocks broken up or fractured at high pressure with water and chemicals - has taken place in the country in the past 7 years after operations were halted at the first British site following earth tremors. The government has since imposed several environmental and technical requirements which must be met before any company can carry out the process. Energy minister Greg Clark said on Thursday that additional financial criteria must also be met. “An equivalent assessment should be undertaken of the financial resilience of companies proposing to carry out hydraulic fracturing operations so that stakeholders can have confidence in the company’s ability to meet its commitments,” he said in a in a written statement on parliament’s website. “We will therefore look at the financial resilience of all companies wishing to carry out hydraulic fracturing operations alongside their application for Hydraulic Fracturing Consent,” he said. Third Energy, 95-percent-owned by Barclays is waiting for final sign off by Clark, to begin test fracking at its Kirby Misperton site in Ryedale, Yorkshire, northern England. Clark said he was satisfied Third Energy had met the technical requirements but is seeking further financial information about the company to help make his final decision. Several firms hope to use hydraulic fracking in Britain, including shale gas developer Cuadrilla and petrochemicals group Ineos.
Norway Aiming For Oil & Gas Output To Reach Record Highs By 2022 -- Now that oil prices has begun to rise again, Norway’s oil and gas development and output will as well — with output perhaps eclipsing the earlier high of 2004 by as soon as 2022, according to a new report from the Norwegian Petroleum Directorate (NPD). To word that differently, Norwegian oil and gas investment is expected to begin climbing again in 2018, after 4 years of decreases. Contrary to the situation in 2004, though, oil and gas investments this go around will be roughly equal, rather than slanted towards oil. “This is very good news, because everybody is talking about a phasing out of the Norwegian petroleum activity and, at least in the next 10 years, we don’t see that,” explained NPD Director General Bente Nyland in an interview with Reuters. Yes, very good news indeed — keep the oil flowing, while talking enthusiastically about the “green” future. That seems to be the path that Norway is now following.
Is This The World’s Most Critical Pipeline? - The Southern Gas Corridor, connecting Azerbaijan to the world’s largest economic block, is one of the most important infrastructure pipeline projects worldwide, bringing Caspian gas into Europe. Europe wants to become less dependent on Russian gas and use more clean energy, taking advantage of the technological advances made in the renewables sector, along with the use of natural gas.After 2016’s 7 percent growth, European gas consumption continued to rise through 2017. Consumption levels showed a year-on-year increase of 6 percent in the first quarter, supported by low temperatures.The Southern Gas Corridor is around 80 percent finalized, with the first gas flow for Europe expected around 2020. That’s great news not only for Europe, but also for the Azerbaijan economy, which stands to benefit from improved exported gas volumes, with the oil and gas sector accounting for up to 45 percent of their GDP and around 75 percent of state revenues.Europe’s natural gas import needs will continue to increase through the next 10 years, a result of the Netherlands and United Kingdom’s shift from gas exporters to importers, and Norway’s energy policy to freeze new oil and gas offshore projects. Azerbaijan will play an essential role in European energy security, not only as a European partner with a stable economy, but also a supplier with growing export potential of the much-needed commodity in a world of rising energy prices. And while the Southern Gas Corridor won’t replace Europe’s need for Russian gas, it will, however, be an outstanding actor for Southern European countries supplied by liquefied natural gas (LNG) carrying higher shipping costs. With gas traders exploiting the price arbitrage between the global LNG market and piped gas coming through the Southern Gas Corridor, we forecast that LNG’s market shares will continue to increase in Europe, as new fields were funded in Israel and Egypt.
Paradise Papers Reveal U.S. Selling Russian LNG In Europe -- The new massive data leak that has been making headlines for several days now has revealed that a company with U.S. ownership has been buying Russian gas and selling it in Europe at higher prices. According to a report in Belgian daily Le Soir, taken up by other media outlets, such as The Guardian and Eurasia Review, Wilbur Ross holds a 35-percent interest in Navigator Holdings, a shipping company registered in the Marshall Islands. According to the leaked documents, four cargo carriers owned by Navigator Holdings were used to load Russian natural gas at the port of Ust Luga before heading to the Anwerp LNG terminal in Belgium.The documents suggest that a company with U.S. ownership is buying Russian gas from petrochemical giant Sibur, and then selling it—at a profit, of course—to the European Union, which is in a rush to build as many LNG terminals as it can in a bid to reduce its dependence on Russian gas.If the reports are true, the situation is an ironic one for Europe: while trying to reduce its dependence on Russian gas it is inadvertently increasing it and is even paying more for it than it would if it bought the extra loads directly from Gazprom. One might wonder how a U.S. company is able to do business with a Russian one. It’s simple: Wilbur Ross himself said earlier this week that Sibur is not a subject to sanctions, so for Navigator Holdings and the petrochemical giant, everything is business as usual. Meanwhile, Gazprom is showing no concern whatsoever about potential challengers of its market share in Europe. Recently, the executive in charge of Gazprom’s export division, Elena Burmistrova, told media that there is nothing that can get in the way of Gazprom’s supplies of natural gas to the continent, even U.S. LNG, which some European gas consumers have hailed as a much needed alternative to Gazprom gas.
Nord Stream 2 Is A Game Changer For Gazprom -- It’s difficult to imagine an energy company that’s more hated and more closely monitored than Gazprom… Nevertheless, defying most trends, 2017 will go down in history as one of Gazprom’s successful years: for the first time in history, its share in Europe’s gas consumption reportedly reached 40 percent. Despite seemingly crippling U.S. sanctions specifically targeting Gazprom’s European endeavors and the EU’s hastily engineered gas rules, the construction of Nord Stream 2 has been going forward as planned, moreover, the project’s European partners (Shell, Engie, OMV, Uniper, Wintershall) wholly fulfilled their financial obligations. Gazprom increased gas sales to almost all its buyers in Europe. Germany’s intake reached a historic maximum of 53.4 BCm (Nord Stream-I utilization rate was equally at an unseen high of 93 percent). Turkey took in 29 BCm (18 percent growth). France totaled 12.3 BCm (7 percent growth). A combination of cold weather, low price and shrinking domestic gas output in Europe led Gazprom to a spectacular increase in production, too — its year-on-year growth amounted to 52 BCm/year. Despite regularly occurring 'fake news' that Gazprom is running short of gas, the gas giant is still keeping idle at 100-120 BCm/year of surplus production, mostly on the Yamal peninsula. So technically it can increase its supplies even further, but the real question is whether there will be sufficient demand to meet it. Further dramatic Europe-bound increases are unlikely until Nord Stream 2 gets onstream. The next few winters might not be as cold as previous ones; oil-pegged gas prices start to appreciate and demand is constrained by existing supply routes. Still, once a pipe dream, now Nord Stream 2 increasingly stands out as Gazprom’s future claim on further European consolidation. The European Commission antitrust enquiry is effectively retracted from the DG Comp’s agenda after Gazprom agreed not to object to cross-border sales of resold Russian gas and make destination clauses flexible.
Qatar sees stampede for gas projects to help beat crisis (Reuters) - U.S. and European oil majors are piling in with offers to help Qatar develop new gas projects, the country’s energy minister said, despite a protracted crisis in the Gulf region and pressure on firms to chose between Qatar and its neighbors. Mohammed al-Sada told Reuters Doha had seen unprecedented interest from majors as Qatar seeks to expand its gas capacity to 100 million tonnes a year from the current 77 million to cement its position as the world’s largest exporter. “Both U.S. and EU majors have shown great interest. We did expect this, but they surprised us on the upside by the degree of keenness,” said al-Sada, when asked whether firms had expressed concerns about potential pressure from Saudi Arabia and the United Arab Emirates (UAE) not to cooperate with Qatar. OPEC kingpin Saudi Arabia and the UAE cut ties with Doha in June, saying Qatar backed terrorism and was cosying up to rival Iran. Qatar rejected the accusation. Reuters reported last year that Qatar’s traditional partners ExxonMobil, Royal Dutch/Shell and Total, which helped turn the country into a gas superpower, had all shown interest in new projects. The companies are also heavily present in the UAE and Saudi Arabia. “We have newcomers too,” said al-Sada. Saudi Arabia and the UAE have presented demands which, Qatar says, would amount to surrendering its sovereignty if implemented. The dialogue between the former allies has been effectively frozen over the past six months despite mediation attempts by the United States. “We are happy to sit down with everyone, but with one message in mind - preserving our sovereignty is a paramount condition,” said al-Sada. The crisis has prompted Qatar to abandon plans to supply more gas to Saudi Arabia and the UAE. It is now looking for new markets for its liquefied natural gas (LNG).
Feb NYMEX natural gas up 5.1 cents ahead of options expiry - After ending Thursday down 6.2 cents at $3.447/MMBtu, NYMEX February natural gas futures climbed overnight ahead of Friday's open and options expiry at the close of business, with unsettled fundamentals.At 7:10 am ET (1210 GMT) the contract was up 5.1 cents at $3.498/MMBtu. Natural gas inventories equaled the second-largest withdrawal since records began in the latest storage report week ended Jan. 19, for which the EIA outlined a net 288 Bcf drawdown.This beat the full range of estimates ahead of the day as well as both the 164 Bcf five-year average pull and a 137 Bcf year-ago withdrawal. Total working gas stocks are currently 2,296 Bcf, or 519 Bcf below the year-ago level and 486 Bcf below the five-year average of 2,782 Bcf.Weather during the storage report period bolstered heating demand, but conditions have since moderated, with the EIA's latest report showing weekly average temperature in the contiguous US rising to 40 degrees Fahrenheit in the week to Jan. 24 from 35 degrees F in the week earlier.
NYMEX February gas rolls off board 5.8 cents higher at $3.505/MMBtu - The NYMEX February natural gas futures contract continued its surge Friday, as the February contract expired at $3.505/MMBtu, up 5.8 cents compared with Thursday's close. Friday's price jump caps a week that saw the February contract spike 32 cents over the past five trading sessions. Friday is the final day with February as the front-month contract. March will take over as the prompt-month contract Monday. NYMEX March gas settled Friday at $3.175/MMBtu, up 7.6 cents.John Woods, president of JJ Woods Associates, said the market is "overdone on the top side," adding that "going into the tail end of winter, prices are going to fall."Cooler weather appears to be on the horizon, with the most recent eight- to 14-day outlook from the National Weather Service calling for a likelihood of lower-than-average temperatures across much of the Midcontinent and parts of the Northeast, likely driving up demand as the market moves to February.S&P Global Platts Analytics projects US demand to average 94.8 Bcf/d over the next eight to 14 days, a jump from the 84.1 Bcf expected Friday.Despite cooler weather spurring demand, Woods said the forecast "has already been built in [to prices]."Possibly adding support to prices are well-below-average storage stocks. Energy Information Administration data show US stocks at an estimated 2.296 Tcf, a 17.5% deficit to the five-year average.In the face of increasing demand, US dry production is expected to remain steady, averaging 77.3 Bcf/d over the next 14 days, according to S&P Global Platts Analytics.
Platts JKM: Asia March LNG prices retreat to $10.325/MMBtu on easing supply concerns - The Platts JKM for March LNG deliveries slipped 22.5 cents/MMBtu over the week to end at $10.325/MMBtu Friday, as prices edged down on the prompt due to expected recovery from affected production facilities.However, cold snaps sweeping across Northeast Asia brought back bullish expectations of a price rebound later in the week. Market participants noted that gradually depleting inventory levels as well as US supply issues could trigger a wave of spring buying.Easing supply concerns over Russia's Sakhalin, Malaysia's Bintulu and Angola LNG projects exerted downward price pressure on prompter cargoes. End-users however also cited potential headwinds coming from additional prompt supply as well as eager sellers hoping to clear away March cargoes before a steep downward correction in April prices.Japanese utility Tohoku Electric's buy tender for an H2 March cargo was heard awarded to a portfolio player at around $10.10/MMBtu on Wednesday. South Korea's POSCO issued a tender Wednesday seeking a March 2-5 cargo for delivery into Gwangyang terminal. The tender closes January 29, with validity until January 30. But there was continued supply uncertainty during the week when potential issues at a US project was reported. In a critical notice Tuesday, Creole Trail Pipeline, which supplies natural gas feedstock to the Cheniere Energy's Sabine Pass liquefaction facility, said that an unscheduled maintenance would reduce transmission capacity through a critical compressor station from Wednesday to Friday. In an updated notice Wednesday morning, the pipeline announced an adjustment to the maintenance restriction, modestly easing flows on the pipe through the remainder of the event.
China's 2017 natural gas production rises 7.7%, Dec up 2.3% - China's domestic natural gas output rose 7.7% year on year to reach 147.42 billion cubic meters in 2017, according to the National Bureau of Statistics of China (NBS). Domestic gas output has been rising through the current decade, registering a 56% jump from 94.48 Bcm in 2010. In December alone, gas production stood at 13.61 Bcm, up 2.3% year on year and 7.8% on month and the highest monthly figure since 2010. The growth in natural gas usage has accelerated in recent years against the backdrop of coal-to-gas switching policies spurred by the Chinese government designed to combat pollution. Meanwhile, robust winter gas demand and widespread shortages in northern China have pushed average domestic trucked LNG prices in China up nearly 50% since mid-November, according to Shanghai Petroleum and Natural Gas Exchange, which monitors trucked LNG transactions from 50 LNG terminals and factories. Domestic trucked LNG prices in the colder northern regions hit a record high of nearly Yuan 10,000/mt due to severe regional supply imbalances and infrastructure bottlenecks, according to sources. However, the domestic price surge did not last long, with a rapid downward correction seen after the government eased restrictions on thermal coal usage for power generation coupled with the resumption in pipeline gas flows from Central Asia. Average domestic trucked LNG prices in China reached a peak at Yuan 7,472/mt on December 22, 2017, before plunging 24.3% to Yuan 5,660/mt on January 19, according to Shanghai Petroleum and Natural Gas Exchange.
50 South East Asian Fields 'Likely' to be Approved for Development to 2020 -- Fifty oil and gas fields in South East Asia (SEA) will likely be approved for development during the three-year period from 2018 through 2020, according to Rystad Energy.These fields, which are said to hold a collective 4 billion barrels of oil equivalent resources, will require $28 billion of capital expenditure (CAPEX) from final investment decision (FID) to first production, Rystad revealed.With 19 fields, Indonesia has the largest count in the SEA FID forecast, although Malaysia dominates the tallies for both the resources developed (37 percent) and required CAPEX (42 percent).Gas makes up 85 percent of the resources reaching FID over the full period, Rystad highlights, with the largest gas ‘kick’ in 2018 coming from Vietnam.“Strong economic growth has led to burgeoning domestic gas demand throughout the region,” Readul Islam, research analyst at Rystad Energy, said in an organization statement.“The resulting uptick in local gas prices as well as the pollution profile of the fuel compared to alternatives means both operators and governments are incentivized to push natural gas projects,” Islam added.Several of the 50 projects are later phases of earlier developments, with the largest infrastructure already in place, Rystad stated.
Ban on dirty oil residue is billion-dollar worry for refiners - Scraping the bottom of the oil barrel for cheap fuel may be turning into a multi-billion-dollar headache for India’s largest crude refiner. The South Asian nation’s battle against pollution has left Indian Oil Corp. searching for alternative markets to sell petroleum coke, the cheapest and dirtiest among the oil products. A host of new limits on the fuel’s use in India, including bans and increased taxes, have been adopted after refiners in the fastest growing oil consumer built plants to process the “bottom of the barrel” fuel. . With tighter emissions controls from China to Indonesia, oil processors across Asia are being rocked by constantly changing rules on what they can produce as governments strive to breathe clean air into some of the world’s most polluted cities. Petcoke took off in India after the government began limiting coal use to reduce carbon emissions. Consumption of the oil residue has quadrupled since 2011, with the fuel being used by cement manufacturers, captive power generators, and small manufacturing industries who see it as a low-cost coal alternative. Last year, India used 25 million tons of petcoke, making the country the world’s biggest market for the crude waste product, with imports from the U.S. to China surging. “Since coal can be substituted by petcoke, the usage in cement industries increased in India, especially after imported coal prices rose in the recent years,” said Satnam Singh, director for energy at CRISIL Infrastructure Advisory. During that time, Indian Oil built the world’s largest delayed-coker unit with the ability to produce as much as 1.3 million tons of petcoke a year. The state-run refiner now has similar units across seven of its nine refineries and is investing $480 million to add another in eastern India. The plants enable Indian Oil to process the heavy, high-sulfur crude, or the worst of the oil, and turn it into higher quantities of a more valuable product. The fuel contains more sulfur than in coal and natural gas, exposing people to the risk of stroke, heart disease and lung cancer. Pollution in New Delhi skyrocketed last year, with the level of deadly carcinogenic pollutants roughly 10 times than in Beijing. As public opposition mounted, India’s top court banned the use of petcoke in Delhi and three neighboring states in October, with the Supreme Court adding it would like to see its use prohibited across the country. The government also removed tax exemptions and raised the levy on its imports last month.
Sunken Iranian tanker could cause 'irreversible' environmental damage after leaving oil slick the size of Paris --An Iranian oil tanker that sank in flames off the east coast of China is thought to be leaking heavy bunker fuel, raising fears of an environmental disaster. Experts warned “irreversible” damage to marine wildlife was possible after the ship sank on Saturday, leaving behind an oil slick the size of Paris. The Sanchi had drifted ablaze for eight days after a collision with a freighter in the East China Sea, one of the worst oil ship disasters in decades. The tanker’s crew of 30 Iranians and two Bangladeshis are all believed to have died. At the time of the crash, the Sanchi was carrying 136,000 tons – almost one million barrels – of condensate, an ultra-light, highly flammable crude oil. The Chinese State Oceanic Administration (SOA) said five oil slicks with a collective area of 101sq km had been spotted on Wednesday, although they had shrunk to about a quarter of the size by the next day. Authorities said bunker fuel, a heavy oil used in ship’s engines, was now also believed to have leaked from the vessel since it sank. The Sanchi is thought to have been carrying about 1,000 tons of bunker fuel, which is toxic to marine organisms and difficult to remove from the sea once spilled. Experts said the scale of the environmental damage would not be clear until the volume of leaked fuel was known, but warned fisheries and marine life could be impacted for years to come. Paul Johnson, research fellow at Greenpeace International’s Science Unit at the University of Exeter, said bunker fuel was “particularly dangerous to birds and other wildlife”, and could sometimes be fatal if encountered by whales, dolphins and porpoises. He told The Independent: “The major impact is going to be living marine organisms that are exposed to the oil slick, which is quite a big one now. It’ll taint fish, it’ll kill fish. If cetaceans encounter it they could be at very severe risk of doing themselves some serious damage.”
An Oil Slick Off the Coast of China Has Tripled in Size - The spill from a sunken Iranian tanker off China's east coast has more than tripled in size, just over a week after the ship sank in a ball of flames. Authorities spotted three oil slicks with a total surface area of 332 square kilometers (128 square miles), compared to 101 square kilometers reported on Wednesday, the State Oceanic Administration said in a statement late Sunday. The Sanchi, which was carrying 111,000 metric tons of light crude oil from Iran, collided with Hong Kong-registered bulk freighter the CF Crystal in early January, setting off a desperate race by authorities to search for survivors and stave off a massive environmental catastrophe. The amount was revised down from the original estimate of 136,000 metric tons, the Ministry of Transportation said Friday. The bodies of only three of the ship's 30 Iranian and two Bangladeshi crew members have been found. Three coast guard vessels were on the scene Sunday night assessing the spill, the oceanic administration said. The type of condensate oil carried by the Sanchi does not form a traditional surface slick when spilt, but is nonetheless highly toxic to marine life and much harder to separate from water. The area where the ship went down is an important spawning ground for species like the swordtip squid and wintering ground for species like the yellow croaker fish and blue crab, among many others, according to Greenpeace. It is also on the migratory pathway of numerous marine mammals, such as humpback and grey whales. While the accident is unlikely to have a significant impact on the coastal ecology, it has already had an effect on marine life, said Liu Hongbin, a professor at Ocean University of China. "But, it is necessary to do more observation to know how big the concrete impact will be," Liu said.
Peak Oil Demand Is A Slow-Motion Train Wreck - The precise date at which oil demand hits a high point and then enters into decline has been the subject of much debate, and a topic that has attracted a lot of interest just in the last few years. Consumption levels in some parts of the world have already begun to stagnate, and more and more automakers have begun to ratchet up their plans for electric vehicles.But the exact date the world will hit peak demand kind of misses the whole point, argues a new report, which is notable since it is coauthored by BP’s chief economist Spencer Dale, along with Bassam Fattouh, the director of The Oxford Institute for Energy Studies.They argue that the focus shouldn’t be on the date at which oil demand peaks, but rather the fact that the peak is coming at all. “The significance of peak oil is that it signals a shift from an age of perceived scarcity to an age of abundance,” they wrote. In other words, oil won’t be on the only game in town when it comes to fueling the global transportation system, which will have far-reaching consequences for oil producers and consumers alike.The exact date is unknowable, and in any event, the year in which the world does hit peak consumption won’t result in some abrupt “discontinuity of behavior,” the report argues. Demand growth will slow and then decline, but probably won’t fall off a cliff. So, the exact date of peak oil demand is “not particularly interesting.” Nevertheless, the implications of a looming peak in oil consumption are massive. Without an economic transformation, or at least serious diversification, oil-producing nations that depend on oil revenues for both economic growth and to finance public spending, face an uncertain future. And slowing demand growth is occurring at a time when supply is less of a concern than it used to be, in large part because new drilling technologies have led to a wave of supply from shale. “The world isn’t going to run out of oil. Rather, it seems increasingly likely that significant amounts of recoverable oil will never be extracted,” the authors wrote.
Oil producers will cooperate beyond 2018, says Saudi Arabia -(Reuters) - Global oil producers are in agreement that they should continue cooperating on production after their deal on supply cuts expires at the end of this year, Saudi Arabia’s energy minister Khalid al-Falih said on Sunday. It was the first time Saudi Arabia, the world’s top oil exporter, had publicly stated OPEC and non-OPEC producers would keep cooperating after 2018. The exact mechanism for cooperation next year has not yet been decided, Falih said, but if oil inventories increase in 2018 as some in the market expect, producers might have to consider rolling the supply cut deal into next year. “There is a readiness to continue cooperation beyond 2018... The mechanism hasn’t been determined yet, but there is a consensus to continue,” Falih said after a meeting of the joint ministerial committee which oversees implementation of the cuts. The committee comprises Saudi Arabia, Kuwait, Venezuela and Algeria, plus non-OPEC producers Russia and Oman. The United Arab Emirates was also present on Sunday as it holds the presidency of OPEC. Before the meeting, Falih said extending the cooperation framework beyond 2018 wouldn’t necessarily mean sticking to countries’ current production targets. The agreement was launched last January and Saudi Arabia has accounted for by far the largest share of the output cuts. Falih said a deal on production levels after 2018 would be about “assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.” Kuwait’s oil minister Bakheet al-Rashidi said Sunday’s meeting focused on compliance with the current agreement on output cuts, and discussion of the deal’s future was expected to occur in June, when OPEC and other producers led by Russia are next scheduled to meet on oil policy. Oman’s oil minister Mohammed bin Hamad al-Rumhi said producers would discuss in November whether to renew their supply agreement or enter a new type of agreement. Oman is in favor of a new deal, he said without elaborating.
Prospect of shale wave looms over resurgent oil prices - While oil prices continue their claw back this month, there is concern in the industry that as the market rebounds, some producers in the U.S. will turn on the taps and flood the market with oil and once again stymie the recovery.The North American benchmark for crude oil opened at over $60 US per barrel at the start of the year and has continued to hover comfortably above that mark through January.While higher oil prices may not be welcomed by consumers, it's good news for a sector that has laboured under a massive supply glut which weighed mightily on the market until recently. But still looming over the recovery is United States shale oil, which played a key role in helping create the glut and was blamed for killing a short-lived rally early last year.The concern is that the current resurgence will renew interest in more costly, second-tier shale projects that were shelved after prices tanked in 2014."Prices over US$60 per barrel will lead to more U.S. shale production," said a research note from TD Economics this month."With production on the rise in the U.S. — in addition to increases in Canada, Brazil and the North Sea — it is unlikely that prices will stay above that threshold on a sustained basis. "What's more, with such a high level of speculation in the market, the risks for prices are heavily skewed to the downside." American energy reports released in recent days suggest U.S. shale production is gaining momentum. On Tuesday, the U.S. Energy Information Administration forecast said U.S. shale oil production will grow by 111,000 barrels a day to nearly 6.6 million in February. That's good news for the U.S. economy, which continues to churn and consume energy, drawing down domestic stockpiles. For some, the question now is whether the shale sector can continue at this pace. The rapid growth has stirred concerns that the industry is already peaking and that production forecasts are too optimistic.
Oil Traders Have Never Been This Bullish -- Net long bets on WTI and Brent hit over 1 billion barrels last week. Speculators are apparently falling over themselves to pour money into these two futures. And prices are reacting as they usually do when large amounts of money are betting on these two contracts or pulling out of them. Is this good news for producers, though?According to some authors, such as Bloomberg Gadfly’s Liam Denning, it’s pretty good news for U.S. shale drillers, who are hedging their production at higher prices, and it should be good news for OPEC and Russia as well. OPEC has a habit of complaining about speculators’ clout on the oil market, but now, Denning argues, the cartel should be grateful to the money managers for supporting prices. They should be grateful not just because Brent is now hovering around US$70 a barrel, but also because near-dated contracts are now more expensive than longer-dated ones, and OPEC sells most of its crude on the spot market.Yet, as Oilprice wrote earlier this week, there are those who don’t believe the current level of oil prices is something that OPEC is happy about. Prices, analysts argue, have soared too high for OPEC’s comfort, and now the cartel may be looking for ways to “talk the price down,” as Citi’s Ed Morse told Bloomberg. In other words, OPEC has no reason to be grateful to speculators about their record-high number of long positions. On the contrary, it has a reason to be angry at them. But, some observers of events on the oil market note, why would OPEC, or rather Saudi Arabia, want to talk prices down ahead of Aramco’s IPO? It doesn’t make sense to actively try and push prices down when Riyadh is going all in on a massive economic reform program that will be funded with the proceeds from the IPO.
Hedge fund trade in oil becomes very crowded – Kemp (Reuters) - Hedge funds added to their record bullish positions in petroleum in the week to Jan. 16, continuing the recent wave of buying, but the extra long positions were almost entirely confined to U.S. crude rather than Brent or refined fuels.Hedge funds and other money managers increased their net long position in the six most important futures and options contracts linked to crude and fuels by a total of 41 million barrels.The net long position in Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil contracts has surged by a massive 1,130 million barrels since the end of June 2017.Since the start of the year, however, most of the increase has come from WTI rather than Brent or refined fuels, according to position data released by regulators and exchanges (http://tmsnrt.rs/2DpAcpw).Total net long positions in petroleum have risen by 109 million barrels in the two most recent weeks, with WTI accounting for 87 million barrels.The remainder has mostly come from U.S. gasoline, where hedge funds have boosted their net long position by almost 15 million barrels.Net positions in Brent, U.S. heating oil and European gasoil are near record highs but have changed little since the start of the year.There is an element of catching up in the position-building in WTI, which has traded at a large and persistent discount to Brent since July and was shunned by portfolio managers until recently.The hedge funds’ net long position in WTI increased from 455 million barrels to 542 million barrels between Jan. 2 and Jan 16 compared with only a minor increase in Brent.As a result, the net position in WTI has now risen by 385 million barrels since the end of June, comparable to the increase of 371 million barrels in Brent.WTI position-building has corresponded with a narrowing of the prompt Brent-WTI premium, which has fallen from a high of almost $6.50 per barrel towards the end of last year to less than $5.30.But across the petroleum complex as a whole, hedge fund positions look increasingly stretched, with fund managers holding almost 10.5 long positions for every short one.Experience suggests such lopsided positions, either long or short, are normally followed by a sharp reversal in prices when some portfolio managers attempt to realise their profits.
Crude oil futures find support from OPEC, non-OPEC meeting - Crude oil futures were largely steady in European morning trading, Monday, garnering support from comments at the OPEC, non-OPEC monitoring committee meeting in Oman on Sunday after falling over the course of last week. At 1215 GMT, March ICE Brent futures were down 7 cents (0.10%) from Friday's settle at $68.54/b, and the NYMEX February WTI contract was down 2 cents (0.03%) at $63.35/b. Comments from Saudi Arabia's energy minister Khalid al-Falih backing OPEC and its non-OPEC partners continuing their output pact beyond 2018 were supportive "We need to see the confidence level of investors within the companies and financial community improving about the long-term prospects of the market, and that is why my guidance to my colleagues is that we should not limit our efforts to 2018," Falih said. A framework for cooperation remains to be defined and could come in a different format than the production caps and targets agreed in 2016, he added. Falih's comments were backed his Russian counterpart, Alexander Novak, who said he believes that "there is benefit to everyone in continuing dialog and interaction." "We believe that it can stay in consultations or in a different framework which will benefit all the consumers and the market," Novak said. OPEC and its 10 non-OPEC partners dismissed rumors that the group is planning to revise or end its deal to curb production before it is due to expire at the end of 2018. "We still have more than 100 million barrels [of oil inventories] to remove, so prior to doing that let's not jump the gun," UAE Energy Minister Suhail al-Mazrouei said.
Crude oil prices rise above peak gains – Oil prices climbed on Monday, pushed higher by Saudi Arabia’s comment that cooperation between oil producers currently withholding supplies would continue beyond 2018. Strong global economic growth and a drop in U.S. drilling activity also supported crude oil price, traders said. Brent crude futures were at 68.89 dollars a barrel at 0315 GMT, up 25 cents, or 0.4 per cent from their last close. Brent on Jan. 15 rose to 70.51 dollars, its highest since December 2014. U.S. West Texas Intermediate (WTI) crude futures were at 63.61 dollars a barrel, up 24 cents, or 0.4 per cent, from their last settlement. WTI climbed to 64.89 dollars on Jan. 16, also its highest since December 2014. Saudi Arabia, the world’s top oil exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said on Sunday that major oil producers were in agreement that they should continue cooperating on production after their deal on supply cuts expires this year. “There is a readiness to continue cooperation beyond 2018…The mechanism hasn’t been determined yet, but there is a consensus to continue,” Saudi Arabia’s Energy Minister Khalid al-Falih said in Oman. A group of oil producers including OPEC and Russia, started to withhold production in January last year to prop up prices. The deal is set to expire at the end of 2018. In the United States, declining drilling activity for new oil production further supported crude. U.S. drillers cut five oil rigs in the week to Jan. 19, bringing the count down to 747, energy services firm Baker Hughes said on Friday.
OPEC Drives Oil Prices Back Up - Oil prices have recovered after suffering losses late last week. Statements emerging from the OPEC meeting in Oman seemed to shore up confidence in the group’s efforts this year, after a long list of oil analysts raised the prospect of wavering compliance and cohesion. Saudi oil minister Khalid al-Falih said over the weekend that the coordination among OPEC and with Russia and other non-OPEC partners should continue beyond this year. “We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation,” he said. The comments eased fears of faltering compliance with the production cuts. But al-Falih said his desire was to solidify long-term coordination to bolster confidence among the oil industry to invest in new upstream projects. The comments suggest that OPEC and Russia, at a minimum, could keep the cuts in place into 2019. “Keeping some level of production cuts into 2019 is the kind of thing that makes sense,” Robin Mills, CEO of Qamar Energy, told Bloomberg. “Just abandoning the deal at the end of 2018 would put a lot of oil back on the market.” Adding another voice to the peak oil debate, Bank of America Merrill Lynch predicts that the world will hit peak oil demand by 2030. At that point, EVs will account for 40 percent of auto sales. “Electric vehicles will likely start to erode this last major bastion of oil demand growth in the early 2020s and cause global oil demand to peak by 2030,” the analysts wrote in an emailed report. China’s switch from coal to natural gas is adding a lot of demand to the global gas market, pushing up LNG prices to three-year highs. China has made significant headway in shutting down dirty coal plants, but as gas consumption ramps up, the country has had trouble finding enough gas. As China gobbles up more LNG cargoes, LNG prices are rising quickly. “We were optimistic on the opportunity in China, but the magnitude surprised us,” Anatol Feygin, chief commercial officer at U.S. LNG exporter Cheniere Energy told the Wall Street Journal. LNG prices in Asia rose to $11.70/MMBtu, the highest price since November 2014.
Crude oil futures edge up on IMF global growth forecast - Crude oil futures were moving higher in European trading on Tuesday on figures showing an improved global economic outlook, but remained rangebound as the market awaited more definitive data such as US crude stocks, which are due for release later in the day. At 1200 GMT, ICE March Brent crude futures were up 24 cents from Monday's settle at $69.27/b, while the new front-month NYMEX March light sweet crude contract was up 21 cents at $63.78/b. "We are taking a breather around the $70/b mark, and you have the US dollar index decline halted but still weak -- so the question is, have we reached the top?" chief commodities analyst at SEB bank Bjarne Schieldrop said. He pointed to US oil inventory data as being a key factor which could halt the bullish price sentiment at the moment. "Looking at inventories over the last year, the deep draws were in the middle of last year and and now it's more of net draw, which could be a reflection that the US production accelerated strongly from August to December, if you extrapolate it," he said, adding that US shale production rises continued to be the counterbalance to the production cuts enacted by OPEC and non-OPEC countries in an effort to reduce global crude stocks. The first batch of US crude and product stocks data for the week is due for release by the American Petroleum Institute later Tuesday and the more definitive numbers from the US Energy Information Administration on Wednesday.
WTI/RBOB Slide After Surprise Crude Inventory Build -- Oil closed at a 3-year high heading into tonight's inventory data, but WTI/RBOB faded after API reported a surprise crude build (after 9 straight weekly draws). Gasoline inventories rose for the 11th week as Cushing stores fell again.Underpinning the price rally were also assurances from Russian and Saudi Arabian oil chiefs that a historic production accord by the world’s largest producers will endure.The comments from Saudi Arabia and Russia quell investors’ “concerns about OPEC discipline deteriorating. That should be welcome news,” Paul Crovo, a Philadelphia-based oil and equity analyst at PNC Capital Advisors LLC, said by telephone. “Inventories continue to go down. That’s all good news.” API:
- Crude +4.755mm (-2mm exp) - biggest build since September
- Cushing -3.572mm(-2.2mm exp)
- Gasoline +4.117mm (+2.2mm exp) - 11th weekly draw in a row
- Distillates -1.28mm (-1.1mm exp)
The streak of crude draws ends at 9... If this data holds up for DOE tomorrow, this will be the 11th weekly gasoline build in a row...
Oil Pares Gains After API Reports Surprise Crude Inventory Build -- The American Petroleum Institute (API) reported a surprise build of 4.755 million barrels of United States crude oil inventories for the week ending January 17, ending the streak of seven large draws in the previous seven weeks, according to the API data. Analysts had expected a drawdown of 1.6 million barrels in crude oil inventories.Last week, the American Petroleum Institute (API) reported a huge draw of 5.121 million barrels of crude oil, along with an increase in gasoline inventories of 1.782 million barrels.This week, the API is reporting another build in gasoline inventories of 4.117 million barrels for the week ending January 17. Analysts had expected a smaller 2.486-million-barrel build.The WTI and Brent benchmarks both saw big gains on Tuesday as the IMF painted a rosy picture of the global economy for 2018 and 2019. At 3:27pm EST, WTI was trading up 1.75% (+$1.11) at $64.68. The Brent benchmark was trading up 1.52% ($1.05) at $70.08—the over-$70-threshhold being a significant psychological level to break through, and a new multi-year high for the closely watched international benchmark.Distillate inventories saw a decrease this week of 1.280 million barrels, largely in line with the forecast for a 1.471-million-barrel decline.Inventories at the Cushing, Oklahoma, site decreased by 3.572 million barrels this week. While US crude oil inventories are up for the week, production for week ending January 12 is also up, coming in at 9.750 million bpd.
Largest Oil Consumers Not In A Rush To Hedge Crude -- Four major airlines have said they have no plans to hedge fuel deliveries despite higher oil prices. These include Delta, American, United, and Dubai’s Emirates. This may suggest the airlines do not believe the current price increase will be a resilient, long-term one. On the other hand, for at least one of the airlines, it’s just how they do business.“We have not hedged since the merger and our philosophy has not changed. We are the largest purchaser of jet fuel and we think we would be bidding against ourselves. The market is quite thin beyond 12 months,” said American Airlines’ managing director and assistant treasurer, Amelia Anderson, speaking at a panel during the Airline Economics conference in Dublin.AirAsia’s CEO Tony Fernandes shares the sentiment. In a Bloomberg interview he said that after airlines have had to deal with WTI at over US$100 a barrel, WTI at US$66 is “still a honeymoon period.” Fernandes added that the airline is not worried about the future price developments because of the strong U.S. shale production, the oil demand outlook, and the gas demand outlook. The comments of the airline executives come on the heels of IMF’s latest world economic outlook, which forecast the world’s economy will grow by 3.9 percent, a 0.2-percentage-point upward revision.
OPEC Supply Cut Target: Stop Trying To Guess The End - Speaking Tuesday on the sidelines of the World Economic Forum in Davos, Saudi Arabia's energy minister, Khalid Al-Falih, said OPEC needed to extend its cooperation with several non-OPEC producers on managing supply "beyond the current agreement." As for Saudi Arabia's recently established alliance with Russia, Al-Falih sees this lasting "decades and generations." Al-Falih was echoing comments he made last weekend in Muscat, when -- apart from urging members of the so-called Vienna Group of OPEC and non-OPEC members to consider cooperating beyond this year -- he also raised questions about the target they should be pursuing. Right now, it's the five-year average of commercial oil inventories in the OECD. But, as he said, that's a dynamic target influenced by the very glut OPEC seeks to eliminate (something I pointed out here). He held out the possibility that any extended agreement might target different levels of production or inventories. The original six-month agreement announced in November 2016 has now been running for more than a year and was extended recently to the end of 2018. Now, though, there appears to be a new timescale: forever.
Crude oil futures steady ahead of US EIA stock data Crude oil futures were largely steady in European morning trade Wednesday, as markets awaited a fresh update from the the US Energy Information Administration on weekly US crude and product inventories. At 1130 GMT, the March ICE Brent futures contract was down 5 cents/b (0.07%) from Tuesday's settle at $69.91/b, while the new front-month NYMEX March contract had gained 19 cents/b (0.29%) and was trading at $64.66/b. Crude oil markets will be watching US stock data expected later Wednesday in order to get a sense of direction. So far this week, front-month ICE Brent futures have swung between Monday's low of $68.39/b and a high of $70.24/b Tuesday. Market sentiment could soften if last week's rise in US crude oil stocks reported by the American Petroleum Institute appear to be validated by the EIA's official data. API data released Tuesday showed a surprise 4.8 million-barrel increase in US crude inventories, the first rise reported after seven weeks of draws. "If the official inventory data of the US Department of Energy were also to show an inventory build when published this afternoon, this would even be the first in ten weeks," Commerzbank analysts said in a report. "Crude oil processing by US refineries is likely to decrease further in the coming weeks. This points to rising US crude oil stocks and is likely to prompt speculative financial investors to reduce their record-high net long positions," the Commerzbank report said, concluding that "oil prices should then come under pressure." Prices were buoyed this week by comments that OPEC and its allies could extend their efforts and continue to monitor crude oil production beyond the end of their ongoing deal.
Weekly Petroleum Report -- EIA -- January 24, 2018 ---Data at this link:
- crude oil drawdown: 1.1 million bbls; now at 411.6 million bbls; still at the middle of the range for this time of year
- Cushing crude stocks fell 3.15 million bbls to 39.2 million bbls; this is a huge drop; nearing the 10-year median
- refineries: operated at 90.9% operable capacity (way down)
- motor gasoline supplied over last four weeks: 8.7 million bpd, up 5%
- distillate fuel product supplied: 4.0 million bpd, up over 15% (can you say "cold snap in New England?)
WTI Tops $65 For First Time Since Dec 2014 After Crude Draw, Production Record - After API reported a surprise crude build overnight, all eyes are on the DOE data this morning which showed a smaller than expected crude draw (-1.07mm vs 2.32mm exp) but still a draw (for the 10th week in a row) compared to API's build.As Bloomberg's Julian Lee notes, cold weather and a growing list of refineries undergoing maintenance probably cut crude intake for a third week. Along with rising production, this could be enough to halt the downward trend in inventories - at least for now. DOE
- Crude -1.07mm (-2.32mm exp)
- Cushing -3.15mm (-2.2mm exp)
- Gasoline +3.1mm (+2.2mm exp)
- Distillates +639k (-1.1mm exp)
DOE data flipped the narrative from API and saw the 10th weekly crude draw in a row (though smaller than expected) and 11th weekly gasoline draw in a row..
US oil prices top $65 a barrel for the first time since December 2014 - U.S. crude prices topped $65 a barrel for the first time in more than three years on Wednesday after government data showed the tenth straight weekly drop in U.S. stockpiles of crude oil. U.S. West Texas Intermediate crude futures ended Wednesday's session up $1.14, or 1.8 percent, at $65.61 a barrel. The settlement marked the highest closing level since Dec. 5, 2014.International benchmark Brent crude rose 59 cents, or 0.8 percent, to $70.55 by 2:28 p.m. ET. The contract also touched a new three-year high on Wednesday.Oil prices turned higher after the U.S. Energy Information Administration reported that U.S. commercial crude stockpiles fell by 1.1 million barrels in the week through Jan. 19. That put total inventories at 411.6 million barrels, the lowest since February 2015, according to Reuters. That was below analyst estimates for a drop of 1.6 million barrels in a Reuters poll, but the report eased traders' worries after industry data released on Tuesday suggested that stocks rose by 4.8 million barrels. The report was further evidence that production limits by OPEC, Russia and several other oil-producing nations are achieving their goal of shrinking stockpiles in developed countries.The drop also comes at a time of synchronized global economic growth that is raising hopes about demand for oil. Exports of U.S. crude have mostly held above 1 million barrels a day since the end of September.The EIA report "was decent enough in terms of the oil drawdowns at the key points in the Gulf Coast and Cushing," the delivery hub for WTI, said John Kilduff, partner at energy hedge fund Again Capital."Underpinning this is this weakened dollar," he added. "It's an incredible move in the dollar that's propping up commodity prices in general."
Futures: Crude back on 2014-high on EIA data, weaker US dollar -- Front-month ICE Brent and NYMEX crude oil futures spiked overnight, breaching the $70/b and $66/b levels, respectively, and extended their bull run Thursday morning in Asia on a weaker US dollar and lower US crude stocks. At 10:57 am Singapore time (0257 GMT), ICE March Brent crude futures were up 40 cents/b (0.57%) from Wednesday's settle to $70.93/b, while the NYMEX March light sweet crude contract was up 54 cents/b (0.82%) at $66.15/b. US crude inventories fell for the 10th consecutive week by 1.071 million barrels to 411.583 million barrels in the week ended January 19, Energy Information Administration data showed Wednesday. Analysts surveyed by S&P Global Platts had expected a 1.6-million-barrel draw. US distillate stocks rose 639,000 barrels to 139.84 million barrels in the same week. Distillate stocks were expected to have declined by 2.5 million barrels. US gasoline stocks increased 3.098 million barrels to 244.04 million barrels, versus analysts' expectations of a 2.1-million-barrel build, EIA data showed. US exports rose 162,000 b/d last week to 1.411 million b/d, helping to drawdown stocks. Higher exports have created an outlet for US production, which averaged 9.878 million b/d last week, up 917,000 b/d year on year. In additional to the EIA release, a weaker dollar may spur buying interest as crude is priced against the US dollar, industry source said. "Currency markets were in focus today, with US Treasury Secretary Mnuchin sparking a dollar sell-off after comments the US would be comfortable with a lower USD," ANZ bank said in its morning report Thursday.
OPEC's output restraint tightens oil inventories and spreads (Reuters) - OPEC and its allies insist more needs to be done to reduce global oil inventories but the market already shows unmistakeable signs of becoming very tight. Brent futures have moved into the largest and most sustained backwardation since June and July 2014, before the slump began and when the spot price was still trading above $100 per barrel. The six-month calendar spread closed in a backwardation of $2.50 per barrel on Jan. 24, up from a contango of $1.85 twelve months ago (http://tmsnrt.rs/2E9y6v5 ). Brent spreads regularly cycle between contango and backwardation as the global oil market alternates between periods of over- and under-supply. Contango is associated with periods of high and rising stocks while backwardation is associated with low and falling inventories. The current six-month spread is already in the 83rd percentile of the entire distribution from 1990 through 2018, a sign traders think stocks are tight and will tighten further. Until recently, spreads in U.S. crude (WTI) lagged behind Brent, reflecting the high levels of stocks around the WTI contract's delivery point at Cushing in Oklahoma. But stocks at Cushing have drawn down sharply over the last two and a half months, from more than 64 million barrels to just 39 million barrels. Cushing crude stocks are now 26 million barrels below the same point in 2017, according to an analysis of data from the U.S. Energy Information Administration (EIA). Cushing stocks are less than 2 million barrels above the 10-year average, down from almost 30 million barrels over the seasonal average at the start of November. Over the same period, the six-month WTI calendar spread has swung into a backwardation of more than $2.50, from a small contango 12 weeks ago, catching up with Brent. Tightening stocks and spreads on U.S. crude have narrowed the discount between WTI and Brent spot prices to less than $5 per barrel from more than $7 late last year.
Weak Dollar Drives The Oil Rally - Defying gravity, WTI and Brent soared to new heights this week, pushed along by an unlikely ally: U.S. Treasury Secretary Steven Mnuchin. Mnuchin surprised reporters when he seemed to express support for a weaker U.S. dollar, which flies in the face of longstanding U.S. government policy supporting a strong greenback. The dollar dropped sharply on the news, raising fears of a campaign by the U.S. to push down its currency to gain an edge in exports.There has long been a solid link between the direction of the U.S. dollar and oil prices. Because oil is denominated in dollars, a weaker dollar makes oil more attractive to all other currencies. That helps stoke demand for crude, so when the dollar drops, oil tends to rise. As such, the decline of the dollar helped push WTI and Brent to new multi-year highs this week.Mnuchin tried to slightly walk back his comments on Thursday, clarifying that there was no policy change. “There are benefits of where the dollar is and there are costs of where the dollar is,” Mnuchin said at the World Economic Forum in Davos. “It’s not a shift in my position on the dollar at all. It is perhaps slightly different from previous Treasury secretaries.” The timing was also notable. The comments came just days after the Trump administration slapped tariffs on solar panels, which stoked concern about tit-for-tat protectionism. And when asked, U.S. Secretary of Commerce didn’t exactly shoot down questions about a brewing trade war. "Trade wars are fought every single day," Secretary of Commerce Wilbur Ross said in Davos. "So a trade war has been in place for quite a little while, the difference is the U.S. troops are now coming to the rampart."
The Oil Rally Continues Unabated - Oil prices rose this week on the back of a weakening dollar – thanks to comments from the U.S. Treasury Secretary supporting a weaker greenback – and ongoing declines in U.S. inventories. Saudi oil minister accuses IEA of overhyping shale. Saudi oil minister Khalid al-Falih made headlines on Thursday when he said at the World Economic Forum that the IEA had an “oversized focus” on U.S. shale growth. He implied that the IEA was hyping the threat of U.S. shale. “I was not disputing the amazing revolution of shale . . .[but] in the overall global supply demand picture it’s not going to wreck the train,” al-Falih said in Davos. “We should not be scared,” he added. “That’s the core job of the IEA, not to take it out of context.” The statement prompted retorts from top IEA officials that shale was indeed one of the biggest “game changers” in the energy industry in the past decade. Al-Falih noted that it was highly unlikely that OPEC would abandon the production cuts before the end of the year. Energy stocks lagged the broader S&P 500 last year, but are up more than 20 percent in the past six months. With demand rising, some market analysts see more gains ahead, even if oil prices fail to move higher. Because of the poor performance last year, energy stocks have some catching up to do and could continue to outperform the broader market. “[W]e don’t think oil needs to move higher,” Ben Kallo, energy analyst at Baird, told the WSJ. “Rather, oil just needs to avoid another correction.” Russian authorities ordered to return to previous lower production limits at its Sakhalin-1 project in Russia’s far east, according to Reuters. The justification was not exactly clear, but likely it was the result of Russia trying to maintain compliance with the OPEC production cuts. Exxon had initially received approval to ramp up production from 200,000 bpd to 250,000 bpd, but Russian authorities ordered the company to scale it back.
US Rig Count Rises As Oil Holds Firm - The number of active oil and gas rigs rose this week, according to Baker Hughes data, increasing by 11 total rigs. This brings the total number of oil and gas rigs to 947, which is an addition of 235 rigs year over year.The number of oil rigs in the United States rose by 12 this week after falling last week. The number of gas rigs decreased by a single rig. The number of oil rigs stands at 759 versus 566 a year ago. The number of gas rigs in the US now stands at 188, up 145 a year ago.At 11:19am EST, the price of a WTI barrel was trading up $0.47 (+0.72%) to $65.98—almost $2.00 above this same time last week. The Brent barrel, on the other hand, was trading down $0.03 (-0.04%) to $69.94.US crude oil production rose again, to 9.878 million bpd, from 9.750 million bpd the week before, setting another new high. Canada has seen severe swings in its active oil and rig count in weeks past. But the last three weeks have seen steady gains. In the two weeks prior, Canada added more than 200 oil and gas rigs. This week, Canada added another 13, bringing its total to 338, although the rigs are still down year over year. Canada’s oil and gas rig count from a year ago was 345. While oil rigs are up 20 year over year, gas rigs in Canada are down 27.The Permian basin rig count accounted for much of this week’s gains, increasing by 18 rigs this week, now standing at 427 rigs versus 291 rigs a year ago this week. The Marcellus basin a lso added 4 rigs, with Granite Wash adding one. Barnett, Cana Woodford, Eagle Ford, Haynesville, Mississippian, and Utica all lost rigs.
Texas adds 13 rigs as US rig count rises to 947 - ABC News: The number of rigs exploring for oil and natural gas in the U.S. rose by 11 this week to 947. That exceeds the 712 rigs that were active this time a year ago. Houston oilfield services company Baker Hughes reported Friday that 759 rigs drilled for oil this week and 188 for gas. Among major oil- and gas-producing states, Texas added 13 rigs, West Virginia increased by four, and New Mexico increased by three. Oklahoma lost four rigs, Louisiana lost three rigs, and Ohio and Utah each lost a single rig. Alaska, California, Colorado, North Dakota, Pennsylvania and Wyoming were unchanged. The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May of 2016 at 404.
Oil settles higher, posts weekly gain as weak dollar underpins- Oil prices settled higher on Friday after hitting three-year highs, with crude also posting a weekly gain as a weaker U.S. dollar underpinned prices. Brent crude futures settled up 10 cents, or 0.1 percent, at $70.52 per barrel after hitting a session high of $70.83. On Thursday, the contract climbed to as high as $71.28, its highest since 2014. U.S. West Texas Intermediate (WTI) crude futures closed at $66.14 a barrel, up 63 cents, or nearly 1 percent. On Thursday, they also reached their highest since December 2014, at $66.66. Brent posted a nearly 2.7 percent weekly gain, while WTI reached a weekly gain of 4.3 percent. “Technically, crude is a little overbought but it’s not causing a huge sell-off right now,” said Mike Sabo, senior market strategist at RJO Futures in Chicago. Both contracts strengthened after support from a weakening dollar, which hit three-year lows against a basket of currencies. [USD/] As oil is priced in dollars, a weaker greenback can boost oil demand, making prices less expensive for buyers using other currencies. “The dip in the dollar raises our expectations for Brent to remain at $70 for a little while longer,” said Bill O‘Grady, chief market strategist at Confluence Investment Management in St. Louis, Missouri. On the supply side, U.S. oil production was expected to soon hit 10 million barrels per day (bpd), putting it on a par with top exporter Saudi Arabia. U.S. oil drillers added 12 rigs this week, the biggest weekly increase since March, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. Meanwhile, hedge funds have been increasing long positions steadily on expectations that tightening supply will keep prices buoyant. Money managers raised their net long U.S. crude futures and options positions in New York and London by 7,612 contracts to 549,602 in the week to Jan. 23, a new record high, the U.S. Commodity Futures Trading Commission (CFTC) said.
Russia may back Aramco IPO, enhance OPEC ties (Reuters) - Russian pension funds are considering investing in Saudi Arabian state oil major Aramco when it lists its stock in a move to strengthen the partnership between the world’s two top oil producers, Russia’s top state investment officer said. The head of Russia’s Direct Investment Fund, Kirill Dmitriev, told Reuters on Tuesday that Moscow and Riyadh should be coordinating oil policies for many more years. “We see great interest in the Aramco IPO from Russian pension funds as well as from our Chinese partners,” said Dmitriev, who two years ago was the first Russian official to suggest the possibility of a joint oil output deal with OPEC. He said he could not disclose the names of the funds or the amount they were prepared to invest. Sources told Reuters last year Chinese state oil companies were willing to become cornerstone investors in the Aramco IPO which could become the world’s biggest, valuing the firm at up to $2 trillion and raising more than $100 billion. “Russia already has significant positions in the oil business so it is hard to expect us taking a very significant stake during the IPO,” Dmitriev said on the sidelines of the World Economic Forum in Davos. He added that the deal would help strengthen growing cooperation with Riyadh. “Extending such cooperation for many more years would be very useful for the market. It has proven its efficiency, when we were targeting balancing supply and demand rather than targeting a particular oil price,” said Dmitriev. OPEC has said it wanted global oil stocks to return to a five-year average and the group’s officials have said that target could be reached by the middle or end of 2018. S But even when the target is reached, OPEC has insisted it would exit from cuts gradually in order not to shock the market. “Future mechanisms of cooperation and concrete tools could differ,” said Dmitriev. He said oil producers had generated an extra $600 billion in revenues thanks to oil cuts and higher prices over the past year, which allowed them to resume investments and guarantee no supply shortages in the future.
Saudi corruption probe: Settlements expected to reach $100 billion -- SAUDI Arabia’s state coffers are set to receive a $124 billion boost with dozens of high-profile figures caught up in a corruption purge paying a high price for freedom. About 95 ministers, businessman and members of the Royal family remain detained at the glizty Ritz-Carlton, which has served a makeshift prison following the anti-corruption purge took last November. One official cited by Bloombergsaid authorities were hoping to finish talks with suspects as part of the probe by the end of this month. However, those who don’t reach a settlement deal will face prosecutors. The Saudi Government now looks set to reap the massive windfall from compensation payments, it has emerged. Attorney-General Sheikh Saud Al Mojeb said charges were due to be dropped against 90 of those held in the hotel. He said those who expressed remorse and agreed to settle will have criminal proceedings against them dropped. The Attorney-General also confirmed most of those detained had struck monetary settlements in exchange for their freedom and the settlements could boost state coffers by $US100 billion. Saudi daily Okaz, which has ties to the monarchy, also quoted an unnamed source as saying a number of high-profile detainees had been released from the Ritz-Carlton over the past 48 hours “after reaching settlements”.
The Crown Price and the New Saudi Economy - When Prince Mohammed announced his highly ambitious national transformation plan in 2016, he promised to privatize state assets, create 1.2 million jobs in the private sector and cut unemployment to 9 percent by 2020. It was rehashing an old panacea — weaning the kingdom off its addiction to oil.Prince Mohammed has made progress. He has lowered obstacles to women’s participation in the work force, cut subsidies on utilities and raised indirect taxes. On Jan. 1, he increased fuel prices by over 80 percent and imposed a new 5 percent sales tax. But his outreach to the private sector, on which his plan depends, has been stymied by a lack of capacity and institutional experience, and, increasingly, his hubris. His oppressive conduct is alienating the very sources he should be trying to attract. Rather than plod on with austerity measures, he seems mesmerized by ambitious vanity projects and fattening his personal portfolio. The Public Investment Fund is supposed to be Saudi Arabia’s sovereign wealth fund, but the prince, who heads its board, runs it like his own business. In April, it acquired 129 square miles of state land for a sports and entertainment city. In August, it announced plans for a tourist resort bigger than Belgium. And in October, Prince Mohammed unveiled Neom, his $500 billion robot city, at an international conference. Once again, the Public Investment Fund led the way. Few, if any, Saudi princes and businessmen were tempted to invest their largess — sometimes ill gotten — into these ventures. Many have learned from bitter experience. The prince’s uncle Abdullah, the previous king, planned six economic cities, including the King Abdullah Economic City on the Red Sea. But though the project’s cost, $27 billion, was barely 5 percent of Neom’s, it is expected to be ready only in 2035. Saudis saw another herd of white elephants on the stampede and shied away. Undeterred, Prince Mohammed has resorted to arrests, asset seizures and shakedowns. In the process, he has turned the House of Saud — whose various branches once shared wealth, power and decision making — into a one-man state. Far from diversifying wealth, he seeks to centralize it in his hands. Scores of princes who were arrested in November have been transferred from imprisonment in Riyadh’s Ritz-Carlton hotel to its high-security jail. An additional 11 princes were hauled in this month, dashing hopes that the November arrests were a one-off.
Smog Choking Iran's Oil Belt Tests Leaders Hit by Protests - Iranian authorities are scrambling to stem a growing crisis over air pollution in the province that produces a major share of the country’s oil, showing a sensitivity to people’s demands not always visible before anti-government protests raged earlier this month. A yellow smog has enveloped the southwestern Khuzestan region ever since a severe dust storm struck on Friday, shutting schools and offices and prompting criticism of the administration across local media. So far, 1,530 people have been hospitalized with breathing problems, according to state-run television. When pressed on the public-health implications on live television, President Hassan Rouhani said he was dispatching senior officials to the area. Supreme Leader Ayatollah Ali Khamenei on Tuesday approved $100 million to “combat particles” in Khuzestan. Authorities’ quick decision-making is “a product of these protests,” said Dina Esfandiary, a fellow at the Centre for Science and Security Studies at King’s College London. While capping pollution can’t be swift, “there are a number of PR stunts they can carry out quickly to show the population, ‘We heard you and we’re gonna do whatever we can to fix theses issues,’” Esfandiary said. Khuzestan has suffered from poor air quality and other environmental blights for years. But changes in the region’s climate and the depletion of rivers and wetlands due to poor water management are making it unlivable. Strong winds blow dust from the surrounding dry plains into cities, compounding the impact of industry and traffic. Ahvaz, the provincial capital, has in previous years been ranked by the World Health Organization as among the most polluted cities in the world. Residents of the province publicly backed Rouhani during last year’s presidential campaign, state TV anchor Reza Rashidpour told him in the live segment on the problem. “Now they’re posting messages saying ‘Khuzestan can’t breathe.’ How long should they be told to wait for change?”
Assad's Victory: What Comes after War in Syria? - SPIEGEL ONLINE: The shell slammed into the roof of the mosque behind the "Eastern Gate," or Bab Sharqi, one of the seven entrances to the old city. "Why are they firing at us? There are only civilians left here," asks Loutfi. What she doesn't know is that the government is waging a campaign of heavy airstrikes on the rebels here in southeastern Syria, and that the attack on the old city represents the trapped rebels' last gasp before their inevitable defeat. In military terms, the war has already been decided -- for Assad and the Syrian regime. Nevertheless, the country is still far from peace.The fighting in Damascus is worse than it has been in a long time. It's as if the constant sound of the explosions were the drumfire for the newly announced peace negotiations between the Syrian government and the opposition, negotiations that have failed repeatedly, as they did recently at a meeting in Geneva under the leadership of United Nations Special Envoy Staffan de Mistura. Russian President Vladimir Putin paid a visit to Syria's dictator Bashar Assad in early December. The message he conveyed was that the military struggle will be over soon, and that some of the Russian troops will be withdrawn. Russia now wants to initiate its own peace process in the new year and persuade the West to provide reconstruction aid to help the country get back on its feet. Shortly after Putin's visit, it was revealed that Russia wants to expand its air base in the country. Meanwhile, the bombs continue to fall on East Ghouta, the suburban belt in southeastern Damascus, one of the last rebel strongholds. There is also shooting in Jarmuk, a Palestinian enclave in the middle of the capital. In the northern city of Idlib, on the Turkish border, fighters with the extremist Al-Nusra front and other rebels are gathering for the final battle with pro-Assad forces.
The next Kurdish war is on the horizon – Turkey and Syria will never allow it to create a mini-state -- Colonel Thomas Veale - “Public Affairs Director at Combined Joint Task Force, Operation Inherent Resolve” – was quite open about the creation of another new and largely Kurdish force which will, in theory, control tens of thousands of square kilometres of Syria. Arab members of the same 30,000-strong “Border Security Force” will man checkpoints further south along the Euphrates river valley. To quote the good colonel, “recruiting is done in such a manner as to build a force reflecting the populations they serve; both in gender and ethnicity”. And there you have it. The Kurds will look after the Kurds, the Arabs (largely Sunnis, though there aren’t many of them) will run the non-Kurdish bits of this new enclave which will, in the north, run right along the Turkish border – an invitation to further civil war, if ever there was one. For an indication of just how equivocal this US decision is, we only have to witness the unprecedented if brief alliance it has created between the Syrian regime – anxious to regain every square foot of the nation which was under attack by Isis, al-Qaeda and various Western and US-armed military outfits for the past seven years – and Turkey, which has over exactly the same period been trying to overthrow Syrian President Bashar al-Assad. Recep Tayip Erdogan has promised to “suffocate” this latest American proxy “terror army”, regarding it as a Kurdish force effectively controlled by the “terrorist” Kurdish Workers Party, the PKK. Assad’s government called the enlistment of the new militia a “blatant assault” on Syria’s sovereignty. Russia warned of partition. Unfortunately for Colonel Veale, Turkey is right to suspect that the PKK controls local Kurdish fighters, Assad is correct in identifying the “Border Security Force” as an attack on Syria’s sovereignty – whoever rules the state itself – and Russia, no stranger to the partition of the Ukraine, knows how to recognise similar US skulduggery. Its origins go back to the start of the war, when the local Kurdish “People’s Protection Units” (YPG) were encouraged by the authorities in Damascus to oppose Isis, al-Qaeda (later Nusrah) and other jihadi groups who were trying to seize the Syrian state. The Syrian army handed the YPG thousands of weapons to defend themselves. In the early days, Assad himself even praised the Kurds for resisting the “terrorist” forces of Isis and al-Qaeda.
Turkey Slams 'Allies' For Sending "Planeloads Of Arms" To Terrorists Ahead Of Emergency UN Session - Turkish President Recep Tayyip Erdogan has turned on Ankara’s allies, insinuating that the US in particular has been providing massive military support to Kurdish YPG in Syria. In a speech to his ruling AK Party, RT reports that Erdogan said that ‘some allies’ of Turkey had provided the YPG Syrian Kurdish militia with 2,000 planeloads and 5,000 truckloads of weapons.“Now, apart from 5,000 trucks, there are weapons and ammunition from around 2,000 planes.” the Turkish leader said.He also accused Ankara’s allies of dishonesty when they say that they do not provide weapons for “terrorists,” referring to Kurdish-linked YPG forces.It was not just Washington that Turkish officials were accusing, they specifically accused France of supporting terrorism ahead of an emergency UN session set for Monday..."Anyone who opposes Turkey’s operation in northern Syria’s Afrin region is siding with terrorists and will be treated accordingly," Turkish Foreign Minister Mevlut Cavusoglu said on Sunday. "We hope France will support Turkey's operation against terrorists in Syria," the minister added in reference to what Turkey has dubbed 'Operation Olive Branch'.After the Turkish military invaded northwest Syria over the weekend in an operation that President Recep Tayyip Erdoğan described as cleaning out Kurdish "terror nests", France called for an emergency meeting of the United Nations Security Council. FM Çavuşoğlu's words were given in warning to French politicians who say they will take up the issue of Turkish aggression at the UN. France has urged Turkey to exercise restraint in its air and land assault targeting US-backed Kurdish forces in Afrin, near Turkey's border.
Turkey launches airstrikes in Syria against U.S.-backed Kurdish fighters — With airstrikes and artillery fire, Turkey on Saturday defied U.S. appeals and opened a long-anticipated offensive on Afrin, an enclave in Syria for Kurdish militias backed by the United States. Turkish officials have framed the offensive as part of a wider battle against Kurdish separatists, known as the Kurdistan Workers’ Party, in Turkey’s southeast. Turkey also fears any gains in strength by the Syrian Kurds, whose territory runs along some of Turkey’s southern border. But the United States has opted to back the Syrian Kurds as proxy fighters against the Islamic State and as a buffer to keep the militants from trying to reclaim territory. The military action immediately raised concerns that it could spark conflicts among the assortment of foreign military powers present, in proximity, across northern Syria. They include Turkey, Russia and the United States. All have the Islamic State as a common foe, but, individually, they back different factions among the various armed groups in Syria. The latest flash point also highlighted the shifting disputes and conflicting agendas that have complicated any efforts toward ending nearly seven years of conflict in Syria. The Turkish military action came amid intensifying violence in the northern Syrian province of Idlib, where Syrian government forces are on the offensive against al-Qaeda-aligned rebels in the east of the province. Turkish troops entered Syria on Jan. 21, to fight Kurdish militias in the start of "Operation Olive Branch." [2:40 PM] (Reuters) Recent statements by U.S. military officials about plans to train border security forces that would protect a Kurdish enclave in Syria also provoked Turkey’s ire. “We are taking these steps to ensure our own national security,” President Recep Tayyip Erdogan said in comments carried by the semiofficial Anadolu agency. Yet Turkish incursions could carry risks. The government of Syrian President Bashar al-Assad had warned that it was prepared to fire on Turkish warplanes in the event of an attack on Afrin.
Erdogan: Operation in Syria’s Afrin has begun -- Turkey says it has launched a much-awaited air and ground offensive against the Kurdish-controlled enclave of Afrin in northern Syria.After days of shelling, Turkish fighter jets on Saturday carried out air raids on the border district targeting positions held by the Syrian Kurdish PYD and YPG groups.The heavy bombardment began as units of pro-Ankara rebels known as the Free Syrian Army (FSA) started moving into Afrin, according to the state-run Anadolu news agency. Turkish President Recep Tayyip Erdogan said on Saturday that the operation in Afrin would be followed by a push in the northern town of Manbij, which the US-backed Kurdish forces captured from ISIL in 2016.Turkey considers Syria's Kurdish Democratic Union Party (PYD) and its armed wing, the YPG, "terrorist groups" with ties to the banned Kurdistan Workers' Party (PKK), which has waged a decades-long fight inside Turkey.The US has previously armed the YPG, viewing it as the most effective ground force in its fight against the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) armed group.Erdogan said that all Kurdish armed groups "are all the same" and that changing their names "does not change the fact that they are terror organisations". According to estimates, there are between 8,000 to 10,000 Kurdish fighters in the Afrin area.
Turkish Tanks Cross Into Syria As Ground Offensive Against US-Backed Militia Begins - Early on Sunday, Turkish ground forces crossed the border and pushed into northern Syria’s Afrin province on Sunday, Ankara said after launching artillery and air strikes on a U.S.-backed Kurdish militia it aims to sweep from its border. Turkey sent armored divisions into northwest Syria after a day of airstrikes as part of 'Operation Olive Branch' which bombed Kurdish YPG forces ("People's Protection Units") in and around Afrin to drive the US-allied Kurdish militia from the area. Turkish-backed Free Syrian Army fighters along with Turkish troops are now moving into the area, according to state-run Anadolu news agency.1/ The ground offensive against Afrin enclave has indeed started. Clashes now inside Afrin province. Kurdish YPG claims it destroyed at least 1 Turkish tank. See video. pic.twitter.com/k81T2OPlbe— Jenan Moussa (@jenanmoussa) January 21, 2018 "Our jets took off and started bombing. And now, the ground operation is underway. Now we see how the YPG ... are fleeing in Afrin," President Tayyip Erdogan said. "We will chase them. God willing, we will complete this operation very quickly." Quoted by Reuters, Erdogan also accused some of Turkey’s allies of providing the YPG with 2,000 plane shipments and 5,000 truckloads of ammunition; the comments were clearly aimed at the United States. According to the local military, Turkish forces forces started the ground phase as part of ‘Olive Branch’ in the north-western Syrian region of Afrin, with Hurriyet reporting that the Turkish military has so far faced no serious resistance from Kurdish forces, which has retreated to towns and villages. Video released by Turkish Armed Forces purportedly shows air strike on tunnel in Kurdish-controlled city of #Afrin in northern Syria pic.twitter.com/NH4pn2rlCc — CGTN (@CGTNOfficial) January 21, 2018 Turkish Prime Minister Binali Yildirim confirmed that tanks and military vehicles had begun to cross the Syrian border, according to Haberturk. They were said to advance roughly five kilometers into the Afrin region. Yildirim also said the Turkish military, NATO’s second-largest, would create a 30-km (19-mile) “safe zone” in the region.
Syria – Turks Attack Afrin, U.S. Strategy Fails, Kurds Again Chose The Losing Side -- After negotiations between Russia/Syria and the Kurds of Afrin had failed, the Russian side made a deal with Turkey. Now Turkey attacks Afrin while everyone else looks aside. The main impetus for this development was the announcement of a U.S. occupation in north-east Syria with the help of the Kurdish YPG/PKK. The occupation strategy is already failing. The Kurds made the false choice. They will be the losers of this game. We had wrongly predicted that Turkish threats against the Kurdish held north-west area of Afrin were empty: Turkey is now attacking the Afrin canton in full force. With help from one George Orwell the operation was dubbed "Olive Branch" The Turkish operation to go after Afrin was triggered by two events. The more important one was the U.S. announcement of a permanent occupation of north-east Syria with the help of a 30,000 men strong SDF "border protection force" consisting of mainly Kurds and some Arabs who earlier fought under ISIS. We had noted at that time:The Turks were not consulted before the U.S. move and are of course not amused that a "terrorist gang", trained and armed by the U.S., will control a long stretch of their southern border. Any Turkish government would have to take harsh measures to prevent such a strategic threat to the country. The U.S. move was amateurish. It ignored the security needs of its NATO ally Turkey in exchange for an illegal and unsustainable occupation of north-east Syria. Secretary of State Tillerson tried to calm the Turks by claiming that the "border protection force" was not for border protection. Reports from the training ground expose that as a lie:
Turkey expects swift campaign against US-backed Kurds in Syria (Reuters) - Turkey shelled targets in northwest Syria on Monday and said it would swiftly crush U.S.-backed Kurdish YPG fighters in an air and ground offensive on the Afrin region beyond its border. The three-day-old campaign has opened a new front in Syria’s multi-sided civil war, realigning a battlefield where outside powers are supporting local combatants. While Washington and other Western capitals expressed concern, Turkish President Tayyip Erdogan said he had secured a go-ahead for the campaign from Russia, principal backer of Syrian President Bashar al-Assad, long Turkey’s foe. Turkey sees the YPG presence on its southern border as a domestic security threat. Turkish forces and their Syrian anti-Assad rebel allies began their push on Saturday to clear the northwestern border enclave of Kurdish YPG fighters. Ankara considers the YPG to be allies of insurgents that have fought against the Turkish state for decades. The United States, meanwhile, has armed and aided the YPG as its main ground allies against Islamic State. Senior U.N. officials briefed the United Nations Security Council behind closed doors on Monday, at the request of France, on the humanitarian and political situation in Syria. “With respect to the situation in Afrin, it was of course part of the conversation,” said French U.N. Ambassador Francois Delattre after the meeting, adding that it was mentioned by most of the 15 council members. “France calls on Turkey for restraint in the volatile environment that we all know in Syria.” But Erdogan said Turkey was determined to press ahead. U.S. Secretary of State Rex Tillerson said Washington had proposed working with Turkey and forces on the ground in Afrin to “see how we can stabilise this situation and meet Turkey’s legitimate concerns for their security.” But Turkey said Washington must end its support for the Kurdish YPG militia before any proposal for cooperation: “If they want a cooperation, we are ready for this cooperation. As the first step to take, they can stop arming terror groups and take back weapons already given,” Deputy Prime Minister Bekir Bozdag told reporters after a cabinet meeting.
Syria offensive: Turkish troops 'capture villages' in Afrin - BBC News: Turkish forces have captured a number of villages in north-western Syria, on the third day of an offensive to oust Kurdish fighters, Turkish media report. Troops, accompanied by allied Syrian rebels, reportedly seized control of several areas in Afrin on Monday. Turkish President Recep Tayyip Erdogan said he would not "step back" in the assault following talks with Russia. Turkey considers the Kurdish YPG militia it is targeting in the region to be a terrorist group. "We are determined, Afrin will be sorted out," Mr Erdogan said in a live television broadcast in Ankara on Monday. "We will take no step back," he said, adding: "We spoke about this with our Russian friends; we have an agreement."The YPG, which controls much of north-eastern Syria, is believed by Turkey to be an extension of the Kurdistan Workers Party (PKK), which has fought for Kurdish autonomy in Turkey for three decades. The YPG denies any direct links and is a crucial part of a US-backed alliance battling Islamic State (IS) jihadists in Syria. Ankara has condemned the US for supporting the YPG and this latest development in the Syrian civil war puts Turkey on a collision course with its Nato ally.
The politics behind Turkey’s Afrin operation -- In recent years, parallel to Turkey effectively giving up on toppling the government of Syrian President Bashar al-Assad, the primary goal of Turkey's foreign policy in Syria has been to keep the Syrian Kurdish enclave fragmented and landlocked.This has underpinned Turkey's previous two military operations within Syria: the Euphrates Shield Operation of August 2016 and Turkey's military entry into Idlib as a result of it cutting a deal with Russia and Iran on de-escalation zones.With the former operation, Turkey prevented the creation of territorial continuity between Syrian Kurdish cantons, while with the latter operation it effectively stopped the YPG’s expanding any further westward towards the sea. But in these two operations, though Turkey indirectly and strategically targeted the Syrian Kurds' growing territorial presence in northern Syria, it nevertheless did not target the PYD–YPG directly. With this recent operation, Turkey is directly targeting the PYD–YPG and is initiating a pushback strategy against the territorial gains of the Syrian Kurds. Plus, it also aims to send a message to the Syrian Kurds that the presence of superpowers US and Russia in Syria might not prove sufficient to shield them against Turkey. It is now public knowledge that Turkey's Afrin operation was facilitated by Russian consent, and it is equally well known that the reason why Turkey chose the path of engaging with Russia was a result of its disillusionment with US policy in Syria and its partnership with the Kurds. Syria has been a major point of friction between Washington and Ankara in recent years. During the initial phase of the Arab uprisings, Turkey's major complaint vis-à-vis the US was related to the US's indecisiveness and inaction on the question of the regime change in Syria. However, in recent years, it has been US policy towards the Syrian Kurdish PYD within the framework of the war on the Islamic State (IS) that has been the main stumbling block in bilateral relations.In fact, the Syrian crisis and the fight against IS have shown that there is a growing gap between Turkish and American threat perceptions and their formula to deal with them.
America’s Syrian humiliation is worse than it looks | Asia Times: Turkey’s “Olive Branch” incursion against Kurdish positions in Northern Syria this week looked bad for Washington. It’s worse than it looks: Turkey cemented a new set of strategic and economic relationships after defying the United States, its erstwhile main ally. Ankara now has financial backing from China and Qatar and the strategic acquiescence of Russia and Iran. Most of all, it has the financial backing to pursue its regional ambitions. Turkey reportedly killed several hundred Kurdish and allied Arab fighters this week, reducing an American-supported force that had done most of the fighting against ISIS in Syria. US-Turkish relations are at an all-time nadir, but Turkey’s financial markets remain unruffled. Washington has hard words for Turkey, but no sticks and stones.Money is the decisive variable for Turkish President Recep Tayyip Erdogan, whose domestic position depends on his ability to hand out economic benefits in the traditional style of third-world dictators. During 2016, Erdogan spurred Turkish banks to increase their lending to business and consumers, and set in motion a credit boom that inevitably led to a bigger trade deficit.Import booms driven by credit-fueled demand have been the undoing of Turkish markets in the past. This time is different. Turkish stocks have risen during the past month, right through the week of the “Olive Branch” offensive, and the cost of hedging the Turkish currency’s exchange rate has remained relatively low. The US-traded Turkish equity ETF, TUR, has climbed back to just below its high point of last August, while the cost of options on the Turkish lira (or implied volatility) remains at the low end of the range.
Slovenia to recognize Palestinian state next month — TV report - Slovenia is planning to recognize Palestine as an independent state next month, and three other European countries — Luxembourg, Ireland and Belgium — are thinking of following suit, Channel 10 news reported Sunday. France, meanwhile, is working behind the scenes to upgrade the Palestinian Authority’s status at the European Union, the report said. The moves follow US President Donald Trump’s December recognition of Jerusalem as the capital of Israel and plan to move the US Embassy to the city from Tel Aviv. Trump said his declaration reflected reality on the ground, and was not intended to prejudge any future arrangement between Israel and the Palestinians regarding the disputed city, though he later said it had taken Jerusalem off the table. Welcomed by Prime Minister Benjamin Netanyahu and leaders across most of the Israeli political spectrum, the move caused an uproar throughout the Muslim world and was panned by the United Nations, the European Union, and many European countries.Last month, Slovenian Parliament Speaker Milan Brglez told Palestinian Ambassador Salah Abdel-Shafi that Slovenia’s recognition of a Palestinian state was “not in doubt,” but just a question of timing.Slovenian Prime Minister Miro Cerar said at the time that although all three Slovenian coalition parties had voted in favor of recognition, his country should wait until a group of EU member states decided to act together. The Slovenian government decided to move ahead on plans to recognize a Palestinian state a week ago, the Channel 10 report said. It said that a vote on recognition was expected to be held by the Slovenian parliament’s foreign affairs committee on January 31, followed by a vote of the full parliament in February.
Philippine President Rodrigo Duterte threatens Middle East work ban after maid ‘rapes and suicides’ | South China Morning Post: Philippine President Rodrigo Duterte has threatened to ban hundreds of thousands of Filipinas from working as maids in the Middle East as he said domestic workers were being raped in Kuwait. Over two million Filipinos, many of them maids, are employed in the region, helping to prop up the Philippine economy with billions of dollars in salary remittances to their families each year. Last week, Duterte barred Filipinos from seeking work in Kuwait over reports of widespread abuse, exploitation and deaths, although the ban did not affect workers already in the Gulf state. “One more incident about a woman, a Filipina worker being raped there, committing suicide, I’m going to stop – I’m going to ban” Filipinos working, he said. “And I’m sorry to all the Filipinos there, they can all go home.” “Let me be blunt about this because Kuwait has always been an ally. But please do something about it and for the other countries of the Middle East.” A visibly angry Duterte was speaking soon before boarding a flight for India to attend a regional summit.“Can I ask you now to treat my countrymen as human beings with dignity?” he added. Duterte said last week that four Filipinas had died in Kuwait over the past few months in apparent suicides. Kuwait said on Wednesday it was still awaiting details from the Philippines about the cases and expressed surprise about Duterte’s new allegations.
Exclusive: Despite sanctions, North Korea exported coal to South, Japan via Russia - intelligence sources (Reuters) - North Korea shipped coal to Russia last year which was then delivered to South Korea and Japan in a likely violation of U.N. sanctions, three Western European intelligence sources said. The U.N. Security Council banned North Korean exports of coal last Aug. 5 under sanctions intended to cut off an important source of the foreign currency Pyongyang needs to fund its nuclear weapon and missile programs. But the secretive Communist state has at least three times since then shipped coal to the Russian ports of Nakhodka and Kholmsk, where it was unloaded at docks and reloaded onto ships that took it to South Korea or Japan, the sources said. A Western shipping source said separately that some of the cargoes reached Japan and South Korea in October last year. A U.S. security source also confirmed the coal trade via Russia and said it was continuing. “Russia’s port of Nakhodka is becoming a transhipping hub for North Korean coal,” said one of the European security sources, who requested anonymity because of the sensitivity of international diplomacy around North Korea. Asked to respond to the report, Kremlin spokesman Dmitry Peskov said on Friday that Russia abided by international law. “Russia is a responsible member of the international community,” he told reporters on a conference call. Interfax news agency quoted an unidentified official at Russia’s embassy to North Korea on Friday as saying Russia did not buy coal from North Korea and was “not a transit point for coal deliveries to third countries.” Russia’s mission to the United Nations told the Security Council sanctions committee on Nov. 3 that Moscow was complying with the sanctions. Two lawyers who specialize in sanctions law told Reuters it appeared the transactions violated U.N. sanctions. Reuters could not independently verify whether the coal unloaded at the Russian docks was the same coal that was then shipped to South Korea and Japan. Reuters also was unable to ascertain whether the owners of the vessels that sailed from Russia to South Korea and Japan knew the origin of the coal. The U.S. Treasury on Wednesday put the owner of one of the ships, the UAL Ji Bong 6, under sanctions for delivering North Korean coal to Kholmsk on Sept. 5. It was unclear which companies profited from the coal shipments.
South Korea's Economy Unexpectedly Contracts As Exports Cinvestors answered that a combination of a lack of trust and an opportunity for return are at play. About one-third of Bitcoin owners said it was a means to avoid government regulation - 24% also said they trust Bitcoin more than the US government in a separate question - and about two in 10 saw it as a hedge against crashes in traditional assets. More than 60% also said that buying the digital coin was seen as a growth investmentrash Most In 33 Years - For only the 4th time since 1999 (and for the first time since Lehman), South Korea's economy unexpectedly shrank in Q4 (contracting 0.4% QoQ against expectations of 0.1% expansion), busting the global-synchronized-growth narrative. Only two analysts forecast the possibility of a contraction... Government spending rose 0.5% QoQ, and while private consumption rose 1.09% QoQ, construction investment tumbled 3.8% QoQ. Exports were the biggest driver - plunging 5.4% QoQ - the biggest drop since 1985... As Goldman notes, Korea's 2017 Q4 GDP contracted 0.2% quarter on quarter (seasonally adjusted), slowing sharply from 1.5% in Q3 and falling for the first time in nine years. The figure was well below consensus and as well as our expectations. Main points:
- 1. Korea's 2017 Q4 GDP contracted 0.2% quarter on quarter (seasonally adjusted), slowing sharply from a high base of 1.5% in Q3 and recording the first sequential decline in nine years. The figure was well below expectations. In year-on-year terms, growth was lowered to 3.0% from 3.8% in Q3.
- 2. Domestic demand's total contribution to sequential GDP growth moderated to 0.6pp, from 0.8pp in the previous quarter. By expenditure, final consumption (including both private and government) continued solid growth of 0.9% qoq sa, helped by a re-acceleration in private consumption to 1.0%. Fixed investment declined 2.0% qoq sa, the first decline in three years. Facilities investment fell 0.6% qoq sa, and the contraction was more pronounced in construction activities (-3.8% qoq sa). The drag from fixed capital formation offset the relative strength in final consumption. Inventories accumulation turned positive again, adding 0.6pp to headline growth.
- 3. Net exports' contribution to sequential growth fell back to -0.8pp. Exports recorded a sequential contraction of -5.4% qoq sa, but slowing from a sharp growth of 6.1% in Q3. Imports also declined 4.1% due mostly to lower machinery imports according to the Bank of Korea press release.
- 4. By industry, manufacturing contracted 2.0% qoq sa, the weakest print since Q1 2009. While the detailed breakdown by sectors is not yet available, the BOK press release highlights that the weakness was concentrated in transport equipment production including autos. In contrast, services continued positive growth at 0.4%, although moderating from 1.1% in the previous quarter.
- 5. For the full year of 2017, Korea's real GDP grew 3.1%, up from 2.8% growth during the previous two years (2015-2016). The weaker-than-expected Q4 GDP figure, however, mechanically lowers our 2018 growth estimate to 2.8%, somewhat below the central bank's latest forecast of 3.0%.
North Korea Calls On Koreans To Push For Unification - A thaw in North-South relations that began early this year as North Korean leader Kim Jong Un and South Korean President Moon Jae-in has accelerated into a full-on reversal. To wit, North Korea on Thursday issued a rare message for “all Koreans at home and abroad,” saying they should make a “breakthrough” for unification without the help of other countries, its state media said.Reuters reports the North Korean press are also saying, “all Koreans" should “promote contact, travel, cooperation between North and South Korea” while adding Pyongyang will “smash” all challenges against reunification of the Korean peninsula.”Relations between the two countries warmed when the South agreed to suspend the military exercises that the North has described as a preamble to war earlier this year, and the neighboring countries - which have technically been at war since the 1950s - agreed to field a combined women's field hockey team during the upcoming Winter Games in PyeongChang.A liberal who campaigned on forging closer ties with the North, Jae-in has butted heads with President Trump and the US military, which remain wary of the North. US military leaders worry that Kim is deviously trying to create a wedge between the US and its main regional ally in its struggle to contain the North's nuclear program.The announcement, which was issued after a joint meeting of government and political parties, also called for Koreans to "defuse military tensions" and create "a peaceful atmosphere" on the peninsula. The North's official news agency explained that military tensions on the peninsula were a "fundamental obstacle" to improving inter-Korean relations. Now that they have ceased, an amicable relationship is developing for the first time since the end of the Cold War.
WW3 Preparations? Amidst Drought, North Korean Officials Raid Homes And Farms To Feed Army - North Korean officials are ransacking homes and raiding farms in order to feed their starving army. Not only has the drought taken its toll on the nation, but this newest harsh seizure of food is causing internal clashes between the civilians and the army. Soldiers for the communist regime had already been given long periods of leave in order to try to find food and make money to purchase food. However, it hasn’t been enough. Collective farms are suffering due to drought and poor harvests, leading officials to ransack farms and homes in order to find any stored food or money that might benefit the army, Daily NK reports. While North Korean citizens are used to officials searching for food and asking for bribes, their use of increasingly brutal tactics to feed a starving army has led to reported clashes between troops and citizens. Farms in the country have not been able to meet quotas, and in response, officials are giving them new assignments.“We are suffering because collective farms in our region did not have a good harvest last year and so we were unable to fulfill the mandatory quota for military provisions. All individuals who weren’t able to meet the demands have been receiving additional assignments since the very beginning of January,” a source in South Hamgyong Province reported to Daily NK.“This year, we have to postpone our farm work due to this ‘extremely urgent’ task of gathering food for the military,” the source said. In the past, individuals were allowed to take leave from farm work to obtain money for fertilizer or farm equipment. But this year, any money is being used to procure food and other items for military use. Famine is believed to have previously killed millions of people in the hermit kingdom. The communist regime prioritizes sending food and resources to the military and high ranking government officials over its general population.
How Will China Retaliate to US Trade Sanctions? - Here are the washing machine tariffs just imposed by Trump. Together with the rest of the world, I've long been waiting for the real Donald Trump--as his Twitter handle describes--to show up in the international trade arena. There is much on his plate at the start of 2018, from deciding of courses of action to take on the dumping of several products as well as determining the future of US trade agreements like NAFTA and the Korea-US Free Trade Agreement (NAFTA)--both of which are under discussion with American counterparts. On Monday, we got our first installment of the trade-hating Trump as the US Trade Representative (USTR) unveiled fairly substantial tariffs on imported goods US manufacturers made complaints about--namely, solar cells and washing machines. Tariff rates of up to 50% are nothing to sneeze at. To be sure, these are not exclusively China-exported goods. Other affected countries like Mexico and South Korea are expressing discontent. (Quite a few Korean-brand washing machines made in Mexico are destined for the US market.) Actually, China is not among the largest exporters to America of washing machines. That said, trade observers have little doubt which country was in the USTR's crosshairs when announcing these tariffs to stop a "surge" of dastardly imports:The Chinese Commerce Ministry on Tuesday expressed "strong dissatisfaction" over the move, saying it "aggravates the global trade environment." The tariff of 30% on foreign solar panels is a blow for China, the world's biggest supplier of the products. Beijing has been widely accused of heavily subsidizing its domestic solar industry and flooding global markets with cheap panels... The Chinese Commerce Ministry called the U.S. process that led to the tariffs "an abuse" of the trade measures available to the Trump administration. In its investigations, the U.S. International Trade Commission determined that imports of solar panels and washers had hurt American companies. Once more, consider the loaded term "trade war." To correctly be described as such, we need a couple of things to happen. First, there needs to be tit-for-tat retaliatory action by the concerned parties. So, how can China get back at America? Let's just say there are countless ways, beginning with actions on US goods as the obvious targets:
Beijing Outraged As US Warship Sails Within 12 Miles Of Contested Island -- The new year is barely three weeks old and already the US Navy’s “freedom of navigation” operations are eliciting furious threats of retaliation from the Chinese military.Since President Donald Trump took office one year ago, the Navy and Air Force have increasingly sought to test the Chinese military response in the Pacific by sailing or flying within a certain perimeter - usually 12 miles - of one of China’s disputed territorial holdings in the South China Sea, according to RT.In the latest clash, the USS Hopper missile destroyer sailed within 12 nautical miles of Huangyan Dao, a tiny island claimed by China, on Jan. 17. As is common during US "Freeops," the US destroyer didn’t solicit Beijing’s permission for entering the waters and was subsequently intercepted by the Chinese Navy, with China’s Foreign Ministry accusing the US of violating “sovereignty and security interests” as well as posing a “grave threat” to its forces stationed in the area."China is strongly dissatisfied with that and will take necessary measures to firmly safeguard its sovereignty," Foreign Ministry spokesperson Lu Kang said in a statement on Saturday. He also warned US forces against further "provocative moves” for the sake of“China-US relations and regional peace and stability."The spokesman added that China has “indisputable” control over the territory, which is also claimed by Taiwan (itself the subject of a sovereignty dispute with the mainland) and the Philippines. China’s Defense ministry echoed Lu’s tone in a separate statement on Saturday, stressing that the military will step up vigilance against air and sea patrols to defend national and regional peace and stability. The US and Chinese militaries have had frequent standoffs in the South China Sea. Despite Washington having no territorial claims in the area – unlike China, Vietnam, the Philippines, Indonesia, Malaysia, and Brunei – it has always stressed the necessity for freedom of navigation in the area and opposed China’s claims.
Beijing’s Trajectory in Science and Technology Shows India Is Far Behind in the Game -- US’s National Science Foundation and National Science Board have recently released their biennial science and engineering indicators which provide detailed figures on research and development (R&D), innovation and engineers. But its true message is in a different direction, “China has become,” concludes Robert J. Samuelson in a column, “or is in the verge of becoming – a scientific and technical superpower. This is not entirely unexpected given the size of the Chinese economy and its massive investments in R&D, even so, he says, “the actual numbers are breathtaking”.
- China is the 2nd largest spender in R&D after the US, accounting for 21% of the world total which is $2 trillion. It has been going up 18% a year, as compared to 4% in the US. An OECD report says that China could overtake the US in R&D spending by 2020.
- China has overtaken the US in terms of total number of science publications. Technical papers have increased dramatically, even if their impact, as judged by citation indices, may not be that high.
- China has increased its technical workforce five times since 2000 to 1.65 million. It also has more B.Sc. degrees in science than any other country and the numbers are growing.
- The US continues to produce more PhDs and attract more foreign students. But new international enrollment at US colleges was down for the first time in the decade in 2017. The Trump administration’s anti-immigration rhetoric and actions are scaring away students.
- China has begun shifting from being an assembler of high-tech components, to a maker of super computers and aircraft and given the pattern of its investments in R&D and technology development, it is focusing on becoming the world leader in artificial intelligence (AI), quantum communications, quantum computing, biotechnology and electrical vehicles.
- As of now, the US still continues to lead in terms of the number of patents and the revenue they generate.
Heavy civilian casualties in cross-border firing between India and Pakistan - At least three civilians were killed and 19 injured on both sides of the frontier between India and Pakistan in the disputed region of Kashmir on Friday as rival troops continued shelling villages and border posts for a third day. Indian police officer S D Singh said two civilians died and at least 10 were injured in Indian-controlled Kashmir. According to Pakistani officials, Indian fire on Friday killed a civilian and wounded nine others in Sialkot in Pakistan's eastern Punjab province. An Indian paramilitary officer said soldiers were responding to Pakistani firing and shelling on dozens of border posts and called it an "unprovoked" violation of a 2003 ceasefire accord. Pakistan's foreign ministry summoned Indian deputy high commissioner J P Singh and condemned what it called "unprovoked ceasefire violations" by India. Both countries have accused the other of initiating past border skirmishes and causing civilian and military casualties. An Indian officer said Friday's shelling came after a relative calm overnight in Jammu following two days of fighting that left at least three civilians and a soldier dead and several others wounded. Mr Singh, the Indian police officer, said shells had been landing in dozens of villages since early Friday. He said authorities deployed bulletproof vehicles to evacuate people who were injured and sick. Dozens of schools in villages along the frontier have been closed and authorities advised residents to stay indoors as shells and bullets rained down. Some damage to houses was also reported on the Indian side. Pakistan urged India to respect the ceasefire, investigate the latest incidents and maintain peace on the frontier. It also asked India to allow the UN Military Observer Group in India and Pakistan to play its mandated role in accordance with Security Council resolutions.
TPP-minus-1 pact agreed in Japan, to be signed in March | Asia Times: Eleven countries aiming to forge an Asia-Pacific trade pact after the United States pulled out of an earlier version will sign an agreement in Chile in March, Japan’s economy minister said on Tuesday, in a big win for Tokyo. It’s also a good deal for Australia, according to Dr Giovanni Di Lieto, a lecturer in international trade law in the International Business program at Monash University in Melbourne. “The deal reduces the scope for controversial investor-state dispute settlements, where foreign investors can bypass national courts and sue governments for compensation for harming their investments. It introduces stronger safeguards to protect governments’ right to regulate in the public interest and prevent unwarranted claims,” Di Lieto said. Trade officials had been meeting in Tokyo to resolve rifts including Canada’s insistence on protections for its cultural industries such as movies, TV and music. An agreement is a win for Japanese Prime Minister Shinzo Abe’s government, which has been lobbying hard to save the pact, originally called the Trans-Pacific Partnership. In one of his first acts as US president in January 2017, Donald Trump pulled the United States out of the original 12-nation treaty. Abe has painted the deal as a spur to growth and reform in Japan and a symbol of commitment to free and multilateral trade at a time when Trump stresses “America First” policies. Speaking at the World Economic Forum in Davos, Switzerland, Canadian Prime Minister Justin Trudeau called the agreement the “right deal.” Canada’s trade minister said in a statement that it included an improved arrangement on autos with Japan and the suspension of intellectual-property provisions that had been a concern.
Coincheck Says It Lost Crypto Coins Valued at About $400 Million - The disclosure that one of Japan’s biggest cryptocurrency exchanges lost about $400 million in NEM tokens is spooking investors in a country still wary of such venues four years after the collapse of Mt. Gox.After hours of speculation Friday night, Coincheck Inc. said the coins were sent “illicitly” outside the venue. Co-founder Yusuke Otsuka said the company didn’t know how the 500 million tokens went missing, and the firm is working to ensure the safety of all client assets. Coincheck said earlier it had suspended all withdrawals, halted trading in all tokens except Bitcoin, and stopped deposits into NEM coins.“We know where the funds were sent,” Otsuka said during a late-night press conference at the Tokyo Stock Exchange. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment." The disappearance likely ranks among the biggest losses or thefts of investor assets since the advent of digital currencies with the launch of Bitcoin in 2009. Japan’s Financial Services Agency said in a statement it is “looking into the facts surrounding Coincheck.”
Top banks suspend accounts of major Bitcoin exchanges in India - Top lenders including State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank have suspended some accounts of major Bitcoin exchanges in India, suspecting dubious transactions, three people aware of the development said. The banks have also sought additional collateral from the promoters of these exchanges on their borrowings and have capped cash withdrawals from the few accounts that are still operational. ""Since last month, banks have been asking for additional collateral with 1:1ratio," a person with knowledge of the matter said. The banks are scrutinising current accounts held by top Bitcoin exchanges, a second person said. Action has been initiated against the top 10 Bitcoin exchanges including Zebpay, Unocoin, CoinSecure and BtcxIndia, said four people aware of the matter. ."The banks have not contacted the company or the promoters regarding the actions you have mentioned," said Sathvik Vishwanath, promoter of Unocoin. Emailed queries to Zebpay, Coin-Secure and BtcxIndia did not elicit any response. SBI, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank did not respond to emails seeking comment..
India will install cameras in classrooms amid a rise of surveillance measures in Asia - India's capital territory Delhi will install surveillance cameras in all of its classrooms after a spate of violent incidents, a decision that comes as increased surveillance measures sweep across Asia. Delhi Chief Minister Arvind Kejriwal said surveillance cameras would be installed in all government schools in the next three months, BBC reported. Parents would be able to see the classroom footage streamed to their phone in real time.Kejriwal said in a tweet last week that he believed surveillance in schools would make the "whole system transparent and accountable." Kejriwal said security measures were also put in place to ensure kid's safety, as India has dealt with several high-profile violent crimes within its school systems. In September, Delhi police arrested a school security guard for allegedly raping a five-year-old girl inside a classroom. Days later, a seven-year-old boy in a school in a nearby province was found dead. Several schools in Kolkata have also adopted technology this month that allows parents to track their children's whereabouts using radio frequency ID tags. Government members have also proposed adding CCTV cameras to hospitals to monitor activity. Critics have called India's increased surveillance measures "dystopian" and have said that the CCTV programs in schools facilitate the creation of a "surveillance state" in India.
India's digital ID project could violate rights of millions, campaigners say - India’s ambitious biometric identity project could lead to millions of people being denied access to essential services and benefits in violation of their human rights, campaigners said, ahead of key court hearings on the legitimacy of the program. India launched Aadhaar, now the world’s biggest biometric database, in 2009 to streamline welfare payments and cut wastage in public spending. The government has since made the card mandatory to access a range of services, including benefits such as state subsidies, pensions and scholarships. This “can obstruct access to several constitutional rights, including the rights of people to food, healthcare, education and social security,” said Aakar Patel, executive director at Amnesty International India. “The government has a legal and moral obligation to ensure that nobody is denied their rights simply because they don’t have an Aadhaar card,” he said in a joint statement with Human Rights Watch (HRW) at the weekend. Officials at the Unique Identification Authority of India (UIDAI), which oversees the program, did not respond to an e-mail seeking comment. The Supreme Court has been holding hearings on the legitimacy of the government’s demand to make Aadhaar mandatory for a range of services, despite the court ruling in 2014 that the ID cannot be a requirement for welfare programs. The top court is scheduled to resume hearings on Jan. 17. Campaigners and technology experts have raised concerns about privacy and the safety of the data, the susceptibility of biometrics to failure, and the misuse of data for profiling or increased surveillance. There have been reports of biometrics failing when fingerprints have faded, and of deaths linked to denial of subsidized food when Aadhaar verification failed. Officials in Jharkhand state in October said Aadhaar was not necessary to get subsidized grains, after the death of an 11-year-old girl who campaigners say died of hunger because her family’s ration card was canceled when it was not linked to their Aadhaar card. “It is ironic that a 12-digit number aimed to end corruption and help the poor has become the very reason many have been deprived of fundamental rights,”
Why India’s Big Fix Is a Big Flub- NYT — Aadhaar, India’s grand program to provide a unique 12-digit identification number to each of its 1.3 billion residents, appears to be collapsing under its own ambitions.When it was set up by the Congress Party-led government in 2009, it was touted as a voluntary biometric ID system that would ensure the smooth delivery of public services — notably welfare benefits and subsidized food for the poor — while limiting the risk of fraud.The Bharatiya Janata Party, then the main opposition party, was among the project’s fiercest critics at first, calling it too costly and a “political gimmick.” But after it came to power, in May 2014, the B.J.P. went further than Congress had ever dreamed of: Since then, it has made Aadhaar mandatory for accessing numerous public services, as well as for some private transactions. So far, Aadhaar — “the foundation” in Hindi — seems to have helped neither with welfare nor against corruption, all the while creating new problems, including by exposing people’s personal data to theft or predation by the private sector. On the one hand, having an Aadhaar number does not in itself guarantee access to India’s welfare benefits — among the least generous in the world. On the other, the need to have one and to link it to one’s various accounts and benefits has prevented some Indians from obtaining state assistance. Several Indian states require people to enlist in Aadhaar before they can claim rice or wheat at subsidized prices under the Public Distribution System, an important source of food security in the country’s poorer areas. Among them is the eastern state of Jharkhand, where only about 7 percent of residents aged 6 to 23 get an adequate diet. In September, an 11-year-old girl there died of hunger after her family was struck off the beneficiaries registry because it had failed to link its ration card to an Aadhaar number. A half-dozen other Indians are reported to have died because of similar reasons.
India woman fights family over 'low caste' husband's murder - BBC News: In March 2016, a 22-year-old man was hacked to death in daylight on a crowded road in southern India for marrying a woman of a higher caste. His wife survived the attack and went on to testify against her parents and campaign against the scourge of caste, as the BBC's Soutik Biswas reports. On the last day of his life, Shankar and Kausalya woke up around nine in the morning in their village hut. They had been married eight months. It was Sunday, and they travelled in a public bus to a local market in Udumalpet, some 14km (8.6 miles) away. They wanted to shop for new clothes for Shankar, who had to attend a function at his college next day.CCTV footage showed the couple walking briskly towards the road. But before they could cross, five men, riding on two bikes, halted behind them. Four of the men sauntered up to the couple and attacked them with long knives. The casualness with which the murderers fell upon them was chilling. They slashed the couple as if they were pruning bushes. Bleeding profusely, Shankar scrambled to run away. Kausalya limped towards a stationary SUV, when she was felled again by her assailants. It was all over in 36 seconds. The men returned to their motorcycles and left leisurely as a crowd began to collect. (The police later found six people came on three bikes, two bearing false number plates. Five of them attacked the couple, while one man kept watch.) An ambulance arrived soon and scooped the couple off the blooded-slicked tarmac. On the way to the hospital, 60km away, the medic inexplicably sat in the front seat. On the metal stretcher, Kausalya, her vision blurring, held the IV drip. Shankar lay still. Minutes later, as the ambulance entered the hospital, Shankar stopped breathing.
These Are The World's Real 'Shitholes'... Literally - In many countries worldwide, there is still a chronic lack of toilets, driving people to defecate outdoors.In fact, as Statista's Niall McCarthy notes, just under a billion people still practice open defecation across the globe and it's a problem that results in widespread disease and millions of deaths. In 2015, the UN called for an end to open defecation by 2030 and some countries such as Vietnam have had considerable success eradicating it.Others are still struggling, however, as the following map clearly illustrates. According to the most recent World Bank data which is from 2015, 40 percent of people in India still defecate outdoors. It is also common across Africa where the highest rates were recorded. Eritrea has the highest rate at 76 percent, followed by Niger (71 percent) and Chad (68 percent).
In Venezuela, money has stopped working - A friend recently sent me a photograph that tells a powerful story about the situation Venezuelans find themselves in now. It’s not a very good picture, really, just a blurry cellphone shot of trash: some wrapping material, an old CD — the detritus left behind after a store was looted last week in San Felix, a city in the country’s southeast. And yet I can’t stop thinking about it, because strewn about in the trash are at least a dozen 20-bolivar bills, small-denomination currency now so worthless even looters didn’t think it was worth their time to stop and pick them up. The photo stopped me dead in my tracks. In theory, according to the “official” exchange rate, which long ago lost even a hint of connection with reality, each of those bills is worth $2. In fact, as Venezuela sinks deeper and deeper into the first hyperinflation the Western Hemisphere has seen in a generation, bolivar banknotes have come to be worth basically nothing: Each bill is worth about $0.0001 at the current exchange rate, meaning you need to have 100 of them to equal one penny. It’s easy to see why the thieves left them behind. Hyperinflation is disorienting. Five or six years ago, the 500 bolivars on the floor would’ve bought you a meal for two with wine at the best restaurant in Caracas. As late as early last year, they would’ve bought you at least a cup of coffee. At the end of 2016, they still bought you a cup of café con leche, at least. Today, they buy you essentially nothing … well, except for 132 gallons of the world’s most extravagantly subsidized gasoline. Prices are now rising more than 80 percent per month, according to the opposition-led National Assembly’s Finance Committee. (The government itself stopped publishing official inflation data long ago.) At that rate, prices double every 34 days or so. Salaries lag far behind, leaving more and more of the country to face outright hunger. Thus, the looting. Rule No. 1 of surviving hyperinflation is simple: Get rid of your money. Given the speed with which money is shedding its value, holding on to it means you’re losing out. The second you’re paid you run out as fast as you can to buy something – anything – while you can still afford it. It’s better to hold almost any asset than money, because assets hold their value and money doesn’t.
'We loot or we die of hunger': food shortages fuel unrest in Venezuela -Amid desperate food shortages Venezuelans are picking up new survival skills. On the night of 9 January, for example, a hungry mob took just 30 minutes to pick clean a grocery store in the eastern city of Puerto Ordaz. By the time owner Luis Felipe Anatael arrived at the bodega he’d opened five months earlier, the looters had hauled away everything from cold cuts to ketchup to the cash registers. Angry about empty supermarket shelves and soaring prices, some people are breaking into warehouses, ransacking food trucks and invading outlying farms. During the first 11 days of January the Venezuelan Observatory for Social Conflict, a Caracas rights group, recorded 107 episodes of looting and several deaths in 19 of Venezuela’s 23 states. There have been previous incidents of looting but analysts fear that the current wave could linger amid the Venezuela’s economic freefall. President Nicolás Maduro blames the country’s woes on an “economic war” against his government by rightwingers and foreign interests. But his critics say his government has disrupted domestic food production by expropriating farms and factories. Meanwhile, price controls designed to make food more widely available to poorer people have had the opposite effect: many prices have been set below the cost of production, forcing food producers out of business. Meanwhile the government has less cash to import food because of its mismanagement of the oil sector, where production has fallen to a 29-year low. Hyperinflation and the collapse of the currency have put the prices of foodstuffs available on the black market beyond the reach of many families. But rather than reforming the economy, the government has resorted to handouts and far-fetched schemes. A newly formed ministry of urban farming encourages people to grow tomatoes and raise chickens on their patios and rooftops.
Oxfam: Richest one percent banked 82 percent of wealth created in 2017 | DW | 22.01.2018: Oxfam's latest report on wealth inequality describes how a wealthy elite accumulates vast fortunes while the poorest go without. But the charity has been criticized as offering a too simplistic view of the imbalances.Oxfam on Monday detailed how the richest one percent grew its wealth by $762 billion (€620 billion) in 2017, which it says was enough to end poverty seven times over.In its annual report on wealth inequality, the UK-based poverty and disaster relief charity said a booming global economy had allowed a small elite group of rich families to grab 82 percent of the new wealth created last year, while the poorest 50 percent saw no increase in their prosperity.The "Reward Work, Not Wealth" report revealed that 2017 saw the biggest increase in the number of billionaires in history, at 2,043, and challenged the narrative that billionaires are created through talent, hard work and innovation, something that is claimed benefits humanity as a whole. Instead, Oxfam said there is growing evidence that the richest often grow much of their wealth by way of inheritance, monopoly or crony connections to government."The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system," said Winnie Byanyima, Executive Director of Oxfam International. "The people who make our clothes, assemble our phones and grow our food are being exploited to ensure a steady supply of cheap goods, and swell the profits of corporations and billionaire investors.”
Macron's Plea To Davos Billionaires: Share The Wealth When a socialist addressed the world's biggest gathering of billionaires and corporate titans, he had a simple, if predictable message: share the wealth. Emmanuel Macron, France’s 40-year-old president and considered by many Angela Merkel's successor as the new face of Europe, made his debut speech at the annual meeting of the World Economic Forum in Davos in front of a star-studded crowded, even by Davos’s standards, which included King Felipe of Spain, Christine Lagarde and Total CEO Patrick Pouyanne among those in the audience. Macron told them "it’s time for a new framework to rein in the excesses of global capitalism": invest, share and protect. But mostly share. “This framework should be based on cooperation and multilateralism,” Macron said quoted by Bloomberg. “This new framework is the unique way to protect our interests in the long run.” And yet, despite the superficial aura of the wealth redistribution narrative and speech, which was addressed as much to his audience in France as in Davos, the message had a hollow ring as France Macron's growing critics have already dubbed him “president of the rich” amid his push to cut back some protections for workers and lower taxes. Taking a not so veiled swipe at Trump's tax cuts and trade policy, and speaking in a mix of French and English "like Canada’s Justin Trudeau, with whom he shares both political views and style" Macron called on executives and officials to avoid a “race to the bottom” on taxes and trade standards, and instead to focus on the common good, social cohesion, health, education, climate and the fight against inequalities. Channeling the ghost of Karl Marx, Macron said there is a "crisis of capitalism" and warned that "the spoils are not being shared fairly."
Globalisation is losing its luster, India's Modi tells Davos summit (Reuters) - Indian Prime Minister Narendra Modi mounted a defense of globalization at the World Economic Forum on Tuesday, urging joint action on climate change and economic cooperation, in a speech some delegates took as a swipe at U.S. President Donald Trump’s America First agenda. Modi, making the forum’s first speech by an Indian head of state in more than two decades, did not mention Trump by name but he criticized the rise of protectionism in remarks delivered three days before the U.S. President will address the summit. “Instead of globalization, the power of protectionism is putting its head up,” Modi said, speaking in Hindi and causing an initial flurry in the audience of business and political leaders as people reached for their translation headsets. “Their wish is not only to save themselves from globalization, but to change the natural flow of globalization.” Modi is leading a big government and business delegation to the summit in the Swiss ski resort of Davos, aiming to showcase India as a fast-growing economic power and a potential driver of global growth. His opening address was a moment of personal triumph for the nationalist leader once shunned by the West for failing to prevent communal rioting in his home state. The occasion also recognized India’s growth as an economic and geopolitical power. Anindya Bakrie, chief executive of media company PT Bakrie Global Ventura, part of Indonesia’s Bakrie conglomerate, said Modi’s remarks were a welcome contrast to U.S. isolationism. “For developing countries, when we hear the U.S. talking about isolationism it’s a bit concerning. So to have more and more leaders talk about the benefits of globalization is really good,” Bakrie said. Arun Kumar, chairman and CEO of accounting firm KPMG in India, said: “He laid out where India stands in terms of his preference for a multi-polar and multicultural world.” Under his America First agenda, Trump has threatened to withdraw from the North American free-trade agreement, disavowed the global climate change accord and criticized global institutions including the United Nations and NATO. Modi’s speech echoed some of the points made by Chinese President Xi Jinping at last year’s Davos summit, but he failed to generate the same enthusiasm.
Davos 2018: Europe squares up to Trump administration in escalating currency war, as ECB chief slaps down Mnuchin - The President of the European Central Bank, Mario Draghi, has taken a sideswipe at the US Treasury Secretary, Steve Mnuchin, for endorsing a weaker dollar, emphasizing deep concerns among central bankers over the economically destabilizing impact of exchange rate swings.At the ECB’s regular conference Mr Draghi referred indirectly to the surprising comments at the World Economic Forum on Wednesday by Mr Mnuchin, who said “a weaker dollar is good for us as it relates to trade and opportunities.”These comments sent the dollar, which has been trending lower since early 2017, down still further. The dollar index, which measures the traded value of the greenback against a basket of other currencies, including sterling and the euro, hit a three-year low of 88.5.Mr Draghi complained to reporters in Frankfurt that although exchange rate movements were “a fact of nature” reflecting economic fundamentals some recent volatility was caused by “someone else” – a clear reference to Mr Mnuchin - whose “use of language...doesn’t reflect the terms of reference that have been agreed.”Mr Draghi cited an IMF communique from last year, signed by the US, which said: “We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes”.Asked directly by journalists whether the ECB Council had been concerned by the Treasury Secretary’s comments Mr Draghi answered in the affirmative. “Several members of the Council expressed concern, and this concern was also in a sense was broader than simply the exchange rate, it was about the overall status of international relations right now,” he said.
How Europe is bursting bitcoin’s bubble – Europe’s financial watchdogs are turning the screws on bitcoin and its cryptocurrency pals, helping to let the air out of a price boom that many economists warn is a bubble.Over the past year Europe’s financial regulators watched cautiously as bitcoin’s price soared nearly to $20,000, lifting other cryptos in its wake.But the grace period is coming to an end as Europeans join policymakers from around the world in warning about a possible bubble that could punish regular investors if it pops.The increased scrutiny coincides with a leveling of bitcoin’s price, quoted Friday at $11,841 (€9,652), down from a high of nearly $20,000 at the end of 2017, but still up from about $1,000 at the start of last year. French Finance Minister Bruno Le Maire is among the most vocal advocates for regulation.Paris wanted to “avoid the risks of speculation or possible financial traffics linked to bitcoin,” he said earlier this week, after appointing former central bank Deputy Governor Jean-Pierre Landau to lead an investigative mission on cryptocurrencies and how they might be regulated.In his efforts to tame bitcoin, Le Maire is getting plenty of backing from the European Commission. In December, Valdis Dombrovskis, the Commission vice president responsible for financial services, wrote to the EU’s three financial watchdogs urging them to warn investors about a possible bubble and puncture the hype surrounding cryptos.He also asked them to review the EU’s regulatory framework to see whether it is suitable for bitcoin, citing “clear risks for investors and consumers associated to price volatility.” On Wednesday, a spokesperson for the Commission said it is continuing to follow developments on cryptocurrencies “very closely.”
Germany Avoids New Elections As SPD Votes For Coalition Talks With Merkel's Bloc -- After 4 months without a government, Germany narrowly avoided new elections when on Sunday the country’s Social Democrats backed the start of formal coalition talks with Angela Merkel’s conservative bloc, a move that could end the country’s ongoing political deadlock and move embattled chancellor a step closer to a fourth term in office, or - if unsuccessful - result in the twilight of Merkel's political career. After four hours of debate, a modest majority of the 645 delegates at an extraordinary SPD conference voted in favor of the talks, with 362 voting in favor and 279 voting against. As the FT notes, the negotiations will be based on a preliminary deal struck earlier this month between SPD leaders and the chancellor’s CDU or Christian Democratic Union and its Bavarian sister party, the Christian Social Union. While the vote passed with a comfortable majority, the result was closer than predicted by party officials, an indication of the depth of the rift within the party. The reason: many SPD members blame its role as junior partner to Merkel for a string of recent poll defeats, and worry that another grand coalition will hurt the Social Democrats’ standing further. They have reason to be worried: according to the latest polls, the party has lost further support in recent weeks, with one survey released this week suggesting the Social Democrats would fall to 18.5% if elections were held now even as the populist AfD continues to gain popular support. As a reminder, the preliminary deal between the SPD and the CDU/CSU is set to transform Germany deeper into a "socialist paradise" with a promises to hike social spending, tax cuts for low-income earners and a sweeping change in Berlin’s approach to Europe. Meanwhile further bolstering German influence in European affairs, SPD leader Martin Schulz has put Europe at the front and centre of his pitch to the conference, insisting that a new government would usher in “historic political change [and] a new dawn for Europe”. Sunday’s vote marked a crucial moment in the tortuous four-month effort to establish a new German government, following September's inconclusive general election which saw a staggering drop in support for both Merkel's conservative block and the SPD.
Distrust and Anger: Inside Germany's Rocky Coalition Talks – SPIEGEL - Preliminary talks to form a new government in Berlin, following the collapse of a previous effort, underscore the degree to which the power of the leaders of Germany's main political parties has eroded. Angela Merkel's own weakness is more apparent than ever. On Dec. 20, four men and two women met at the Reichstag in Berlin, the building where Germany's parliament meets, for exploratory talks on the forming of a new government. It had been almost three months since the general election on Sept. 24, and after the first attempt to form a government failed in November, it was up to Merkel's Christian Democrats (CDU), their Bavarian sister party the Christian Social Union (CSU) and the SPD to try to agree on whether they should form another coalition together. German voters in September had made it clear that they had grown tired of the "grand coalition," but -- as German President Frank-Walter Steinmeier had continually reminded party leaders -- the country needed a government. As such, the mood among those present on Dec. 20 was not nearly as tranquil as the streets outside. One day before, Schulz had shifted blame to the CSU for the fact that official coalition talks with the aim of forming a new government between the conservatives and the SPD would not be able to begin until the second week of January. The Bavarians, Schulz noted, wanted to wait until after a meeting of CSU Bundestag delegates. The new head of the CSU caucus, Alexander Dobrindt, angrily demanded to know how Schulz could make such a claim? He said the CSU was ready at any time for negotiations. Schulz countered that Dobrindt had misunderstood him. In response, Merkel grabbed her mobile phone and read a news story with a quote from Schulz about the delay. Schulz looked at Merkel and Dobrindt and said, "People, that was not an attack on you. It was simply a statement of fact." It wasn't a good start to talks aimed at forming a new coalition government. And conversations with those involved in the talks reveal just how great is the distrust between the three parties involved and between their leaders. And it's not just a function of having grown tired of each other after governing in a coalition together for eight of the 12 years since 2005.
Germany: Angela Merkel′s conservatives and SPD open grand coalition talks | News | DW | 26.01.2018: Germany's two largest parties have formally launched talks to form a new government after September's elections. Party leaders were upbeat about the prospect of a grand coalition in the run-up to the talks. Formal coalition talks between German Chancellor Angela Merkel's Christian Democrats (CDU); their sister party, the Christian Social Union (CSU); and the center-left Social Democrats (SPD) started on Friday. Thetalks are aimed at forming what is commonly referred to as a grand coalition, which would bring together Germany's two largest parties to form a government. How we got here:
- Germany's general election last year witnessed the CDU garner the most votes, but fall short of a governing majority.
- The SPD said it would not form a government with the CDU/CSU after the elections, forcing Merkel to attempt a so-called Jamaica coalition with the Greens and the Free Democrats.
- Exploratory coalition talks with the Greens and FDP fell through in November, forcing Merkel's conservatives to pivot to their former coalition partners, the SPD.
- On Sunday, the SPD narrowly voted to go ahead with formal coalition talks despite a major push from the center-left party's youth wing to back out of a possible grand coalition.
Use of sand vests to calm children with ADHD sparks concern - German schools are increasingly asking unruly and hyperactive children to wear heavy sand-filled vests in an effort to calm them and keep them on their seats, despite the misgivings of some parents and psychiatrists. The controversial sand vests weigh between 1.2 and six kilograms (2.7 – 13Ib) and are being used by 200 schools across Germany. Advocates of the vests, which cost between €140 and €170(£124 – £150), say they have witnessed a remarkable change in behaviour in many of the children who have worn them, claiming the heavy vests help to curb children’s restlessness. A growing number of children are being diagnosed with attention deficit hyperactivity disorder (ADHD) each year in Germany, as elsewhere. Schools that use the vests argue they are an uncomplicated way of tackling the phenomenon head on, and a gentler and less complicated form of therapy than drugs such as Ritalin. “Children love to wear the vests and no one is forced into wearing one against their will,” claimed Gerhild de Wall, head of the inclusion unit at the Grumbrechtstrasse school in the Harburg district of Hamburg, which has been one of the sand vest pioneers. But critics say the vests are reminiscent of straitjackets used to constrain violent patients in psychiatric hospitals, and are in danger of stigmatising their wearers.
Catalan nationalists struggle to form government - Although the nationalists narrowly held on to their absolute majority in the Catalan parliament in the December 21 regional election, they have been unable to appoint a regional premier and form a new government. If a new premier is not invested before the January 31 deadline, a new election must take place. The crisis centres on the ban on five nationalist deputies being able to vote in the regional parliament—including former regional premier Carles Puigdemont, leader of Together for Catalonia (JxCat). The five fled to Belgium after the Catalan Parliament declared independence in October, fearing arrest after Popular Party (PP) Prime Minister Mariano Rajoy invoked Article 155 of the Constitution giving Madrid the power to directly administer regions. Sedition and rebellion charges led to the imprisonment of three deputies, including vice-premier Oriol Junqueras (Republican Left of Catalonia, ERC). Rajoy had hoped to install pro-Spanish unity parties in power on December 21, but it backfired. He has since threatened to extend the use of Article 155 if a new government resurrects the “independence process.” Although Catalan parliamentary regulations allowed the three imprisoned deputies to nominate proxies able to vote, lawyers say the same privilege cannot be extended to the five in exile without the Speaker’s committee changing the rules. As a result the nationalist bloc is reduced to 65, instead of 70, deputies in the 135 seat regional Parliament - three seat short of an absolute majority. Last week, the nationalists managed to get the ERC’s Roger Torrent elected as Speaker, a post with the power to decide who to propose for investiture as regional premier. However, he only obtained a simple majority on the second ballot - beating by just nine votes José María Espejo-Saavedra candidate of the right wing anti-independence Citizens party, which won the largest number of seats in the election.
Catalan separatists want Puigdemont home for parliament debate Politico - Madrid and Barcelona are on a collision course over the exiled pro-independence leader Carles Puigdemont, with Spain threatening to arrest him if he returns for an investiture debate next week in the regional parliament that would restore him to the post of Catalan president. The assembly’s pro-independence speaker, Roger Torrent, said Puigdemont must be allowed home for the vote. “There is only one candidate and this candidate seems to have a majority,” he told POLITICO after meeting Puigdemont in Brussels on Wednesday. But such an act would be in direct defiance of the Spanish government, which has imposed direct rule on Catalonia. Deputy Prime Minister Soraya Sáenz de Santamaría told reporters in Madrid on Thursday that Puigdemont “will be arrested when he enters Spanish territory.” Madrid says Torrent should choose another candidate for the investiture debate, which the speaker announced will happen on January 30. The deputy PM added that the government is looking into legal action against Torrent’s decision this week, just a few days after he was elected as speaker, to sign Puigdemont’s official nomination. Responding to Madrid’s comments, a spokesperson for the pro-independence alliance Junts per Catalunya said Puigdemont “has no limit on his civil rights. He has not even been judged.” Puigdemont himself said earlier this week he still “doesn’t rule out” going home for the vote.
Draghi’s Membership in Murky G30 Financial Group Under Fire - On Wednesday, ECB President Mario Draghi suffered the rare ignominy of being criticized in public by the EU’s Ombudsman, Emily O‘Reilly, whose job it is to arbitrate public complaints about EU institutions. The complaint against Draghi was that he had compromised his public role by regularly attending the Group of 30, a secretive club of corporate and central bankers.In her response to the complaint, O‘Reilly recommended that Draghi should suspend his membership of the group for the remaining duration of his term.“The implied closeness of the relationship through membership – particularly between a supervising bank and those it supervises – is not compatible with the independence obligation of an institution such as the ECB,” O’Reilly said.Previously called the Consultative Group on International Economic and Monetary Affairs, the Group of 30 (or G30) is a Washington DC-based private group whose members consist of central bank governors, private sector bankers and academics. Membership is by invitation only. Its current membership list reads like a Who’s Who of global finance. It includes current and former central bankers, many of whom now work or worked in the past for major financial corporations, such as:
- Mario Draghi (ECB, Bank of Italy, Goldman Sachs)
- Ben Bernanke (former Chairman of the Federal Reserve)
- William Dudley (New York Fed, Goldman Sachs)
- Timothy Geithner (Warburg Pincus, former US Treasury Secretary, New York Fed)
- Mark Carney (Bank of England, Bank of Canada, Goldman Sachs)
- Axel Weber (UBS, ECB, Bundesbank)
- Haruhiko Kuroda (Bank of Japan)
- Christian Noyer (Bank for International Settlements, Bank of France)
- Jaime Caruana (Bank for International Settlements)
- Agustín Carstens (Bank for International Settlements, former Chairman of Bank of Mexico)
It also includes senior representatives of financial corporations with subsidiaries supervised by the ECB, including: Gail Kelly (UBS), Tidjane Thiam (Crédit Suisse), E. Gerald Corrigan (Goldman Sachs), Jacob Frenkel (JP Morgan Chase, Bank of Israel) and Philipp Hildebrand (BlackRock, Former Chairman of the Governing Board, SNB). And it includes economists such as Lawrence Summers, Paul Krugman, and Kenneth Rogoff. While the group prides itself on being a well-intentioned forum for “deepen(ing) understanding of international economic and financial issues,” its abject lack of transparency makes it an ideal setting for the trading of insider information or favors.
Emmanuel Macron: French would 'probably' vote to leave EU - France would "probably" have voted to leave the EU if it had held an in/out referendum, according to the country's leader. Emmanuel Macron attributed the UK's decision to leave the EU to British voters' loss of faith in globalisation and unrestricted free markets.The French President suggested there is "always a risk" with votes such as Britain's 2016 referendum, when asking the public "just 'yes' or 'no' in a very complicated context".Asked whether a Leave or Remain vote in France could have ended with the same result, Mr Macron told the BBC's Andrew Marr Show: "Yes, probably. Probably in a similar context. But our context was very different so I don't want to take any bets."Mr Macron, as a committed supporter of European integration, added he would fight "very hard" to keep France in the EU if it were to hold a referendum on membership of the bloc.He added: "It's a mistake when you just ask 'yes' or 'no', when you don't ask people how to improve the situation and to explain how to improve it." Offering his interpretation of Britain's vote to leave the EU, Mr Macron said: "My understanding is that middle-classes and working-classes - and especially the oldest in your country - decided that the recent decades were not in their favour. "And that the adjustments made by both [the] EU and globalisation - for me it was a mix of both of them - was not in their favour. Also appearing on the show, Labour's shadow chancellor John McDonnell claimed he agreed with Mr Macron's assessment that Brexit was due to a sense that "neoliberalism has alienated people".
Emmanuel Macron confronts the UK with a hard truth: it is burning its bridges to Europe -- Teresa May's refusal to guarantee European citizens' rights, Boris Johnson's World War II comparisons and Philip Hammond's description of the EU as “the enemy” all squandered goodwill during the Brexit negotiations. But Johnson's proposal of a literal bridge to France has helpfully distracted from the hard truths delivered by Emmanuel Macron last night. At his press conference with Theresa May, the French president warned that while he wanted a new trade deal to “cover everything”, the UK could not expect “full access to the single market and to financial services”. Macron emphasised: “The choice is on the British side, not on my side. They can have no differentiated access to financial services. If you want access to the single market, including the financial services, be my guest [Macron slipped into English for the last three words]. But it means that you need to contribute to the budget and acknowledge European jurisdiction. Such are the rules and we know this is the system already in place for Norway.”Should the UK reject this model (as Theresa May consistently has done), it would have to settle for something “closer to the situation of Canada”. Macron continued: “We have some trade agreements which allow access to all services, be they financial or others, access as well to any industry sector, but not the same level of relationship as if you were a member of the single market. And there shall be no hypocrisy in this respect, otherwise it will not work. Or we would destroy the single market and its coherence.” Macron's message is not a new one. Indeed, Michel Barnier, the chief Brexit negotiator has consistently framed the UK's choice as one between Norway and Canada. The EU, as Macron emphasised, is not “punishing” Britain: it is merely upholding its rules. If you're not a member of the club, you can't expect access to the best facilities. Yet the UK continues to delude itself about the choice it faces. Rather than accepting the economic price it will pay (far from gaining £350m a week, Britain is forecast to lose nearly £300m a week), the government maintains, in defiance of evidence, that the EU will make multiple exceptions for it.
How Brexit puts the UK at risk of more collapses like Carillion -- The construction industry has always been characterised by uncertainty. Managing large construction projects involves enormous challenges, coming from the political, economic, social and technological environments involved. The bigger the project, the bigger the challenge. So, in many ways, the collapse of the UK’s second-largest construction company, Carillion, is not surprising. The National Audit Office, which scrutinises the UK government’s public spending, predicted that more than one-third of mega projects – the kind that the government outsources to Carillion – will fail in the years ahead. And yet the shape and speed of Carillion’s demise was still shocking – even to the many industry observers who were watching its poor performance over the past year. Not least because its rapid descent into liquidation, without first going into administration, put 40,000 jobs at risk overnight. Carillion’s demise shows the risks that are encountered in an industry that contributes £90 billion (6.9% of GDP) to the UK economy. Although it is still too early to know all the details of how and why it collapsed, it is an important reminder that the construction industry is characterised by risk, uncertainty and complexity on all levels. And something we should be mindful of is how Brexit will compound this. A quick glance at the performance of Carillion shows that it amassed risky contracts without being able to fulfil its commitments. This put it under mounting debts – its liabilities were in excess over its total value of assets – and precipitated its demise. Winning lucrative contracts is great, but contractors need to have a positive cash flow to pay the various instalments of implementing its contracts. In other words, contractors can win as many projects as they can, but they must be able to fulfil their outward payments at any given point of project implementation. When every contract comes with uncertainty, this is magnified when more projects are run at the same time. Managing projects in general means managing uncertainty that is divided into known uncertainty and unknown uncertainty. The ongoing Brexit talks add a new layer to these uncertainties. The UK is engaged in negotiations with the EU on its single market access, which will affect the free passage of people and goods with its biggest trade partner. EU imports equal 6% of production costs in the UK’s construction industry and 8% of the industry’s existing workforce is at risk if the UK does not retain access to the single market.
Theresa May's new Brexit strategy: jump first, argue later -- Tell us what you want, Britain’s European partners ask ever more plaintively. We need clarity, chorus the businesses at the sharp end of Brexit. Downing Street is silent. For good reason. Theresa May’s approach to Britain’s departure from the EU has become a strategy to avoid a strategy. The prime minister’s chosen road to Brexit is paved with fudge. Hard choices can wait. The only thing that counts is getting over the line by March 2019.Not so long ago, cabinet Brexiters were boasting that a comprehensive trade deal with the 27 EU nations would be wrapped up by the day before yesterday. Boris Johnson, the foreign secretary, scoffed at the notion that it would take two years to disentangle Britain’s affairs from those of its near neighbours. As reality began to impose itself there were what seemed reasonable hopes the government would raise its game. It might even develop a plan. Not a bit of it.Mrs May, it is obvious, has no organising vision of the shape of Britain’s post-Brexit relationship with its own continent. Yet she does have one overarching ambition. As things stand, history will remember her as an accidental prime minister who foolishly squandered a parliamentary majority in an election she had no need to call — the worst prime minister of modern times with the exception, of course, of her immediate predecessor, David Cameron. By her own lights, the way to change this narrative is to make sure Britain leaves the union next March; to demonstrate that she has honoured the decision of the 2016 referendum. Everything else — the nation’s prosperity and security or its standing in the world — is a second order question. The scope of a trade deal, arguments about a customs union and access to the single market, the role of the European Court of Justice, co-operation against terrorism — all these can be settled once Britain has cut its bonds with Brussels.
Trade insurers to pay out £31m after suppliers hit by Carillion collapse -- Insurers are expected to pay out £31m to suppliers hit by the collapse of construction and outsourcing giant Carillion. The figure from the Association of British Insurers (ABI) relates to claims on trade credit policies, which cover firms against the risk of not being paid for goods or services that they provide following a company going bust, or political upheaval. Carillion, which ran a host of public services as well as building roads and hospitals, went into liquidation last week under the weight of at least £2.2bn in debt and pension liabilities. The collapse of the company, which employed 20,000 people in the UK, left thousands of suppliers and subcontractors who were owed money in limbo. ABI assistant director Mark Shepherd said: "One insolvency can risk a domino effect to hundreds of firms in the supply chain." The figures came as engineering contractor Van Elle, which regularly carried out work for the business, said the collapse would have an impact on it and could affect its ability to achieve full-year profit expectations. It said it had pencilled in a £1.6m bad debt charge and identified £2.5m of anticipated revenue for the second half of its financial year related to its work with Carillion. Chief executive Jon Fenton said the company had had "constructive dialogue" with the official receiver handling Carillion's collapse, and Network Rail, over the contracts but while they may still be delivered in the current year, the "status and timing of specific programmes remains uncertain".
The improbable demanded by the unreasonable - A theme we often return to on this blog is how easy it is to read things wrong if you assume the actors are working rationally and with good information. This is something we are often guilty of. The process of blogging Brexit, therefore, is a process of understanding who thinks what and for what reason.We are, however, dealing with politicians who don't know the system, don't know its rules, and will never take measures to remedy this. It is for this reason we see politicians repeatedly asserting that things that are not possible are not impossible. Since the media has no institutional knowledge and the collective memory of a gerbil with ADHD it will uncritically repeat every utterance as though no events preceded it. Especially so should a story be convenient to the house narrative. This is how we find the media constructing its own parallel universe.What further complicates matters is when member states flatly contradict that which has been set out by M. Barnier. No doubt that member states will have influence but there are certain laws of Brexit physics which cannot be broken. All of this, though, is ignored by the media who are only too happy to acknowledge that UK ministers have no idea what they are doing, but somehow accept that foreign politicians are oracles on all matters from financial services to the inner workings of the EEA.This phenomenon will be especially familiar to anyone who has tried arguing the case for the EEA where europhile Norwegian politicians are repeatedly quoted despite them having precisely zero exposure to the Efta process. These such appeals to authority make it all but impossible to separate truth from fiction. We then have mixed signals from politicians like Corbyn who says that we must leave the single market but also must have "some sort of customs union". It is an absolute certainty that a man like Corbyn can not tell us the difference between either, meanwhile we have yet to see a legacy media journalist able to make an accurate distinction either. We are therefore left to wonder how anyone can make confident assertions about the public will.
Latest Tory Brexit Row: Another Bun Fight or a Cage Match? -Yves Smith - Are the Tories finally going to oust Theresa May? The Prime Minister has managed to hold on to power vastly longer than the pundits thought. She was first expected to be turfed out quickly as a result of her disastrous decision to call a snap election last year. Then conventional wisdom held that she’d be gone before Christmas. Without going over the fever chart of May’s perceived standing, two things have helped her stay in power are the lack of attractive alternative as party leader and the continued delusion over Brexit. On the hard core Brexit side, Boris Johnson is too famously erratic and disliked by too many to cinch enough support. Michael Gove seems always to be in the wings but his candidacy seems always to go off the rails before it even gets enough steam. Rees-Mogg is the darling of the ultras, but that is enough to give other people willies. And on the softer Brexit side of the Tories, there’s the (relatively) solid Philip Hammond, but the hard Brexit camp has enough control over the party than anyone who isn’t as rabid as they are is disqualified. Now at some point, there is going to be a political crisis in the UK. I am nowhere near familiar enough with UK politics to be able to sketch out what shape it might take. But one reason the bizarre denialism about Brexit isn’t simply that the Goverment isn’t remotely capable of handling the task, and has talked itself into believing that the EU will be super nice and come up with some sort of 11th hour procedural fudge that will spare the UK from doing heavy lifting and making real sacrifices. It is also that coming to grips with what kind of Brexit the UK wants means one wing of the Tory party will win and the other will lose. The ultras are bloody-minded enough that they might blow up the party, or at least turf May out, if they don’t get their way. Right now, they don’t seem to have the numbers. But will that change when the Brits can no longer ignore the biggest, ugly reality of Brexit: that they have little bargaining leverage and that the EU will not be moved by the UK throwing its toys out of the pram? If nothing else, the emotional pitch of the latest intra-party row seems more intense than earlier spats. The trigger was that Hammond, speaking at Davos, made the mistake of pumping for a version of Brexit that some readers have advocated, “Brexit in name only”. As Politico described it:The chancellor, Philip Hammond, long an advocate of a cautious retreat from the EU, gave his most explicit endorsement yet for a Brexit in which the U.K.-EU economic relationship would alter only “modestly.” “We are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively moving them, hopefully very modestly, apart,” he said.
Brexit: Britons favour second referendum by 16-point margin – poll - Voters support the idea of holding a second EU referendum by a 16-point margin, according to one of the largest nationwide opinion polls since the Brexit vote.The ICM survey, conducted as part of a Guardian reporting project, found 47% of people would favour having a final say on Brexit once the terms of the UK’s departure are known, while 34% oppose reopening the question. Excluding the roughly one-fifth who do not have a view gives a lead of 58% to 42% for a second referendum, showing rising interest in the idea as concern grows over the direction of recent negotiations. The increased backing has come from both sides of the debate, with one-quarter of leave voters in favour of having another referendum on the final deal. Other key findings include:
- Mounting concern about the impact of leaving, with 43% of voters worried Brexit will have a negative effect on the UK economy and a narrow majority believing it will have a negative impact on the “British way of life”.
- Signs that Labour voters may be becoming more open to a rethink, with 9% of the party’s leave backers switching to remain, and stronger support for a second referendum in marginal Labour seats than elsewhere.
- A hardening of the Brexit demographic divide, with young voters 17% more likely than before to support remain and over-65s more determined than ever to leave.
- A widening of the geographic gulf, with voters in Scotland even more likely to vote remain, but support for leave holding up in Wales and parts of England, such as the Midlands.
The consequences of revisiting the vote are hard to predict, with the country still split largely in two, and signs of both camps hardening their positions.
Only three out of 160 social housing towers reclad after Grenfell fire -- Only three of the 160 social housing towers identified as dangerous after the Grenfell Tower fire are known to have been reclad with safer materials, leaving tens of thousands of people still living in “fire hazards”.Seven months after the fire that killed 71 people in west London, the number of council and private blocks over 18 metres high across England found to be wrapped in similar combustible plastic-filled cladding has risen to 312, figures released by the Ministry of Housing, Communities and Local Government revealed. Almost all of those – 299 – are likely to be in breach of building regulations on fire safety. Officials predict the numbers will continue to rise.Just over 100 towers that are home to people who rent from councils and registered social landlords have not had any combustible cladding removed despite panels failing tests. Cladding has been removed from 17 buildings, while the process of recladding has started on a further nine. The government said that it only knows of three that have been fully reclad, but said there may be more.The pace of the response was attacked by Labour as “simply not good enough” and emerged amid disputes between councils and the government over who should pay.Camden, which has stripped the cladding and insulation from five towers and has estimated the replacement cost to be £50m, is seeking government support. The works will not be completed until summer 2019, the north London council has estimated. Temperatures inside the flats of blocks being worked on have dropped because of a lack of insulation. The council has promised to pay tenants extra heating bills. In Salford, where nine council housing towers had their cladding condemned, not all of the material has been removed. The council has previously demanded the government contribute to the cost. “More than seven months after the Grenfell Tower fire, it should shame ministers that only three blocks with dangerous cladding have had it replaced,” said John Healey, the shadow housing secretary.
The many problems with a market for higher education - In April this year, the Office for Students will become the “regulator and competition authority” for the English higher education sector. The establishment of this authority, complete with its own “chief executive”, captures perfectly the transition of the country’s university sector, where income from tuition fees has gradually supplanted direct government funding over the last few decades.This process of government-encouraged marketisation — one of those rare instances where Latinate jargon is actually instructive — naturally leads to a conception of the student as a customer or consumer.It has therefore generated high levels of competition between universities, which encourages them to do new things, like improve their accommodation, advertise on YouTube, or issue hundreds of millions of pounds of debt in international capital markets.So what kind of a “market” are we dealing with here? Enter: the National Audit Office, which in December produced a report on the matter. It pointed out that the average student debt for a three-year degree is £50,000 – a “legal financial liability”. The independent body, which is funded by Parliament, also revisited the theme this week in a blog, which argued that students “don’t have the same protections at the point of sale as some other services”.Because students are paying for tuition through government loans, which are repaid through an effective marginal tax rate on their future earnings, they are unlikely to discriminate between prices in the way that consumers typically do. It is likely for this reason that most institutions have been able to find “customers” at the same price point — pretty much everyone charges the £9,000 a year maximum (87 out of 90 in 2016 in England, according to the Institute for Fiscal Studies). Arguably, a prominent institution which charged less would suffer a competitive disadvantage, by potentially identifying itself as of a lower calibre than any other institution in the eyes of prospective students.
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