Fed’s QE Unwind Accelerates Sharply - Wolf Richter - The Fed’s balance sheet for the week ending January 31, released this afternoon, completes the fourth month of QE-unwind. And it’s starting to be a doozie.This “balance sheet normalization” impacts two types of assets: Treasury securities and mortgage backed securities (MBS) that the Fed acquired during the years of QE and maintained afterwards.The Fed’s plan, as announced in September, is to shrink the balances of Treasuries and MBS by up to $10 billion per month in October, November, and December 2017, then to accelerate the pace every three months. In January, February, and March 2018, the unwind would be capped at $20 billion a month; in Q2, at $30 billion a month; in Q3, at $40 billion a month; and starting in Q4, at $50 billion a month.According to this plan, balances of Treasuries and MBS will shrink by $420 billion in 2018, by an additional $600 billion in 2019, and by an additional $600 billion every year going forward until the Fed deems the level of its holdings “normal.” Whatever this level may turn out to be, it will be much higher than the level suggested by the growth trajectory before the Financial Crisis.For January, the plan called for shedding up to $20 billion: $12 billion in Treasuries and $8 billion in MBS.On its December 27 balance sheet, the Fed had $2,454 billion of Treasuries. By January 31, it had $2,436 billion: a drop of $18 billion in one month!This exceeds the planned drop of $12 billion for January. But hey, over the holidays, most folks at the New York Fed, which does the balance sheet operations, were probably off and not much happened. And so this may have been a catch-up action, with a sense of urgency. In total, since the beginning of the QE Unwind, the balance of Treasuries has plunged by $30 billion, to hit the lowest since August 27, 2014. This part of the QE Unwind is happening:
Shrinkage & The Fed's Balance Sheet Promises - Remember all the hullabaloo back in September about the Federal Reserve’s decision to shrink their balance sheet? Believe it or not, it was somewhat of a big deal and many strategists were warning about the lack of support for risk markets from this action. Here is the actual announcement from the FOMC’s press release:Effective in October 2017, the Committee directs the Desk to roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during each calendar month that exceeds $6 billion, and to reinvest in agency mortgage-backed securities the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $4 billion. Small deviations from these amounts for operational reasons are acceptable.At the time I wasn’t too fussed about the action as reducing a $4.4 trillion balance sheet by $10 billion a month didn’t seem all that important.But $10 billion is just a start. The Fed’s goal is to eventually reach $50 billion a month, with the program ending in 2020 having hopefully shrunk the balance sheet to $3 trillion. Now as Jim Bianco likes to remind his readers, no modern economy has successfully retracted their quantitative easing program and significantly reduced their balance sheet, so if the Fed actually follows through with their plan, it will be a first.There’s all sort of hope that both the ECB and the BoJ, will also reduce their balance sheet expansion in the coming quarters. So on a net basis, global Central Banks will go from stimulating through net quantitative easing, to quantitative tightening.Here is a chart from BofA Merrill Lynch that predicts G4 Central Bank balance sheet expansion will peak in the 1st quarter of 2018 and then gradually shrink.
Fed Stands Pat, But More Rate Hikes Are On The Way, by Tim Duy - As anticipated, the Fed left rates unchanged at the conclusion of yesterday’s FOMC meeting. The statement was little changed but the handful of revisions point to continuing rate hikes. The Fed remains on track for three 25bp rate hikes in 2018. For the most part, the turnover at the Fed combined with ongoing solid data has left the remaining doves sidelined. The low inflation warnings of last year were largely a head fake as the Fed was always positioned to continue raising rates as long as there looked to be continuing downward pressure on unemployment.The FOMC statement was largely unchanged compared to December. The Fed dropped the hurricane references as they were no longer relevant for the outlook. The Fed revealed additional confidence in the inflation outlook by dropping the reference to low near-term inflation in place of an expectation that inflation will rise this year. The firming of recent inflation numbers likely influenced this change although it was evident in the Fed’s forecast from December.Risks remain roughly balanced; they did not delete the “roughly.” They are still watching inflation developments, but note that this can cut both ways. Last year it arguably reflected the influence of doves worried about low inflation. Now it could be interpreted as the influence of hawks worried about high inflation. In either case, the Fed remains data dependent. More curious was the addition of the word “further.” As in: The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. It would be nice to have had a press conference to see if there was any significance to this change. In my view, the reason for this change was to dissuade anyone from thinking the Fed was done hiking rates. Arguably then you can say this statement is more consistent with the message of the SEP than the last statement. The message of the December SEP was that inflation will climb in 2018 and so too will rates. The December statement was arguably a bit mushy on both points. The January statement thus clarifies the likely path of policy. So maybe we should read the January statement as an effort to make the statement more consistent with the forecast? And that this was easier to accomplish with some of the more dovish voices rotating off as voting members? Something to get some clarity on in the coming weeks. Oh, the FOMC also selected incoming Federal Reserve Chair Jerome Powell to be the chair of the FOMC. But you kind of saw that coming.
FOMC Statement: No Change in Policy - FOMC Statement:Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to move up this year and to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
Real-Time Estimates of Potential GDP: Should the Fed Really Be Hitting the Brakes? - Summary: The most recent releases of Gross Domestic Product (GDP) imply that the current level of U.S. output is almost equal to the Congressional Budget Office’s (CBO’s) estimate of the “potential level of GDP,” a measure of how much the U.S. economy could produce if its resources were fully and efficiently utilized. The World Bank further estimates that this closing of the output gap has occurred not just in the U.S. but across most advanced economies (World Bank 2018). Ten years after the onset of the Great Recession, according to this view, the economy has finally returned to its potential level and economic policy instruments should be gradually returned to normal levels, a process the Federal Reserve is now implementing. in this brief, based on our earlier research, we challenge this conclusion. According to our analysis, CBO’s and other similar estimates of potential output are too pessimistic, and as such, they encourage policymakers, such as those at the Federal Reserve, to accept lower levels of potential than those which could be achieved. This pessimistic view and associated policies could be extremely costly to U.S. households. Our findings include: In deriving potential GDP, current methods used by key agencies tend to under-respond to the shocks they should respond to and over-respond to the shocks that they should not respond to. Most recently, this has led to some frequently used estimates of potential GDP that are as much as $1.2 trillion, or nearly $10,000 per household, below our preferred estimate. Methods that do not feature the under-/over-responsiveness problem we document imply that more active stimulus on the part of the Federal Reserve is warranted to enable actual GDP to finally catch up to potential. The benefits of this policy shift would include significantly greater household incomes and higher employment levels than those engendered by the current policy stance.
PCE Price Index: December Headline & Core -- The BEA's Personal Income and Outlays report for December was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.11% month-over-month (MoM) and is up 1.70% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.18% MoM and 1.52% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made to figures for September through November. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016 with a decline in 2017. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.
At Davos, high spirits belie deepening sense of systemic unease - “America is roaring back,” President Trump said in a speech before world leaders and titans of business and banking, as he touted his tax cut and efforts to slash regulatory red tape, along with the booming stock market and strong employment figures. Yet he was far from the only one offering up big doses of confidence. Executives from Bank of America’s Brian Moynihan to Blackstone’s Steve Schwarzman hyped the idea of more global companies investing in the U.S. over the next year in the wake of the $1.5 trillion tax plan that passed Congress last month. “I think it's possible you're going to hit 4% [growth] sometime this year,” JPMorgan Chase CEO Jamie Dimon — who is hardly a Trump fan — told CNBC earlier this week. “I promise you, we are going to be sitting here in a year and you all will be worrying about inflation and wages going up too high.” But still there’s a problem that’s been nagging some: gravity. What goes up must come down — the iron law of physics that seems to hold for the markets and the broader economy, too. And with the financial crisis a mere 10 years in the rearview, the line between abandoning worry and irrational exuberance can seem awfully thin. Indeed, references to the crisis, both explicit and more veiled, seemed to wind their way around coverage of the events this week, punctuating the clinking of champagne glasses and boastful projections of the boom times ahead. “It does feel to me a little bit like 2006,” Jes Staley, chief executive of Barclays, said in The Wall Street Journal on Friday. “ ‘Maybe we’ve solved the riddle of economic cycles’ — that’s what we were all saying. We really got that wrong.” Scott Minerd, chief investment officer at Guggenheim Partners, went so far as to call Davos a “valuable contra-indicator” for investors in a note this week. “Optimism about global growth is disturbingly high at Davos. While I am of the opinion that the global economy is gaining momentum, I always find it discomforting when virtually everybody shares the same opinion,” he told Reuters on Tuesday. “My fear is that that economic optimism is spilling over into global equities, which will lead to a mania in stocks.” At the same time, Carlyle Group co-founder David Rubenstein warned on a forum panel that, oftentimes, “something wrong happens” when people are this optimistic.
Atlanta Fed estimate of GDP growth tops 5%, doubling consensus -- How fast is the U.S. economy growing? Most estimates say that, for the first quarter, growth is in the region of about 2.6%. But the Atlanta Fed’s GDPNow model says that first-quarter growth may be an eye-popping 5.4%. Growth that fast would be the strongest since the third quarter of 2003. The U.S. did grow 5.2% in the third quarter of 2014. It’s important to state how the Atlanta Fed’s model works. It takes newly released data — like the ISM manufacturing survey and construction spending data released Thursday — and uses that data to then project growth, based on historical correlations. The New York Fed’s model, which was updated last week, calls for first-quarter growth of 3.1%, which would represent at acceleration from the fourth quarter but at a far more muted rate than the estimate from the Atlanta Fed.
Atlanta Fed Sees Q1 GDP Soaring to 5.4% | Zero Hedge - The first estimate of Q4 GDP may have been a dud, with soaring imports resulting in a disappointing 2.6% annualized print, but that hasn't stopped the Atlanta Fed to unveil its most bullish GDP forecast in years: moments ago, the regional Fed revised its initial Q1 GDP nowcast estimate from 4.2% to a whopping 5.4% following today's strong ISM print. This would be the highest GDP forecast by the Atlanta Fed going back to Q1 2012: This is how the Fed justified its euphoria economic outlook: The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 5.4 percent on February 1, up from 4.2 percent on January 29. The forecast of real consumer spending growth increased from 3.1 percent to 4.0 percent after this morning's Manufacturing ISM Report On Business from the Institute for Supply Management, while the forecast of real private fixed-investment growth increased from 5.2 percent to 9.2 percent after the ISM report and this morning's construction spending release from the U.S. Census Bureau. The model's estimate of the dynamic factor for January—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.42 to 1.37 after the ISM report. Then again, the Atlanta Fed is best known for its initial high-balling of GDP estimates which then gradually fade as the quarter progresses and as real data replaces estimates from sentiment surveys such as the ISM. Finally, keep in mind that the blistering Q1 2012 GDP, which was also supposed to print north of 5% was eventually marked down to just 0.8%.
Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade? Maybe yes.In Davos some days ago Treasury Secretary Mnuchin declared that a lower valued dollar would lead to a lower US trade deficit. The dollar promptly fell several percents and various persons and many observers reacted in horror, most prominently former TreasSec Larry Summers. He did no actually dispute Mnuchin’s claim factually, rather he asserted that people holding that position as he did should follow a strong dollar policy and talk it up, that a lower dollar raises prices of imports (true) and that advocating it is just plain irresponsible, even though his predecessor, Lloyd Bentsen, in the Clinton administration also talked down the dollar at one point as a job-increasing policy. Dean Baker at Beat the Press responded to all this with two days worth of posts defending the factual basis of Mnuchin’s claim against his critics (some of whom did not dispute his facts but rather argued the policy was unwise for other reasons). He argued that indeed lower values of the currency leads to lower trade deficits, noting experience in the 1980s especially when a strong dollar led to a soaring o the US trade deficit that fed into a sharp decline in manufacturing employment in the US Rust Belt, with the deficit declining as the dollar fell after the 1985 Plaza Accord. He pointed out that a lower dollar lowers the price of US exports abroad, which tends to increase the quantity of exports, and raise the price of imports in the US (as Summers noted), which tends to decrease the quantity of imports. All of this is indeed true, even if the size of those changes may vary a lot. Over on Facebook Max Sawicky reposted Dean’s claims, which led the estimable data wonk and socialist critic of Wall Street, Doug Henwood, to demand of Dean to specify exactly how much exports would increase by country and by sector. I gave Doug a hard time about him giving Dean such a hard time about this, which led Doug and some others to get vigorously on my case. So, I think it might be worth laying out in more detail what is likely to be true in all this, given that it seems that a lot of people have taken to spouting hyperbolic nonsense about it.
Mnuchin: "I Absolutely Support A Strong Dollar Over The Longer Term" - Here we go again.A week after Treasury Secretary Steven Mnuchin unleashed FX vol chaos when he said in Davos that "a weaker dollar is good for us as it relates to trade and opportunities", which spread to the bond market and most recently to stocks, Mnuchin was on the tape again moments ago, and during a hearing at the Senate Banking Committee in DC., the former Goldmanite said that he "absolutely supports a strong dollar over the long term", adding that "I strongly support we have a free currency market that we don’t intervene in."As for the key issue, namely day to day fluctuations in the USD, Mnuchin said that the short-term level of dollar "is not a concern."Mnuchin also said that his comments on dollar in Davos "were blown out of proportion by media" and were in no way “intended to talk down dollar."In response, there was a modest knee jerk reaction higher in USD with USDJPY rising above 108.80 briefly, and the BBDXY bouncing but it has been a controlled reaction as the market has learned to ignore the Mnuchin "noise."Finally, discussing the upcoming federal debt-ceiling negotiation, Mnuchin says "we are very open to bipartisan solutions to figure out something as an alternative to the current system, which I think many of us would agree doesn’t work very well." Good luck with that, especially if the government is shut down in the weeks leading into the debt ceiling X-Date, after which the US government will be officially in technical default.
Um, Is the US Treasury “Yield Curve” Steepening or Flattening? -- In this cycle, the Fed has hiked its target range for the federal funds rate only after meetings that were followed by a press conference. There are four of them scheduled this year – the first one on March 14-15. So, next time the Fed may nudge up its target range (currently 1.25%-1.50%) is 6 weeks away.The one-month yield of US Treasury securities has vacillated around 1.25% since the last rate hike in December, closing on Friday at 1.24%. The three-month yield has vacillated above 1.4% for a month, closing on Friday at 1.41%. So this end of the curve is waiting till the propitious decision on March 15 gets closer: About $14.8 trillion of the US government’s $20.5 trillion in debt is publicly traded (the remaining $5.7 trillion is held by internal accounts of the US government, such as Social Security). This makes the Treasury market the most liquid bond market in the world, and its benchmark yields underpin a number of other markets, including the mortgage market. And unlike Treasuries with shorter maturities, Treasuries with longer maturities have moved in recent weeks, with prices falling and yields rising.The two-year yield jumped 5 basis points to 2.13% on Friday, the highest since September 2008, continuing the spike that started on September 8, 2017, shortly before the Fed announced the QE Unwind start-date: The whole mid-range of the yield curve has moved up. The five-year yield jumped 6 basis points to 2.47% on Friday. The seven-year yield rose 5 basis points to 2.60%, up from 2.33% at the end of December.The chart below shows the “yield curves” as they occurred on these four dates:
- Yields on Friday, January 26, 2018 (red line)
- Yields on December 29, 2017 (black line)
- Yields on August 29, 2017 (green line) two weeks before the QE unwind was detailed.
- Yields on December 14, 2016 (blue line) when the Fed stopped flip-flopping, raised its rates, and became a clockwork.
Note how the gap has widened in the middle from the green line (August 2017) to the black line (December 29, 2017), and further to the red line (January 26, 2018) – in other words, how the curve has steepened recently from the one-month yield up through the seven-year yield: The spread between the one-month yield and the five-year yield on Friday was 1.23 percentage points, the widest since March 20, 2017. And the spread between the one-month yield and the seven-year yield was 1.36 percentage points, the widest since May 22, 2017.
Treasury expects to borrow $441 billion in first quarter - The U.S. Treasury expects to borrow $441 billion in the first quarter, $71 billion lower than previously estimated, according to a statement Monday. The new forecast includes an end-of-quarter cash balance of $210 billion. Analysts said debt ceiling constraints and the uncertain cash flow impact of the tax bill may make it difficult for the government to project borrowing. Experts say the government will hit the debt ceiling in early March unless Congress acts to allow borrowing. During the second quarter, Treasury said it expects to borrow $176 billion in net marketable debt with cash balance of $360 billion. During the October-December quarter, Treasury borrowed $282 billion in net marketable debt and ended with a cash balance of $229 billion. The government had estimated borrowing of $275 billion for the quarter.
U.S. budget deficit to top $1-trillion in 2019: budget experts - (Reuters) - As the U.S. Congress limps toward the likely passage next week of another stopgap spending bill to avert a government shutdown, a Washington think tank has estimated the federal budget deficit is on track to blow through $1 trillion in 2019. If it does, it would be the first time since 2012 the U.S. economy will have to support a deficit so large, highlighting a basic shift for the Republican Party, which has traditionally prided itself on fiscal conservatism. The Committee for a Responsible Federal Budget, a Washington fiscal watchdog, said the red ink may rise in fiscal 2019 to $1.12 trillion. If current policies continue, it said, the deficit could top a record-setting $2 trillion by 2027. The committee had previously projected the deficit - the difference between the government spending and its annual tax revenue - would reach $983 billion in fiscal 2019. That estimate came after Congress in December passed a tax overhaul that will add about $1.5 trillion to the national debt over a decade. But that estimate was made obsolete by a shutdown-averting stopgap funding bill Congress approved earlier this month. It delayed the implementation of some healthcare taxes, further reducing the government’s projected tax revenues. Congress in coming days is expected to weigh another stopgap funding bill, needed by Feb. 8. Lawmakers also want to pass disaster relief funding, and they are pursuing an agreement to lift budget caps on spending. Stan Collender, a longtime budget expert, predicted in October that trillion-dollar deficits would become “the new normal” under President Donald Trump. Trump and fellow Republicans control the White House and both chambers of Congress. There were four consecutive $1-trillion deficits under former President Barack Obama. But they resulted from a historic financial crisis, a recession and stimulative spending. “During the Trump years, the deficits are occurring mostly because of legislative changes, like the tax cut,” Collender said. In June 2017, before the tax overhaul was enacted, the nonpartisan Congressional Budget Office, Congress’ official scorekeeper, predicted the U.S. government would hit a trillion-dollar deficit in fiscal 2022. An updated CBO report would typically be released around now, but the office said last week that the update would be delayed, partly because of the need to produce projections that reflect the recently enacted tax legislation.
The G.O.P. Tax Cut Is Draining the Treasury Even Faster Than Expected - One of the many things confirmed by the great tax-bill melodrama of 2017 is that Republicans only pretend to care about “fiscal responsibility” when Democrats are in power and tax cuts aren’t on the line. With the opportunity to slash the corporate rate nearly in half, cries of “I won’t endorse a bill that adds one penny to the deficit!” evaporated, and tacking on $1.5 trillion became no big deal. Tax cuts, we will soon be reminded, don’t grow on trees, and the social safety net must be pared back in exchange. For now, though, Republicans are still in the trickle-down honeymoon phase, seeing in every corporate press release more confirmation that America has been made great again. Which makes it somewhat ironic that the Treasury is now burning through its cash reserves at an even more spectacular rate. According to the nonpartisan Congressional Budget Office, the federal government will run out of money even sooner than expected, thanks to the new tax legislation, which is estimated to lead to a fall in revenue of $136 billion in 2018. A default on debts had originally been forecasted for late March or early April. But now, because of the new withholding tables, “withheld receipts are expected to be less than the amounts paid in the comparable period last year.” That, combined with the fact that the Treasury generally issues a high number of tax refunds in February and March, means that the $272 billion in cash the Department had on hand as of Tuesday will quickly dwindle. If the debt ceiling isn’t increased by the first half of March, the C.B.O. cautioned on Wednesday, “the government would be unable to pay its obligations fully,” and would be forced to delay payments, default on its debts, or both. Treasury markets are already skittish at the prospect, according to Bloomberg, and the matter may prove contentious in Congress, which is already grappling with an immigration stalemate and another government shutdown vote on February 8. A proposal to raise the debt ceiling may repel G.O.P. deficit hawks, who in the past have pushed for spending cuts before allowing a vote. And Democrats may be equally hesitant to support the measure, particularly if there’s been zero progress on the immigration front.
Only Trump can restore America's ability to win a nuclear war | TheHill: When the Cold War ended in 1991, America made an unwise decision. No enemies were in sight, so our leaders — with the strong concurrence of the American people — decided it was safe to dismantle much of the superb nuclear weapons capability that had won that half-century of poised armageddon. Ongoing nuclear programs were stopped. Budgets were cut. New nuclear capabilities were prohibited by law. A presidential moratorium denied underground nuclear testing. No research into advanced nuclear technology was allowed. Essentially, America went into an unannounced a nuclear freeze, and we have progressively increased its restrictions and denials for a quarter-century. As a result we have lost most of our essential nuclear weapons capabilities. All of our nuclear weapons are far beyond the end of their design lives. Not one has been tested for over 25 years to make sure they still work. Designed for the nuclear threat of a past century, our much-reduced nuclear stockpile is unable to deter most of the nuclear threats we face today. But that’s only the beginning. The nuclear weapons world is a world of science! And science has been e has been the principal target of the cutbacks and rejections.Mankind’s immense technological advances in the last few centuries have resulted from application of the “scientific method,” which focuses upon experimentation and testing. If you deny testing, you deny science, and if you deny science, you deny progress. Our leaders — following the mistaken idea that nuclear weapons are evil — wished to deny their progress; thus their top-priority goal has been to prevent nuclear weapons testing.
Kissinger Warns "Pre-Emptive Attack" Against North Korea "Is Strong" Possibility - Former Secretary of State Henry Kissinger has said that he agrees with the aggressive statements President Trump has made towards North Korea. The former Secretary of State said that the Trump Administration “will hit that fork in the road, and the temptation to deal with it with a pre-emptive attack” against North Korea “is strong, and the argument is rational.” PJ Media reports…The Trump administration has signaled that North Korea would be crossing a red line if it developed nuclear capability for its intercontinental ballistic missile program. Yet some policy officials and military experts claim that North Korea has already crossed that line, or is at least very close to attaching nuclear warheads to its missiles.Kissinger offered his thoughts on the impending “fork in the road,” in which the administration may consider pre-emptive military action or increasingly tighter sanctions against the regime. “We will hit that fork in the road, and the temptation to deal with it with a pre-emptive attack is strong, and the argument is rational, but I have seen no public statement by any leading official,” Nixon’s secretary of State told members of the Senate Armed Services Committee. “But in any event, my own thinking, I would be very concerned by any unilateral American war at the borders of China and Russia, in which we are not supported by a significant part of the world, or at least of the Asian world.”The current North Korean trajectory, Kissinger continued, could lead to nuclear proliferation throughout Asia, as he believes South Korea will not accept being the only Korea without nuclear capability. Japan will follow suit, he said. “Then we’re living in a new world, in which technically competent countries with adequate command structures are possessing nuclear weapons in an area where there are considerable national disagreements,” Kissinger said. “That is a new world that will require new thinking by us.” This would drive a rethinking of the entire U.S. nuclear deterrent posture, Kissinger said, as the current strategy assumes only one potential nuclear threat. One little country in North Korea does not pose such an extreme threat, Kissinger said, but the situation has the potential to evolve into a nuclear landscape the world has never seen.
Trump administration presses for more options for war on North Korea -- More ominous signs are emerging that the Trump administration is in the advanced stages of preparing a pre-emptive military attack on North Korea that has the potential to trigger a catastrophic war in North East Asia and the world.A lengthy New York Times article on Thursday revealed that the Pentagon is under intense pressure from the White House to provide Trump with options for a limited military strike on North Korea—a “bloody nose” scenario designed to frighten the North Korean regime into giving up its nuclear arsenal.During last year, Trump repeated his bellicose threats to rain “fire and fury” and “totally destroy” North Korea if it did not capitulate to US demands to denuclearise. Citing unnamed American officials, the New York Times reported: “The national security adviser, Lt. Gen. H.R. McMaster, believes that for Mr Trump’s warnings to North Korea to be credible, the United States must have well-developed military plans.”The article continued: “But the Pentagon, they say, is worried that the White House is moving too hastily towards military action on the Korean Peninsula that could escalate catastrophically. Giving the president too many options, the officials said, could increase the odds that he will act.” Spokesmen for Defence Secretary James Mattis and Joint Chiefs of Staff chairman General Joseph Dunford both denied that the Pentagon was dragging its feet. But tactical differences within the White House over a pre-emptive US military attack on North Korea have been evident for months.
Trump Revises Nuclear Posture Toward Russia: Conventional Attack Could Prompt Nuclear Response - The Trump administration will continue much of the Obama administration's nuclear weapons policy - with the addition of a much more aggressive stance towards Russia, according to the results of a year-long, 74-page "Nuclear Posture Review" (NPR) conducted by the Department of Defense. The administration's view is that Russian policies and actions are fraught with potential for miscalculation leading to an uncontrolled escalation of conflict in Europe. It specifically points to a Russian doctrine known as "escalate to de-escalate," in which Moscow would use or threaten to use smaller-yield nuclear weapons in a limited, conventional conflict in Europe in the belief that doing so would compel the U.S. and NATO to back down, according to AP. "Recent Russian statements on this evolving nuclear weapons doctrine appear to lower the threshold for Moscow's first-use of nuclear weapons," reads the report. Of note, "Russia" is mentioned 14 times in the document. The United States and Russia have in the past maintained strategic dialogues to manage nuclear competition and nuclear risks. Given Russian actions, including its occupation of Crimea, this constructive engagement has declined substantially. We look forward to conditions that would once again allow for transparent and constructive engagement with Russia....this review candidly addresses the challenges posed by Russian, Chinese, and other states strategic policies, programs, and capabilities, particularly nuclear.In order to address Moscow's more liberal policy on the use of nukes, the Trump administration has two solutions; 1) modify a "small number" of existing ICBMs carried by Trident strategic submarines with smaller-yield nuclear warheads, and 2) "in the longer term," develop a nuclear-armed sea-launched cruise missile - a weapon that existed during the Cold War but was retired in 2011 by the Obama administration. The rest of the Nuclear Posture Review falls mostly in line with the previous administration's stance, and does not call for any net increase in strategic nuclear weapons.
Washington Widens the War in Syria by Provoking Turkey - The Trump administration has drawn Turkey deeper into the Syrian conflict by announcing a policy that threatens Turkey’s national security. Washington’s gaffe has pitted one NATO ally against the other while undermining hopes for a speedy end to the seven year-long war.Here’s what’s going on: On January 18, US Secretary of State Rex Tillerson announced the creation of a 30,000-man Border Security Force (BSF) to occupy East Syria. Two days later, January 20, the Turkish Army launched a ground and air offensive against Kurdish troops in the Afrin canton in Northwest Syria.The media has tried to downplay the connection between the two events, but the cause-and-effect relationship is pretty clear. Tillerson’s provocation triggered the Turkish invasion and another bloody phase to the needlessly-protracted conflict. Washington’s screwup has made a bad situation even worse. A five-year-old child could have figured out that Turkey wasn’t going to sit-back and let the US establish a Kurdish state on its border without putting up a fight. Keep in mind, the US plans to defend this new protectorate with a 30,000-man proxy-army comprised of mostly Kurdish fighters from the People’s Protection Units or YPG. The Turks, however, believe the YPG is connected to the terror-listed PKK which has prosecuted a scorched earth campaign against the Turkish state for decades. That’s why Turkish President Recep Tayyip Erdogan will not allow these groups to dig in along Turkey’s southern border, they constitute a serious threat to Turkey’s security. Just imagine if Hezbollah decided to set up military encampments along the Mexican border. How long do you think it would take before Trump blew those camps to kingdom come? Not long, I’d wager.
In Afghanistan’s Unwinnable War, What’s the Best Loss to Hope For? - After 16 years of war in Afghanistan, experts have stopped asking what victory looks like and are beginning to consider the spectrum of possible defeats.All options involve acknowledging the war as failed, American aims as largely unachievable and Afghanistan’s future as only partly salvageable. Their advocates see glimmers of hope barely worth the stomach-turning trade-offs and slim odds of success.“I don’t think there is any serious analyst of the situation in Afghanistan who believes that the war is winnable,” Laurel Miller, a political scientist at the RAND Corporation, said in a podcast last summer, after leaving her State Department stint as acting special representative for Afghanistan and Pakistan.This may be why, even after thousands have died and over $100 billion has been spent, even after the past two weeks of shocking bloodshed in Kabul, few expect the United States to try anything other than the status quo.It is a strategy, as Ms. Miller described it, to “prevent the defeat of the Afghan government and prevent military victory by the Taliban” for as long as possible.Though far from the most promising option, it is the least humiliating. But sooner or later, the United States and Afghanistan will find themselves facing one of Afghanistan’s endgames — whether by choice or not.“I’ll tell you what my best-case scenario would be,” said Frances Z. Brown, an Afghanistan expert at the Carnegie Endowment for International Peace.That, she said, would see the American-led coalition abandon its efforts to impose a centralized state and instead allow Afghans to build their own state from the bottom-up.It would mean accepting a central government that acts more like a horse trader among local strongmen and warlords. American and allied troops would guarantee enough security to sustain the state. Afghans would figure out the rest for themselves. Over time, ideally, Afghans might develop a functioning economy, then something like real democracy and, finally, peace and stability.“But what we know from other cases is that this takes generations,” Ms. Brown said. “So the 18-month time frames we’ve always had for Afghanistan are not realistic.”
MSU scholars find $21 trillion in unauthorized government spending; Defense Department to conduct first-ever audit -- Earlier this year, a Michigan State University economist, working with graduate students and a former government official, found $21 trillion in unauthorized spending in the departments of Defense and Housing and Urban Development for the years 1998-2015. The work of Mark Skidmore and his team, which included digging into government websites and repeated queries to U.S. agencies that went unanswered, coincided with the Office of Inspector General, at one point, disabling the links to all key documents showing the unsupported spending. (Luckily, the researchers downloaded and stored the documents.)Now, the Department of Defense has announced it will conduct the first department-wide, independent financial audit in its history (read the Dec. 7 announcement here).The Defense Department did not say specifically what led to the audit. But the announcement came four days after Skidmore discussed his team’s findings on USAWatchdog, a news outlet run by former CNN and ABC News correspondent Greg Hunter. “While we can’t know for sure what role our efforts to compile original government documents and share them with the public has played, we believe it may have made a difference,” said Skidmore, the Morris Chair in State and Local Government Finance and Policy at MSU.
Trump seeks to halt funding for International Space Station by 2025: report | TheHill: President Trump is reportedly planning to request an end to funding for the International Space Station (ISS) by 2025, a move that would be a major hurdle to expanding space exploration efforts. The president’s official budget for fiscal year 2019 is scheduled to be released next month, but a draft proposal, seen by The Verge, would call for U.S. support for the program, which has been in place for more than 20 years, to end. NASA contributes between $3 billion and $4 billion to the International Space Station every year, according to The Verge. It is key as a destination for American astronauts who currently have no alternative destinations in orbit. According to The Verge, commercial companies like SpaceX and Boeing have said they would likely not be able build orbiting modules by the time funding for the ISS runs out in 2024. A NASA spokesperson declined to comment on the budget draft, but noted the program’s importance to human space travel. “NASA and the International Space Station partnership is committed to full scientific and technical research on the orbiting laboratory, as it is the foundation on which we will extend human presence deeper into space,” the spokesperson said. The move lines up with Trump’s efforts to move NASA funding away from international efforts and toward other space exploration projects, like building vehicles to explore deep space and returning American astronauts to the Moon.
Donald Trump’s talk of ‘America first’ and fair trade smacks of double standards, says China | South China Morning Post: China’s state-run news agency has criticised US President Donald Trump’s speech suggesting his “America first” policies would not harm other nations and that he fully supported free trade as long as it was “fair and reciprocal”. Xinhua said in a commentary published on Sunday that Trump’s comments at the World Economic Forum in Davos amounted to double standards and his protectionist policies would ultimately become a stumbling block when dealing with global partners. Trump said in his comments on Friday that his “America first” policy did not mean “America alone” and that there had never been a better time to do business with the US. Trump took credit for growth in the US economy, but added: “The United States will no longer turn a blind eye to unfair economic practices, including massive intellectual property theft, industrial subsidies and pervasive state-led economic planning.” He has previously levelled the allegations against China, but did not criticise the country by name during his speech. China reported a record-high trade surplus of US$276 billion with the US last year, with Trump pledging to try to narrow the trade deficit.
China should ‘be ready for a trade war’ after Donald Trump’s Davos speech | South China Morning Post: China should be prepared for a trade war with America and more economic competition, analysts warned after US President Donald Trump told Davos the United States was “open for business” and would no longer tolerate unfair trade practices. The first US president to address the World Economic Forum for 18 years, Trump took a slightly softer tone delivering his “America First” message, adding that it did not mean “America alone”. “I’m here to deliver a simple message. There has never been a better time to hire, to build, to invest and to grow in the United States. America is open for business and we are competitive once again,” he told the audience of business and political leaders in the Swiss ski resort. Taking credit for economic growth in the US, Trump emphasised tax cuts and deregulation as drawcards for investment while again criticising countries he said exploited the system through “predatory behaviours”. “The United States will no longer turn a blind eye to unfair economic practices including massive intellectual property theft, industrial subsidies and pervasive state-led economic planning,” he said. Although he did not name China, analysts said Trump was clearly pointing the finger at Beijing, which he sees as a major competitor. “He changed his tone a little for the audience, but not the substance of his message. And he is taking significant economic measures against China irrespective of this speech,” said Shi Yinhong, who specialises in US studies at Renmin University in Beijing.
Trump trade rift report adds a chapter to steel import saga - US market players anxiously awaiting President Donald Trump’s decision on whether or not to restrain steel imports got something else instead: the report of a rift between Trump and Wilbur Ross, secretary of the US Department of Commerce, which launched the import investigation last year. Online news organization Axios reported early this week that Ross had fallen out of favor with Trump and that US Trade Representative Robert Lighthizer has taken over as chief trade negotiator. Ross, a former steel executive who initiated the Section 232 steel import investigation, was said in the article to have been harshly criticized by the president and told he was no longer trusted to negotiate trade deals. The report also stated that Ross negotiated a steel trade deal with China that was rejected by the president. On the heels of the report, White House Press Secretary Sarah Huckabee Sanders said in a press briefing that Trump has “100% confidence” in Ross. “He loves Wilbur, thinks he’s doing a great job and has been a strong advocate for the administration and been a great leader when it comes to the trade discussion on steel, aluminum, and certainly his involvement in trade across the board with the administration.” Commerce public affairs officials contacted by S&P Global Platts had no comment on the report, but relayed comments made to Axios by other administration officials, including Lighthizer. He said he and Ross “work together every day” on trade issues and that Ross is valued for his “sharp business acumen, his insight into trade policy issues and his hard work to advance the president’s agenda.” Deputy White House Press Secretary Raj Shah and Trump’s chief economic adviser Gary Cohn also issued statements (readily shared by Commerce public affairs staff) defending the Ross/Trump relationship. Shah told Axios that Ross “is leading the administration’s approach on steel, aluminum, intellectual property and trade,” adding that “far from souring on his performance,” Trump has expanded Ross’ responsibilities.
Trump’s China Policies Are Working a Treat - Say what you like about Donald Trump’s rhetoric on trade. The MSM is in a constant meltdown over it. But the fact is he is engineering the fastest reboot of the US/China imbalance that anyone can remember without having to fire much more than a beebee gun. China response has been to let the yuan roar higher: Of course, China may also be happy to see the yuan rise to push forward its rebalancing. Especially since the last time it tried in 2015, the yuan crashed and threatened to take down the global economy. This time, the higher yuan is giving consumers greater purchasing power as it works against industrial over-capacity while capital outflow has been contained. It will add to pressure on US yields but that may be offset by other benefiting surplus nations, like Japan: But it will also exacerbate the Chinese macro-level slowdown this year if it does not stimulate more domestically. We are already seeing such in the PMI with new export orders leading the growth fade despite “global synchronised growth”: In commodities it is not all bad news. It means less Chinese production versus imports, though for bulks that is likely to be carrion comfort given China is also steadily slowing credit and building will most assuredly follow: It suggests a few things for the year ahead:
- It would be downright bad manners for Trump to not ease up on the protectionist push in response (not rhetorically);
- “Global synchronised growth” is going to morph this year into global synchronised growth ex-China, and
- If you think Australia is about to join the global boom then I have a bridge to sell you.
Maybe fighting back against a currency-pegging, excess saving mercantilist is not so bad for your country.
U.S. farmers have much to lose if NAFTA deal collapses (Reuters) - A collapse of the North American Free Trade Agreement (NAFTA), which U.S. President Donald Trump has threatened to scrap, could create the most profound disruption for U.S. farmers who produce grains, meats and dairy products sold to Canada and Mexico. Blake Erwin, a third-generation American who raises cattle, corn and soybeans in Dixon, Nebraska, said on Saturday that he is not closely monitoring the negotiations, but that he hopes the outcome will support U.S. farmers who are struggling to make a living due to low commodities prices, rising healthcare costs and high property taxes. “A trade agreement has to be fair for the United States, but we also want to keep those exports going for the farmer,” said Erwin, 34. “We don’t want to mess up any good things we got going.” Erwin spoke to Reuters over the weekend as U.S., Canadian and Mexican negotiators met in Montreal for the sixth of seven planned rounds of talks to revamp the 1994 pact. U.S. farmers and exporters are fighting to preserve their exports at a time when Canada is finding customers in new markets. They also face strained relations between the United States and Mexico, a major buyer of U.S. corn, wheat, beef, pork and dairy products. “The U.S. is behaving so badly it’s going to create opportunities for Canadian agriculture,” Iowa State University economist Dermot Hayes said last week during a visit to Winnipeg. Trade flows have already begun to shift. The United States remains the dominant grain supplier to Mexico. Yet Mexico imported 583,000 metric tonnes of corn from Brazil in 2017, a 980 percent jump from the previous year, according to Mexican government trade data. Mexican imports of U.S. soybean meal, used to feed chickens and livestock, fell 29 percent in the first 11 months of 2017, compared with the same period the previous year, according to the U.S. Department of Agriculture. Slideshow (17 Images)Trump’s animosity toward Mexico and complaints over trade imbalances have pushed longtime buyers to work with new suppliers and expand existing relationships in South America, the European Union and other regions, trade experts said. “You get partners who build a bond and get real comfortable working together. We’re starting to see that bond becoming more important than price for where countries are buying grains,”
US rejects proposals to unblock NAFTA, will seek 'breakthroughs' (Reuters) - U.S. President Donald Trump’s trade chief rejected Canadian proposals for unblocking NAFTA modernization talks on Monday but pledged to seek “breakthroughs” by late February, easing concerns that Washington would soon withdraw from the trilateral pact. Trump, who described the North American Free Trade Agreement as a disaster that has drained manufacturing jobs to Mexico, has frequently threatened to abandon it unless it can be renegotiated to bring back jobs to the United States. U.S. Trade Representative Robert Lighthizer said after a sixth round of NAFTA negotiations in Montreal that Trump’s views on the pact are unchanged, and cautioned that talks are still moving too slowly on U.S. priorities. “We finally began to discuss the core issues, so this round was a step forward,” Lighthizer said. “But we are progressing very slowly. We owe it to our citizens, who are operating in a state of uncertainty, to move much faster.” Lighthizer said he would work “very hard” toward “major breakthroughs” between now and the start of a nine-day stretch of talks in Mexico City scheduled for Feb. 26. He said he has not considered pausing the talks for Mexico’s presidential election due to launch on April 1, and progress over the next month would determine whether a deal would be “on a fairly short track or on a longer track.” He added that Trump would ask Congress to renew the administration’s “fast track” trade negotiating authority, which expires at the end of June. Lighthizer’s Mexican and Canadian counterparts struck a more optimistic tone, saying that substantial progress was made in Montreal, with completion of a NAFTA chapter on anti-corruption. Mexican Economy Minister Ildefonso Guajardo said enough progress was made for him to predict that chapters on telecoms and digital trade would be completed in Mexico City. “For the next round, we will still have substantial challenges to overcome. Yet the progress made so far puts us on the right track to create landing zones to conclude the negotiation soon,” Guajardo said. Officials are now openly speculating that the bid to salvage the $1.2 trillion free-trade pact will continue well beyond an end-March deadline set to avoid Mexican presidential elections.
What’s next for NAFTA? -- U.S. Trade Representative and self-professed curmudgeon Robert Lighthizer admitted some progress at the close of the sixth round of NAFTA talks in Montreal, but not before effectively eviscerating a significant new Canadian proposal meant to break open the talks on auto rules of origin as enormously vague.He urged Canada and Mexico to dig even deeper so that the negotiations can produce “major breakthroughs” before negotiators reconvene in late February in Mexico City for the seventh round of talks on revamping the 24-year-old pact.“We find that the automotive rules of origin idea that was presented, when analyzed, may actually lead to less regional content that we have now, fewer jobs in the United States, Canada and likely Mexico,” he said. Mexican Economy Secretary Ildefonso Guajardo said the proposal would need more analysis before his country could take a position.One official close to the talks said the fact that Lighthizer didn’t hit Canada over its alternatives to U.S. proposals on an investor-state dispute mechanism and sunsetting the deal was seen as a good sign. But the trade ministers appeared to have not yet waded into the negotiating weeds. The half-hour meeting Monday morning between Lighthizer and Canadian Foreign Minister Chrystia Freeland consisted mainly of a review of the week’s talks and Lighthizer previewing with his counterpart what he was going to say at Monday’s press event, one source told Morning Trade. Still, the pressure is on to begin finding some common ground on the thornier issues, including autos. In many ways, this round of talks barely moved the needle in that respect, other than to show that Canada is willing to find ways to work with or work around controversial U.S. proposals. “We finally began to discuss some of the core issues, so this round was a step forward — but we are progressing very slowly,” Lighthizer warned. “We owe it to our citizens, who are operating in a state of uncertainty, to move much faster.” Read the full rundown here.
Leaving NAFTA would be a self-imposed economic disaster resulting in job losses for 1.8M US workers in every state - AEI - Below is the Executive Summary of a new research study “Terminating NAFTA: The National and State-by-State Impacts on Jobs, Exports and Output” prepared by Trade Partnership Worldwide for the Business Roundtable.Using a methodology that enables us to capture the full impacts (both positive and negative; direct and indirect) across the U.S. and international economies, we find that a termination of the North American Free Trade Agreement (NAFTA) would have significant net negative impacts on the U.S. economy and U.S. employment, particularly over the immediate years after termination. Termination would re-impose high costs of tariffs on U.S. exports and imports, which would reduce the competitiveness of U.S. businesses both domestically and abroad. U.S. exports would drop, both to Canada and Mexico and globally, as U.S. output becomes more expensive and therefore U.S. businesses would be less competitive in these markets. Foreign purchasers would shift away from U.S. goods and services in favor of lower-cost goods and services made in other international markets, particularly those made in Asia. These efficiency losses and trade shifts would have an impact on U.S. production of both goods and services, and thus also on U.S. employment. We estimate that, if NAFTA is terminated and most-favored nation (MFN) duties are re-imposed for U.S. trade with Canada and Mexico, the level of U.S. real output would fall 0.6 percent below levels that would prevail if NAFTA were in effect in each of the first one to five years after termination. Lower output means less employment after all the gains and losses are tallied: on balance 1.8 million workers would immediately lose their jobs in the first year with full termination and the return of MFN tariffs (see map above of job losses by state and table of job losses by industry).
EconoFact: “Threats to U.S. Agriculture from U.S. Trade Policies” -- Menzie Chinn -- Or, Does Mr. Trump feel lucky? From EconoFact: The agriculture sector in the United States depends upon exports for its vitality. Sales of U.S. agricultural products abroad are responsible for 20 percent of U.S. farm income, supporting more than one million American jobs on and off the farm, according to the U.S. Department of Agriculture. The three biggest buyers of American agricultural products are China, Canada, and Mexico. Yet trade with these three countries faces heightened uncertainty. The Trump Administration initiated a process of renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, which includes the option of exiting the deal altogether. In addition, the United States has started a series of investigations of unfair practices leveled against China, some of which have already resulted in the imposition of new tariffs. These trade policy initiatives threaten agricultural exports both because of the potential increase of tariffs on exports to Canada and Mexico that would result from a withdrawal from NAFTA as well as the very real threat of retaliation in response to other proposed policies. The entire article is here. More on agricultural sector fortunes here.
The International Economic Consequences of Mr. Trump - What has fundamentally changed with the Trump administration is not that it behaves more selfishly than its predecessors, but that it seems unconvinced that the global system serves US strategic interests. For the rest of the world, the key question is whether the global system is resilient enough to survive its creator’s withdrawal. This year’s World Economic Forum in Davos proved to be yet another opportunity for US President Donald Trump’s administration to display its customary verbal incontinence and send shockwaves through the global economy. This time, there were two sources. The first shock came from US Treasury Secretary Steven Mnuchin, who broke with more than two decades of strict discipline by suggesting that a weaker dollar would be in America’s interest. The second came from Commerce Secretary Wilbur Ross, who seemed to rejoice at the prospect of waging and winning a trade war. For once, it was Trump himself who restored calm by denying that the US was pursuing a beggar-thy-neighbor strategy. But he did so only after his cabinet secretaries’ statements had attracted sharp responses from international partners. If Trump’s first year in power provides an indication of what is to come, there is little reason to look forward to more stable US economic leadership. A year after his inauguration, Davos provided a powerful reminder that he is far from being normalized. To be fair, the Trump administration is certainly not the first to put “America first.” Yet there is something different this time. From the moment it inherited global leadership from the United Kingdom – symbolically with the signing of the Atlantic Charter in the summer of 1941 – until Trump was elected 75 years later, few could doubt that the US was the ultimate owner of the international economic regime. And the rest of the world knew that perfectly well. What has fundamentally changed with the Trump administration is not that it behaves more selfishly than its predecessors. It is that it seems unconvinced that buttressing the global system serves US strategic interests. Critically, it seems unconvinced that integrating China into this system and offering it a place at the top table is the best way to accommodate its rising economic might.
Trump gets chance to sell nation on rebuilding plan | TheHill: President Trump will pitch his long-awaited infrastructure plan during his inaugural State of the Union address next week, using the stage as an opportunity to start selling both Congress and the public on his ambitious rebuilding effort. The infrastructure package is shaping up to be one of the few policy items left on the GOP agenda this year after must-pass pieces of legislation such as spending bills and debt-ceiling legislation are resolved. But doubts are growing on Capitol Hill about whether lawmakers will be willing to rally behind a bipartisan infrastructure bill, especially in the wake of a nasty fight over immigration that led to this month’s three-day government shutdown. Lawmakers say the ability to muscle the rebuilding proposal over the finish line will likely rest squarely on Trump’s shoulders. “I think the president is going to have to play a big role. It’s going to take a lot of presidential leadership to get infrastructure,” Sen. John Thune (R-S.D.), chairman of the Senate Commerce, Science and Transportation Committee, told reporters this week. “A lot of it will come down to how is it paid for, and the substance will matter in terms of whether or not there is bipartisan support for it.” Trump has long promised to rebuild U.S. roads, bridges, airports and other public works with a massive infrastructure package. The idea is to use $200 billion in federal seed money to create $1 trillion worth of overall infrastructure investment by raising revenues from the private sector and local governments.
Trump's $1 trillion plan inspires 'Hunger Games' angst- President Donald Trump won the White House promising a $1 trillion, 10-year blueprint to rebuild America — an initiative he said would create millions of jobs while making the nation’s highways, bridges, railroad and airports “second to none.” But the infrastructure plan he's poised to pitch in Tuesday’s State of the Union is already drawing comparisons to the The Hunger Games.” Instead of the grand, New Deal-style public works program that Trump's eye-popping price tag implies, Democratic lawmakers and mayors fear the plan would set up a vicious, zero-sum scramble for a relatively meager amount of federal cash — while forcing cities and states to scrounge up more of their own money, bringing a surge of privately financed toll roads, and shredding regulations in the name of building projects faster. The federal share of the decade-long program would be $200 billion, a sum Trump himself concedes is "not a large amount." The White House contends it would lure a far larger pool of state, local and private money off the sidelines, steering as much as $1.8 trillion to needs as diverse as highways, rural broadband service, drinking water systems and veterans hospitals. (Maybe even commercial spaceflight, one recently leaked draft suggests.)The administration isn't expected to issue full details for two to four weeks. But already, the details that have emerged are unnerving some key infrastructure supporters in Congress, who say it's unrealistic to propose such a mammoth program without money to pay for it. They also note that Trump's budget proposals have called for cutting existing infrastructure programs at the Department of Transportation and the Army Corps of Engineers. “I think we’re down to minus about $200 billion, because I don’t think they have enough money to fund the current program, let alone anything on top of it,” . “I don’t see any money from what I’ve seen so far at all. Zero. Not $200 billion, certainly not a trillion.”
Trump’s Infrastructure Plan Gets Some Things Right - Last year I wrote a letter to President Trump outlining four principles for prioritizing federal spending in a new infrastructure bill. Last week, a preliminary infrastructure spending plan was leaked, the way things like this often do in our nation’s capital. Many have asked me to comment on the leaked document and so I’ll give you my immediate qactions: There’s lots to like, and it could have been much worse.My nightmare scenario was another Obama-style stimulus bill ($831 billion total with $105 billion spent on infrastructure) only focused on handing out federal dollars primarily for new highways, interchanges, frontage roads and other build-it-and-they-will-come kinds of investments. This is nowhere near that. Breathe a sigh of relief.My ideal scenario would have been something that focused on the four principles I put forth last year: (1) prioritize maintenance, (2) prioritize small projects, (3) spend more below ground than above and (4) prioritize neighborhoods more than 75 years old. There’s a little bit of that in this bill. Half of the undisclosed amount of money (widely believed to be in the $200 billion range) would go into something called the Infrastructure Incentives Initiative. This has all the hallmarks of the worst of federal infrastructure spending: anything infrastructure-related is eligible, any government or public authority can apply, scoring is heavily weighted to induce local governments to take on lots of debt and there is only faint concern for long term maintenance costs or return on investment. Yuck! But the plan has one provision that changes all of this: Grant awards can’t exceed 20 percent of total project costs. Wow! I’ve been on projects where the federal government paid 95 percent — an approach ripe with all the worst kinds of perverse incentives — but that won’t happen here. For a state or local government to get the federal money, they will need to have some serious skin in the game to the tune of 80 percent of the funding. If that provision makes it through Congress (count me doubtful), it would be transformative.
Trump Calls For $1.5 Trillion Infrastructure Plan -- President Donald Trump was widely expected to discuss his long-anticipated infrastructure plan tonight, particularly since the White House leaked an outline for a plan to generate $1 trillion in spending through public-private partnerships. Tonight, Trump unveiled an even more ambitious sum, requesting Congress present an infrastructure bill for $1.5 trillion to rebuild America's roads, airports and rails.NEW: Trump calls on Congress to produce a bill to spur $1.5 trillion in infrastructure investment pic.twitter.com/PKjtocYyLp— Axios (@axios) January 31, 2018 Lamenting that it can take up to 10 years for a permit to be approved to build a simple road Trump demanded that the infrastructure plan also clear away the red tape surrounding the permitting process. As previously discussed, Trump's framework under discussion for modernizing U.S. roads, bridges, waterways and other public works calls for allocating at least $200 billion in federal funds over 10 years to spur states, localities and the private sector to spend at least $800 billion and as much as $1.6 trillion. Ultimately, however, the government may be on the hook for the full amount, which would have to be funded with incremental debt. Excerpted from the speech: I am asking both parties to come together to give us the safe, fast, reliable, and modern infrastructure our economy needs and our people deserve.m Tonight, I am calling on the Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment we need. Every Federal dollar should be leveraged by partnering with State and local governments and, where appropriate, tapping into private sector investment — to permanently fix the infrastructure deficit. Any bill must also streamline the permitting and approval process — getting it down to no more than two years, and perhaps even one.
A $1.5 Trillion Question in Trump’s Public Works Plan: Who Pays? - President Donald Trump wants $1.5 trillion for infrastructure. All he needs is a way to pay for it. Lawmakers from both parties and industry representatives say they’re still waiting for key details months after Trump promised a plan to restore the nation’s roads and bridges. They’re also skeptical about prospects for legislation that doesn’t include robust federal contributions for projects and specific financing sources. Trump urged Congress in his State of the Union speech Tuesday night to put forward a $1.5 trillion bipartisan infrastructure bill that envisions greater reliance on local and private-sector money. His request left even some Republicans searching for more details. While leveraging public dollars is a good start, “the question is, how are you going to pay for it?” John Cornyn of Texas, the No. 2 Senate Republican, said after the speech.In a speech to lawmakers last year, the president mentioned a $1 trillion infrastructure figure. That was increased to $1.5 trillion after his team met with state and local officials who showed enthusiasm for the plan and its incentives, a White House official said. The administration has proposed contributing at least $200 billion in federal funds over 10 years to spur spending by states, localities and the private sector.A fact sheet released along with the State of the Union address said half of the funds would go toward generating state and local investments in infrastructure. That would be achieved by offering grants with preference given to applicants that generate their own revenue for projects, administration officials have said.The White House said Wednesday it plans to send detailed principles to Congress in the coming weeks, after the legislative calendar and a government shutdown c aused a delay in the public rollout of the plan.
2018 State of the Union Address C-SPAN (with transcript)
Trump offers same policies in new bipartisan packaging - In his first State of the Union address to Congress, President Donald Trump struck an upbeat, optimistic tone and promised to move forward with a “clear vision and a righteous mission — to make America great again for all Americans.” Much of the speech sought to paint a portrait of a country moving ahead in a united fashion to ensure Americans a better political and financial future — a contrast in tone to the president’s often divisive rhetoric during the 2016 presidential campaign where his opponents received derogatory nicknames. But Trump focused largely on familiar policy proposals, including on immigration and infrastructure, which he positioned as common-sense, mainstream ideas — even though Democrats have been cool or outright rejected them. Nowhere has that been clearer than in the immigration plan outlined last week by the White House, which Trump said “generously” outlines a path to citizenship for 1.8 million undocumented immigrants, twice as many as are currently covered under President Barack Obama’s DACA program. He committed to ending the visa lottery system and eliminating immigration preferences for extended family in favor of what he described as a merit-based system, ideas Democrats say upend the tradition of immigration laws in this country.“It is time to reform these outdated immigration rules, and finally bring our immigration system into the 21st century,” Trump argued. But the immigration policy details spoke to the hawkish side of Republican party — breaking with the speech’s theme of bipartisan cooperation. Trump also flicked at promises to lower the cost of prescription drugs and tackle opioid addition, workforce development, and prison reform. The latter two policy initiatives have been championed by Trump’s daughter and son-in-law Ivanka Trump and Jared Kushner. In a nod to foreign policy and recent provocations against North Korea’s nuclear ambitions, the speech also said that “as part of our defense, we must modernize and rebuild our nuclear arsenal, hopefully never having to use it, but making it so strong and powerful that it will deter any acts of aggression.”
Trump’s State of the Union address: A spectacle of reaction and militarism --US President Donald Trump’s first State of the Union address, delivered Tuesday night, was a festival of reaction and political filth. The speech dragged on for more than 80 minutes, interrupted by ovations from the assembled members of the Senate and House of Representatives. It was filled with paeans to the police and military (which won the particular support of Democrats), fascistic attacks on immigrants, and invocations of religion, patriotism and the American flag, culminating in howls of “USA! USA!” during the closing section of the address. The annual State of the Union speech has long since decayed into a hollow ritual, whose essential emptiness is an expression of the crisis and decay of American democracy, weighed down by militarism and rampant economic inequality. With Donald Trump, the real state of the union is revealed, not by the endless torrent of lies fashioned by his speechwriters, or the people they exploited as human props, but in the persona of the president himself: the first billionaire to occupy the White House, preening over the signal accomplishment of his first year in office—trillions of dollars in tax breaks for corporations and the super-rich. In a speech that quickly received positive responses in the media, Trump cited the record-breaking rise in the stock market and the decision of major corporations to repatriate funds to the United States—since they can now do so virtually tax-free—as though these would benefit American workers. However, Trump’s efforts to paint a portrait of a country on the rise, with living conditions improving, will not have fooled anyone. Only a few minutes after claiming that Americans have never had it so good, he noted that 64,000 people died of drug overdoses in America last year, a record number. This was one of his few concessions to social reality, which Trump used to demand increased police powers. Trump’s arrogant demeanor reflected something of the political conjuncture. The Democrats pretended to oppose the tax cut, but did nothing to stop it, because their most important social base, Wall Street, supported it enthusiastically. The Democrats pretended to fight for immigrant youth covered by the DACA program, but abandoned the effort after a two-day shutdown of the federal government. Trump has taken the measure of this toothless “opposition” and feels strengthened accordingly.
Read: Bernie Sanders panned Trump’s broken promises in his response to the State of the Union - While Rep. Joe Kennedy III (D-MA) delivered the official Democratic response to President Donald Trump’s State of the Union address, the 37-year-old congressman shared the spotlight with Sen. Bernie Sanders (I-VT), who streamed his own speech on social media. Sanders was just one of five responses to the State of the Union: the official Democratic response from Kennedy, the official Spanish-language response by Virginia Del. Elizabeth Guzman, Sanders’s response, a speech by Rep. Maxine Waters (D-CA) set to broadcast on BET Wednesday night, and a speech from former Congresswoman Donna Edwards of Maryland on behalf of the Working Families Party. This is the second year in a row that Sanders has sidestepped the official Democratic response and delivered his own speech after the State of the Union. Throughout his address, Sanders picked apart Trump’s self-congratulatory speech, hammering home his own points about continuing inequality for the poor and middle class, two groups Trump promised to lift up during his campaign for president. Issue by issue, Sanders measured Trump’s promises against the actual outcomes so far in his presidency.
Bernie Keeps Promoting The New Cold War, And Yes, We Need To Talk About It – Caitlin Johnstone - In an otherwise fine video response to the last night’s vapid, flag-waving State of the Union address, Bernie Sanders once again promoted the neocon think tank-generated and unproven claim that Russia interfered in America’s 2016 elections via “cyberwarfare”, and repeated the completely baseless insinuation that they colluded with Trump to do so.“How can he not talk about the reality that Russia, through cyberwarfare, interfered in our election in 2016, is interfering in democratic elections all over the world, and according to his own CIA director will likely interfere in the 2018 midterm elections that we will be holding?” asked the Vermont Senator. “How do you not talk about that unless you have a very special relationship with Mr. Putin?”This is not an exception to the rule for Sanders, but one more addition to an already consistent and deliberate pattern. In February of last year Sanders delivered a widely viewed video message to his massive online audience solely geared at promoting the Russiagate narrative. At the end of March, he did it again. In May, he did it again. Over and over and over again, month after month after month, Sanders has been using his immense platform as the most popular and trusted politician in America to sell these world-threatening cold war escalations to the millions of Americans who adore him. This is a big deal. This is not some petty quibble with Sanders’ policies like disagreeing with the specifics of his stance on free trade or fracking. This is not some minor detail which can be dismissed with accusations of purism and impracticality and “Hey, no politician is perfect.” This is the single most pressing issue of our time, and Bernie Sanders is currently, actively marching our world in the exact opposite direction of where it needs to be heading. There is no threat to our species more imminent and dangerous than the threat of annihilation in a nuclear holocaust, and Sanders is helping to manufacture consent for escalations which make that possibility more and more likely. This is a huge problem, and we need to talk about it right now.
Trump’s State of Delusion - Amidst the nauseating spectacle of Trump’s State of the Union address on Tuesday night, perhaps the most remarkable feature was the inability of the ruling class—not only Trump, but also the Democratic opposition and the media commentary—to deal seriously with any of the myriad crises engulfing American and world capitalism. The State of the Union address was, as originally conceived, intended as an occasion for the president to outline to Congress and the American people the overall economic, social and geo-political situation facing the country. However, over the past four decades, and particularly since the Reagan White House, the event has become an increasingly hollow charade, full of bombast and empty boasting, incapable of acknowledging the mounting crisis of American capitalism.This period has seen an accelerating decline in the global economic position of the United States. The American ruling class has sought, particularly since the dissolution of the Soviet Union in 1991, to offset its decline by military means. But more than a quarter-century of unending war—in the Middle East, the Balkans, Central Asia, and North Africa—has produced only a series of debacles.The United States finds itself increasingly isolated in the Middle East, challenged economically by a rising China, and estranged from its traditional allies in Europe. Last month, the new National Defense Strategy suddenly announced that the official justification over the past 17 years for war and the buildup of police state powers at home, the global “war on terror,” has been supplanted by the preparation for “great power conflicts,” i.e., a new world war.Within the borders of the United States, the decay of social conditions, combined with the consolidation of a new financial aristocracy and unprecedented levels of economic inequality, have brought class tensions to the breaking point. The entire political establishment is discredited in the eyes of the broad mass of the working class. Disgust with capitalism and interest in socialism are growing. And amidst the general ruling class euphoria over massive tax cuts for the rich and an ever-rising stock market, more sober observers are warning of a financial crash even more traumatic than the collapse that occurred ten years ago.
What Companies Are Doing With Their Tax Windfall - The GOP tax overhaul has inspired what seems like a flurry of action from companies looking to gain billions of dollars in potential savings. Every day, a new organization announces bonuses and wage increases.Others, however, are using their funds to lay off thousands of workers.Despite the headlines, it turns out most companies aren’t doing much at all with their tax savings, according to a new survey from Willis Towers Watson. At least not yet.The HR consulting firm asked 333 employers with at least 1,000 employees what they have done or plan to do as a result of the Tax Cuts and Jobs Act. Only 4% of companies said they had “increased wages for all employees”; an additional 3% said they planned to do so in the next year. While a further 13% said they’re “considering taking action this year or next,” a full 80% of companies aren’t considering giving raises at all.“Companies are really spending time thinking about this,” said John Bremen, a managing director at Willis Towers Watson. “They’re trying to figure out what to do in terms of what’s going to be the highest impact and greatest value.”Bremen sees three general trends among employers. One group is using the tax bill windfall to make previously planned investments, such as raising the minimum wage or increasing 401(k) contributions. Another group is trying to modernize their workforce by hiring new kinds of workers. The third group is attempting to keep up with the proverbial Joneses: As companies see their competitors offering headline-grabbing bonuses, they feel compelled to do the same.At this rate, it’s too early to tell what the trickle-down impact of the bill will be, if any. The bonus and wage increases provided to employees have, so far, been a fraction of the savings companies are seeing from the tax bill. It will take years to determine the full impacts of the bill, economists say. Still, employees are seeing some changes. Almost 20% of companies surveyed said they had already added Roth 401(k) retirement plans for employees, making it the most popular benefit change as a result of the tax bill. Unlike a traditional 401(k), a Roth taxes money up front when it goes into the account, rather than down the line when it comes out.
Tax Reform: The Devil’s in the Details - The Tax Cuts and Jobs Act was written in secret and subject to no formal debate. Most legislators voted on it without having read it. Consequently, many of the details are only now becoming clear. There’s been plenty of good news about the recent tax changes … but there’s a lot of hidden bad news too.Besides temporary reductions to personal tax rates and a huge slash at corporate rates, the new tax rules also doubled the standard deduction, to $24,000.But legislators had to pay for all this somehow — or at least, appear to try.One casualty that affects everyone is the personal exemption. Until 2017, every taxpayer could reduce their taxable income by $4,050 per person in their household. Not any more.Another change with widespread impact is home equity loan interest. Unlike mortgages over $750,000, there’s no grandfathering provision, so if you have a home equity line of credit (HELOC), your taxes just went up.You can’t deduct moving expenses, either, even if they result from a job change. And you can say buh-bye to deductible casualty and theft losses, unless they’re due to a presidential disaster area declaration. To add insult to injury, tax preparation fees are nondeductible from 2018 onward.But the biggest sleeper in the new tax regime is the elimination of almost all “miscellaneous deductions.”Believe me, you’ll thank me for alerting you to this little morsel now, at the beginning of the year, when there’s still time to do something about it.Before this year, you could deduct all sorts of things from your tax liability. Some were limited to an amount exceeding 2% of your adjusted gross income (AGI), but others were unlimited. They’re all gone. Here’s what you just lost.
Hatch touches a third rail: Should credit unions be taxed - — Credit union groups were scrambling Wednesday to respond to a letter from Senate Finance Committee Chairman Orrin Hatch questioning whether the industry had outgrown its income-tax exemption. In a letter to National Credit Union Administration Chairman J. Mark McWatters, Hatch expressed concern “that the credit union industry is evolving in ways that take many credit unions further from their tax-exempt purpose.”Hatch, a seven-term Utah Republican, also included a dig at the NCUA for loosening field-of-membership requirements and for not requiring credit unions to disclose the salaries they pay top management. “Such transparency is vitally important to ensure that credit unions are honest stewards of the tax benefits they receive,” he wrote. Hatch’s inquiry is significant. Though he is retiring at the end of this session, his role as head of the Senate finance panel puts him in the lead position on matters of tax policy. While Congress recently passed a tax cut bill, lawmakers are looking for other revenue sources as they begin consideration of a massive infrastructure package. An NCUA spokesman said Thursday that agency officials are reviewing Hatch’s two-page letter and planned to respond. Credit union trade groups, on the other hand, wasted no time replying…
New Dept of Justice Guidelines Will Stymie Whistleblowers --Jerri-lynn Scofield - Earlier this month, the Department of Justice (DoJ) quietly floated a new policy that will stymie whistleblowers. As reported by the Wall Street Journal in U.S. Looks Toward Gatekeeper’s Role on Whistleblower Claims:The Justice Department urged its lawyers to weed out meritless cases from the hundreds of suits brought on its behalf under an anti-fraud law called the False Claims Act.Justice Department attorneys should consider using a provision in the False Claims Act that lets the department ask a judge to dismiss claims, even if the whistleblower who brought the case wants to go ahead, according to an internal memo dated Jan. 10 from Michael D. Granston, director of the commercial litigation branch of the Civil Division.“This is good both for the government and it’s good for private industry,” said Mitch Ettinger, a white-collar defense lawyer at Skadden, Arps, Slate, Meagher & Flom LLP. Unfortunately, the new policy is neither good for whistleblowers, nor ultimately, the taxpayers who ultimately pay when the US government is defrauded. To understand why, a bit of history is in order, which I discussed at length in an earlier post, SEC Takes Victory Lap for Pathetic Performance of Whistleblower Program: Incentives for private parties to spill the beans are a hallowed component of the US legal system, dating back to the Civil War-era False Claims Act (FCA) and extended by Congress in 1986. This statute includes “qui tam” provisions permitting individuals to sue on behalf of the government– and to receive a bounty if they prevail. The phrase qui tam is an abbreviation for the Latin “qui tam pro domino rege quam pro se ipso in hac parte sequitur”, which means “[he] who sues in this matter for the king as well as for himself. Now, under the new policy, DoJ attorneys are encouraged to seek to dismiss meritless claims– and that ultimately leaves the DoJ with much greater control over which whistleblower claims proceed– and which don’t. And if you believe that the DoJ will only confine itself to thwarting “meritless” suits, well, I have a bridge that I’d like to sell you.
Trump’s deregulation efforts are still going strong - President Donald J. Trump rolled into his first year in office with huge claims about the ways he would be scaling back government involvement in Americans’ lives. Just a week and a half into his first term, he issued Executive Order 13771, declaring a one in-two out approach to creating new and discarding preexisting regulations. And last month, Trump declared the effort a great success. “[I]nstead of eliminating two old regulations, for every one new regulation we have eliminated 22 - 22 - that’s a big difference. We aimed for two for one, and, in 2017, we hit 22 for one,” he told a Roosevelt Room audience.To illustrate his point, he stood between two stacks of paper: one, taller than he is, representing the number of regulations in 1960 and another, knee-high, representing the supposed number of regulations now. Success in a snapshot, he might argue, though, for those whose concerns focus on quality over quantity, that image isn’t much comfort. “I want every Cabinet Secretary, agency head, and federal worker to push even harder to cut even more regulations in 2018,” he went on. “And that should just about do it. I don’t know if we’ll have any left to cut, but we’ll always find them.”Though there have been attempts to track the way regulations are being created and slashed in the current administration, the sheer volume of movement can be a lot to follow and the creation of new regulations has not stopped, despite Trump’s statements. Among the current regulations on the Trump administration cutting block is one concerning tip-based wages, which would end up affecting huge swaths of the service industry - think every restaurant, bar, and casino in America, which the Department of Labor estimates includes “1,298,231 tipped workers in the selected occupations, and 206,770 full-service restaurants, and 40,095 drinking places.” Under the changes, employers who pay the federal minimum wage can use employees’ tips in other ways, including to tip out back-of-the-house staff. According to the DOL, the cost of businesses to familiarize themselves with the new rule would be $3.431 million in the first year.
Trump unveils sweeping attack on immigrants in reform proposal --On Thursday, the Trump administration rolled out the most right-wing immigration reform proposal since the Johnson-Reed Act of 1924 established immigration quotas to “stabilize the ethnic composition” of the United States. The Trump proposal, based largely on the SECURE Act introduced by Senators Tom Cotton and David Perdue, will fundamentally alter the sociodemographic composition of the United States. If enacted as law, the proposal will cut documented immigration by 22 million people over the next 50 years. According to the White House, the plan includes $25 billion to expand the wall along the US-Mexico border and to further militarize not only the borderlands but at all “ports of entry/exit,” i.e., all air and sea ports. The plan will result in a massive hiring of Immigration and Customs Enforcement (ICE) agents, who will be further armed and emboldened with pseudo-legal powers to conduct mass workplace raids, home invasions and public arrests of immigrants. The Trump plan proposes to hire “new DHS personnel, ICE attorneys, immigration judges, prosecutors and other law enforcement professionals” to speed up the deportation process. The plan will drastically slash due process protections for immigrants who are lucky enough to see the inside of a courtroom, or, in the government’s newspeak, “implement immigration court reforms to improve efficiency and prevent fraud and abuse.” As for the country’s 1.8 million undocumented immigrants who are recipients or eligible for protection under the Deferred Action for Childhood Arrivals (DACA) program, the Trump administration proposal puts forward a “10-12 year path for citizenship, with requirements for work, education and good moral character.” DACA recipients would also be required to prove they are not a “public charge,” likely by abstaining from public benefits. This means nothing for DACA recipients, whose rights could be taken away once again by a right-wing legislature at any point over the next decade.
Trump Has Got Democrats Right Where He Wants Them - President Trump’s immigration proposal has put Democrats in a bind; they know it and he knows it. Trump’s immigration “framework” — first outlined on Jan. 25 — represents an unusually sophisticated strategy. He proposes to more than double the number of Dreamers granted a path to citizenship, a significant concession to Democrats.In return, he seeks approval of a set of policies strongly opposed by the left, each of which is designed to stem what Trump sees as a threatening increase in the nonwhite population of the United States.What kind of numbers are we talking about? According to the Pew Research Center:In 2014, immigrant women accounted for about 901,000 U.S. births, which marked a threefold increase from 1970 when immigrant women accounted for about 274,000 births. Meanwhile, the annual number of births to U.S.-born women dropped by 11 percent during that same time period, from 3.46 million in 1970 to 3.10 million in 2014. There are now an estimated 690,000 registered Dreamers in the United States, all of whom were brought to this country as children before 2007. Trump’s offer would increase the number offered a path to citizenship to 1.8 million by adding those who are eligible for DACA (Deferred Action for Childhood Arrivals), but who never registered. For a Democratic Party whose electoral strength depends on Hispanic support (64 percent of Latinos identified with or leaned toward the Democratic Party in 2016) preventing the deportation of the Dreamers and providing them with legal status has become a matter of political necessity. Trump, acutely aware of the importance of DACA to Democrats, deliberately turned the status of Dreamers into a crisis on Sept. 5 when he ended the Dreamers program. Since then, DACA has been the subject of constant debate and negotiation. Democrats have continued to threaten to shut down the government, when the Treasury runs out of money on Feb. 8, if no favorable agreement can be reached. Trump’s proposal more than meets Democratic demands on DACA. But in return Trump wants Democrats to swallow three proposals of varying unpalatability.
- First, the creation of a $25 billion fund for construction of a southern border wall to prevent illegal entry to the United States, primarily by undocumented Hispanics.
- Second, a shift in immigration priorities from family reunification to a merit system granting entry to workers with relatively high skills. This would require limiting reunification preferences to minor children and spouses, while eliminating them for parents, siblings and adult children, what critics call “chain migration.” These steps would reduce immigration from developing countries: The two top countries of origin benefiting from family reunification policies are Mexico and the Dominican Republic.
- Third, an end to the Diversity Immigrant Visa Program. The countries providing the largest numbers of immigrants under the lottery visa program, according to the State Department, are Cameroon, Congo, Liberia, Egypt, Iran, Nepal, Ukraine and Uzbekistan.
Hispanic Caucus: Goodlatte bill is the 'mass deportation act' | TheHill: The Congressional Hispanic Caucus (CHC) slammed a House Republican immigration proposal Tuesday as conservatives in the chamber pushed leadership to support the bill. CHC Chairwoman Rep. Michelle Lujan Grisham (D-N.M.) called the proposal — officially known as the Securing America’s Future Act and colloquially as the Goodlatte bill, after sponsor Rep. Bob Goodlatte(R-Va.) — the "Mass Deportation Act.""The Mass Deportation Act is a farce of a bill," Lujan Grisham said in a statement. "The bill undermines local law enforcement, it hurts farmers, hurts families, guts legal immigration; and aims to rip apart communities through mass deportation, while only providing Dreamers with temporary protections and no pathway to citizenship."The bill has received support from conservatives in the Republican conference and House Republican leadership, bolstered by its powerful co-authors, Reps. Bob Goodlatte (R-Va.), Michael McCaul (R-Texas), Raúl Labrador (R-Idaho) and Martha McSally(R-Ariz.).“Instead of supporting the numerous introduced bipartisan bills that reflect our shared values, House Republican Leaders and this Administration are more interested in pushing partisan, poison-pill legislation that sabotage efforts toward sensible, meaningful legislative protections for Dreamers," said Lujan Grisham."If Speaker [Paul] Ryan [R-Wis.] is serious about getting the 218 votes he needs to pass critical legislation for Dreamers, then he must support truly bipartisan legislation," she added. The White House has also suggested it will support the bill, which contains many of the administration's published principles on immigration.
The H-1B visa problem will NOT go away - For those of you who aren’t already asleep I’ll start with the Cliff Notes version of the H-1B issue, which I have written about ad nauseam as you can read here (notice there are three pages of columns, so dig deep). H-1B is a U.S. immigration program to allow 65,000 foreign workers into the USA each year for up to six years, which means that at any moment there are almost 400,000 of these folks working at the desk next to yours. Some people claim that H-1Bs take jobs better filled by U.S. citizens and some feel that H-1Bs are essential for the functioning of technology industries that would otherwise be devoid of needed talent. I am clearly on the side of the former folks who see H-1Bs as a scam intended to take jobs away from, well, me. Few people who like to express opinions about the H-1B program actually understand it. That’s in part because both industry and government tend to lie a lot. Lying in this case isn’t strictly a Trump thing, either: the Obama Administration lied about H-1Bs, too. One lie commonly told about H-1Bs is that the visas are for geniuses whose unparalleled abilities mean we as a nation absolutely must have them working here. That’s not true. There IS such a visa but it’s an O-1 Extraordinary Ability Worker Visa, not an H-1B. If these H-1B folks were actually so accomplished they’d come to work here as O-1s, which are unlimited in number. Rather than being supremely accomplished, H-1Bs are just supposed to be competent and able to do jobs for which U.S. citizen candidates can provably not be found. Say a company needs an IT specialist, for example, and finds that it can’t somehow recruit any U.S. citizens for the position despite extensive outreach and advertising. In that case if a comparably skilled H-1B candidate is available they can get the job. The more common trend, however, is for a company to really prefer H-1Bs over U.S. citizens because they tend to work for less money and absolutely work for lower benefits, so zealous human resource people, often working with consultants, manage to write job descriptions that preclude U.S. citizens and/or bury the announcements such that qualified U.S. candidates never know they even exist. This, too, is a form of lying.
FEMA to Shut Off Food and Water Aid to Puerto Rico -- The Federal Emergency Management Agency ( FEMA ) will "officially shut off" food and water aid to Puerto Rico four months after Hurricane Maria devastated the island. "The reality is that we just need to look around. Supermarkets are open, and things are going back to normal," Alejandro De La Campa, FEMA's director in Puerto Rico, told NPR . "If we're giving free water and food, that means that families are not going to supermarkets to buy.""It is affecting the economy of Puerto Rico. So we need to create a balance. With the financial assistance we're providing to families and the municipalities, they're able to go back to the normal economy," he added.The remaining food and water supplies and its distribution will be turned over to the Puerto Rico Emergency Management Agency.NPR reported that FEMA has distributed more than 30 million gallons of potable water and nearly 60 million meals to the island's residents to date. The agency has also approved more than $500 million in Maria-related public assistance and disbursed an additional $3.2 million in unemployment aid to people whose jobs were affected by the storm.However, parts of the U.S. territory have struggled to recover after the Category 4 storm and want the federal aid to continue. A third of Puerto Rico is still without power . Hundreds of thousands of people still lack access to potable water.
Scoop: Trump team considers nationalizing 5G network -- Trump national security officials are considering an unprecedented federal takeover of a portion of the nation’s mobile network to guard against China, according to sensitive documents obtained by Axios. We’ve got our hands on a PowerPoint deck and a memo — both produced by a senior National Security Council official — which were presented recently to senior officials at other agencies in the Trump administration. documents say America needs a centralized nationwide 5G network within three years. There'll be a fierce debate inside the Trump administration — and an outcry from the industry — over the next 6-8 months over how such a network is built and paid for. Two options laid out by the documents:
- The U.S. government pays for and builds the single network — which would be an unprecedented nationalization of a historically private infrastructure.
- An alternative plan where wireless providers build their own 5G networks that compete with one another — though the document says the downside is it could take longer and cost more. It argues that one of the “pros” of that plan is that it would cause “less commercial disruption” to the wireless industry than the government building a network.
A source familiar with the documents' drafting says Option 2 is really no option at all: a single centralized network is what's required to protect America against China and other bad actors. Option 1 would lead to federal control of a part of the economy that today is largely controlled by private wireless providers. In the memo, the Trump administration likens it to "the 21st century equivalent of the Eisenhower National Highway System" and says it would create a “new paradigm” for the wireless industry by the end of Trump's current term. The PowerPoint presentation says that the U.S. has to build superfast 5G wireless technology quickly because “China has achieved a dominant position in the manufacture and operation of network infrastructure,” and “China is the dominant malicious actor in the Information Domain.”
In letter to congress, social media companies outline plans for mass censorship - Leading US technology companies are hiring thousands more human reviewers and developing artificial intelligence algorithms to monitor and censor political speech on the internet, according to letters submitted to Congress prior to January 16 and released on January 25. The letters from Facebook, Twitter and Google are written follow-ups to questions at the Senate Intelligence Committee hearing into “Social Media Influence in the 2016 U.S. Elections,” held on November 1, 2017. Facebook Vice President and General Counsel Colin Stretch wrote that the company will double the size of its army of content moderators from 10,000 to 20,000 people, and add another 3,000 employees to its Community Operations department, which will “review content that our users and automated tools flag as inappropriate, dangerous, abusive, or otherwise violating our policies.” These changes will help “to identify new kinds of abuse on our platform, and to respond quickly to reports from our community and from law enforcement.” In addition, Facebook is adding 1,000 staff to its “teams dedicated to reviewing ads around the globe.” Their work will be used to “train our automated review systems to be more efficient and effective at finding improper ads and enforcing our policies.” Facebook’s human reviewers work in tandem with increasingly powerful artificial intelligence algorithms, which learn to mirror the decision-making behavior of human censors, allowing for a vast increase in the scale of censorship.
In a Major Free Speech Victory, a Federal Court Strikes Down a Law that Punishes Supporters of Israel Boycott -- A federal judge on Tuesday ruled that a Kansas law designed to punish people who boycott Israel is an unconstitutional denial of free speech. The ruling is a significant victory for free speech rights because the global campaign to criminalize, or otherwise legally outlaw, the Boycott, Divestment, and Sanctions movement has been spreading rapidly in numerous political and academic centers in the U.S. This judicial decision definitively declares those efforts — when they manifest in the U.S. — to be a direct infringement of basic First Amendment rights guaranteed by the U.S. Constitution. The enjoined law, enacted last year by the Kansas legislature, requires all state contractors — as a prerequisite to receiving any paid work from the state — “to certify that they are not engaged in a boycott of Israel.” The month before the law was implemented, Esther Koontz, a Mennonite who works as a curriculum teacher for the Kansas public school system, decided that she would boycott goods made in Israel, motivated in part by a film she had seen detailing the abuse of Palestinians by the occupying Israeli government, and in part by a resolution enacted by the national Mennonite Church. The resolution acknowledged “the cry for justice of Palestinians, especially those living under oppressive military occupation for fifty years”; vowed to “oppose military occupation and seek a just peace in Israel and Palestine”; and urged “individuals and congregations to avoid the purchase of products associated with acts of violence or policies of military occupation, including items produced in [Israeli] settlements.”
GOP lawmakers confident on prison reform ahead of midterms | TheHill: – Republican lawmakers — boosted by support from the White House, governors and outside conservative groups — say they’re confident they will pass a criminal justice reform bill before the 2018 midterm elections. “I think it would be a great thing if we could pass prison reform and get it to the president’s desk,” Sen. John Cornyn (R-Texas), the chief vote counter for the GOP majority in the Senate, told a group of donors affiliated with billionaire conservative brothers Charles and David Koch on Saturday night.“I’m more optimistic about that happening this year and in the next few months than I’ve ever been.” Prison reform is a priority for the Koch network, which is holding its winter seminar in the California desert this weekend. They’ve been working closely with White House senior adviser Jared Kushner, who has been spearheading the effort for the administration. “They’re fully supportive and hopefully they can use the bully pulpit to support it,” said Mark Holden, the senior vice president for Koch Industries.
Trump Ignores DOJ Warning, Notifies Sessions He Wants FISA Memo Released -- President Trump broke with the Department of Justice last week by calling for the release of a four-page "FISA memo" purportedly summarizing widespread surveillance absues by the FBI, DOJ and Obama Administration, reports the Washington Post.The President's desire was relayed to Attorney General Jeff Sessions by White House Chief-of-Staff John Kelly last Wednesday - putting the Trump White House at odds with the DOJ - which said that releasing the classified memo written by congressional republicans "extraordinarily reckless" without allowing the Department of Justice to first review the memo detailing its own criminal malfeasance during and after the 2016 presidential election. The decision to release the memo ultimately lies with congress. Somehow WaPo knew that Kelly and Sessions spoke twice last Wednesday - once in person during a "small-group afternoon meeting" and again that night over the phone. Trump "is inclined to have that released just because it will shed light," said a senior administration official who was speaking on the condition of anonymity to recount private conversations. "Apparently all the rumors are that it will shed light, it will help the investigators come to a conclusion." The memo, written by staffers for House Intelligence Committee chairman Rep. Devin Nunes (R-CA), was made available for all Congressional House members in mid-January for viewing in a secure room. Lawmakers who have seen the document have called for its release to the general public, as it is said to contain "jaw dropping" revelations of extensive abuse of power and highly illegal collusion between the Obama administration, the FBI, the DOJ and the Clinton Campaign against Donald Trump and his team during and after the 2016 presidential election.
Trump to Review House Memo Alleging FBI Abuses Before Release - President Donald Trump will review a classified Republican memo that alleges bias and counterintelligence abuses in government surveillance of people surrounding him before releasing it publicly, a White House aide said Tuesday. The memo has passed from a House committee to the White House for review, which is required because the document is based on classified information. Trump has as many as five days to review the document for national security concerns, but it won’t be mentioned as part of his State of the Union speech to Congress Tuesday, White House counselor Kellyanne Conway told Fox News. “It’s up to the president,” Conway told CNN in a separate interview regarding the timing of its release. “We want it to be a deliberative process and we respect the process, the transparency and accountability. But can’t really comment on the substance of the memo.” The majority-Republican House Intelligence Committee decided to seek release of the memo on a party-line vote Monday, Representative Adam Schiff, the ranking Democrat on the panel, said. The Republican majority refused along party lines to disclose a competing memo written by Democrats. “This is an effort to circle the wagons around the White House and distract from the Russia probe,” Schiff said. Committee Republican Mike Conaway of Texas, assigned to head the probe of election-meddling by Russia, said “yes,” when asked if he was confident that releasing the memo wouldn’t endanger national security. He said the Democratic memo might be released at a later time. Schiff said the committee’s majority has also voted to open an investigation of the Justice Department and the Federal Bureau of Investigation. Conaway rejected that characterization, saying oversight of the agencies was always part of the committee’s duties.
Trump doesn't sanction Russia for election meddling -- President Donald Trump had a chance this week to show he was tough on Russia — and he mostly blew it. On Monday, he failed to meet a deadline to impose sanctions on individuals who do business with Russian military or intelligence entities.But he did release a list — which is a report from the Treasury Department — of more than 200 influential, wealthy Russians and senior government officials as part of a naming-and-shaming exercise to put top Russians on notice. Congress mandated both actions — the sanctions and the list — to punish Russia for meddling in the 2016 presidential election. Here’s the backstory: Last August, Trump reluctantly signed into law the Countering America’s Adversaries Through Sanctions Act. Republican and Democratic lawmakers crafted the bill in response to Trump’s unusual warmth toward Russian President Vladimir Putin and his refusal to blame Russia for interfering in the election. The legislation almost unanimously passed both chambers, and it was clear that Congress would override a presidential veto. It was explicitly designed to make old sanctions against Russia permanent and pressure Trump to impose new ones. The bill forced Trump to impose costs on Putin for interfering in America’s democratic process and his interventions in Ukraine and Syria. But Trump resented Congress’s move to box him in on Russia policy. The president slammed the legislation in a written signing statement, calling it “seriously flawed,” and said that he could “make far better deals with foreign countries than Congress.” Sean Kane, a former sanctions official at the Treasury Department, told me that most presidential administrations balk at Congress telling them whom and what to sanction — that’s power the White House likes to wield. So Trump missed Monday’s deadline to impose the new sanctions. But the administration did do something else it was required to do: It released a list of 210 Russian leaders and billionaires with purported ties to Putin in order to indicate that the administration was watching them.
U.S. Releases Sweeping List of Russian Oligarchs and Officials - The U.S. identified 210 Russian billionaires and top officials in a sweeping list required under last summer’s sanctions law, but underlined that those named aren’t being targeted for new restrictions.The highly anticipated document, mandated by Congress over White House objections to punish Russia for alleged meddling in the 2016 election, had fueled alarm in Moscow and threatened to further escalate tensions between the Cold War rivals. The Treasury announced the list just ahead of a midnight deadline, emphasizing it doesn’t mean those listed “meet the criteria for designation under any sanctions program.” Relieved investors pushed yields on Russian 10-year bonds to the lowest levels in five years as the Treasury provided no details on a separate report on the effect of expanding sanctions to Russian sovereign debt. The State Department told Congress Monday that provisions of the law affecting the defense and intelligence sector are having a deterrent effect, making new sanctions on dealing with them mandated by the law unnecessary.
Trump's Stance on Russia Sanctions Angers Both Moscow and Washington — The Trump administration managed the unusual feat this week of outraging both Russia’s leaders in Moscow and Russia’s biggest critics in Washington with its handling of a new sanctions law intended to punish the Kremlin for interference in the 2016 American elections.The State Department angered members of Congress by announcing on Monday that it did not plan to impose new sanctions called for in a measure that President Trump reluctantly signed into law last year. And the Treasury Department angered Moscow late Monday night — Tuesday morning in Russia — with a new name-and-shame list identifying 210 senior Russian political and business figures.The twin announcements left a muddled impression of how Mr. Trump plans to approach the Kremlin in his second year in office even as investigators search for evidence of collaboration between his campaign and Russian agents. His domestic opponents complained that once again Mr. Trump seemed to be in thrall to Russia, while the Kremlin complained that he was a captive of what it described as the American deep state.“This is definitely an unfriendly act,” President Vladimir V. Putin said when asked about the Treasury Department list during a campaign event in advance of Russia’s own presidential election in March. “It is complicating Russian-American relations, where the situation is already hard, and is definitely harming international relations in general.”Mr. Putin said Moscow had pondered virtually breaking ties with Washington over what is known in Russia as the “Kremlin report,” but decided against it. “We were prepared to undertake retaliatory steps, and quite serious ones too, which would cut our relations to zero,” he said. “But we will refrain from such steps for the time being.” On Capitol Hill, lawmakers criticized Mr. Trump for not imposing additional sanctions on Russia as envisioned in the legislation passed over his objections by veto-proof bipartisan majorities in both houses last August.
FBI Deputy Director McCabe Steps Down, Forced To Retire Early -- In a move that was widely expected (although not for another month or so), Deputy FBI Director Andrew McCabe is stepping down effective Monday, NBC reported.McCabe, who briefly served as acting director last year after Trump fired Comey, first let it slip to the Washington Post late last year that he would be retiring in the coming months as Congressional Republicans targeted him for criticism surrounding his pro-Clinton bias (McCabe's wife even secured campaign funding from Clinton ally Terry McAuliffe, something he initially failed to disclose).BREAKING: Andrew McCabe has stepped down effective today as FBI deputy director, multiple sources familiar with the matter tell @ NBC News pic.twitter.com/kLrhDjzq7B— MSNBC (@MSNBC) January 29, 2018 Around the time of the reports of his impending retirement, McCabe had spent several marathon sessions answering questions from Congressional committees behind closed doors.It was expected that McCabe would hang on until early March, when he would become eligible for his full pension. It's unclear why he's choosing to step down early. Several media outlets reported that McCabe is using his remaining vacation days to go on "terminal leave" and that his official retirement from the agency won't happen until March, allowing him to collect the full pension. As we noted last week, FBI Director Wray threatened to resign after being pressured by AG Jeff Sessions. McCabe's accelerated resignation may a sign that Trump appointee Christopher Wray - who succeeded James Comey as FBI Director - is finally cleaning house. According to Axios, McCabe may be leaving in anticipation of the release of an inspector general's report on how the FBI handled the Clinton email investigation.
Andrew McCabe Under Active DOJ Investigation For Sitting On Weiner Laptop Emails - The Justice Department's internal watchdog has been investigating former FBI Deputy Director Andrew McCabe for apparently sitting on emails obtained from Anthony Weiner's laptop, the Washington Post's Devlin Barrett and Karoun Demirjian reported Tuesday (of note, Barrett was recently outed as a potential source of FBI leaks, according to text messages between FBI employees accused of political bias). The DOJ Inspector General, Michael Horowitz, wants to know why McCabe allegedly took little to no action for approximately three weeks on the trove of emails sent by Hillary's top aide, Huma Abedin - Weiner's wife, which were discovered during an unrelated investigation into Weiner "sexting" with an underage girl. The inspector general, Michael E. Horowitz, has been asking witnesses why FBI leadership seemed unwilling to move forward on the examination of emails found on the laptop of former congressman Anthony Weiner (D-N.Y.) until late October about three weeks after first being alerted to the issue, according to these people, who spoke on the condition of anonymity to discuss the sensitive matter.A key question of the internal investigation is whether McCabe or anyone else at the FBI wanted to avoid taking action on the laptop findings until after the Nov. 8 election, these people said. It is unclear whether the inspector general has reached any conclusions on that point. –WaPo In late September 2016, approximately five weeks before the US election, thousands of Huma Abedin's work-related emails were found on Weiner's laptop. According to WaPo, the New York FBI office alerted FBI headquarters within days - though accounts as to the exact date vary. Either way, McCabe was made aware of the matter by late September or early October, as the NY field office agents wanted to discuss the issue with DC Clinton email investigators to compare notes. According to people familiar with the matter, officials at FBI headquarters requested the emails' metadata - which include the sender, recipient and timestamp.
The Russiagate Stakes Are Extreme -- The Republicans’ delay in releasing the summary of the House Intelligence Committee’s Russiagate investigation is giving weight to the presstitutes’ claim that the report is not being released, because it is a hack attempt at a Trump coverup that is not believable. Only Republicans are stupid enough to put themselves in such a situation. Readers ask me why the summary memo is not released if it is real. There must be some reasons besides the stupidity of Republicans. Yes, that is so. Among the many reasons that might be blocking release are:
1) Republicans are very national security conscious. They don’t want to provide precedents for the release of classified information.
2) Many Republican congressional districts host installations of the military/security complex. Upsetting a large employer and directing campaign financing to a challenger is a big consideration.
3) The George W. Bush/Dick Cheney regime was a neoconservative regime. One consequence is that Republicans are influenced by neoconservatives who stress the alleged “Russian threat.”
4) The Israel Lobby can unseat any member of the House and Senate. The Israel Lobby is allied with the neoconservatives and this alliance intends to keep the US militarily active against perceived threats to Israel’s hegemony in the Middle East and against Russia, which supports Syria and Iran, countries perceived as threats by Israel.
5) Many Republicans are themselves invested in false Russiagate allegations against Trump and would like to replace him with Pence. Other Republicans believe that Trump is undermining Washington’s expensively-purchased foreign alliances and, thereby, undermining US power.
Many Americans do not seem to understand what is at stake. What America is confronted with is a coup conspiracy organized by top officials of the Obama Justice Department, FBI, CIA, the Hillary DNC, and the presstitute media to overturn the result of a democratic election and remove the president from office. The basis of the coup is a fake dossier purchased for money that consists of unsupported allegations against Trump and that was used to obtain warrants from the FISA court to spy on Trump and various associates hoping to find something that can be used against Trump. Regardless, the false allegations could be fed to the CIA’s media assets and used to create a scandal requiring a special prosecutor to investigate Russiagate. Once the investigation was under way, the presstitutes kept the scandal alive hoping to convince enough Americans that Trump must have done something—“where there is smoke, there is fire”—that justifies his removal. It worked against Richard Nixon, but not against Ronald Reagan, and Trump is no Reagan.
Stormy Weather - Kunstler - For those of us who are not admirers of President Trump, it’s even more painful to see the Democratic opposition descend into the stupendous dishonesty of the Russian Collusion story. When the intelligentsia of the nation looses its ability to think — when it becomes a dis-intelligentsia — then there are no stewards of reality left. Trump is crazy enough, but the “resistance” is dragging the country into dangerous madness. It’s hard not to be impressed by the evidence in the public record that the FBI misbehaved pretty badly around the various election year events of 2016. And who, besides Rachel Maddow, Anderson Cooper, and Dean Baquet of The New York Times, can pretend to be impressed by the so far complete lack of evidence of Russian “meddling” to defeat Hillary Clinton? I must repeat: so far. This story has been playing for a year and a half now, and as the days go by, it seems more and more unlikely that Special Prosecutor Robert Mueller is sitting on any conclusive evidence. During this time, everything and anything has already leaked out of the FBI and its parent agency the Department of Justice, including embarrassing hard evidence of the FBI’s own procedural debauchery, and it’s hard to believe that Mr. Mueller’s office is anymore air-tight than the rest of the joint.If an attorney from Mars came to Earth and followed the evidence already made public, he would probably suspect that the FBI and DOJ colluded with the Clinton Campaign and the Democratic Party to derail the Trump campaign train, and then engineer an “insurance policy” train wreck of his position in office. Also, in the process, to nullify any potential legal action against Clinton, including the matter of her email server, her actions with the DNC to subvert the Sanders primary campaign, the Steele dossier being used to activate a FISA warrant for surveillance of the Trump campaign, the arrant, long-running grift machine of the Clinton Foundation (in particular, the $150 million from Russian sources following the 2013 Uranium One deal, when she was Secretary of State), and the shady activities of Barack Obama’s inner circle around the post-election transition. There is obviously more there there than in the Resistance’s Russia folder.
WSJ Editorial Board Calls On Trump To Release The Memo - In an editorial that appeared in today's paper, the Wall Street Journal editorial board officially called on the Trump White House to release the infamous "FISA memo" - something that conservatives have been demanding for weeks now, with little luck.Fortunately, shortly after the editorial was posted online last night, Trump promised that the memo was "100%" going to be released - despite pleas from Rod Rosenstein, the deputy AG who appointed Mueller and is purportedly named in the four page memo - that its release could compromise existing investigations. This morning, Chief of Staff John Kelly revealed in a Fox radio interview that he had seen the memo, and that it will be released "pretty quick."It's unsurprising that Democrats have opposed the memo's release at every turn - accusing Republicans of distorting the truth for political ends. The hypocrisy here is glaring because, of course, Democrats have an enormous political stake in whether this memo sees the light of day, or not. But tellingly, in their criticisms, Dems have chosen to ignore the central question: Is the FBI guilty of "egregious abuses", like the Nunes has claimed?Suddenly, it seems, progressives who went into hysterics following Snowden's decision to expose the NSA's shockingly pervasive - and legally dubious - domestic surveillance programs - are no longer concerned with abuses of power by federal law enforcement or intelligence agencies, and apparently no longer believe that FISA decisions should be subject to more oversight. Many also vociferously opposed the ratification of Section 702 of the FISA Act, which Congress voted to renew earlier this month. As anybody who can remember when the FBI was run by J Edgar Hoover, the agency's history is littered with examples of these types of abuses.
FBI and White House clash over controversial Republican memo - BBC News: The FBI has questioned moves to release a secret memo said to accuse it of abusing surveillance powers to target Donald Trump's presidential campaign. "We have grave concerns about the material omissions of fact that fundamentally impact the memo's accuracy," the agency said. There are suggestions the Congressional memo may be published on Thursday. Democrats fear the document may be an attempt to discredit the inquiry into Trump campaign links to Russia. Democratic Congressman Adam Schiff accused his Republican counterparts of altering the text of the document after it was voted on. He said it should be withdrawn and reviewed again prior to any possible public release. Special Counsel Robert Mueller is leading the investigation into alleged Russian meddling and possible obstruction of justice by members of the Trump administration. The White House has to approve the memo's release but its chief of staff, John Kelly, told Fox News Radio it would be "released here pretty quick" for the "whole world" to see.The four-page document was compiled by staffers for House Intelligence Committee (HIE) head Devin Nunes, a member of Mr Trump's Republican party. It apparently accuses the Department of Justice (DoJ) and the FBI (Federal Bureau of Investigation) of abusing a surveillance programme known as the Foreign Intelligence Surveillance Act (Fisa) during the 2016 presidential election campaign. The allegation is that the FBI ran surveillance on a member of Mr Trump's campaign. According to lawmakers who saw the memo, it says the FBI obtained a warrant to spy on the campaign aide on the basis of unproven accusations against Mr Trump known as the "Russian dossier". That dossier was compiled by former UK intelligence agent Christopher Steele with money financed in part from Hillary Clinton's campaign.
FBI director prepared to issue rebuttal if Nunes memo released, Fran Townsend says -- FBI director Christopher Wray is prepared to issue a rebuttal if the White House releases Rep. Devin Nunes's classified memo alleging inappropriate surveillance of the Trump campaign by the FBI and Justice Department, according to CBS News senior national security analyst Fran Townsend. The FBI issued a statement Wednesday that they have "grave concerns" about the memo and the "material omissions of fact that fundamentally impact the memo's accuracy." Townsend, who served as homeland security adviser to President George W. Bush, told "CBS This Morning" she believes the FBI is worried about both the accuracy of the memo's contents and what it may reveal about their sources and methods. "I think we have to remember the Nunes memo is an advocacy piece. It's not a fact piece. This is Chairman Nunes' summary of what he believes the abuses are. For that reason, it's one-sided," Townsend said. Townsend, who spent 13 years at the Justice Department, said it's simply "not possible" for one partisan actor to push through a FISA warrant or to obtain one based on a single piece of evidence. "There's multiple internal reviews in the FBI, there's a legal review at the Justice Department, it goes to the attorney general, or in this case, the deputy who reviews it and then it goes to an independent federal judge who looks at it. No FISA warrant relies on a single piece of evidence. So if the allegation from Chairman Nunes is that they relied solely on the Steele dossier, that's not possible. It never happens," she said. Earlier this week, FBI Deputy Director Andrew McCabe stepped down amid mounting pressure from the FBI director. Townsend also addressed a Washington Post report about an internal Justice Department probe focusing on McCabe's slow handling of a batch of Hillary Clinton's emails uncovered in the late stages of the 2016 campaign. "My understanding here from sources inside the FBI was initially they believe there might have been as many as 6,000 e-mails some of which may have been classified and there would have had to been an entire process to review that," Townsend said. "I think we shouldn't attribute malice where it might have just been bureaucratic caution."
FBI Agents Issue Statement In Support Of FBI Director -- With just hours to go until the allegedly public release of the FISA memo - unless either the White House or Congress gets cold and decide to halt the public distribution of the memo - on Thuesday afternoon, the FBI Agents Association joined the fray, when it issued a statement of support for FBI Director Christopher Wray, who according to CNN has hinted he may resign if the memo is released. This is what the 3-tweet statement said: "The FBI Agents Association appreciates FBI Director Chris Wray standing shoulder to shoulder with the men and women of the FBI as we work together to protect our country from criminal and national security threats. As Director Wray noted, FBI Special Agents have remained steadfast in their dedication to professionalism, and we remain focused on our important work to protect the country from terrorists and criminals—both domestic and international. Special Agents take a solemn oath to our country and to the Constitution, and the American public continues to be well-served by the world’s preeminent law enforcement agency." It was not immediately clear how releasing a memo which allegedly reveals how the FBI "was weaponized by the Obama officials/DNC/HRC to target political adversaries" prevents the FBI from continuing to serve the American public.
Speaker Ryan Backs Trump Decision To Release The Memo Friday, Congress "Doing Its Job Of Oversight" -- Republicans are reportedly planning to kick off the month of February by releasing the infamous FISA memo alleging "egregious abuses" of FISA surveillance powers by the FBI, Reuters reported citing a Trump administration official who said on Wednesday that the memo is "likely to be released on Thursday."The four-page memo has circulated among the House, and has been seen by the president and his chief of staff, John Kelly. Trump has until Friday to decide whether the memo should remain classified.The news comes after the FBI yesterday issued a "rare public statement" condemning the memo as factually inaccurate, saying it had "grave concerns" about its release, which it said could be detrimental to national security.Bloomberg reports that The White House plans to sign off on the memo's release today and send it back to Congress with a declaration that is has been declassified. The committee would then release the memo.The release is likely to come Friday morning, Fox News is told.As White House legal and national security experts reviewed the document, the Senate’s No. 3 Republican, John Thune, urged his House of Representatives colleagues to allow the Senate Intelligence Committee to review the document and to heed the FBI’s concerns before they made it public.The administration official told Reuters earlier the memo was likely to be released on Thursday. The timing, however, remained in flux. Speaker Paul Ryan dismissed Nancy Pelosi and Chuck Schumer's demands that Nunes resign, saying Congress is "doing its job of oversight" with the memo, adding that "if civil liberties were abused with FISA, then the memo needs to come out." As a reminder, the FISA memo accuses the FBI and Justice Department of misleading a Foreign Intelligence Surveillance Court judge in March as they sought to extend an eavesdropping warrant against Trump campaign adviser Carter Page, four sources familiar with it told Reuters. The memo contends that the FBI and Justice Department failed to tell the judge that some of the information used to justify the warrant included portions of a dossier of Trump-Russia contacts that was opposition research paid for by Democrats.
FBI Warns Republican Memo Could Undermine Faith In Massive, Unaccountable Government Secret Agencies — Stressing that such an action would be highly reckless, FBI Director Christopher Wray warned Thursday that releasing the “Nunes Memo” could potentially undermine faith in the massive, unaccountable government secret agencies of the United States. “Making this memo public will almost certainly impede our ability to conduct clandestine activities operating outside any legal or judicial system on an international scale,” said Wray, noting that it was essential that mutual trust exist between the American people and the vast, mysterious cabal given free rein to use any tactics necessary to conduct surveillance on U.S. citizens or subvert religious and political groups. “If we take away the people’s faith in this shadowy monolith exempt from any consequences, all that’s left is an extensive network of rogue, unelected intelligence officers carrying out extrajudicial missions for a variety of subjective, and occasionally personal, reasons.” At press time, Wray confirmed the massive, unaccountable government secret agencies were unaware of any wrongdoing for violating constitutional rights.
The Nunes FBI memo: What you need to know -- President Donald Trump on Friday announced the declassification of a disputed House memo that alleges wrongdoing by top bureau officials, allowing its release over the objection of congressional Democrats and intelligence leaders. “The memo was sent to Congress, it was declassified,” the president told reporters in the Oval Office. “Congress will do whatever they’re going to do, but I think it’s a disgrace what’s happening in our country.” The four-page document, compiled by the staff of the House Intelligence Committee’s chairman, Rep. Devin Nunes (R-Calif.), has sparked tense clashes between Republican and Democratic officials. Senate Minority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) on Thursday called for Nunes to be stripped of his position atop the panel because of how he has handled the matter. Republicans pushed back, stressing that the memo’s release was necessary given the seriousness of its claims.The document alleges that senior FBI officials improperly used a secret surveillance program, commonly known as FISA, to target the Trump campaign in 2016. The memo portrays bureau officials as overstepping agency rules in their investigation of Carter Page, a former Trump campaign aide, and his ties to Russian officials, while carrying out their probe of foreign interference in the 2016 election. One of the key contentions in the document is that authorities obtained a warrant to surveil Page without the adequate evidence required for a FISA warrant. You can read the full text of the memo here.
Trump in open clash with FBI over Russia probe -- The political conflict in Washington expressed in the Russia investigation has reached a new and extraordinary level of intensity, with the White House expected to deliver a public rebuff to the FBI and the Justice Department Friday. White House officials told the press Thursday afternoon that President Trump had approved the public release of the so-called “Nunes memo” over the vociferous objections of the FBI, and that it would probably be sent back to Congress for release sometime Friday.The Nunes memo is a four-page document drafted by the staff of the House Intelligence Committee, chaired by Republican Representative Devin Nunes of California. It reportedly states that the FBI initiated wiretap surveillance of former Trump foreign policy adviser Carter Page in October 2016, at the height of the presidential election campaign, based on unproven allegations of ties between Page, Trump and the Russian government.These allegations make up the bulk of a 35-page report prepared by Christopher Steele, a former British intelligence agent hired by Fusion GPS, a Washington-based muckraking firm that was commissioned by the Democrats to conduct opposition research into Trump. Steele compiled raw, unverified material supplied by his Russian contacts, purporting to document Trump’s efforts to develop business in Moscow and the Russian government’s efforts to cultivate relations with Trump’s campaign staff and advisers.Whatever its own lies and distortions, the Nunes memo apparently asserts one irrefutable truth. It argues that the Russia investigation was concocted, without any genuine basis in fact, by sections of the intelligence apparatus who supported Hillary Clinton’s campaign.Despite the massive media propaganda on this issue, no actual evidence has ever been presented of Russian interference in the 2016 elections (whether through hacking or through the purchase of small quantities of pro-Trump advertising on social media). This bogus issue has been placed at the center of American political life to promote a definite line in foreign policy, demanding greater US military intervention in the Syrian civil war and a more militantly anti-Russian posture in Eastern Europe, the Middle East and Central Asia.
Trump has picked a fight with the FBI. He’ll be sorry. - Presidents don’t win fights with the FBI. Donald Trump apparently wants to learn this lesson the hard way. Most presidents have had the sense not to bully the FBI by defaming its leaders and — ridiculously — painting its agents as leftist political hacks. Most members of Congress have also understood how unwise it would be to pull such stunts. But Trump and his hapless henchmen on Capitol Hill, led by Rep. Devin Nunes (R-Calif.), have chosen the wrong enemy. History strongly suggests they will be sorry. The far-right echo chamber resounds with wailing and braying about something called the “deep state” — a purported fifth column of entrenched federal bureaucrats whose only goal in life, apparently, is to deny America the greatness that Dear Leader Trump has come to bestow. It is unclear who is supposed to be directing this vast conspiracy. Could it be Dr. Evil? Supreme Leader Snoke? Hillary Clinton? This whole paranoid fantasy, as any sane person realizes, is utter rubbish.* The asterisk is for the FBI. The bureau has no political ax to grind, and the attempt by Nunes and others to portray it as some kind of liberal cabal is comical. But it does have great institutional cohesion, a proud sense of mission, and a culture that inculcates the “us vs. the world” attitude that is so common among law enforcement agencies. I’m old enough to remember the days when J. Edgar Hoover ran the place like his own private Stasi — wiretapping civil rights leaders such as the Rev. Martin Luther King Jr., infiltrating anti-Vietnam War groups with informers and provocateurs, seeking or manufacturing damaging “evidence” against those he targeted, keeping copious files on the peccadilloes of the politicians who were theoretically his masters. Presidents from Franklin D. Roosevelt through Richard Nixon coexisted warily with Hoover, afraid to fire him for fear of all the beans he might spill. Harry S. Truman was an especially bitter opponent. “We want no Gestapo or secret police. The FBI is tending in that direction,” he said. But when Truman left office, Hoover was still FBI director. He held on to the job from the FBI’s founding in 1935 until his death in 1972 — six weeks before the Watergate break-in.
FISA Memo Released: Here's What It Says - The just released FISA memo accuses senior officials at the DOJ of inappropriately using biased opposition research into then-candidate Trump to obtain surveillance warrants on transition team members as part of the federal investigation into the Trump campaign and Russia. According to the document, information from the the so-called Steele dossier was "essential" to the acquisition of surveillance warrants on Trump campaign aide Carter Page. It claims that then-deputy FBI director Andrew McCabe told the committee in December that without the information from the Steele dossier, no surveillance warrant for Page would have been sought. The memo alleges that the political origins of the dossier — paid for by Hillary Clinton and the Democratic National Committee (DNC) — were not disclosed to the clandestine court that signed off on the warrant request. The document claims that although the FBI had "clear evidence" that the author of the dossier, former British spy Christopher Steele, was biased against Trump, it did not convey that to the surveillance court when making its warrant applications. Steele told then-associate deputy attorney general Bruce Ohr that he was "desperate that Donald Trump not get elected and was passionate about him not being president," the memo says. House conservatives have touted the memo's revelations as “worse than Watergate” and hinted that it could prove the undoing of the federal investigation into Trump’s campaign. Meanwhile, Democrats on the panel say that it is a cherry-picked set of inaccurate accusations designed to kneecap special counsel Robert Mueller. They have drafted their own counter-memo to rebut the Republican-drafted document, but the majority voted against immediately making that document public earlier this week. The memo is based on a slate of highly-classified materials provided to the committee by the Justice Department itself, in a closed-door deal brokered by Speaker Paul Ryan (R-Wis.). Naturally, the DOJ has claimed that the release of the memo is an abrogation of the terms of that deal, an assertion spokesmen for both Ryan and Nunes have rejected.Meanwhile, the underlying evidence remains classified, a state of affairs that Democrats and some national security analysts say makes it impossible to independently verify the memo’s conclusions. As The Hill reported earlier, ahead of the document's release, Paul Ryan privately urged House Republicans not to overplay the document — and not to tie it to the Mueller investigation. Here are select excerpts from the FISA memo (full pdf below):
"That's It?" Comey Bashes "Dishonest And Misleading" FISA Memo - While the Democrats' response to the publication of the FISA memo was predictable, the one person's reaction to the FISA memo release that everyone was looking forward to, was none other than that of the man under whose watch it all happened: former FBI director James Comey, whose firing started the entire Mueller probe in the first place.And at 1:47pm ET we got it, when the former FBI director tweeted the following in response to a memo which "raises concerns about the legitimacy and legality of certain DOJ and FBI interactions with the Foreign Intelligence Surveillance Court." That’s it? Dishonest and misleading memo wrecked the House intel committee, destroyed trust with Intelligence Community, damaged relationship with FISA court, and inexcusably exposed classified investigation of an American citizen. For what? DOJ & FBI must keep doing their jobs. — James Comey (@Comey) February 2, 2018 Of course, with the memo now in the public, others have questions of their own addressed to Comey such as one asking if "Comey committed perjury, obstruction of justice or abuse of authority" when he certified the memo's veracity before the FISA court and several months later testified under oath in Congress that the dossier was "salacious and unverified." .@comey, you testified under oath to Congress that the dossier was “salacious and unverified,” yet you certified its veracity to the FISA Court prior to that testimony. Thats perjury, obstruction of justice, abuse of authority...what am I missing? #ObamaGate — John Cardillo (@johncardillo) February 2, 2018 Whether Comey is adversely impacted by the fallout from the FISA memo scandal is so far unknown, but it is clear that the war between Trump and the Deep State has just escalated to a level of never before seen animosity. How it is resolved is anyone's guess.
FBI Director Wray Tells Staff After Memo: "Keep Calm & Tackle Hard” - While Democrats and Republicans argue over the veracity and impact of the long-anticipated FISA memo, FBI Director Christopher Wray - who despite being appointed by President Trump opposed his push to have the memo released - sent a heartfelt note to the bureau's rank and file employees, reassuring them that this, too, shall pass, and thanking them for their dedicated service.While media reports have mostly focused on the superficial partisan squabbling, the work that the FBI does has a real impact on American communities that is felt far and wide. His upbeat, optimistic message contrasted with a tweet sent by his predecessor, former FBI Director James Comey - under whose watch most of these alleged abuses occurred."That's it?" the former director asked, before accusing the House Intelligence Committee, which compiled the memo under the leadership of Rep. Devin Nunes, of producing a document that is "dishonest and misleading."Meanwhile, the Democratic leadership warned the administration not to use the memo as a "excuse" to fire Special Counsel Bob Mueller, and Republican Sen. John McCain said the memo "serves only Putin's interests". Read Wray's note below in its entirety...The American people read the papers, and they hear lots of talk on cable TV and social media. But they see and experience the actual work you do - keeping communities safe and our nation secure, often dealing with sensitive matters and making decisions under difficult circumstances. And that work will always matter more.Talk is cheap; the work you do is what will endure.We speak through our work. One case at a time. One intelligence product at a time. One decision at a time.We do that work, and we stay laser-focused on doing great work, even when it's not easy, because we believe in the FBI. We believe in what it stands for and in what this institution means to people. And nothing is going to change that.We're going to keep doing that work, because we know who and what we are, and because we know that our mission comes first. The American people come first.So I ask you to keep doing your great work and keep being the great people you are. And I know that I consider it an incredible privilege to work beside you — and that I'm determined to defend your integrity and professionalism every day.Remember: keep calm and tackle hard. Thank you for standing strong together, and for keeping your faith in this institution that means so much to all of us.
GOP Reps Seek Criminal Prosecution Of FBI, DOJ Officials For "Full Throated" Illegal Misconduct And "Treason" -- Following the release of a four-page memo detailing rampant FISA warrant abuse by the FBI and DOJ, Rep. Paul Gosar (R-AZ) announced that he will seek the criminal prosecution of FBI and DOJ officials for the "full throated adoption of this illegal misconduct and abuse of FISA by James Comey, Andrew McCabe, Sally Yates and Rod Rosenstein" who Gosar called "traitors to our nation." Gosar focuses on the memo's claim that the FBI and DOJ did not mention that Christopher Steele, the ex-MI6 spy who compiled the dossier, was partially funded by the Clinton campaign and the DNC. "This is third world politics where the official government agencies are used as campaign attack dogs," Gosar said.The letter reads in part:The House Permanent Select Committee on Intelligence memorandum on the FBI abuse of FISA warrants and targeting a sitting President is not just evidence of incompetence but clear and convincing evidence of treason....I will be leading a letter to the Attorney General seeking criminal prosecution against these traitors to our nation."My full statement on the declassified memo: pic.twitter.com/eRo6ugpWQ9— Rep. Paul Gosar, DDS (@RepGosar) February 2, 2018 Meanwhile, Georgia GOP Gubernatorial candidate Sen. Michael Williams is calling for the prosecution of Comey - saying he should be "sent to prison for his crimes": "The leadership of the FBI and DOJ behaved in a way we would expect of the former Soviet Union, not the United States of America. I applaud Representative Nunes and other Republican members of the House Intel Committee for fighting and exposing corruption. Americans are tired of corrupt bureaucrats and their career politician enablers. If powerful leaders are not held accountable, the American people will never regain faith in the institutions meant to protect us. Former FBI Director James Comey was entrusted with one of the most powerful positions in the world. Sadly, he intentionally abused his power in an effort to destroy Donald Trump's presidency. He should be prosecuted to the fullest extent of the law and sent to prison for his crimes. No one is above the law. No one." We're sure Attorney General Jeff Sessions - who resisted calls for a second special counsel to investigate FBI misconduct - will take Gosar's request seriously, despite praising Deputy AG Rod Rosenstein earlier today for representing "the kind of quality and leadership that we want in the department" - right after the FISA memo detailing his conduct was released.
Release of Nunes memo throws anti-Russia campaign into disarray -- The Democratic Party was thrown into disarray Friday after the publication of a classified memo exposing as a factionally-motivated witch-hunt the investigation by leading intelligence agencies into the Trump administration’s alleged collusion with Russia.The so-called Nunes memo, which Democratic lawmakers, US intelligence agencies, and major newspapers had been seeking to block for days, alleges that the FBI under the Obama administration used discredited sources and withheld key information to initiate a wiretap of former Trump campaign adviser Cater Page.The Democrats responded to the prospective release of the Nunes memo with undisguised hysteria, declaring that it threatened National Security and was insufficiently deferential to the US intelligence agencies. Now that the memo has been released, Democrats’ claim that it contains sensitive national security secrets has been exposed as lies.The memo, written by Republican House Intelligence Committee Chairman Devin Nunes, claims that the FBI obtained a Foreign Intelligence Surveillance (FISA) court authorization to wiretap Page in the fall of 2016 based on a memo compiled by former British intelligence official Christopher Steele.The so-called Steele dossier, which was released to the public last year, made lurid allegations that Russian government officials had recordings of Trump engaging in “perverted sexual acts” with prostitutes “which have been arranged/monitored by the FSB [Russian intelligence service].” According to the Nunes memo, FBI director James Comey called the Steele Dossier “salacious and unverified” in congressional testimony in June 2017.In perhaps its most explosive passage, the memo alleges that Andrew McCabe, a deputy FBI director who just stepped down this past week, testified before the House Intelligence Committee in December that “no surveillance warrant would have been sought… without the Steele dossier information.”
Here’s the Nunes Memo On the FBI and Russia Investigation … Read It For Yourself -- Nunes memo (PDF) -- Nunes memo (Text) Here it is in text form …
Five takeaways from the Nunes surveillance memo | TheHill: Republicans on the House Intelligence Committee released a controversial memo on Friday alleging that senior officials at the FBI and Department of Justice (DOJ) abused their powers to spy on members of President Trump’s campaign. The release of the memo, which was put together by House Intelligence Committee chairman Devin Nunes(R-Calif.) and declassified by the White House, came despite the fierce objections of Democrats, the FBI and the Justice Department, who described the documents as misleading and a partisan attempt to discredit the various Russia probes. Here are five takeaways from the memo, which has consumed Washington and sparked a political war between Trump allies and the nation’s premier law enforcement agencies.
- Both sides think the memo gives them political ammunition. For those on the right, the memo confirms every suspicion they have had about the U.S. government spying on the Trump campaign and political bias they say has reached the top levels of the DOJ and FBI.Democrats are firing back, saying that the memo is full of cherry-picked data points and “misleading allegations” aimed at discrediting special counsel Robert Mueller’s investigation into Trump’s campaign
- The FBI’s Russia investigation started with Papadopoulos. Trump’s allies have long alleged that the Russia probe is politically motivated because it began with the Steele dossier, which was funded in part by Hillary Clinton’s campaign and the Democratic National Committee (DNC).
- The controversy around FBI agent Peter Strzok is only going to grow
The Nunes memo says Peter Strzok — the FBI agent that Republicans have accused of harboring anti-Trump bias — was responsible for launching the FBI’s counterintelligence investigation into whether Trump campaign officials coordinated with Russia. - Memo claims that media was used to push the Trump-Russia narrative. Republicans have long accused the media of uncritically accepting Democratic talking points in an effort to push the idea that the Trump campaign colluded with Russia.
- The memo names names. Steele is the primary GOP target in the memo, which seeks to cast him as a partisan who compiled the dossier because he was hell-bent on keeping Trump from getting elected. But the memo also calls out a host of senior FBI and DOJ officials that Republicans have accused of bias.
The Biggest Nunes Memo Revelations Have Little To Do With Its Content - Caitlin Johnstone -- I think it’s very fitting that the ever-tightening repetitive loops of America’s increasingly schizophrenic partisan warfare have finally hit peak shrillness and skyrocketed into a white noise singularity on Groundhog Day. Right about now I feel like we’re at the part of the movie where Bill Murray is driving over a cliff in a pickup truck with a large rodent behind the wheel.If you only just started paying attention to US politics in 2017 what I’m about to tell you will blow your mind, so you might want to sit down for this: believe it or not, there was once a time when both of America’s mainstream political parties weren’t screeching every single day that there was news about to break any minute now which would obliterate the other party forever. No Russiagate, no Nunes memo, no Rachel Maddow red yarn graphs, no Sean Hannity “tick tock”, no nothing. People screaming that the end is nigh and it’s all about to come crashing down were relegated to street corners and the occasional Infowars appearance, not practicing mainstream political punditry for multimillion dollar salaries on MSNBC and Fox News. I’m not saying it’s a bad thing that Americans are starting to look critically at the power dynamics in their country, but the partisan filters they’ve slapped over their eyes are causing mass confusion and delusion. Now everyone who questions the CIA is a Russian agent and the term “deep state” suddenly means “literally anyone who doesn’t like Donald Trump”. Your take on the contents of the Nunes memo will put you in one of two radically different political dimensions depending on which mainstream cult you’ve subscribed to, and it will cause you to completely miss the point of the entire ordeal.
Clinton–Obama Emails: The Key to Understanding Why Hillary Wasn’t Indicted -- From the first, these columns have argued that the whitewash of the Hillary Clinton–emails caper was President Barack Obama’s call — not the FBI’s, and not the Justice Department’s. (See, e.g., here, here, and here.) The decision was inevitable. Obama, using a pseudonymous email account, had repeatedly communicated with Secretary Clinton over her private, non-secure email account. These emails must have involved some classified information, given the nature of consultations between presidents and secretaries of state, the broad outlines of Obama’s own executive order defining classified intelligence (see EO 13526, section 1.4), and the fact that the Obama administration adamantly refused to disclose the Clinton–Obama emails. If classified information was mishandled, it was necessarily mishandled on both ends of these email exchanges. If Clinton had been charged, Obama’s culpable involvement would have been patent. In any prosecution of Clinton, the Clinton–Obama emails would have been in the spotlight. For the prosecution, they would be more proof of willful (or, if you prefer, grossly negligent) mishandling of intelligence. More significantly, for Clinton’s defense, they would show that Obama was complicit in Clinton’s conduct yet faced no criminal charges. That is why such an indictment of Hillary Clinton was never going to happen. The latest jaw-dropping disclosures of text messages between FBI agent Peter Strzok and his paramour, FBI lawyer Lisa Page, illustrate this point.
Nomi Prins: Trump’s Financial Arsonists - naked capitalism -- Yves here. While Prins is correct to call out the Trump administration’s enthusiasm for financial deregulation, it’s not as if the Democrats have a great track record on that front. As we chronicled at nauseating length, Dodd Frank was weak and designed to be weakened further via having many provisions kicked over to further study before being finalized, which allowed lobbyists to have a second go at diluting them, and better yet, when public and press interest in the crisis abated. One important force for strengthening regulations came about by accident, via Danny Tarullo at the Fed taking on bank regulation and being determined and sharp-elbowed about it. Another was Gary Gensler at the CFTC, who was not expected to be a reformer.By contrast, Mary Jo White at the SEC was widely seen as not interested in enforcement, with Commissioner Kara Stein regularly opposing White’s mere gestures. Yes, White did some more enforcing that her replacement Jay Clayton is doing…but she had to at least feign taking a Democratic party, “we’re not really in the banks’ pocket” posture, as opposed to the Republicans being open about it.The CFPB has also been underwhelming under Obama. Obama chose Richard Cordray, who from his days as Ohio attorney general was a known “all hat, no cattle” type. He was late to implement a payday lending rule, and by virtue of it not becoming effective until after Trump took office, it was reversed. The CFPB’s biggest accomplishment is arguably its complaints database, but even then, it did not use it to maximum advantage. The Los Angeles Times, and following them, the Los Angeles prosecutor, identified the Wells Fargo fake account abuses. As regular readers know, when the press reported on the scale of the violations, the CFPB, which acted as the lead regulator on the sanctions, was criticized for not going after Wells executives.
Wall Street’s Top Cop Can’t Shake Money Ties to Mysterious Firm - Pam Martens - When Jay Clayton, President Donald Trump’s pick to head Wall Street’s top cop, the Securities and Exchange Commission, was preparing for his Senate confirmation in March of 2017, the watchdog nonprofit, Public Citizen, requested in a formal letter that the Senate Banking Committee investigate Clayton’s family ties to a mysterious company called WMB Holdings. On the day of the confirmation hearing, March 23, 2017, David Dayen penned this breathtaking assessment at The Nation:“Clayton’s family gets millions of dollars in annual dividends from a private company named WMB Holdings, some of which Clayton plans to retain even if confirmed. This company and its affiliated partners (Delaware Trust Co and CSC) are conduits for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering. Public Citizen found apparent links between these companies and Mossack Fonseca, the notorious Panamanian law firm at the center of the Panama Papers scandal.” Yesterday, Susan Antilla and Gary Rivlin, both Reporting Fellows with The Investigative Fund at The Nation Institute, filed a powerful look at Clayton’s conflicts and tenure at the SEC since his confirmation. That mysterious WMB Holdings came up again. Antilla and Rivlin wrote at The Intercept that the Clayton family’s stake in WMB Holdings, “held by his wife and children through a series of family trusts” is generating “more than $4 million in dividends per year.” Pause for a moment and think about that: what is the market value of an asset that generates $4 million in dividends annually. As a gauge, it would take $200 million in a stock that pays a 2 percent dividend to generate $4 million in annual cash flow. In other words, this is clearly a massive part of the family’s net worth, if not the overwhelming part. And yet, the Senate Banking committee was not curious enough to drill down to find out what this company is all about, despite a detailed request from Public Citizen, which even posed the questions that should be asked.
Don’t put SIFI designations on the back burner -- In a November report, the Treasury Department issued two primary recommendations for how the Financial Stability Oversight Council should exercise its authority to subject systemically important nonbanks to enhanced oversight. If followed, they would mark a deeply concerning shift in the FSOC’s approach to its role as a systemic risk regulator. First, the report recommends that the council consider the likelihood of a firm’s failure when deciding whether to designate it as a “systemically important financial institution,” or SIFI, and thus subjected to enhanced regulation and oversight by the Federal Reserve. But if the FSOC waits until a systemically important nonbank is likely to experience material distress, it’s too late.Consider American International Group. If the council designated AIG as systemically important in 2007, that would have done little to prevent its failure, in part because it takes years to develop and apply these standards. If the standards were applied in the early 2000s — when the company was healthy and no one thought it was going to experience distress — it’s possible that AIG may not have failed during the crisis or that its failure would have been less severe. It’s not even clear a method exists to accurately and consistently predict the expected chance of failure at a range of different financial institutions. The Treasury report doesn’t suggest how to predict the likelihood of failure or what chance of failure would be necessary to warrant designation. If the explanation above isn’t clear enough, simply consider the implications of this quote included in the report to justify the recommendation: “Material financial distress at a nonbank financial company does not pose a threat to U.S. financial stability if the company will not experience financial distress.” According to this approach, if the FSOC had existed back in 2004, regulators would not have designated a then-healthy Lehman Brothers. Instead, they would have argued that material financial distress at Lehman Brothers did not pose a threat to U.S. financial stability because Lehman Brothers would not experience financial distress
Otting defends OCC's steps to improve supervision post-Wells scandal - — Comptroller of the Currency Joseph Otting on Thursday again took issue with Senate Democrats over their concerns about internal supervisory changes following the Wells Fargo cross-selling scandal. Responding to a Jan. 17 letter from seven senators, criticizing the Office of the Comptroller of the Currency's progress in implementing supervisory changes, Otting wrote in a letter that their concerns were "unfounded" and their letter contained “errors and misperceptions.” He had criticized the lawmakers' claims earlier this month in a conference call with reporters. Otting said that the OCC had implemented “eight of the nine” recommendations that arose from its internal review of Wells’ cross-selling scandal. That review, which was initiated by former Comptroller Thomas Curry, highlighted many shortcomings in the agency’s supervisory process to detect wrongdoing associated with Wells’ employees opening unauthorized accounts on behalf of their customers.
Fed toughens stress test scenarios for 2018 — The Federal Reserve on Thursday released its 2018 stress testing scenarios, saying that it had dialed up its "severely adverse" scenario from last year. The central bank said it toughened the test because it is designed to be countercyclical — that is, contemplate more severe shocks when baseline conditions are better and less severe shocks when they are already unfavorable. The Fed conducts two separate stress testing scenarios every year on each of the bank holding companies under its supervision with more than $50 billion in assets. The first test is the Dodd-Frank Act Stress Test, which examines a bank’s balance sheet performance under the scenarios using a standard capital management plan. The second is the Comprehensive Capital Analysis and Review, which differs in that it uses the bank’s own capital management plan to better assess how the bank might actually perform under the same conditions. Each test examines a bank’s performance over nine future consecutive quarters. Three scenarios are assessed: baseline, where the prevailing market conditions are similar to what is expected over the nine-quarter timeline; adverse, which indicates moderate economic malaise; and severely adverse, which contemplates a major recession along the lines of the 2008 financial crisis. Under the Fed’s adverse scenario, the U.S. unemployment rate rises to a peak of 6.25% while asset prices face a pronounced decline. Equity market prices decline roughly 30% by the end of 2019 and experience greater volatility in the Fed’s 2018 adverse scenario, while house prices decline by 12% and commercial real estate prices decline by 15% by the end of 2020. This represents a less severe reduction in equity index valuations compared to the 2017 adverse scenario. The Fed’s severely adverse scenario, meanwhile, sees a “broad-based and deep correction in asset prices—including in the corporate bond and real estate markets,” according to the Fed document. Under such a scenario, equity prices would fall by 65% by the beginning of 2019, while the VIX — a metric of market volatility — would exceed 60% by the end of 2018. Home prices would decline by 30% and commercial real estate prices by 40% by the end of 2018 under the severely adverse scenario. The unemployment rate would peak at 10% by the third quarter of 2019, while real GDP would decline to -8.9% in the second quarter of 2018, bouncing back gradually to 4.5% by the first quarter of 2021.
Fed drops hammer on Wells Fargo as four board members ousted — The Federal Reserve voted unanimously Friday to impose an unprecedented enforcement action against Wells Fargo in response to its phony-accounts scandal, restricting the bank’s future growth, while Wells said it would remove four members of its board of directors. “Responding to recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo, the Federal Reserve Board on Friday announced that it would restrict the growth of the firm until it sufficiently improves its governance and controls,” the Fed said in a Friday evening release.“Concurrently with the Board’s action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year.” The Federal Reserve voted unanimously Friday to levy an unprecedented enforcement action against Wells Fargo in response to its cross-selling scandal, restricting the bank’s future growth and removing four members of its board of directors. Wells Fargo The order, which was approved by a vote of 3-0, bars Wells from growing beyond its asset size as of the end of 2017; the bank held $1.95 trillion as of yearend. Vice Chairman for Supervision Randal Quarles abstained from the vote because he had recused himself from supervisory matters related to Wells Fargo in December. Fed Chair Janet Yellen — whose last day leading the Fed is Feb. 3 — said in a statement that the enforcement action is meant to send a signal to other banks that the agency is serious about corrective action against banks guilty of the kinds of customer abuses it uncovered in its investigation of Wells. “We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” Yellen said. “The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.”
Wells Fargo Hit With Unusual Ban on Growth in Yellen’s Final Act - After markets closed on her final workday in office, Federal Reserve Chair Janet Yellen delivered a blow to one of the nation’s largest banks: Wells Fargo & Co. won’t be allowed to grow until it cleans up. Fed officials said the San Francisco-based lender’s pattern of consumer abuses and compliance lapses called for an unprecedented sanction. Until Wells Fargo addresses shortcomings in areas including internal oversight, it can’t take any action that would boost total assets beyond their level at the end of 2017, without the Fed’s permission. The bank said after-tax profit in 2018 would be reduced by $300 million to $400 million and its stock slumped in late trading Friday. “This is akin to the last scene in ‘ The Godfather,”’ “Chair Yellen decided to handle unfinished business on her way out the door.” Yellen’s act stands out at a time when the Trump administration is looking to dial back some of the financial regulations put in place after the 2008 global financial crisis. Those moves include watering down enforcement actions at the Consumer Financial Protection Bureau and proposing revisions to Dodd-Frank reforms on Wall Street. Still, President Donald Trump singled out Wells Fargo in a Twitter message in December: “Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!” Wells Fargo began stumbling through a spate of scandals 17 months ago, starting with revelations that branch employees opened millions of accounts without customer permission to meet aggressive sales targets. The company kept coming under fire after revealing that auto-loan clients were forced to pay for unwanted car insurance and that mortgage customers were improperly charged fees. On Friday night, Fed officials said they’d been working on their order for a while, and that the company had just finally agreed to it. The announcement came hours before Yellen’s term was to expire, hitting the biggest bank in her former district. She was president of the San Francisco Fed from 2004 to 2010.
Banks, credit unions urge Senate leaders to hold vote on reg relief — Banks and credit unions teamed up Monday to urge lawmakers to bring a regulatory relief bill reforming certain provisions of the Dodd-Frank to the full Senate floor for a vote. The bill is the result of years or careful negotiations between Senate Banking Committee Chairman Mike Crapo, R-Idaho, and moderate Democrats to make targeted Dodd-Frank reforms. The legislation was cleared by the committee last month, and has enough support to avoid a Democratic filibuster. “At a time of frequent congressional gridlock in Washington, this bipartisan legislation is a shining example of how our elected leaders can advance necessary solutions by working together and across the aisle,” said a letter signed by the American Bankers Association, Credit Union National Association, Independent Community Bankers of America and National Association of Federally-Insured Credit Unions. The letter was sent to Senate Majority Leader Mitch McConnell, R-Ky., and Sen. Chuck Schumer of New York, the Democratic leader. It urged them to “promptly” bring the bill up for consideration in a “fair and open manner.”The bill mostly benefits institutions assets of less than $10 billion. However, the bill does take steps to roll back regulations for bigger banks, such as by raising the asset threshold for "systemically important" banks to face tougher supervision from $50 billion to $250 billion, and by easing stress testing requirements for midsize and regional banks.
Lawmakers press Mnuchin over GSE reform, reg relief and cyber threats - — The government must continue to provide support for the mortgage market in any new housing finance system, Treasury Secretary Steven Mnuchin said Tuesday. During a Senate Banking Committee hearing, Mnuchin said reform of Fannie Mae and Freddie Mac is a top priority of the Trump administration. While he declined to spell out many details of the administration's views, he said keeping the 30-year fixed-rate mortgage is essential and that requires backing by a government guarantee. “I don’t think the private markets on their own would support it,” Mnuchin said. “As we talk about GSE reform, we need to make sure we don’t do something that would put that at risk.” Mnuchin was ostensibly there to discuss the Financial Stability Oversight Council's annual report, but spent much of his time discussing the government-sponsored enterprises, regulatory relief and cybersecurity. Following are highlights of his testimony.
- GSE reform is on the front burner. Mnuchin said in his opening statement that he viewed a resolution of the current conservatorship arrangement for Fannie and Freddie as “neither a sustainable nor lasting solution,” and called on Congress to arrive at a bipartisan agreement that could provide necessary support for the housing market without putting taxpayers at undue risk.
- Progressive Democrats hit Mnuchin hard on raising SIFI threshold. Mnuchin praised a bipartisan Senate regulatory reform bill authored by Crapo, describing it as a “balanced and thoughtful approach” and calling on both chambers to “move legislation as quickly as possible.” But progressive Democrats questioned him on a key provision of the bill which would raise the systemically important threshold for banks to $250 billion from $50 billion. Sen. Elizabeth Warren, D-Mass., noted that the change would drop most of the SIFI banks from the designation list, including banks with more consolidated assets than Countrywide, which played a major role in the 2008 financial crisis.
- Republicans still wary of Basel, Financial Stability Board. Mnuchin fielded a handful of questions about the influence of foreign standard-setting bodies in U.S. banking regulation. Sen. Tom Cotton, R-Ark., said that he and a number of other lawmakers are worried the Financial Stability Board’s standards could usurp U.S. bank regulators’ prerogative in setting capital and liquidity rules.
- Mnuchin sees no immediate cybersecurity threats. Mnuchin said that he doesn’t “see any specific gaps today” in cybersecurity, but said that improving information sharing and stopping threats as they become known is an ongoing and critical safeguard to the financial system.
- Possible room for bipartisan long-term debt ceiling deal. Mnuchin opened the door to some kind of long-term revision of the debt ceiling process, reiterating his criticism of the current process whereby Congress has to raise the country’s debt load as a separate legislative item from authorizing spending.
House approves bills to simplify remote account opening, stop senior financial abuse - The House passed two bills on Monday that would seek to halt financial abuse of senior citizens and make it easier for consumers in rural areas to open bank accounts remotely. Industry groups praised lawmakers for passing the Making Online Banking Initiation Legal and Easy, or Mobile Act, and a broader bill that contained provisions of the previously introduced SeniorSafe Act. That measure would protect bankers from lawsuits if they report suspected elder financial abuse to law enforcement. “By adopting this legislation, the members of the U.S. House of Representatives have taken a positive step forward to enacting into law a measure to combat financial exploitation and abuse of older Americans,” Lee Covington, senior vice president and general counsel of the Insured Retirement Institute, said in a press release. The Mobile Act would essentially create a federal-level carve-out for banks and credit unions from restrictions on using state IDs. Meanwhile, the Mobile Act would allow financial institutions to use a scan or image of a customer’s state-issued photo ID to authenticate a customer’s identity when opening an account remotely. Bankers and trade groups have identified that as a hurdle to banking some underserved rural markets. Most states have laws restricting how a person’s state-issued ID may be used or copied, but make specific exemptions allowing banks and credit unions to scan or copy those IDs for know-your-customer purposes. However, a handful of states do not specifically exempt financial services from these laws, and the Mobile Act aims to address that by essentially creating a federal-level carve-out for banks and credit unions.
GSE reform, Dodd-Frank reform get overlooked in State of the Union -- — The busy legislative agenda laid out by President Trump in the State of the Union speech Tuesday night casts doubt on how quickly Congress can move on financial services legislation, particularly a housing finance reform package.The president’s speech included calls for Congress to enact immigration reform, as well as spending for infrastructure investment and the military, without mention of core policy issues of interest to the financial services industry. Trump touted his administration’s steps to ease regulations across industries, but steered clear of a pending bill that would provide targeted relief for banks from provisions of the Dodd-Frank Act. Lawmakers interviewed after the speech said they still expect the Senate to pass the regulatory relief bill, which was negotiated by Banking Committee Chairman Mike Crapo, R-Idaho, and has bipartisan support. But they were less optimistic that a plan for reforming the government-sponsored enterprises Fannie Mae and Freddie Mac will take shape this year, despite legislative talks on housing finance reform picking up steam.“I am concerned about the amount of legislative time this year to tackle it in the way that it should be,” Rep. French Hill, R-Ark., a member of the House Financial Services Committee, said of GSE reform.Rep. Steve Pearce, R-N.M., also a member of the House committee, said some of the recent legislative victories for the GOP congressional leadership and Trump administration bring regulatory relief closer to the top of the agenda. “The tax bill was the first piece of that. Reopening the government and holding steady was the second piece, and it is going to make it easier to pass some of these other reforms, like the Dodd-Frank reforms,” Pearce said. “The Senate feels pretty confident they are going to get a major piece of legislation through, [and] we can do it in the House if they can get it done it the Senate.”
January 2018: Unofficial Problem Bank list declines to 101 Institutions --Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.Here is the unofficial problem bank list for January 2018. Here are the monthly changes and a few comments from surferdude808:Update on the Unofficial Problem Bank List for January 2018. The list had a net decline of two insured institutions to 101 banks. Likewise, aggregate assets had a small decline of $200 million to $20.7 billion. A year ago, the list held 163 institutions with assets of $43.5 billion. Actions were terminated against First South Bank, Spartanburg, SC ($238 million) and Blue Grass Federal Savings and Loan Association, Paris, KY ($33 million). Heartland Bank, Little Rock, AR ($182 million) found their way off the list through a merger partner. Added this month was Jackson County Bank, Black River Falls, WI ($253 million).
Blowback from B of A's halt to free checking spreads to Hill - Two Democratic congressmen are chastising Bank of America for its recent decision to stop offering checking accounts that were free to many consumers. Reps. Elijah Cummings of Maryland and Jimmy Gomez of California noted Friday that the bank’s action comes shortly after the passage of tax legislation that will yield big financial benefits for Charlotte, N.C.-based B of A. “It is difficult to understand why one of America’s largest banks would end a program that many low-income American families rely on just weeks after benefiting from one of the largest tax cuts in American history,” the congressmen wrote in a letter to Bank of America CEO Brian Moynihan. The congressmen requested a briefing from B of A officials. They also asked the $2.2 trillion-asset bank to turn over documents showing how many customers will be affected and the annual cost of providing free accounts. A Bank of America spokeswoman noted in an email that the bank stopped offering the account to new customers in 2013. She added that the bank "will be pleased to explain to these members the many ways we provide straightforward and transparent service, including to low-to-moderate income customers." More than 106,000 people have signed a petition at Change.org urging B of A to reconsider its decision to stop offering the accounts.
Wall Street to Vanguard: We’re Not Your Doormat - Wall Street is fighting back against Vanguard Group. In the past year, large financial firms including Fidelity Investments, TD Ameritrade and Morgan Stanley have all made changes to their fees or product lineups that make it more expensive for some customers to invest in Vanguard’s funds. In some cases, these firms have even made it impossible to invest in Vanguard mutual funds at all. The changes made so far are small and have occurred in several different corners of the investing market, but they represent a stark shift for an industry that has struggled to manage being both Vanguard’s partner and competitor. Vanguard has pulled in record levels of new cash in recent years as investors plowed money into lower-cost index-tracking funds. It now manages nearly $5 trillion in assets, up from $1.4 trillion 10 years ago. That growth was aided for years by Wall Street as many wealth managers and brokerage firms sold inexpensive Vanguard products to their customers. More recently, rival money managers have tried to better compete on price, slashing their fees.Now, rival asset managers, brokerage firms and retirement-plan administrators are fighting back more aggressively. Fidelity, the largest 401(k) plan administrator in the country, will now charge some new corporate customers that hire the firm to run their 401(k) plans a fee of 0.05% on assets invested in Vanguard funds. That new fee covers administrative services that Fidelity provides as a 401(k) record-keeper, a spokeswoman for the Boston firm said. “This is about leveling the playing field.” Fidelity explicitly requires employers to pay the fee, rather than passing it off to plan participants, a person familiar with the matter said. Companies and plan participants typically share 401(k) plan administration costs, however, which means savers could bear some or all of the new cost if an employer sought to recoup the new expense in a less explicit way, retirement industry executives say. The fee is small but could add up over time.
Market Euphoria May Turn to Despair If 10-Year Yield Jumps to 3% - It’s getting harder and harder to quarantine the selloff in Treasuries from equities and corporate bonds.The benchmark 10-year U.S. yield cracked 2.7 percent on Monday, rising to a point many forecasters weren’t expecting until the final months of 2018. For over a year, range-bound Treasuries helped keep financial markets in a Goldilocks state, with interest rates slowly rising due to favorable forces like stronger global growth and the Federal Reserve spearheading a gradual move away from crisis-era monetary policy.Yet the start of 2018 caught many investors off guard, with the 10-year yield on pace for its steepest monthly increase since November 2016. It’s risen 30 basis points this year and reached as high as 2.73 percent in Asian trading Tuesday. Suddenly, they’re confronted with thinking about what yield level could end the good times seen since the presidential election. For many, 3 percent is the breaking point at which corporate financing costs would get too expensive, the equity market would lose its luster and growth momentum would fade.“We are at a turning point in the psyche of markets,” said Marty Mitchell, a former head government bond trader at Stifel Nicolaus & Co. and now an independent strategist. “A lot of people point to 3 percent on the 10-year as the critical level for stocks,” he said, noting that higher rates signal traders are realizing that quantitative easing policies really are on the way out. U.S. stocks have set record after record, buoyed by strong corporate earnings, President Donald Trump’s tax cuts and easy U.S. financial conditions. The S&P 500 Index has returned around 6.8 percent this year, once reinvested dividends are taken into account, and the U.S. equity benchmark is already higher than the level at which a Wall Street strategists’ survey last month predicted it would end 2018. What often goes unsaid in explaining the equity-market exuberance is that Treasury yields refused to break higher last year. Instead, they remained in the tightest range in a half-century, allowing companies to borrow cheaply and forcing investors to seek out riskier assets to meet return objectives.
Stocks Dive as Treasury Yields Set Off Alarm Bells - Pam Martens - The benchmark 10-year U.S. Treasury yield touched 2.7 percent on Monday and as of 8:16 a.m. this morning it has returned to that level. The sharp rise in Treasury yields produced a 177 point drop in the Dow Jones Industrial Average yesterday. As of 10:07 a.m. this morning, the Dow had lost an additional 334 points. Many market watchers see even more dangerous headwinds for the stock market if the 10-year Treasury reaches a 3 percent yield. (See our analysis: Rising Treasury Yields Pose Risk for Those Over-Weighted in Stocks.)The recent market action suggests that investors are about to get a serious investing lesson in the concept of supply and demand. According to research from the major Wall Street banks, there is going to be a stunning doubling of the net issuance of U.S. Treasury securities in the current Federal fiscal year versus last year. Net issuance of Treasuries in the last fiscal year was approximately $500 billion. For the coming year, Goldman Sachs projects the amount will be $1.03 trillion; Deutsche Bank thinks it will be about $1 trillion while JPMorgan Chase is floating the breathtaking figure of $1.42 trillion.The huge increase comes from two primary factors: a mushrooming budget deficit from the recently passed tax cuts and the wind down by the Federal Reserve of its Treasury purchases.Until last October, the Federal Reserve was sopping up Treasury issuance by rolling over all of its maturing holdings of Treasuries into newly issued Treasuries. The Federal Reserve is now in the runoff mode in order to “normalize” its balance sheet from its Quantitative Easing (QE) days during the financial crisis when it purchased more than $3 trillion of Treasuries and mortgage-backed bonds.The first Fed runoff came in October of last year with the Fed shrinking the amount of maturing Treasury principal it was rolling over into new Treasuries by $6 billion a month. According to its preset schedule, that figure was boosted to $12 billion this month. The shrinkage amount will grow gradually until October of this year when the Fed will roll over $30 billion less each month in Treasuries going forward than it had in prior years. (The Fed also acquired huge holdings in mortgage-backed bonds during the financial crisis and it is trimming its rollover of maturing principal in those as well.) To summarize, Treasury supply is going to double while one major buyer, the Fed, is ratcheting down its purchases.
Unknown Group Pays $175 Million For 74,000 Acres In Nevada For Mysterious Ethereum Project - Earlier this month, we reported that a Russian businessman had purchased two vacant power stations in the Perm region with the intention of setting up a large crypto mining operation - the latest sign that miners are moving to fill the void left by China's crackdown on cryptocurrency miners, who had previously enjoyed heavily subsidized power.As for North America, we've already noted that miners are clustering in Winnipeg City, Manitoba, the town with the cheapest electricity on the whole continent.And now, a mysterious new industrial scale cryptocurrency project is coming to Nevada: As the Nevada Independent reports, a little-known company focused on blockchain technology and bitcoin has purchased a huge chunk of land at the Tahoe-Reno Industrial Center. The park has managed to attract dozens of tech firms, including several notable names. Back in 2014, it made headlines when Tesla selected the park as the site for its Gigafactory. Google and Switch also have campuses there. All told, Blockchains bought 74,000 acres for $175 million - the largest deal since the park was developed in 1998, and more than the Gigafactory and the other corporate campuses.A little-known company focused on the underlying technology behind cryptocurrencies such as Bitcoin has purchased a huge chunk of land at a Northern Nevada industrial park. Storey County Commissioner and Tahoe-Reno Industrial Center broker Lance Gilman said he closed escrow last week on the sale of 67,125 total acres of land to Blockchains, LLC, a business that studies and develops applications for blockchain distributed ledger technology, the decentralized platform that makes up the backbone of Bitcoin and other cryptocurrencies.
Two new payment firms try out Ripple's cryptocurrency -- Ripple's vision of a world in which money moves as fast and frictionlessly as email just got one step closer to being realized. Two new payments companies, IDT Corp. and MercuryFX, have announced that they plan to use Ripple's cryptocurrency, XRP, to improve the speed and efficiency of cross-border payments. The news comes hot on the heels of MoneyGram's own announcement earlier this month that it was piloting Ripple's xRapid product as a means of settling customer transactions. Alastair Constance, founder and CEO of the currency exchange provider Mercury FX, said in a news release that XRP and traditional fiat currency "fit hand in glove," and that he expects the cryptocurrency to help companies like his "remove billions of dollars in unnecessary intermediary fees." Those fees derive from the correspondent banking model that makes international payments slow and costly to send, with the sending institution often in the dark about how much a given transaction will cost. Such intrinsic costs eat into the money that participants in the $600-billion-a-year remittance market are able to send home to their families.
Giant crypto hacks undermine digital assets -- Coincheck, a Japanese digital-asset exchange that is one of the nation's largest, lost more than $400 million worth of the cryptocurrency NEM in a theft that may give banks and other large institutions fresh reason to be wary of the asset class. In all, 500 million NEM coins were stolen, according to company officials, who briefed the press during a late-night conference at the Tokyo Stock Exchange. In reaction to the loss, Coincheck froze withdrawals and halted trading in all assets other than bitcoin. It also suspended deposits of NEM. The prices of major digital assets fell on the news, with NEM hit hardest. The value of the 10th-largest cryptocurrency declined 25%, from just over $1.00 to less than $0.77 at its lowest point. It recovered somewhat after the drop but was still down more than 8% by midday Eastern time. While the security of NEM itself is not in question, nor is that of any other cryptocurrency, digital exchanges themselves have often proved vulnerable to thefts and cyberattacks.At a time when regulators around the world are threatening action against digital tokens, it seems unlikely that banks, already gun-shy, will want to partner or invest with exchanges that can't secure their funds. "Major institutional capital is waiting on the sidelines for institutional rails," said Richie Hecker, chairman and chief economist of Crypto Working Group. "But custody is still a major issue. You need to solve for custody to be able to get those very large asset managers coming in."
Facebook is banning all ads promoting cryptocurrencies — including bitcoin and ICOs - Facebook is banning all ads that promote cryptocurrencies, including bitcoin, in an effort to prevent people from advertising what the company is calling “financial products and services frequently associated with misleading or deceptive promotional practices.” That means no advertiser — even those that operate legal, legitimate businesses — will be able to promote things like bitcoin and other cryptocurrencies, initial coin offerings — ICOs for short — or binary options, according to a Facebook blog post. A James Altucher crypto ad, delivered by Facebook’s Audience Network Peter Kafka That also means that “crypto-genius” James Altucher, whose ads have appeared all over the internet and have become a meme of sorts for the entire crypto industry, won’t be able to advertise on Facebook. Ads that violate the company’s new policy will be banned on Facebook’s core app, but also in other places where Facebook sells ads, including Instagram and its ad network, Audience Network, which places ads on third-party apps. “This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices,”
CFTC subpoenas add to fears of an unsustainable crypto bubble - Cycling and other professional sports have doping, and now concerns are mounting that the cryptocurrency industry may have used a kind of performance-enhancing drug of its own, in the form of a digital token called tether.The Commodity Futures Trading Commission sent subpoenas last month to Tether, the company that issues the token, and to Bitfinex, one of the world's largest digital-asset exchanges and a company with close ties to Tether. If the subpoenas should lead to an enforcement action, it may scare off banks, big technology firms and other institutions that have been warming up to cryptocurrency.News of the subpoenas, which were delivered on Dec. 6 but reported only this week, prompted a sell-off of bitcoin and related assets and stoked fears that the market's meteoric rise and sky-high valuations may have been fueled by fake money.Tether tokens are supposed to function as digital dollar receipts, with the value pegged to the U.S. dollar and the company holding fiat currency in reserve for every token it issues. That way, exchanges like Bitfinex have a token of stable value that can be used to facilitate cryptocurrency trades.Where a problem would arise is if the dollar reserves were a fiction and Tether has simply been printing digital money to drive up asset prices. More than 2.2 billion tokens have been issued so far. The collapse of a house of cards that big could tank cryptocurrency prices and usher in a prolonged bear market.
Worries Grow That the Price of Bitcoin Is Being Propped Up - A growing number of virtual currency investors are worried that the prices of Bitcoin and other digital tokens have been artificially propped up by a widely used exchange called Bitfinex, which has a checkered history of hacks and opaque business practices. In December, Bitfinex was subpoenaed by the Commodity Futures Trading Commission, a United States regulatory agency. The news, first reported by Bloomberg on Tuesday and confirmed by a source familiar with the subpoena but not allowed to publicly discuss an ongoing investigation, led to a sell-off in most virtual currencies. The people behind Bitfinex issue a virtual currency called Tether. Unlike most digitals tokens, every Tether is supposed to be backed by traditional money — the United States dollar. New Tether tokens are issued when investors give them dollars. One dollar is worth one token. Because of the credibility that comes with that tie to the dollar, Tether are often used to buy other virtual currencies like Bitcoin. In recent months, however, many investors have been raising alarm bells about Tether. Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down. The Tether were used on the Bitfinex exchange to make big purchases of Bitcoin and other tokens, helping push their prices back up, according to multiple analyses of data from Bitfinex. “This became more and more concerning, because every time the markets went down, you have seen the same thing happen,” “It could mean that a lot of the rally over December and January might not have been real.”
"Dr. Doom" Nouriel Roubini Says Bitcoin Is The "Biggest Bubble In Human History" -- NYU economist Nouriel Roubini - aka "Dr. Doom" - has long been a cryptocurrency skeptic. So it's hardly surprising that he delighted in bashing the cryptocurrency during an appearance on Bloomberg TV Friday, where he said the bitcoin boom that carried the price of a single token to $20,000 late last year was "the biggest bubble in human history" and that this "mother of all bubbles" is finally crashing..And, of course,And it's not just Bitcoin, Roubini added. There are more than 1,300 cryptocurrencies or ICOs, and “most of them are even worse” than the largest digital token. These constitute a “a bubble to the power of two or three,” he said.Furthermore, while many of bitcoin's critics (Warren Buffett, Ray Dalio, Jamie Dimon - though Dimon later recanted) have clarified that they see value in "blockchain technology", which many have proclaimed has the potential to change the world by disrupting industries as diverse to Wall Street and health care.Blockchain has “been around for 10 years, and the only application is cryptocurrencies, which is a scam,” the New York University economist added. Roubini added that bitcoin "is an environmental disaster." As we pointed out late last year, bitcoin mining already consumes more energy than 12 US states.
AriseBank raises questions about ICO fraud, decentralized banking - When AriseBank announced last week that it had become the first crypto platform to purchase two traditional banks, it won plenty of attention. Its press release was picked up by major media sites like HuffingtonPost and its endeavor was endorsed by Stan Larimer, founder of the decentralized cryptocurrency exchange Bitshares, who announced a partnership with the bank. The firm claimed it had raised $600 million within a few weeks through its initial coin offering and the issuance of the AriseCoin token. It also said it had secured Federal Deposit Insurance Corp. approval for its bank purchases. But within days, those claims fell apart. Texas regulators finalized a cease-and-desist order against AriseBank and its founder, Jared Rice Sr., claimed the FBI raided his home and the Securities and Exchange Commission seized all the firm’s assets. The FDIC told American Banker it had received no applications of any kind from AriseBank, much less approved them. A look at AriseBank is a glimpse into the murky world of initial coin offerings and cryptocurrency startups, a place where it can be hard to tell who is legitimate.
Intel reportedly notified Chinese companies of chip security flaw before the U.S. government --Another new report from The Wall Street Journal today suggests that Intel didn’t immediately notify the U.S. government of the issues. The Journal is reporting that Intel notified some of its customers of the security flaws in its processors, dubbed Spectre and Meltdown, but left out the U.S. government as part of that. Some of the companies Intel notified included Chinese technology companies, though the report suggests there is no evidence that any information was misused. An Intel spokesperson told The Journal that the company wasn’t able to tell everyone it planned because the news was made public earlier than expected.The latter part of that is probably going to sting a little harder because it would seem that Intel was going to give the U.S. government little lead time ahead of disclosure of the flaw, as security editor Zach Whittaker points out on Twitter: This is grade A crap. Several people told me Meltdown/Spectre's planned disclosure was set for Jan. 9 but was revealed on Jan. 3 after a PoC came out. Based on WSJ, Intel was going to tell the US gov. only a week before disclosure?! It knew since June! https://t.co/DLusu37zoL pic.twitter.com/3s9COTub0C— Zack Whittaker (@zackwhittaker) January 28, 2018 “The Google Project Zero team and impacted vendors, including Intel, followed best practices of responsible and coordinated disclosure,” an Intel spokesperson said. “Standard and well-established practice on initial disclosure is to work with industry participants to develop solutions and deploy fixes ahead of publication. In this case, news of the exploit was reported ahead of the industry coalition’s intended public disclosure date at which point Intel immediately engaged the US government and others.”
‘Jackpotting’: new hack attack makes ATMs spit out cash like slot machines | South China Morning Post: Two of the world’s largest ATM makers have warned that cyber criminals were targeting US cash machines with tools that force them to spit out money in hacking schemes known as “jackpotting”. Diebold Nixdorf Inc and NCR Corp did not identify any victims nor say how much money had been lost. Jackpotting has been rising worldwide in recent years, though it is unclear how much cash has been stolen because victims and police often do not disclose details. The attacks were reported earlier on Saturday by the security news website Krebs on Security, which said they had begun last year in Mexico. The companies confirmed they had sent out the alerts to clients. NCR said in a Friday alert that the cases were the first confirmed “jackpotting” losses in the United States. It said its equipment had not been targeted in the recent attacks, but that it was still a concern for the entire ATM industry. “This should be treated by all ATM deployers as a call to action to take appropriate steps to protect their ATMs against these forms of attack,” the alert said.Diebold Nixdorf said in a separate Friday alert that US authorities had warned the company that hackers were targeting one of its ATM models, known as Opteva, which went out of production several years ago. A confidential US Secret Service alert sent to banks said the hackers targeted stand-alone ATMs typically located in pharmacies, big box retailers and drive-through ATMs, Krebs on Security reported. Diebold Nixdorf’s alert described steps that criminals had used to compromise ATMs. They include gaining physical access, replacing the hard drive and using an industrial endoscope to depress an internal button required to reset the device.
ATM thieves target stand-alone machines in 'jackpotting scheme’ - A type of ATM attack popular in Mexico recently is making its way to the United States. While bank-run ATMs don’t appear to be affected so far, older, front-loaded cash machines are vulnerable to the attack, according to an alert the Secret Service has sent to financial firms and ATM manufacturers. The crime is known as “jackpotting,” a method in which thieves, pretending to be repairmen, break directly into ATMs, install malicious software or hardware that makes the machines spit out cash. Security blogger Brian Krebs first reported on the attacks on U.S. ATMs on Friday. According to a Secret Service alert Krebs acquired, the victim ATMs tend to be located in pharmacies, big box retailers, and drive-thru ATMs. Krebs noted that these machines lack the security and round-the-clock monitoring of ATMs installed at financial institutions.
Jackpotting’ hackers steal over $1 million from ATMs across U.S.: Secret Service (Reuters) - A coordinated group of hackers likely tied to international criminal syndicates has pilfered more than $1 million by hijacking ATM machines across the United States and forcing them to spit out bills like slot machines dispensing a jackpot, a senior U.S. Secret Service official said on Monday. Within the past few days there have been about a half-dozen successful “jackpotting” attacks, the official said. The heists, which involve hacking ATMs to rapidly shoot out torrents of cash, have been observed across the United States spanning from the Gulf Coast in the southern part of the country to the New England region in the northeast, Matthew O‘Neill, a special agent in the criminal investigations division, told Reuters in an interview. The spate of attacks represented the first widespread jackpotting activity in the United States, O‘Neill said. Previous campaigns have been spotted in parts of Europe and Latin America in recent years. “It was just a matter of time until it hit our shores,” O‘Neill said. Diebold Nixdorf and NCR Corp, two of the world’s largest ATM makers, warned last week that cyber criminals are targeting ATMs with tools needed to carry out jackpotting schemes. The Diebold Nixdorf alert described steps that criminals had used to compromise ATMs. They include gaining physical access, replacing the hard drive and using an industrial endoscope to depress an internal button required to reset the device. A confidential U.S. Secret Service alert seen by Reuters and sent to banks on Friday said machines running XP were more vulnerable and encouraged ATM operators to update to Windows 7 to protect against the attack, which appeared to be targeting ATMs typically located in pharmacies, big box retailers and drive-thrus.
Traders Arrested In Futures Spoofing Probe - In a shocking development - shocking because as everyone obviously knows market are never rigged or manipulated - late on Friday Reuters reported that the CFTC was set to announce it has fined European lenders UBS, HSBC and Deutsche Bank millions of dollars each for "spoofing" and manipulation in the U.S. futures market.The enforcement action by the U.S. derivatives regulator was said to be the result of a multi-agency investigation that also involved the Department of Justice and the FBI - the first of its kind for the CFTC.Reuters also reported that the fines for UBS and Deutsche Bank would be north of ten million, while the fine for HSBC will be slightly less than that. Spoofing, as a reminder, involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions. Spoofing is what Navinder Sarao was criminally accused of doing when he singlehandedly launched the May 2010 flash crash, for which he is now imprisoned.And yes, spoofing is a criminal offense under a provision implemented as part of the 2010 Dodd-Frank financial reform. Following the Reuters report, many asked why Sarao was arrested and jailed, while major banks caught spoofing and manipulating futures will get away with paying a fine that is a tiny fraction of how much they made from rigging markets in the first place. Well, it appears that someone else is going to jail after all, because as Reuters followed up this morning, US authorities were set to arrest several people on Monday as part of the spoofing and manipulation probe. The individuals who are set to be perp walked, were previously employed as traders by UBS, Deutsche Bank and HSBC, and will be charged as part of the multi-agency probe, This is the first time the CFTC, DOJ and FBI have worked together to bring both criminal and civil charges against multiple companies and individuals, sources said.
European banks pay $46.6 million to settle U.S. 'spoofing’ charges - (Reuters) - Three European banks paid a settlement of $46.6 million, and eight individuals were charged, in a U.S. probe into alleged manipulation of the futures and commodities market. UBS, Deutsche Bank, HSBC and former traders at the banks, as well as individuals at other firms, were charged following a multi-agency probe into “spoofing” in metals and equities futures, the U.S. Justice Department and the country’s derivatives regulator said on Monday. It was the first time the Justice Department and the Commodity Futures Trading Commission (CFTC) worked together, along with the Federal Bureau of Investigation, to bring criminal and civil charges against multiple companies and individuals, underlining their increased focus on holding individuals accountable for corporate wrongdoing. Spoofing, which is a criminal offense under the 2010 Dodd- Frank financial reform law, involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions. Deutsche Bank and UBS have agreed to pay $30 million and $15 million respectively to settle the civil charges in the case, while HSBC will pay $1.6 million, the CFTC said. All three banks received reduced penalties from the CFTC for providing significant assistance in the investigations, which relate to activity that dates back as far as 2008. UBS self-reported the alleged misconduct by its traders to the regulator, the CFTC said. The imminent arrests and charges were reported earlier by Reuters. A spokesman for UBS said the bank was happy to resolve the matter and has “long since remediated the conduct.” A spokesman for HSBC said the bank was pleased to have resolved the matter. A Deutsche Bank spokesman said the bank “has provided substantial and proactive cooperation with the government’s investigation and has enhanced controls and surveillance to help ensure that the underlying conduct does not occur in the future.”
The Trump administration’s attempt to dismantle the fiduciary rule: A year in review - EPI Blog -- February 3, 2018 marks one year since President Trump issued a Presidential Memorandum to “review” the fiduciary rule. This was just two weeks into his administration, a clear signal that undermining this common sense rule is a top priority for the administration.mIf fully implemented, the fiduciary rule would require that financial professionals presenting themselves as investment advisers act in their clients’ best interests. The rule is needed because “conflicted” advice leads to lower investment returns, causing real losses for workers saving for retirement—an estimated $17 billion a year—for the clients who are victimized. The rule would prohibit common practices such as steering clients toward investments that pay the adviser a commission but provide the client a lower rate of return. It was exhaustively researched by the Department of Labor and debated over several years, survived several court challenges, and was completed in 2016. It was supposed to be implemented on April 10, 2017.However, unscrupulous players in the financial industry are working to kill the rule so they can continue fleecing retirement savers—and the Trump administration is doing everything it can to help them out. Here’s the rundown of the fiduciary rule shenanigans from Trump’s first year:[…] All told, we estimate that these delays will cost retirement savers $18.5 billion over 30 years. And as noted above, the Trump administration is clearly planning to further dismantle or weaken the fiduciary rule through the rulemaking process at DOL and the SEC. The administration’s willingness to dismantle a rule that would enhance the retirement security of American workers is a testament to how far they are willing to go to serve unscrupulous elements within the financial industry who want to keep bilking workers saving for retirement.
CFPB's Mick Mulvaney plans to prosecute debt collectors (podcast) Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, sent strong signals in a memo to all bureau staff last week that he wants to crack down on unscrupulous debt-collection firms as part of an overall effort to be more data driven and less mission-driven and more data-focused. Kate Berry reports on this and Mulvaney's other first steps as overseer of the agency.
Appeals court affirms CFPB's constitutionality, leadership structure - The leadership structure of the Consumer Financial Protection Bureau is constitutional, a federal appeals court ruled Wednesday.The U.S. Court of Appeals for the D.C. Circuit said that having a single director of the agency, as opposed to a commission, does not violate the constitution, overturning an earlier court ruling that concluded the opposite. The decision means that the president can only fire a CFPB director "for cause," and cannot do so at will, as the earlier court ruling claimed. "Today, we hold that federal law providing the director of the CFPB with a five-year term in office, subject to removal by the president only for 'inefficiency, neglect of duty, or malfeasance in office,' is consistent with the president’s constitutional authority," said the ruling, which was approved by eight of 11 justices involved in the review of the case. But the ruling was not a complete victory for the CFPB. It affirmed the lower court ruling throwing out the CFPB's $109 million fine against PHH, a nonbank mortgage lender that was fined over an alleged kickback scheme. The appeals court said that then-CFPB Director Richard Cordray had erred in reinterpreting the Real Estate Settlement Procedures Act and applying penalties retroactively. "Even if the director’s contrary interpretation (that Respa prohibits tying arrangements) were permissible, the panel held, it was an unlawfully retroactive reversal of the federal government’s prior position," the ruling said. "The court said that the panel had stated that a three-year statute of limitations applies both to administrative proceedings and civil actions enforcing Respa."The case was remanded to the CFPB for it to set a new penalty.
What CFPB gained, lost in appeals court ruling | American Banker - A federal appeals court handed a major victory — and a significant defeat — to the Consumer Financial Protection Bureau by upholding its constitutional structure while also slapping down the agency's practice of making new interpretations of law through enforcement actions.The results were similarly mixed for other key players. On the one hand, the ruling, which says the president can only fire a CFPB director for cause, will allow any appointee of President Trump to survive into the next administration should the president not win reelection. Yet it also prevents the president from having greater control over the CFPB once a new chief is installed. Democrats, too, both win and lose. They praised the decision as a victory because it leaves more power with the independent CFPB. But the ruling may stop a future Democratic president from retaking control of the CFPB swiftly after the election. "It's a victory for the CFPB in the long-long run, but the Democrats may have to wait two or three years to replace a Trump nominee," At issue is the 8-3 decision by the U.S. Court of Appeals for the D.C. Circuit that found the CFPB's structure was constitutional, striking down an earlier ruling that said a president should be able to fire a director at will. "Congress’s decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will," the court ruled in a 250-page decision. "We have no warrant here to invalidate such a time-tested course. No relevant consideration gives us reason to doubt the constitutionality of the independent CFPB’s single-member structure." But the decision, while affirming the CFPB's independence, did not let the agency off the hook entirely. The court said Cordray erred in redefining the Real Estate Settlement Procedures Act to take action against PHH, an issue that had been largely overlooked by the case's more controversial constitutional issues. The court said the CFPB had violated due process by not providing PHH with notice of its new interpretation of Respa. It also ruled that the CFPB is subject to the three-year statute of limitations in administrative cases. "This is a complete victory for PHH and the mortgage industry," "The court has clearly said that lenders can do business with someone that may be referring business to them as long as they are paying a reasonable, fair market value for the services rendered."
CFPB seeks input on overhaul of internal legal proceedings -- The Consumer Financial Protection Bureau is seeking comment on how it sues companies via an internal process rather than the traditional court system. The agency said Wednesday that it will soon take public input on how to improve an internal process, called the administrative adjudication process, in which companies under investigation are heard by a CFPB judge. Some federal regulators have a similar process but the CFPB said in its request that its process “can result in undue burdens, impacts, or costs on the parties subject to these proceedings.” One of the CFPB’s most heated administrative cases began in 2014, when it cited mortgage lender PHH Corp. for violating a mortgage law related to referrals with insurers. The case began to go awry when former CFPB Director Richard Cordray partly disagreed with the administrative law judge’s findings and ramped up the fine to $109 million. PHH fought back in the appeals court, going so far as to challenge the constitutionality of the CFPB as having a single director who can only be fired by the president “for cause.” On Wednesday, the U.S. Court of Appeals for the D.C. Circuit said that the CFPB’s single director structure is constitutional, overturning a previous court ruling. However, the appeals court did agree with a lower court ruling that threw out PHH’s fine on grounds that Cordray misinterpreted a real estate settlement law. The CFPB, now under Republican appointee acting Director Mick Mulvaney, is going through a revamp of its enforcement policies and practices. The request for comment on its administrative adjudication process is the second one the agency issued since last week, when it sought a public review of how it should investigate companies that face a potential enforcement action. The CFPB expects it will begin taking comments on its administrative adjudication process on Feb. 5. The agency also said it plans to issue a third request for public comment related to its enforcement process next week.
Warren, Waters ask Mulvaney about CFPB change of heart on payday — Top Democrats in the House and Senate sent a letter to Mick Mulvaney on Wednesday questioning his decision to delay the implementation of the Consumer Financial Protection Bureau’s payday loan rule. “We have a number of questions about the sudden reversal of the CFPB’s positions” including the payday rule, a case against four installment lenders and an investigation into a payday lender, said the letter, which was led by Sen. Elizabeth Warren of Massachusetts and the top Democrat on the House Financial Services Committee, Rep. Maxine Waters of California, and signed by four other Democrats. Under Mulvaney’s leadership, the CFPB announced on Jan. 16 that it was reconsidering the payday loan rule. Two days later, it dismissed a case against the installment lenders and on Jan. 22 dropped an investigation into World Acceptance Corp. “The agency barely explained its payday rule reversal,” said the letter, which was also addressed to Leandra English, who was former CPFB Director Richard Cordray’s chief of staff and tapped to be the acting director before the position was given to Mulvaney. A case challenging Mulvaney’s status as head of the agency is still pending. The letter questions Mulvaney’s reasoning after telling reporters in December that there wasn’t much he thought the bureau could do to stop the payday rule from going into effect. At the time, he said, the best course for stopping the rule would be for Congress to use the Congressional Review Act to reverse it. The letter also asks for a list of people who provided Mulvaney legal advice on the payday rule and to detail meetings that newly appointed staff attended where the rule was discussed.
States mull loosening of laws in response to CFPB payday rule -- The Consumer Financial Protection Bureau’s payday loan rule was supposed to reduce the number of Americans who get mired in debt they can’t afford. But in an ironic twist, the 4-month-old rule is being used in state legislatures to justify the creation of a new category of loans that would be even costlier for many borrowers. One such bill in Florida has zipped through three legislative committees in recent weeks. The Indiana House of Representatives voted to pass a similar measure Wednesday. The CFPB rule, which faces an uncertain future in Washington, is designed to sharply reduce the use of two-week payday loans. But it does not crack down on longer-term installment loans with triple-digit annual percentage rates, and that is where payday lenders now see an opportunity in state capitals.
CFPB's Mulvaney strips his fair lending office of enforcement powers - Acting Consumer Financial Protection Bureau Director Mick Mulvaney has stripped the agency's fair lending office of enforcement powers in a sign that many consumer advocates see as trying to reduce oversight and penalties for firms that discriminate against borrowers. The move appeared to be a demotion for the fair lending division, which was previously an equal division alongside supervision and enforcement, and which is now part of the office that handles internal agency concerns about employees. "The Fair Lending Office will continue to focus on advocacy, coordination, and education, while its current supervision and enforcement functions will remain in SEFL," Mulvaney wrote in a memo sent to staff on Tuesday, referring to the Office of Supervision, Enforcement and Fair Lending. "I do not expect that staff will experience changes in employment status, but it is possible that some may experience changes in jobs and duties." The move was part of a broader restructuring effort by Mulvaney, who also moved the agency's consumer response division to a separate office of education and engagement. The Mulvaney memo was first reported by the Intercept, an online news publication. The CFPB confirmed the memo's accuracy on Thursday. How much the restructuring will mean is open for debate. Under the Dodd-Frank Act, the CFPB's Office of Fair Lending and Equal Opportunity provides "oversight and enforcement of federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the bureau." Given that enforcement of fair lending laws is mandated by the 2010 financial reform law, it is unclear what happens now that Mulvaney has stripped enforcement from the division, lawyers said.
Is Trump team moving to political middle in CFPB director search? — Mick Mulvaney's appointment as interim director of the Consumer Financial Protection Bureau was a win for CFPB critics and the administration's conservative base. But the latest names being discussed for the permanent job have something Mulvaney lacks: a background on consumer protection issues. Jonathan Dever, an Ohio state lawmaker that sources say is in the running, founded a law firm in the state that represents clients facing foreclosure. And another name getting attention of late, Dan Iannicola, helped lead financial literacy efforts as a Treasury Department official in the George W. Bush administration.Meanwhile, although J. Mark McWatters, the National Credit Union Administration chairman who is also being discussed for the CFPB job, does not appear to have a similar background, observers point out that his NCUA nomination drew Democratic support. That could be key for any CFPB pick in a Senate where Republicans hold a razor-thin majority.
Mick Mulvaney could use Dodd-Frank to gut CFPB mortgage rules - Mick Mulvaney's recasting of the Consumer Financial Protection Bureau marks a new day for the agency, but a substantial part of his authority to unwind rules — particularly on mortgages — was already part of the agency's tool chest before he arrived. Last summer, the bureau under then-Director Richard Cordray sought comment on the effectiveness of its mortgage underwriting and servicing rules, both issued in 2013. The assessments are part of a Dodd-Frank Act requirement that the agency conduct five-year "look-backs" to tell whether "significant" rules are working out as intended. Observers said the look-backs will likely aid Mulvaney, appointed as the CFPB's acting director in late November, in his stated plans to ease bureau rules. The assessment process could result in significant changes to the mortgage rules, many said. "The look-back review gives Mulvaney an opportunity to undo a lot of the legacy of Cordray, and I don't think anyone realizes it," said Ed Mills, a managing director at Raymond James. "This is fertile ground for revising the rules and gives Mulvaney the chance to make more significant changes." Technically, the CFPB's five-year look-back reviews only require that the bureau issue a request for public comment and a report, and it is basically up to the agency which rules are "significant" enough to get a look-back. So far, rules slated for a look-back are not limited to mortgage policies; for example, the agency launched one in March for its remittance rule. But the door is already open to the CFPB, under Mulvaney, using the mortgage rule look-backs to consider significant changes. The agency began the process in May of assessing the rule requiring lenders to validate a borrower's "ability to repay," as well as a rule imposing servicing requirements under the Real Estate Settlement Procedures Act. For both, the agency will issue reports on the assessment process in January of next year. The statutory language in Dodd-Frank regarding look-backs is making lenders optimistic, and consumer advocates concerned, about the prospect of the rules being altered. The law states specifically that the CFPB can "modify, expand or eliminate" a rule under the look-back review.
SIGTARP seeks more scrutiny of Making Home Affordable servicers - Servicers that handle loans in the government's Making Home Affordable program could face more enforcement at the urging of the Special Investigator General for the Troubled Asset Relief Program.Alleged mismanagement of MHA loans has become the biggest risk to the program, according to the latest quarterly report by TARP Special Inspector General Christy Goldsmith Romero."The top threat in TARP today is unlawful conduct by any of the 130 banks and other financial institutions in TARP's $27.8 billion Making Home Affordable program," according to the report, which identifies priorities for TARP cases prosecuted with the Department of Justice.In recent years, SIGTARP has been more focused on enforcement actions related to fraud by bank insiders. During that time, SIGTARP levied criminal charges against 99 bankers, convicted 83, and sentenced 56 to prison. The four insiders convicted worked at banks that collapsed and led to $13 million in TARP losses.Treasury has spent $18.4 billion on MHA and plans to spend another $9.4 billion through 2023, which makes the program another important investment to defend with enforcement actions. SIGTARP has recommended that certain servicers should pay for independent reviews of how MHA loan cancellations, payments or other activities were handled due to alleged mismanagement. Those servicers are Ocwen, Wells Fargo, JPMorgan Chase, Bank of America, Nationstar/Mr. Cooper and Citi. "Citi disagrees with the characterization of its performance. Treasury's MHA Program Progress Report in 2017 confirmed that Citi met or exceeded benchmarks in all categories except one that needed moderate improvement," a Citi spokesman said in an email. JPMorgan Chase and Wells Fargo representatives declined to comment.
Clock running out to get housing finance reform moving — Housing finance reformers are pushing full steam ahead to get a bill introduced before the political calendar makes passage nearly impossible. A draft of a bill leaked this week that would put Fannie Mae and Freddie Mac into receivership and replace them with multiple guarantors and create a housing finance system where the majority of mortgages would be backed by an explicit government backstop. The leak was a clear sign that there will be a push to get congressional action soon. “With the Senate’s agenda likely to fill up with efforts to pass a banking deregulation bill during the first quarter, and perhaps an infrastructure package thereafter— and with election year ‘rigor mortis’ already setting in — housing finance reformers need to establish momentum quickly to have even a prayer of making it into the queue for floor action,” said Chuck Gabriel, an analyst for Capital Alpha, in a note to clients this week.
Bill to boost SBA lending comes with strings attached - Lawmakers are looking to significantly increase oversight and regulation of the Small Business Administration’s flagship 7(a) program. A bill introduced in by Rep. Steve Chabot, R-Ohio, would codify the SBA’s Office of Credit Risk Management and require the agency to conduct an annual risk analysis of the 7(a) portfolio. The bill would also require the SBA to submit an annual justification for the Office of Credit Risk Management’s budget. Those caveats are part of a measure that would give Administrator Linda McMahon authority to increase the 7(a) program’s funding authority by 15% once every fiscal year to avoid interruptions. The effort comes at a time when deregulation has been the mantra in Washington. Meanwhile, chargeoffs in the 7(a) program ended fiscal year 2017 at the lowest levels in five years.During the fiscal year that ended Sept. 30, the agency charged off $690 million of 7(a) loans, or just 0.8% of the program’s $86.2 billion in unpaid principal balances. The last time the chargeoff rate fell below 1% was in fiscal year 2013.“The SBA portfolio continues to perform well into 2018 with no noticeable change in credit quality,” agency spokeswoman Shannon Giles said by email Thursday. “Defaults remain at their lowest levels in years.”The low chargeoff rate is a sign that SBA lenders have improved underwriting by “using more empirical data and common sense,” said Jay Lucas, director of credit services at the Atlanta accounting and consulting firm Porter Keadle Moore. In spite of more rigorous underwriting, the 7(a) program continues to grow. Through the first three weeks of January, lending activity is up more than 27% over the same period in fiscal 2017. As of Jan. 19, the program had approved guarantees for loans totaling $8.4 billion, compared with $6.9 billion a year earlier.
USDA trying again to spur construction lending for rural housing -- The U.S. Department of Agriculture's Rural Housing Service is piloting a new single-close, construction-to permanent mortgage program after a previous venture in 2016 to spur construction lending in rural areas did not attract many participants. Under the pilot program, the RHS provides an upfront government guarantee on the construction loan that also allows the lender to increase the interest rate by 200 basis points during the construction phase. This is a departure from traditional RHS loans, which do not allow increases in the normal interest rate, according to Cathy Glover, acting RHS deputy administrator for single-family loans. Housing industry representatives say the new Rural Housing Service program has benefits for the construction sector compared with the previous version. But it still might take a while for banks to get on board. Bloomberg News In the new pilot program, "you may also float the construction interest rate down to the allowable maximum rate when construction is complete," Glover said in a speech earlier this month at a meeting of the National Council of State Housing Finance Agencies. "This will give you some cushion during the construction period. We think that is a great feature. Non-utilized funds can be applied to the loan amount. In addition, [the] construction loan is guaranteed before construction begins." Housing industry representatives say the new program has benefits compared with the previous version. But it still might take a while for banks to get on board. "Builders like it because the loan is fully funded upfront and it reduces the capital they need to complete the project,"
Housing: Part 281 - Milking the underclass -- I have previously linked to some Atlanta properties to show how much of a premium homeowners are capturing in low end markets. But, Atlanta is a relatively successful city right now, and it is growing. The cities where I should have been looking are the rustbelt cities. Cleveland, for instance, is full of homes that are practically free.Here is a home that rents for $800 per month and Zillow estimates its value at $19,000, so that monthly mortgage expenses would be $75.
Here is a home that would rent for $1,000, worth $72,000, with monthly mortgage payments of $285.
Here is a home that would rent for $1,800, worth $212,000, with monthly mortgage payments of $838.
Here is the pattern. (All data from Zillow.) At the high end in Cleveland, Price/Rent is about 11x, but it declines sharply as you move down-market. At the low end it is less than 6x.
If we graph rent versus price, we can see that, using the top half of the market as the benchmark, there is an extreme premium on rent in the bottom half of the market. Basically, a $500/month floor. As I have noted before, the issue here is that regulators aren't in the business of kicking tenants out of their homes. That would be cruel. Regulators are in the business of preventing tenants from owning their homes. In practice, what that means is that the CFPB enforces a non-owning class, and if households in that class, whose membership is determined by the CFPB, want to live in a house in Cleveland, the first thing they have to do is write a check for $500/month to someone who the CFPB has decided can be in the ownership class. The CFPB has created a very effective system for transferring $6,000 per year from the pockets of tenants in Cleveland into the pockets of owners in Cleveland. This, of course, doesn't show up in any tables anywhere of federal revenues and expenditures. It doesn't show up as a decrease in net incomes after federal transfers, because it just looks like it's a natural part of the cost of living in Cleveland. But, it is not. It is a regulatory burden. This Price/Rent relationship exists to some extent in every city. Most cities only have a few zip codes at the peak Price/Rent level. So, the Price/Rent graph above for most cities looks more like a straight, upward sloping line with just a few zip codes on the horizontal line at the top. For most cities, that inflection point where Price/Rent levels out is more like $400,000 or $500,000.
Freddie Mac: Mortgage Serious Delinquency Rate Increased Sharply in December --Freddie Mac reported that the Single-Family serious delinquency rate in December was 1.08%, up sharply from 0.95% in November. Freddie's rate is up from 1.00% in December 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". This increase in the delinquency rate was due to the hurricanes - no worries about the overall market - and we might see a further increase over the next month or so (These are serious delinquencies, so it takes three months late to be counted). After the hurricane bump, maybe the rate will decline to a cycle bottom in the 0.5% to 0.8% range..
Fannie Mae: Mortgage Serious Delinquency rate increased in December due to Hurricanes -- Fannie Mae reported that the Single-Family Serious Delinquency rate increased to 1.24% in December, up from 1.12% in November. The serious delinquency rate is up from 1.20% in December 2016. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. By vintage, for loans made in 2004 or earlier (4% of portfolio), 3.28% are seriously delinquent. For loans made in 2005 through 2008 (6% of portfolio), 6.55% are seriously delinquent, For recent loans, originated in 2009 through 2017 (90% of portfolio), only 0.53% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.This increase in the delinquency rate was due to the hurricanes - no worries about the overall market - and we might see a further increase over the next month or so (These are serious delinquencies, so it takes three months late to be counted). After the hurricane bump, maybe the rate will decline to 0.5 to 0.7 percent or so to a cycle bottom.
MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 26, 2018... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 10 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.41 percent, from 4.36 percent, with points increasing to 0.56 from 0.54 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Rising rates stifle mortgage application volume - Rising rates suppressed total mortgage application activity, which decreased 2.6% from one week earlier, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey for the week ending Jan. 26 showed that the refinance index decreased 3% from the previous week.The refinance application share decreased to 47.8% from 49.4% the previous week. The seasonally adjusted purchase index decreased 3% from one week earlier. The unadjusted purchase index increased 15% compared with the previous week and was 10% higher than the same week one year ago.On an unadjusted basis, the MBA's Market Composite Index was up 12% over the previous week.Adjustable-rate loan application activity increased to 5.7% from 5.2%, while the share of Federal Housing Administration-guaranteed loans decreased to 10.7% from 11.4% the week prior.The share of applications for Veterans Affairs-guaranteed loans decreased to 10.1% 10.9% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.8%.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 5 basis points to 4.41%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 3 basis points to 4.34%. For both conforming and jumbo loans, these are the highest rates since March 2017.The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 3 basis points to 4.4%, the highest rate since September 2013, MBA said. For 15-year fixed-rate mortgages the average rate increased 4 basis points to 3.85%, the highest since April 2011. The average contract interest rate for 5/1 ARMs increased to its highest level since March 2011, 3.79%, from 3.7%.
"Mortgage Rates Surge to Highest Levels in More Than 3 Years" -- From Matthew Graham at Mortgage News Daily: Mortgage Rates Surge to Highest Levels in More Than 3 Years Mortgage rates are in trouble. This will come as no surprise to regular readers. For the past few weeks, rates made several successive runs up to the highest levels in more than 9 months. It was really only the spring of 2017 that stood in the way of rates being the highest since early 2014. After Friday marked another "highest in 9 months" day, it would only have taken a moderate movement to break into the "3+ year" territory. The move ended up being even bigger. From a week and a half ago, most borrowers are now looking at another eighth of a percentage point higher in rate. In total, rates are up the better part of half a point since December 15th.
"This Isn't A Drill" Mortgage Rates Hit Highest Level Since May 2014 - Mortgage News Daily reports Mortgage Rates Surge to Highest Levels in More Than 3 Years. The chart does not quite show what MND headline says but the difference is a just a few basis points. I suspect rates inched lower just after the article came out. For the past few weeks, rates made several successive runs up to the highest levels in more than 9 months. It was really only the spring of 2017 that stood in the way of rates being the highest since early 2014. After Friday marked another "highest in 9 months" day, it would only have taken a moderate movement to break into the "3+ year" territory. The move ended up being even bigger.From a week and a half ago, most borrowers are now looking at another eighth of a percentage point higher in rate. In total, rates are up the better part of half a point since December 15th. This marks the only time rates have risen this much without having been at long term lows in the past year. For example, late 2010, mid-2013, mid-2015, and late 2016 all saw sharper increases in rates overall, but each of those moves happened only 1-3 months after a long term rate low.So far this month, MBS have stunningly dropped over 200 bps, which easily translates into a .5% or more increase in rates. I've been shouting "lock early" for quite a while, and this is precisely why, This isn't a drill, or a momentary rate upturn. It's likely the end of a decade+ long bull bond market. LOCK EARLY. -Ted Rood, Senior Originator Drill or not, if rising rates stick, they are bound to have a negative impact on home buying.In the short term, however, rate increases may fuel the opposite reaction people expect.Why? Those on the fence may decide it's now or never and rush out to purchase something, anything. If that mentality sets in, there could be one final homebuilding push before the dam breaks. That's not my call. Rather, that could easily be the outcome.
Mortgage rate increases likely to continue in the coming weeks - Mortgage rates, which are significantly higher since the start of the year, are likely to rise for weeks to come, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.22% for the week ending Feb. 1, up from last week when it averaged 4.15%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.19%. "The Federal Reserve did not hike rates this week, but the market views future hikes as a near certainty," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release. "The expectation of future Fed rate hikes and increased borrowing by the U.S. Treasury is putting upward pressure on interest rates. The 30-year fixed rate mortgage is up over a quarter of a percentage point (27 basis points) from the first week of the year." The 15-year fixed-rate mortgage this week averaged 3.68%, up from last week when it averaged 3.62%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.41%.The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.53% this week with an average 0.4 point, up from last week when it averaged 3.52%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.23%. "Each new wave of economic data points to a tight labor market and steady gross domestic product growth," . "These rosy fundamentals, combined with the larger federal borrowing as a result of tax reform, are putting upward pressure on mortgage rates. “
Black Knight: House Price Index up 0.3% in November, Up 6.4% year-over-year - Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted. From Black Knight: Black Knight HPI: Appreciation Remains Steady as U.S. Home Prices Gain 0.27 Percent in November, Up 6.44 Percent Year-Over-Year
• After 67 consecutive months of annual appreciation, U.S. home prices reached another new peak at $283K
• At the national level, home prices have now gained 6.49 percent growth since the start of 2017
• New York led all states in monthly appreciation with home prices there rising 1.36 percent from October
• Home prices fell in six of the nation’s 20 largest states; Wisconsin saw the largest decline at -0.37 percent
• Ten of the 20 largest states and 12 of the 40 largest metros hit new home price peaks in November
Once again, this index is Not seasonally adjusted, and seasonally declines in some states is expected (so don't read too much into any regional declines). The year-over-year increase in this index has been about the same for the last year (close to 6% range). Note also that house prices are above the bubble peak in nominal terms, but not in real terms (adjusted for inflation). Case-Shiller for November will be released tomorrow.
Case-Shiller: National House Price Index increased 6.2% year-over-year in November --S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3 month average of September, October and November prices).This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: Cities in the West: Seattle, Las Vegas and San Francisco Lead Gains in S&P Corelogic Case-Shiller Home Price IndicesThe S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in November, up from 6.1% in the previous month. The 10-City Composite annual increase came in at 6.1%, up from 5.9% the previous month. The 20-City Composite posted a 6.4% year-over-year gain, up from 6.3% the previous month.Seattle, Las Vegas, and San Francisco reported the highest year-over-year gains among the 20 cities. In November, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.6% increase, and San Francisco with a 9.1% increase. Six cities reported greater price increases in the year ending November 2017 versus the year ending October 2017. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in November. The 10-City and 20-City Composites reported increases of 0.3% and 0.2%, respectively. After seasonal adjustment, the National Index recorded a 0.7% month-over-month increase in November. The 10-City and 20-City Composites posted 0.8% and 0.7% month-over-month increases, respectively. Ten of 20 cities reported increases in November before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment. […] “Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.” The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).
Home Prices Continue Rise in November - With today's release of the November S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.75% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 6.2% for the last two plus years. Today's S&P/Case-Shiller National Home Price Index (nominal) reached another new high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.75% from the previous month. The nonseasonally adjusted index was up 6.4% year-over-year. Investing.com had forecast a 0.7% MoM seasonally adjusted increase and 6.3% YoY nonseasonally adjusted for the 20-city series. Here is an excerpt of the analysis from today's Standard & Poor's press release. “Home prices continue to rise three times faster than the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.” [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.
Home Prices In 80% Of US Cities Grow Twice Faster Than Wages... And Then There's Seattle -- According to the latest BLS data, average hourly wages for all US workers in November rose at a stubbornly low 2.5% relative to the previous year, well below the Fed's "target" of 3.5-4.5%, as countless economists are unable to explain how 4.1% unemployment, and "no slack" in the economy fails to boost wage growth. Another problem with tepid wage growth, in addition to crush the Fed's credibility, is that it keeps a lid on how much general price levels can rise by. With record debt, it has been the Fed's imperative to boost inflation at any cost (or rather at a cost of $4.5 trillion) to inflate away the debt overhang, however weak wages have made this impossible. Well, not really.Because a quick look at US housing shows that while wages may be growing at roughly 2.5%, according to the latest Case Shiller data, every single metro area in the US saw home prices grow at a higher pace, while 16 of 20 major U.S. cities experienced home price growth of 5% or higher: double the average wage growth, and something which even the NAR has been complaining about with its chief economist Larry Yun warning that as the disconnect between prices and wages become wider, homes become increasingly unaffordable.And while this should not come as a surprise - considering we have pointed it out on numerous occasions in the past - one look at the chart below suggests that something strange is taking place in Seattle, which has either become "Vancouver South" when it comes to Chinese hot money laundering, or there is an unprecedented mini housing bubble in the hipster capital of the world. Also worth keeping an eye on: price appreciation in Sin City has quietly surged in recent months, and in September home prices surged 10.7% Y/Y, the only other double digit price increase in the US after Seattle. Considering that Las Vegas was the epicenter of the last housing bubble when prices exploded higher only to crash, it may be a good idea to keep a close eye on price tendencies in this metro area for confirmation of the second housing bubble.Confirming the recent jump in home prices, at the national level in November home prices for the Top 20 metro areas rose 6.4% YoY according to Case Shiller, matching October and the fastest rate since June 2014.
Real House Prices and Price-to-Rent Ratio in November --Mcbride - It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 6.4% above the previous bubble peak.However, in real terms, the National index (SA) is still about 11.6% below the bubble peak (and historically there has been an upward slope to real house prices). The year-over-year increase in prices is mostly moving sideways now around 6%. In November, the index was up 6.2% YoY. Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). Case-Shiller and others report nominal house prices. As an example, if a house price was $200,000 in January 2000, the price would be close to $282,000 today adjusted for inflation (41%). That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through August) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to February 2006 levels. The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to September 2004 levels, and the Composite 20 index is back to April 2004. In real terms, house prices are back to 2004 levels.This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to December 2003 levels, and the Composite 20 index is back to October 2003 levels.
NAR: Pending Home Sales Index Increased 0.5% in December, Up 0.5% Year-over-year -- From the NAR: Pending Home Sales Tick Up 0.5 Percent in DecemberPending home sales were up slightly in December for the third consecutive month, according to the National Association of Realtors®. In 2018, existing-home sales and price growth are forecast to moderate, primarily because of the new tax law's expected impact in high-cost housing markets.The Pending Home Sales Index, a forward-looking indicator based on contract signings, moved higher 0.5 percent to 110.1 in December from an upwardly revised 109.6 in November. With last month's modest increase, the index is now 0.5 percent above a year ago.... The PHSI in the Northeast dipped 5.1 percent to 93.9 in December, and is now 2.7 percent below a year ago. In the Midwest the index decreased 0.3 percent to 105.0 in December, but is still 0.3 percent higher than December 2016.Pending home sales in the South grew 2.6 percent to an index of 126.9 in December and are now 4.0 percent higher than last December. The index in the West rose 1.5 percent in December to 101.7, but is still 3.1 percent below a year ago. This was close to expectations of a 0.4% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in January and February.
Home Ownership Rate: Up 0.8% YoY in Q4 -- Over the last decade, the general trend has been consistent: The rate of home ownership continues to struggle. The Census Bureau has now released its latest quarterly report with data through Q4 2017. The seasonally adjusted rate for Q4 is 64.0 percent, up from 63.9 in Q3. The nonseasonally adjusted Q4 number is 64.2 percent, above the Q3 number of 63.9. The Census Bureau has been tracking the nonseasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980. Here is a snapshot of the nonseasonally adjusted series with a 4-quarter moving average to highlight the trend.The consensus view is that trend away from homeownership is a result of rising residential real estate prices in general and limited supply of entry-level priced homes that would attract first-time buyers. Here is the YoY version of the chart going back to 1965. The snapshot below gives us a crude comparison of the US homeownership rate compared to seventeen other countries. Our data source is a subset of the nearly four dozen countries in this Wikipedia entry on homeownership. We included the outliers at the top and bottom, Romania at 96.4% and Switzerland at 44.0%, most as of 2015 and 2014, respectively.
End of the 9-Year Rental Housing Boom? - Since the Financial Crisis, the number of renters surged at a blistering pace, and renters became a majority in 42 cities, but the trend has now reversed.The number of people living in rented housing in the US has surged by 23 million over the past 10 years. This is the period that includes the Housing Bust. But the number of people living in owner-occupied homes (“homeowners”) inched up only by 679,000.Over the same period, the total US population has increased by 23.7 million. In other words, the growth in the renter population absorbed nearly the entire growth in the population.In 2006, of the 100 largest cities, only 20 had a higher renter population than owner population. Ten years later, 42 cities do.Of the top 100 cities, only three experienced a decrease in rentership rate: Anchorage, AK (-1.3%), Irving, TX (-2.5%) and Winston-Salem, NC (-3.6%). The other 97 cities all experienced an increase in rentership rates, according to a report by RentCafé, based on data from the Census Bureau’s American Community Survey.The list below shows the 25 cities where the rentership rate has increased the fastest from 2006 to 2016. Gilbert, AZ, is number one. Its rentership rate grew by 53.4%. But Gilbert is special. While the absolute number of renters in Gil bert surged over the decade, the city’s overall population experienced a spectacular boom, and the number of homeowners surged too, and the rentership rate, at 30.6%, remains the second lowest of the top 100 cities, though it grew the fastest.By contrast, Toledo is number five on this list. In 2006, its rentership rate was 38.3%. Over the past 10 years, the rate grew by 31.3% to reach 50.3%. But Toledo’s overall population declined over the period, which helped boost the rentership rate.The cities in the list are in order of how fast their rentership rates grew (right column). Even for number 25, Baton R ouge, the rentership rate still grew by over 22%!
NMHC: Apartment Market Tightness Index remained negative for Ninth Consecutive Quarter - From the National Multifamily Housing Council (NMHC): Apartment Markets Remain Soft in the January NMHC Quarterly Survey Apartment market conditions continued to soften according to results from the January National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The Market Tightness (36), Sales Volume (40) and Debt Financing (38) Indexes landed below the breakeven level of 50, while the Equity Financing Index increased to 58. In addition, the survey found that half of respondents expect green financing to increase in 2018.“The latest survey results underscored the prevailing view at our recent Apartment Strategies Conference that we are late in the current cycle,” said NMHC Chief Economist Mark Obrinsky. “While some seasonality comes into play, the Market Tightness Index was a little below its long-term January average, indicating market conditions are slightly weaker than normal. Demand for apartments overall remains strong and equity capital still looks favorably on the apartment sector. However, many owners are satisfied with their holdings and more inclined to stand pat.” The Market Tightness Index decreased one point to 36 – the ninth consecutive quarter of declining conditions. Just 14 percent reported tighter conditions compared to the previous three months, compared to 42 percent of senior executives who reported looser conditions.
Q4 2017 GDP Details on Residential and Commercial Real Estate - The BEA has released the underlying details for the Q4 advance GDP report. The BEA reported that investment in non-residential structures increased at a 6.8% annual pace in Q4. This is a turnaround from early last year when non-residential investment declined due to less investment in petroleum exploration. Investment in petroleum and natural gas exploration increased substantially in Q4, from a $55 billion annual rate in Q4 2016 to a $107 billion annual rate in Q4 2017 - but is still down from a recent peak of $165 billion in Q4 2014. Without the increase in petroleum and natural gas exploration, non-residential investment would be down year-over-year. The first graph shows investment in offices, malls and lodging as a percent of GDP. Investment in offices decreased in Q4, and is down 7% year-over-year. Investment in multimerchandise shopping structures (malls) peaked in 2007 and was up 4% year-over-year in Q4. The vacancy rate for malls is still very high, so investment will probably stay low for some time. Lodging investment increased in Q4, and lodging investment is up 5% year-over-year. The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes). Home improvement was the top category for five consecutive years following the housing bust ... but now investment in single family structures has been back on top for the last four years and will probably stay there for a long time. However - even though investment in single family structures has increased from the bottom - single family investment is still very low, and still below the bottom for previous recessions as a percent of GDP. I expect further increases over the next few years. Investment in single family structures was $272 billion (SAAR) (about 1.4% of GDP), and was up in Q4 compared to Q3. Investment in home improvement was at a $238 billion Seasonally Adjusted Annual Rate (SAAR) in Q4 (about 1.2% of GDP).
Construction Spending increased in December -- Earlier today, the Census Bureau reported that overall construction spending increased in December:Construction spending during December 2017 was estimated at a seasonally adjusted annual rate of $1,253.3 billion, 0.7 percent above the revised November estimate of $1,245.1 billion. The December figure is 2.6 percent above the December 2016 estimate of $1,221.6 billion. Both private and public spending increased in December:Spending on private construction was at a seasonally adjusted annual rate of $963.2 billion,0.8 percent above the revised November estimate of $955.9 billion ...In December, the estimated seasonally adjusted annual rate of public construction spending was $290.0 billion, 0.3 percent above the revised November estimate of $289.1 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been increasing, but is still 22% below the bubble peak.Non-residential spending has been declining over the last year, but is 5% above the previous peak in January 2008 (nominal dollars).Public construction spending is now 11% below the peak in March 2009, and 10% above the austerity low in February 2014.The second graph shows the year-over-year change in construction spending.On a year-over-year basis, private residential construction spending is up 6%. Non-residential spending is down 3% year-over-year. Public spending is up 4% year-over-year.This was above the consensus forecast of a 0.5% increase for December, however spending for the previous two months was revised down.
Real Disposable Income Per Capita Gains in December --With the release of yesterday morning's report on December Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.27% month-over-month change in disposable income was trimmed to 0.16% when we adjust for inflation. The year-over-year metrics are 3.14% nominal and 1.42% real.Post-recession, the trend was one of steady growth, but generally flattened out in late 2015. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 74.5% since then. But the real purchasing power of those dollars is up only 26.2%.
US Savings Rate Hits Crisis Lows Amid Soaring Credit Card Debt - Amid soaring credit card use, the tumble in Americans' savings rate continued in December with a modestly better than expected 0.4% MoM rise in incomes and as expected 0.4% rise in spending (but upward revisions in spending). For the inflation waters, the Fed's favorite price indicator, the Core PCE, saw a one-tenth gain to 0.2%, matching consensus, and was up 1.5% Y/Y.Income is growing at 4.1% YoY - the most since Nov 2015 - but spending continues to outpace that growth. Income growth is dominated by private worker gains, which are rising at an impressive clip, up 5.2% YoY, the highest since Nov 2015. Meanwhile, government workers arent' doing too bad either, with average wages and salaries rising 3.1% Y/Y. What is odd is that despite the rise in incomes, Americans continue to spend more than they make, which means that the US savings rate continues to slid, and is now not only the lowest since the crisis, but is the lowest since September 2005. Recall the striking Gluskin Sheff chart we presented a month ago, which showed that 13-week annualized credit card balances in the U.S. had gone "completely vertical" in the last few months of 2017. We now know why: American consumer are officially tapped out.And remember David Rosenberg's "haunting math" from the GDP number:"The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%." As of today, that number would be even worse.
What Does it Mean, Saving Rate drops to 12-Year Low when 50% of Americans Don’t Have Savings? - Or what the averages are hiding. We will start with income and see what’s left over, and for whom. Personal income increased by 4.1% in December from a year earlier, the Bureau of Economic Analysis reported today. This includes all income received by all persons from all sources, such as from labor, financial assets (dividends and interest income but not capital gains), business activities, homeownership (rentals), government transfers, etc. “Real” personal income — adjusted for inflation via “chained 2009 dollars” — rose only 2.37%. This is for the US overall. Per-capita “real” personal income – which accounts for 0.71% population growth in 2017 and measures income per individual – rose only about 1.7%. If the inflation measure even slightly understates actual inflation as experienced by these individuals, their personal income growth might go away entirely. Next step down…Disposable personal income – personal income less personal taxes – increased 3.9% year over year in December. This is the income that folks have available for spending or saving. “Real” disposable personal income rose 2.1%. And on a per-capita basis, it rose only 1.4%. So these are not exactly huge increases. Not everyone is getting this income growth equally. The economy can be divided up into layers. Bridgewater Associates founder Ray Dalio sees a split between the top 40% of income earners for whom the economy is doing well, and the bottom 60% for whom the economy is a series of setbacks. Or by it could be 30% and 70%. Wherever the split is drawn, the smaller group of top income earners has had it good while the larger group of income earners at the bottom is struggling. But consumers, no matter what their income levels, are trying to do their best to prop up the economy, upholding an American tradition. And they’re spending more, the Bureau of Economic Analysis reported today. Personal consumption expenditures (PCE) – the goods and services purchased by everyone living in the US – rose 4.6% year-over-year. Adjusted for inflation, spending grew by 2.8%.Personal outlays – PCE plus personal interest payments and personal transfer payments – rose 4.7% year-over-year.So, with disposable income rising 3.9% (not adjusted for inflation), and with personal outlays jumping 4.7% (not adjusted for inflation), what’s left over and for whom? The personal saving rate – disposable income less personal outlays – fell to 2.4%. This was even below the savings rate of 2.5% in November 2007, and the lowest savings rate since September 2005:
Vehicle Forecast: Sales Expected to Exceed 17 million SAAR Again in January - The automakers will report January vehicle sales on Thursday, Feb 1st. Note: There are 25 selling days in January 2018, there were 24 selling days in January 2017.From WardsAuto: U.S. Forecast: January Sets Stage for Anticipated Year-Over-Year DeclineThe Wards Intelligence January forecast calls for 1.16 million LVs to be delivered over 25 selling days, resulting in a 46,430-unit daily sales rate compared with 47,442 in prior-year (24 days). The DSR is down 2.1% from like-2017. The resulting seasonally adjusted annual rate is 17.24 million units, below the 17.75 million in the previous month and 17.34 million year-ago. Sales had been below 17 million SAAR (Seasonally Adjusted Annual Rate) for six consecutive months last year, until September, when sales increased due to buying following Hurricane Harvey. If sales exceed 17 million SAAR in January, this will be the fifth consecutive month over 17 million SAAR. However, overall, it appears sales will be down again in 2018. Here is a table of light vehicle sales since 2000. The record year for sales was 2016, followed by 2015, both breaking the previous record set in 2000. Last year, 2017, was the fourth best year ever, just ahead of 2001.
U.S. Light Vehicle Sales decline to 17.1 million annual rate in January -- Based on a preliminary estimate from AutoData, light vehicle sales were at a 17.1 million SAAR in January. That is down 1.2% from January 2017, and down 3.8% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for January (red, light vehicle sales of 17.12 million SAAR from AutoData). This was below the consensus forecast of 17.3 million for January. Note that the increase in sales at the end of 2017 was due to buying following the hurricanes. Sales will probably decline again in 2018 after setting a new sales records in both 2015 and 2016. The second graph shows light vehicle sales since the BEA started keeping data in 1967."It Just Gets Worse And Worse": A Record 32% Of Used Car Trade-Ins Are Underwater -- We have frequently written about the unsustainable trends in new car sales in the United States created by the combination of lower rates, easing underwriting standards and voracious demand for new securitizations by wall street and pension funds that will do just about anything for an extra 20bps of yield. This week we find that according to the latest Edmunds' data, many of the same problems also afflict the used auto market. The most startling takeaway from the report is that the percentage of used cars being traded in with negative equity values - which means that dealers lenders are willing to accept an immediate loss for new transactions - continues to rise and currently stands at an all-time high 32.4%, up from under 20% in 2009. Moreover, the average balance of the negative equity also continues to rise and stood at a record $5,130 last year, up over a quarter from $4,075 a decade earlier. This confirms that banks and finance companies are making riskier loans to keep up revenue as vehicle sales slow. and here's why. The record percentage of underwater loans on trade-ins suggests that car owners are trading in their vehicles sooner than they had previously. According to Bloomberg, "a consumer is often the most underwater on his or her auto loan in the first few years of ownership, because the value of the vehicle drops fastest over that time. By the fourth year, for example, the borrower has paid down a big chunk of the loan, catching up to the depreciation they took in the first few years."As Bloomberg explains, for borrowers who do trade in their underwater cars, lenders are essentially giving them the money to pay down their loan. The dealer sells the used car, and whatever balance remains on the old loan is folded into the new loan. The borrower might get a longer-term loan than he or she had before to help keep monthly payments manageable. That means that loan balances are getting bigger relative to the value of the new car, and the debt will be paid off slower.
Combined U.S. & Canadian Industrial Spending Falls --Research by Industrial Reports, Inc. shows combined U.S. and Canadian planned capital spending fell 25 percent in January compared to December. January spending for the two nations totaled $39.76 billion compared to December’s $53.58 billion. The research organization reported 263 planned U.S. and Canadian projects in January.Planned U.S. project spending was off by 12 percent in January with $31.29 billion in planned investment compared to the December total of $35.66 billion. Canadian planned investment also declined to $8.47 billion in January compared to $17.92 billion in December. Projects in both nations ranged in value from $300,000 to $4 billion.Power and energy projects led U.S. spending with $12.36 billion in planned investment, followed by process projects with $9.90 billion. Manufacturing projects reported $6.49 billion in planned U.S. spending. In Canada, process projects led all markets with $5.81 billion in planned spending. Power and energy projects accounted for $1.13 billion and manufacturing projects showed $1.09 billion.Arizona led the U.S. in planned investment for the month with $5.81 billion, followed by Louisiana with $5.45 billion and Wisconsin with $2.75 billionIn Canada, Alberta led the provinces and territories with $5.91 billion in planned spending. Québec reported $1.13 billion and Saskatchewan reported $1 billion. North Carolina was the leader in U.S. project activity with 15 planned projects. Texas reported 13 planned projects and Indiana had 12. Alberta led Canadian project activity with nine planned projects. Québec reported six and Ontario five.
U.S. factory orders post fifth straight monthly increase (Reuters) - New orders for U.S.-made goods increased more than expected in December, but business spending on equipment appeared to be slowing after strong growth in 2017. Factory goods orders rose 1.7 percent, advancing for a fifth straight month, the Commerce Department said on Friday. November’s report was revised to show orders jumping 1.7 percent instead of the previously reported 1.3 percent increase. Economists polled by Reuters had forecast factory orders climbing 1.5 percent in December. Orders increased 6.0 percent in 2017. Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, dropped 0.6 percent in December instead of falling 0.3 percent as reported last month. Orders for these so-called core capital goods edged up 0.1 percent in November. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.4 percent in December instead of increasing 0.6 percent as reported last month. Core capital goods shipments rose 0.3 percent in November. Business spending soared last year, in part as companies anticipated a massive cut in the corporate income tax rate, which was passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month. The overhaul of the tax code, the most sweeping in 30 years, slashed the corporate income tax rate to 21 percent from 35 percent. Business spending increased in the fourth quarter at its fastest clip in more than three years. Strong business spending, a weakening dollar and strengthening global economy are supporting manufacturing, which makes up about 12 percent of the U.S. economy. In December, orders for machinery rose 0.4 percent after falling 0.3 percent in November. Orders for industrial machinery rebounded 4.3 percent after slumping 4.4 percent. Orders for transportation equipment surged 7.1 percent after increasing 4.5 percent in November. But orders for electrical equipment, appliances and components fell 0.9 percent. Orders for computers and electronic products slipped 0.1 percent.
Dallas Fed: Manufacturing Expansion Solid in January -- From the Dallas Fed: Texas Manufacturing Expansion Continues - Texas factory activity continued to expand in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained elevated but retreated to 16.8 after surging to an 11-year high in December.Most other measures of manufacturing activity also pointed to somewhat slower growth in January after the rapid expansion seen in December. The new orders index moved down from 30.1 to 25.5, and the growth rate of orders index fell six points to 15.5. The capacity utilization index also stayed positive but declined, dropping 12 points to 14.5. Meanwhile, the shipments index rose six points to 27.1, indicating a pickup in growth.Perceptions of broader business conditions remained highly positive in January. The general business activity index pushed up further to 33.4, its highest reading in more than 12 years. The company outlook index remained elevated but edged down to 27.8. Labor market measures suggested a slight deceleration in employment growth and longer workweeks this month. The employment index came in at 15.2, down five points from December.
January Regional Fed Manufacturing Overview --Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for January is 21.5, down from the previous month's 22.6.
ISM Manufacturing index decreased to 59.1 in January --The ISM manufacturing index indicated expansion in January. The PMI was at 59.1% in January, down from 59.3% in December. The employment index was at 54.2%, down from 57.2% last month, and the new orders index was at 65.4%, down from 67.4%. From the Institute for Supply Management: January 2018 Manufacturing ISM® Report On Business®: "The January PMI® registered 59.1 percent, a decrease of 0.2 percentage point from the seasonally adjusted December reading of 59.3 percent. The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent. The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent. The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent. The Inventories Index registered 52.3 percent, an increase of 3.8 percentage points from the December reading of 48.5 percent. The Prices Index registered 72.7 percent in January, a 4.4 percentage point increase from the December reading of 68.3 percent, indicating higher raw materials prices for the 23rd consecutive month. Here is a long term graph of the ISM manufacturing index. This was above expectations of 58.7%, and suggests manufacturing expanded at a slightly slower pace in January than in December.
Markit Manufacturing PMI: "Strongest Manufacturing Growth Since March 2015" --The January US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.5, up from the 55.1 final December figure. Today's headline number was at the Investing.com forecast of 55.0. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the an excerpt from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release:“US manufacturing started 2018 in fine fettle, with the PMI up to its highest for over two-and-a-half years. Output growth accelerated in response to fuller order books, the latter buoyed by the twin drivers of robust domestic demand and rising exports."“The acceleration of manufacturing growth and upward price trends are grist to the mill for Fed hawks, adding to the likelihood of interest rates rising in March.” [Press Release] Here is a snapshot of the series since mid-2012.
Chicago PMI Falls in January -- The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, fell in January to a value of 65.7 from a revised 67.8 in December. Investing.com forecast 64.2. Here is an excerpt from the press release: “Official data in Q1 tends to come in weaker than in reality, but our survey suggests that despite softening a little, sentiment among businesses remains robust. This was the best January result in seven years, capped off by the Employment indicator rising to its highest level in almost 6 years,” said Jamie Satchi, Economist at MNI Indicators. “Still, inflationary pressures remain elevated and show no signs of abating, something that should be at the forefront of the Fed’s mind,” he added. [Source] Let's take a look at the Chicago PMI since its inception.
Weekly Initial Unemployment Claims decrease to 230,000 --The DOL reported:In the week ending January 27, the advance figure for seasonally adjusted initial claims was 230,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised down by 2,000 from 233,000 to 231,000. The 4-week moving average was 234,500, a decrease of 5,000 from the previous week's revised average. The previous week's average was revised down by 500 from 240,000 to 239,500.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.
ADP: Private Employment increased 234,000 in January --From ADP:Private sector employment increased by 234,000 jobs from December to January according to the January ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis....“We’ve kicked off the year with another month of unyielding job gains,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Service providers were firing on all cylinders, posting their strongest gain in more than a year. We also saw robust hiring from midsize and large companies, while job growth in smaller firms slowed slightly.” Mark Zandi, chief economist of Moody’s Analytics, said, “The job market juggernaut marches on. Given the strong January job gain, 2018 is on track to be the eighth consecutive year in which the economy creates over 2 million jobs. If it falls short, it is likely because businesses can’t find workers to fill all the open job positions.” This was above the consensus forecast for 195,000 private sector jobs added in the ADP report. The BLS report for January will be released Friday, and the consensus is for 176,000 non-farm payroll jobs added in January.
First Look at January: ADP Says 234K New Nonfarm Private Jobs -- The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the ADP January estimate of 234K new nonfarm private employment jobs, a decrease over December's revised 242K. The 234K estimate came in above the Investing.com consensus of 186K for the ADP number. The Investing.com forecast for the forthcoming BLS report is for 184K nonfarm new jobs (the actual PAYEMS number) and the unemployment rate to remain at 4.1%.Here is an excerpt from today's ADP report:“We’ve kicked off the year with another month of unyielding job gains,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Service providers were firing on all cylinders, posting their strongest gain in more than a year. We also saw robust hiring from midsize and large companies, while job growth in smaller firms slowed slightly.”Mark Zandi, chief economist of Moody’s Analytics, said, “The job market juggernaut marches on. Given the strong January job gain, 2018 is on track to be the eighth consecutive year in which the economy creates over 2 million jobs. If it falls short, it is likely because businesses can’t find workers to fill all the open job positions.” Here is a visualization of the two series over the previous twelve months.
A Closer Look at This Morning's ADP Employment Report -- In this morning's ADP employment report we got the January estimate of 234K new nonfarm private employment jobs from ADP, a decrease over December's revised 242K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail. Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high. There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above began drifting higher in early 2015, only to decrease slightly and level off in 2017. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing.
January Employment Report: 200,000 Jobs Added, 4.1% Unemployment Rate - From the BLS: Total nonfarm payroll employment increased by 200,000 in January, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. ... The change in total nonfarm payroll employment for November was revised down from +252,000 to +216,000, and the change for December was revised up from +148,000 to +160,000. With these revisions, employment gains in November and December combined were 24,000 less than previously reported. ... In January, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.74, following an 11-cent gain in December. Over the year, average hourly earnings have risen by 75 cents, or 2.9 percent. ... [Annual Revision] In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2017. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system. ... The total nonfarm employment level for March 2017 was revised upward by 146,000 (+138,000 on a not seasonally adjusted basis, or +0.1 percent). The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 200 thousand in January (private payrolls increased 196 thousand). Payrolls for November and December were revised down by a combined 24 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In January the year-over-year change was 2.114 million jobs. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate was unchanged in January at 62.7%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio was unchanged at 60.1% (black line). The fourth graph shows the unemployment rate. The unemployment rate was unchanged in January at 4.1%. This was above the consensus expectations of 176,000 jobs, however the previous two months combined were revised down 24,000.
January jobs report: good headline growth, mostly negative internals - HEADLINES:
- +200,000 jobs added
- U3 unemployment rate unchanged at 4.1%
- U6 underemployment rate rose 0.1% from 8.1% to 8.2%
- Not in Labor Force, but Want a Job Now: declined -137,000 from 5.308 million to 5.171 million
- Part time for economic reasons: rose +74,000 from 4.915 million to 4.989 million
- Employment/population ratio ages 25-54: fell -0.1% from 79.1% to 79.0%
- Average Weekly Earnings for Production and Nonsupervisory Personnel: rose +$.0.03 from $22.31 to $22.34, up +2.4% YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
- Manufacturing jobs rose by +15,000 for an average of ------00 a month vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.
- Coal mining jobs increased by 100 for an average of --- a month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each monththe average manufacturing workweek fell -0.2 hour from 40.8 hours to 40.6 hours. This is one of the 10 components of the LEI.
- construction jobs increased by 36,000. YoY construction jobs are up +226,000.
- temporary jobs increased by +1,800.
- the number of people unemployed for 5 weeks or less increased by +45,000 from 2,235,000 to 2,280,000. The post-recession low was set over two years ago at 2,095,000.
- Overtime was unchanged at 3.5 hours.
- Professional and business employment (generally higher- paying jobs) increased by +23,000 and is up +448,000 YoY.
- the index of aggregate hours worked in the economy rose by +0.2%.
- the index of aggregate payrolls rose by +0.4% .
- the overall employment to population ratio for all ages 16 and up is unchanged at 60. m/m and is up + 0.2% YoY.
- The labor force participation rate is unchanged at 62.7 m/m and is down -0.2% YoY at 62.7%
Payrolls Jump 200K, Beating Expectations As Earnings Soar Most Since 2009 - While Wall Street did expect a whisper number above the consensus forecast of 180K, the big question for today's payrolls report was what would average hourly earnings - that critical leading indicator for inflation - do. Well, according to the BLS, while January payrolls did indeed beat, rising by 200K, above consensus... ... it was the average hourly earnings that slammed expectations, rising by 2.9% Y/Y (and up 0.3% M/M, exp. 0.2%) well above the 2.6% expected, and the highest print since Jun 2009. However, it important to note that the only reason hourly earnings rose as much as they did is because the average weekly hours worked dropped sharply from 34.5 to 34.3. Meanwhile the average weekly earnings actually declined from 2.9% to 2.6%, with the number dropping from $919.43 in December to $917.18.Elsewhere, the unemployment rate kept constant at 4.1%, as expected. Going back to payrolls, the change in total nonfarm payroll employment for November was revised down from +252,000 to +216,000, and the change for December was revised up from +148,000 to +160,000. With these revisions, employment gains in November and December combined were 24,000 less than previously reported. After revisions, job gains have averaged 192,000 over the last 3 months. In kneejerk response, Bill Gross just said that the jobs report "should send the 10Y yield to 3%", and the report ensures the "Fed will continues to hike." Summarizing the report's key details:
- U.S. Jan. Nonfarm Payrolls Rose 200k;
- Avg. hourly earnings Y/y 2.9%, prior 2.7% est. 2.6%
- U.S. Nonfarm private payrolls rose 196k vs prior 166k; est. 181k
- Manufacturing payrolls rose 15k after rising 21k in the prior month; economists estimated 20k, range 10k to 30k from 19 economists surveyed
- Unemployment Rate at 4.1%
- Unemployment rate 4.1% vs prior 4.1%; est. 4.1%
- Participation rate 62.7% vs prior 62.7%
- Avg. hourly earnings 0.3% m/m, est. 0.2%, prior 0.4%
- Underemployment rate 8.2% vs prior 8.1%
- Change in household employment 409k vs prior 104k
Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.Employment in food services and drinking places continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.Employment in health care continued to trend up in January (+21,000), with a gain of 13,000 in hospitals. In 2017, health care added an average of 24,000 jobs per month. In January, employment in manufacturing remained on an upward trend (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months. The average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.3 hours in January. In manufacturing, the workweek declined by 0.2 hour to 40.6 hours, while overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.6 hours.
Labor market strength continues in January - (9 graphs) The labor market added 200,000 jobs in January as reported by the BLS. Over the month revisions showed an upward revision in December of 12,000 (148,000 to 160,000) and lower for November (252,000 to 216,000). The private sector added 196,000. The gains were widespread, with only small declines in a few sectors: Nondurable goods down 3,000 and Information jobs in the services sector were down 6,000. The strongest employment growth was in the service sector but there were also gains in construction and in the volatile mining sector driven by higher oil prices. Although average hourly earnings rose from $26.65 to $26.74, average weekly pay fell from $919.43 to $917.18 due to weekly hours falling from 34.5 to 34.3. The work week may have contracted because of weather in January so it remains to be seen if there is increasing wage pressure in the labor market. The household survey showed little changes, if any, in most of the categories. The unemployment rate nudged up from 4.09% to 4.15%. The employment to population ratio held at 60.1% and the labor force participation rate remained at 62.7%. Both of these have been stable for the past several months. Looking more closely at the labor force participation rate reveals some interesting trends for various groups. While the LFP rate for women had been climbing over time, it peaked in the early 2,000’s and has been declining since, although it has remained stable over the past couple of years. The long decline in male LFP has also slowed of late and is hovering around 69%. The only real increases over the past decade or so was in those 55 years and older. The decline of teens from 50% to about 35% is one of the more remarkable changes. Another large decline is seen for those with only a high school degree. Their labor force participation rate has fallen from about 65% to 57% over the past two decades. However, the LFP rate of those with less than a high school degree has remained roughly constant over the past couple of decades.The BLS released productivity numbers for January on February 1. Output per hour in the nonfarm business sector fell by 0.1% with output rising by 3.2% and hours rising 3.3%. This is one facto keeping wage growth low.
US Hiring Rebounds In January But One-Year Trend Eases - Companies in the US added 196,000 workers in January, according to this morning’s report from the Labor Department. The gain beat expectations for a 172,000 increase, according to Econoday.com’s consensus forecast. The stronger print for the private sector isn’t really a surprise, considering the upbeat gain in the ADP Employment Report for January that was released earlier in the week. Today’s results reflect ongoing strength in the labor market, but the annual trend continues to signal that job growth, while still healthy, continues to decelerate. Private-sector payrolls increased 1.70% for the year through last month, down slightly from 1.75% in the previous month. No big deal? Maybe, although the latest year-over-year advance marks the second-slowest annual rise in seven years. For context, the smallest annual increase since 2011 was posted last September, when private payrolls rose 1.62%. Let’s be clear: there’s no immediate concern in today’s year-over-year results. A 1.70% increase is a solid pace that’s strong enough to keep the economy humming. But today’s numbers suggest that labor-market growth is facing headwinds at this late date in the business cycle. The expansion is currently the third-longest on record, according to NBER, and will move into second place this April. If the recovery endures through the summer of 2019 it will become the longest expansion on record, which dates to the mid-19th century There’s still no sign of recession risk on the immediate horizon, but it’s prudent to recognize that the recovery from the Great Recession is no spring chicken. It’s debatable if age alone is a risk factor – many economists have their doubts. But with the Federal Reserve on track to continue raising interest rates, combined with a flattish yield curve and faster wage growth (worker pay in January rose at the fastest rate in eight years), it’s reasonable to wonder if the macro headwinds are set to strengthen in the months ahead. “The gain in wages will add to concerns that inflationary pressures are building in the economy,” says Michael Feroli, chief US Economist at JPMorgan Chase. “It solidifies expectations that the Fed will hike in March. The question is, what will they signal for hikes after that?”
9 takeaways from the January jobs report - The economy added 200,000 jobs last month, according to new figures released Friday by the Bureau of Labor Statistics The report follows President Donald Trump’s first State of the Union address earlier this week, where he touted the economy’s growth under his watch. Whether Trump — or any president — deserves credit for economic growth is up for debate. But the overall numbers were positive, and many economists predicted the growth would continue throughout the year. Here are nine takeaways from January’s jobs report.
- Of the 200,000 jobs created last month, a large number came in industries that Trump has championed as a candidate and president. The construction industry added 36,000 jobs, and manufacturing added 15,000 new jobs as well.
- The health care industry added 21,000 jobs in January, slightly down from the industry’s average monthly gain of 24,000 jobs in 2017.
- Food services and “drinking places” also fared particularly well last month. Restaurants, bars and other places where food and alcohol are served added a total of 31,000 jobs.
- The unemployment rate in January was 4.1 percent, unchanged from the figures for the previous month. The unemployment rate is the lowest it’s been since 2000, when it fell to 3.9 percent in December of that year.
- The labor force participation rate stood at 62.7 percent, the same as December. The rate counts the share of adults who have jobs or are actively seeking employment.
- Average hourly wages have risen 2.9 percent, or 75 cents, over the past year. Hourly wages went up nine cents an hour in January, after seeing an 11-cent jump in December. Mark Hamrick, Bankrate.com’s senior economic analyst, said the wage growth was the “biggest story” from the jobs report.
- “Could we see wage growth break through the 3 percent barrier? That’s a key question for the coming months,” Hamrick wrote in an email.
- The solid jobs report and wage growth could spur the Federal Reserve to raise its benchmark interest rate in March. But Jared Bernstein, who served as an economic adviser to former Vice President Joe Biden, wrote Friday there were “excellent reasons to embrace and welcome, not fear, faster wage growth.”
- “There may be more room to run in this economy than we previously thought,” Bernstein wrote in a post on his economics blog.
Black Unemployment Surges By The Most In 12 Years - Trump's SOTU claim that black unemployment was at all time lows came perfectly timed, because if he had waited just 2 more days, the story would be very different. According to the latest BLS data, while black unemployment in December was indeed the lowest on record, at 6.8%, something snapped in January and the unemployment rate for blacks snapped higher to 7.7%, the biggest monthly jump since November 2005, and the highest since April 2017! That was one part of the racial divide. The other part is that while blacks clearly got the short end of the unemployment stick in January, whites were happy as the unemployment rate for White workers dropped to 3.5%, the lowest since January 2000, although we doubt that Trump will parade vocally with that particular statistic.
Where The Jobs Were In January: Who's Hiring And Who Isn't - January was expected to be a far stronger month for payrolls than December with adverse weather conditions gone, and that's precisely what the BLS unveiled as employers added 200,000 jobs in January, while more importantly the average hourly earnings for workers rose 2.9% from a year earlier, to $26.74 from $25.99, even if this was largely the result of a sharp drop in hours worked. So which sectors were responsible for the rebound in January employment? As SouthBay Research summarizes, solid payroll strength was observed in Durable Goods Manufacturing (+18K) reflecting the generally stronger manufacturing environment. Meanwhile, services was hit by weakness in Accounting and Education. Accountant hiring typically picks up in January but this year Accounting payrolls were softer than normal. As a result, Accounting payrolls (seasonally adjusted) actually fell (-10K) in January. This development is particularly strange in light of the recent tax law changes that always boosts demand for accounting and bookkeeping support. Also contributing to the softness was deeper-than-normal seasonal layoffs in Education payrolls (Winter break). Pointing to underlying consumer spending is the boost in Construction (+36K) and Leisure/Hospitality (+35K). Businesses appear to be responding to continued strong consumer spending and hiring accordingly. Meanwhile, Retail was soft (+15K) but that's to be expected in light of the ongoing brick-and-mortar problems (i.e. the long-running debate if it's a channel issue - Amazon - or consumer spending issue - record low savings).Employment in food services and drinking places continued to trend up in January (+31,000); the industry has added 255,000 jobs over the past 12 months. Meanwhile, employment in manufacturing remained on an upward trend (+15,000) with Durable goods mfg industries adding 18,000 jobs. Finally, as , below are the industries with the highest and lowest rates of employment growth for the most recent month: monthly growth rates are shown for the prior year.
Comments on January Employment Report - Bill Mcbride - The headline jobs number was above consensus expectations at 200 thousand, however the previously two months were revised down a combined 24 thousand. Overall this was a strong report, with a nice pickup in wage growth. In January, the year-over-year employment change was 2.114 million jobs. This has been generally trending down, but is still solid year-over-year growth.This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.9% YoY in January. Wage growth had been trending up, although the acceleration in wage growth slowed in 2017. The number of persons working part time for economic reasons has been generally trending down, however the number increased slightly in January. The number working part time for economic reasons suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.2% in January. Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.42 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.52 million in December This is the lowest level since April 2008. This is trending down, but remains a little elevated. The headline jobs number was solid, and the unemployment rate unchanged at a low level, and wage growth picked up - overall a strong report and a continuation of multi-year trends.
US Worker Productivity Slumped In Q4 - For the first time since Q1 2016, US Worker Productivity declined in Q4 2017, after accelerating for three straight quarters. The headline measure of nonfarm business employee output per hour decreased at 0.1% annualized rate (est. 0.7% gain) after a downwardly revised 2.7% gain in previous three months. Unit labor costs rose at 2% annualized rate (est. 0.9% gain) following 0.1% decline. As Blkoomberg warns, the data reinforce the trend of relatively paltry gains since the last recession ended, limiting the scope for economic growth to pick up without causing an unwanted acceleration in inflation. For the full year, productivity rose 1.2 percent, in line with the pace over the last decade. The latest report also underscores that productivity figures can be volatile from quarter to quarter, and that the underlying trend may not have changed much despite the third quarter registering the fastest increase since early 2015. Incoming Federal Reserve Chairman Jerome Powell has said that labor-force participation and productivity gains are key to lifting the sustainable rate of expansion in the world’s largest economy. Without a boost in productivity, President Donald Trump may find it difficult for growth to meet his 3 percent goal. A modest silver-lining shows that among manufacturers, productivity rose at a 5.7% pace in the fourth quarter, most since 2010, rebounding from a 4.9% decline in the prior quarter. Productivity in sector was up 1.1% from year earlier. However, adjusted for inflation, hourly earnings fell at a 1.8 percent annualized pace after a 0.6 percent increase.
US labor costs increase solidly in the fourth quarter (Reuters) - U.S. labor costs increased solidly in the fourth quarter and growth in compensation is expected to accelerate as a tightening labor market forces employers to raise wages to retain and attract workers. The Employment Cost Index, the broadest measure of labor costs, increased 0.6 percent after an unrevised 0.7 percent rise in the third quarter, the Labor Department said on Wednesday. That lifted the year-on-year rate of increase to 2.6 percent, the largest increase since the first quarter of 2015, from 2.5 percent in the third quarter. Economists polled by Reuters had forecast the ECI rising 0.6 percent in the final three months of 2017. Wages and salaries, which account for 70 percent of employment costs, rose 0.5 percent in the fourth quarter after advancing 0.7 percent in the prior period. Wages and salaries were up 2.5 percent in the 12 months through December. That followed a similar gain in the year to September. Wage growth is expected to get a boost from a strong labor market, which is forecast to hit full employment this year. The unemployment rate is at a 17-year low of 4.1 percent and economists expect it to drop to 3.5 percent by the end of 2018. A $1.5 trillion tax cut package pushed through by the Trump administration and the Republican-controlled U.S. Congress in December is also expected to bolster compensation growth. The tax cut has resulted in some companies either paying out one-time bonuses or raising wages for employees. Companies like Starbucks Corp (SBUX.O) and FedEx Corp have announced they will use some of the savings from the tax cut to boost wages for workers. The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation. Economists say labor costs need to rise by at least 3 percent to push inflation closer to the U.S. central bank’s 2 percent inflation target. Labor costs increased 2.5 percent in the year to September.
Report: Labor Department hiding unfavorable report on impacts of tip-pooling rule | TheHill: The Department of Labor is reportedly hiding an unfavorable report on its proposal to pool workers tips. Bloomberg Law, citing current and former Labor Department sources, reported that department leaders scrubbed a report that showed employees could lose billions of dollars if it follows through on its plan to reverse the Obama-era ban on employers pooling workers’ tips. According to the report, senior department officials ordered staff to revise the data methodology to lessen the expected impact and were still uncomfortable including later calculations that showed progressively reduced tip losses. The public has until Feb. 5 to comment on the proposal, which does not include the government’s analysis on the rule’s impact. The agency said in its proposal the “reallocation of tips may have implications on employment and earnings, as well as some impact on the tipping behavior of customers.” "Due to data limitations, it is difficult to quantify these impacts,” it added, however. A Labor spokesperson said in a statement that the department intends to publish an informed cost/benefit analysis as part of the final rule.
Trump’s Department of Labor suppresses an inconvenient fact re their tip-retention proposal. - Jared Bernstein -- I’ve developed an awfully high outrage bar over the past year, but this Dept. of Labor suppression of evidence incident clears it by a mile, for at least 3 reasons. First, consider what this rule change goes after: The tips of minimum wage workers. I know of none–not one—bit of evidence that the fact the waitpersons get tips is an economic problem in America. To the contrary, tips are one way low-wage workers in tipped industries, many of whom these days are family breadwinners, meet their family budgets while holding minimum-wage jobs. So, let’s be clear. The Trump Labor Dept is doing the bidding of the Nat’l Rest Assoc, not low-wage workers. And trust me, we’ve already got a whole administration and Congressional majority that’s tilted against working people. We don’t need the DoL, an agency that is supposed to represent workers’ needs, to pile on. Second, while this rule is wholly unnecessary—tip-pooling arrangements are, of course, common—it would have been perfectly easy to write it in such a way as to prohibit employers from pocketing the tips. But the pen of the DoL was guided by the hand of the restaurant lobby, such that if this rule takes effect, employers will be able to legally pocket workers tips. Finally, let’s also be clear about what happened here. The DoL’s analytic staff did what it always does in these situations—based on its best knowledge of the industry and the affected workers, it estimated the transfer costs of the rule. Then, as we understand it, political appointees didn’t like the answer so they instructed the analysts to knock it down. They still didn’t like the answer—and I should point out here that it is still the case that no one outside the DoL knows that answer—and so they buried it. We are thus left with are two disturbing realities of politics in the Trump administration: a behind the scenes attack on economically vulnerable workers, and a willingness to dispose of inconvenient facts. History is replete with governments driven by these sorts of motivations, but I assure you, they are not called democracies.
EPI applauds USDA decision rejecting poultry industry petition to speed up processing lines -- This afternoon, the United States Department of Agriculture (USDA) to rejected the National Chicken Council’s petition for exemptions from rules stating that line speeds in poultry plants should not go beyond the already-fast rate of 140 birds per minute. EPI applauds the decision.Workers in our nation’s poultry processing plants deserve the basic protections of workplace safety laws and regulations. Line speed regulations protect working people from employers who want to increase profits at the expense of workers’ health and safety. The poultry industry’s own data show that their workers are injured at twice the rate of the national average, and increasing line speeds would only make things worse. Moreover, these statistics likely undercount the number of injuries. The USDA has recognized “systemic underreporting of work-related injuries and illnesses” and the Government Accountability Office documented workers’ widespread fear of retaliation by poultry plant owners if they report injuries, which makes it difficult to accurately evaluate the extent to which poultry workers suffer injuries. It is clear that the nation’s 250,000 poultry workers face great risk in their jobs, and that increasing line speeds would only increase their risk of serious and debilitating injuries.
Whole Foods Becomes Amazon Hell Foods as Employees, Managers Quit, Cry on the Job….and These People Want to Run Your Healthcare? – Yves Smith - In a scoop, Business Insider reports on how Amazon is creating massive turnover and pointless misery at Whole Food by imposing a reign of terror impossible and misguided productivity targets. Anyone who has paid the slightest attention to Amazon will see its abuse of out of Whole Foods workers as confirmation of an established pattern. And even more tellingly, despite Whole Foods supposedly being a retail business that Bezos would understand, the unrealistic Whole Foods metrics aren’t making the shopping experience better. As we’ll discuss below, we’d already expressed doubts about how relevant Bezos’ hyped Amazon model would be to Whole Foods. Proof is surfacing even faster than we expected. It’s bad enough that Bezos engages in the worst sort of class warfare and treats warehouse workers worse than the ASPCA would allow livery drivers to use horses. Not only do horses at least get fed an adequate ration, while Amazon warehouse workers regularly earn less than a local living wage, but even after pressure to end literal sweatshop conditions (no air conditioning so inside temperatures could hit 100 degrees; Amazon preferred to have ambulances at ready for the inevitable heatstroke victims rather than pay to cool air), Amazon warehouse workers are, thanks to intensive monitoring, pressed to work at such a brutal pace that most can’t handle it physically and quit by the six month mark. For instance, from a 2017 Gizmodo story, Reminder: Amazon Treats Its Employees Like Shit: Amazon would very much prefer to have reporters writing some drivel about a discount code than reminding people that its tens of thousands of engineers and warehouse workers are fucking miserable. How do I know they’re miserable? Because (as the testimony below demonstrates) they’ve told every writer who’s bothered to ask for years.
- Gawker, May 2014 – “I Do Not Know One Person Who Is Happy at Amazon”
- The New York Times, August 2015- “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace”
- The Huffington Post, October 2015 – “The Life and Death of an Amazon Warehouse Temp”
For a good overview of the how Amazon goes about making its warehouse workers’ lives hell, see Salon’s Worse than Wal-Mart: Amazon’s sick brutality and secret history of ruthlessly intimidating workers. Mind you, Amazon’s institutionalized sadism isn’t limited to its sweatshops. Amazon is also cruel to its office workers. The New York Times story that Gizmodo selected, based on over 100 employee interviews, included: “You walk out of a conference room and you’ll see a grown man covering his face,” he said. “Nearly every person I worked with, I saw cry at their desk.”
Bombshell report details worries of a 'shadow' newsroom and alleged spying at the LA Times-- Some employees at the Los Angeles Times are reportedly facing new uncertainty only days after the newspaper's editorial staff voted to unionize, HuffPost reported on Friday. Tronc, the publisher of the LA Times, is developing a separate entity within the company and hiring a team of editors who will oversee a group of contributors, HuffPost reported. The new entity — called the L.A. Times Network — exists on the company's business side, prompting concerns about potential conflicts with editorial staffers. Journalists hired for the new venture have been working on the second floor of LA Times' offices, one floor below the main newsroom. Some had not yet been formally introduced to editorial staff, HuffPost reported. Employees cited by HuffPost said they fear Tronc may be trying to create a redundant, "shadow" newsroom of non-union employees as a precursor to layoffs of newly unionized journalists. The initiative Tronc is pursuing, in which contributors produce content on niche topics that get distributed throughout Tronc's newspaper network, is not a new concept. Business Insider's advertising reporter Tanya Dua wrote last week that such a model, which for years had been a proven way for publishers to scale quickly and affordably, has gone out of fashion. Additionally, employees alleged that some staffers were being targeted by management over suspected leaks, with some employees saying they feared the company was spying on their phones and computers. Those fears were compounded, according to HuffPost, after one LA Times editor was recently suspended and escorted off the premises.
Puerto Rico’s New Power Struggle: Privatization - naked capitalism by Jerri-lynn Scofield - This Real News Network interview with Petra Bartosiewicz of Harper’s Magazine discusses Puerto Rico’s plans to privatize its debt-ridden public electric utility, PREPA. This decision was announced last week — at a time when close to half of the island’s residents still lack power even though Hurricane Maria occurred four months ago. Bartosiewicz’s recent Harper’s article, Before the Deluge:How Washington sealed Puerto Rico’s fate, is well worth your time. (video with transcript)
Does America have a caste system? - In the United States, inequality tends to be framed as an issue of either class, race or both. Consider, for example, criticism that Republicans’ new tax plan is a weapon of “class warfare,” or accusations that the recent U.S. government shutdown was racist. As an India-born novelist and scholar who teaches in the United States, I have come to see America’s stratified society through a different lens: caste.Many Americans would be appalled to think that anything like caste could exist in a country allegedly founded on life, liberty and the pursuit of happiness. After all, India’s atrocious caste system determines social status by birth, compels marriage within a community and restricts job opportunity. But is the U.S. really so different? I first realized that caste could shed a new light on American inequality in 2016, when I was scholar-in-residence at the Center for Critical Race Studies at the University of Houston-Downtown. There, I found that my public presentations on caste resonated deeply with students, who were largely working-class, black and Latino. I believe that’s because two key characteristics differentiate caste from race and class. First, caste cannot be transcended. Unlike class, people of the “low” Mahar caste cannot educate or earn their way out of being Mahar. No matter how elite their college or how lucrative their careers, those born into a low caste remain stigmatized for life. Caste is also always hierarchical: As long as it exists, so does the division of people into “high” and “low.” That distinguishes it from race, in that people in a caste system cannot dream of equality. Caste, in other words, is societal difference made timeless, inevitable and cureless. Caste says to its subjects, “You all are different and unequal and fated to remain so.”
"The Honest Poor"? - 1 In 5 Of America's Homeless Live In NYC Or LA - In 2017, over 553,000 Americans were homeless with one out of every five of them living in New York City or Los Angeles. As Statista's Niall McCarthy notes, 65 percent of the country's homeless population was provided with emergency shelter, according to a report from the U.S. Department of Housing and Urban Development. The largest number of homeless people was recorded in New York City (76,501), with Los Angeles in second place (55,188). And this is what we get for record high stock prices, record high debt, record high central bank balance sheets, and record high complacency? It is perhaps no coincidence that the density of homeless Americans tends to focus on left-leaning states run by politicians who might lead one to believe that the poor in America are held down solely by the machinations of the rich and connected. As xRugger writes at Jim Quinn's Burning Platform blog, there seems to be a sentiment out there that the poor are simply not responsible for the state in which they find themselves and that one day they will rise up and throw off the shackles that bind them in poverty and want. Everything has been done to them; therefore, we are obligated to do everything for them. As xRugger explains - and will be obvious shortly - he disagrees. Do not put your hope for change in the poor and downtrodden of this country. Your faith in the supposed virtuous poor is badly misplaced. The majority of the American underclass are neither virtuous nor (by any rational standard of true poverty) are they poor. This is not a statement meant to absolve the wealthy and powerful of their sins in that they have done much to degrade and destroy the “disadvantaged” of this nation. They will have their own millstone to deal with. Having said that, let’s chat a little bit about the true state of the American underclass.
If You Want to Expand Our Welfare System, Call It ‘Assistance to the Poor’ --Last Spring, in a highly publicized meeting with members of the Congressional Black Caucus, President Donald Trump received some startling news. One of the members mentioned to Trump that pushing forward with “welfare reform” would be hurtful to her constituents, “not all of whom are black.”“Really?” Trump replied. “Then what are they?”Statistically, they were probably white. But given the United States’ history with the word “welfare,” it’s not all that surprising that Trump was confused.Despite the fact that white Americans benefit more from government assistance than people of color, means-tested aid is primarily associated with black people and other people of color—particularly when the term welfare is used. For many Americans, the word welfare conjures up a host of disparaging stereotypes so strongly linked to stigmatized beliefs about racial groups that—along with crime—it is arguably one of the most racialized terms in the country.Martin Gilens, a professor of political science at Princeton University, has studied the relationship between whites’ racial attitudes and their opinion on welfare extensively. In one study, he finds that white people’s racial attitudes are the single most important influence on their views on welfare. In other words, white people who are more prejudiced toward black people are also significantly more opposed to welfare. Numerous studies in the social sciences have substantiated this claim. That has tremendous consequences for the types of policies that are proposed and passed. Public support for programs associated with the term welfare are generally weaker than support for other programs, like unemployment insurance, primarily because welfare is so strongly linked to the negative attitudes white people possess about black people. However, the public is willing to support redistributive benefits generally when they are not called welfare. For example, in 2014, 58 percent of white people thought that we are spending too much on welfare, whereas only 16 percent reported that we are spending too much on the poor.
76 Illegal Immigrants Found Crammed Into Tractor-Trailer In Texas, Including 13 Children - Border patrol agents found 76 illegal immigrants inside a tractor-trailer during a traffic stop northeast of Laredo, Texas last week. #USBP Laredo Sector Border Patrol Agents Rescue 76 Illegal Aliens in a Tractor-Trailer, more information, https://t.co/Dz6ePV7VLl pic.twitter.com/9YMQ1zSrMY CBP South Texas (@CBPSouthTexas) January 29, 2018The agents pulled the truck over on U.S. Highway 83 to question the driver about his immigration status, according to the Border Patrol. Upon opening the rear of the trailer, 76 people from Mexico, Honduras, El Salvador and Guatemala were discovered - including 13 unaccompanied children. The driver, who turned out to be a U.S. citizen, was arrested by Customs and Border Protection agents and had his truck seized. "These criminal organizations view these individuals as mere commodities without regard for their safety," said Gabriel Acosta, assistant chief patrol agent for the Laredo border patrol sector. "The blatant disregard for human life will not be tolerated. We will continue to work with our law enforcement partners to disrupt and dismantle these organizations and prosecute those responsible." The US Customs and Border Protection Agency has been stepping up efforts to curb illegal immigration - taking such measures as searching a record number of cellphones and other devices at US points of entry last year while hunting for smugglers and terrorists - much to the chagrin of the ACLU. In fiscal year 2017, which ended Sept. 30, the government searched the devices of 30,200 people, the vast majority leaving the country, up from 19,051 in fiscal year 2016. More than 80% of the devices belonged to foreigners or legal permanent residents, with less than one in five owned by a U.S. citizen.
Corrupt Baltimore Cops Admit Planting Guns, Using GPS-Locators To Rob Drug Dealers -- Over the past year, the Baltimore Police Department has undoubtedly gained national attention in a corruption scandal involving the Gun Trace Task Force, running wild on the streets of Baltimore. Members of this elite group were charged with “racketeering and other corruption, accused of robbing citizens, making illegal arrests and filing for thousands of dollars in overtime they never worked,” said the Baltimore Sun.Maurice Ward, one of the Gun Trace Task Force detectives, took the stand Tuesday in the case of officers Daniel Hersl and Marcus Taylor who were charged with robbery, extortion, fraud and firearm charges.Ward’s testimony provided a somewhat shocking account of how detectives used GPS locators to follow drug dealers, and then, eventually rob them of their cash and drugs.According to the Baltimore Sun, here are some notable and shocking moments from the testimony during Tuesday’s proceedings:Ward testified that his squad would prowl the streets for guns and drugs, with his supervisor, Sgt. Wayne Jenkins, driving fast at groups of people and slamming on the brakes. The officers would pop their doors open to see who ran, then give chase and detain and search them. Ward said this occurred 10 to 20 times on slow nights, and more than 50 times, “easy,” on busier nights.The officers had no reason to target the crowds other than to provoke someone who might have drugs or a gun into running. “A lot of times” guns and drugs were recovered in this way, Ward said.Ward said Jenkins liked to profile certain vehicles for traffic stops. Honda Accords, Acura TLs, Honda Odysseys were among the “dope boy cars” that they would pull over, claiming the drivers weren’t wearing seat belts or their windows were too heavily tinted. Ward said Jenkins also believed males over the age of 18 carrying bookbags were suspicious and attempted to stop them.Jenkins would portray himself as a federal agent, telling drug dealers that he was taking their money and drugs but would let them go because they weren’t his ultimate target.Ward said the officers used illegal GPS trackers to follow the movements of some targets.Jenkins would ask suspected drug dealers, “If you could put together a crew of guys and rob the biggest drug dealer in town, who would it be?” The officers would use the answers to determine who to target, Ward said
Study: Pretrial Detention Makes Poor People Plead Guilty - America’s cash bail system ensures that thousands of people who have not been convicted of a crime nevertheless sit in jail before their trial. A new study finds that pretrial detention is warping our justice system in profound ways. The newly published study in the American Economic Review, by researchers from Princeton, Stanford, and Harvard, notes that the US has half a million people sitting in jail before trial on any given day—the highest rate in the world. The question they examined: What effect does this massive program of pretrial detention have on the eventual outcomes of the criminal cases, and on society itself? Perhaps their most shocking finding is that merely holding people in jail before trial—which occurs for economic reasons having nothing to do with guilt or innocence—had a large impact on whether or not people plead guilty. We find that initial pretrial release decreases the probability of being found guilty by 14.0 percentage points... The decrease in conviction is largely driven by a reduction in the probability of pleading guilty, which decreases by 10.8 percentage points... These results suggest that initial pretrial release affects case outcomes primarily through a strengthening of defendants’ bargaining positions before trial[.] By keeping people in jail until their trial, our system persuades them to plead guilty. That is a perversion of justice at the most basic level. If you have any doubt that this is nothing more than the criminalization of poverty, think about this: “we find in our data that the typical defendant earned less than $7,000 in the year prior to arrest, likely explaining why less than 50 percent of defendants are able to post bail even when it is set at $5,000 or less.” The study also found that “initial pretrial release increases the probability of employment in the formal labor market three to four years after the bail hearing by 9.4 percentage points,” illustrating how cash bail can easily trap defendants in a downward cycle of poverty and unemployment. [The full study]
Florida warden retaliates for article publicizing prison abuses, slave labor and prisoner protest -- Editor’s note: The following article was written by Kevin ‘Rashid’ Johnson on Jan. 18. The next day, the warden had Rashid moved to a freezing cold cell in retaliation. Rashid managed that day to send this message to the Abolitionist Law Center; supporters have not heard from him since. Readers are asked to call the office of Warden Barry Reddish, at 904-368-2500 or fsprison@mail.dc.state.fl.us to ask firmly and politely about the health and wellbeing of Kevin Johnson, No. 158039.
Man Uses $1m Win To Finally Visit Doctor, Gets Terminal Cancer Diagnosis, Dies Weeks Later - A New York lottery winner who used some of his million-dollar prize to pay for a visit to the doctor, was told he had stage 4 cancer, and died several weeks later. Donald Savastano, who won $1 million playing the New York Lottery’s 'Merry Millionaire' game, said on collecting his prize that he had bought the ticket on a whim and was hoping the money would change his life for the better.“Being a self-employed carpenter, I didn’t really have a plan for retirement,” Savastano told WBNG at the time. “The money will help with that. I don’t have any other extravagant plans. I’ll buy a new truck, pay off some debt and invest for the future.” As well as thinking about using his newly found fortune to book a vacation and buy himself a new truck, the self-employed carpenter also took the opportunity to pay for a visit to the doctor—something he had previously not been able to afford.But during his appointment the doctor told Savastano, who had reportedly been feeling unwell for some time, that he had stage 4 cancer in his lung and brain. The 51-year-old died just three weeks after winning the jackpot and getting his diagnosis. Danielle Scott, who worked at the store that sold Savastano his winning ticket, told ABC7: "He was self-employed. He didn't have insurance, he hadn't been feeling good for a while, I guess, and when he got the money he went into the doctor."
Parents Are Making Their Children Drink Bleach to ‘Cure Them of Autism’ - Parents are making their children drink industrial bleach to "cure" them of autism, with the potentially deadly practice traced back to a cult in the United States.According to the British tabloid Sunday People, six British police forces probed cases in which children as young as 2 were forced to undergo the potentially lethal treatment. The treatment being administered is CD (chloride dioxide) or MMS ("miracle mineral solution"), with a secret Facebook group touting its use to desperate parents in the United Kingdom.The method was promoted by a controversial U.S. church with a branch in Los Angeles: the secretive Genesis II Church, founded by Jim Humble, a former scientologist. A 2016 investigation by Eyewitness News and ABC News found an underground network clustered in Southern California, promoting MMS on Facebook as a cure for ailments including cancer, Parkinson's and autism in children.The previous year, the BBC exposed a secret conference in which leading figures from the church traveled to the U.K. to promote the use of MMS, which it claims is a non-dangerous religious sacrament. They believed autism was caused by pathogens and parasites, which chloride dioxide kills. Doctors said claims of adherents were groundless, and the solution was untested and could cause serious harm. The solution includes two chemicals, sodium chlorite and hydrochloric acid, that combine to make bleach. It is sold to be used orally or as an enema. Proponents recommend mixing it with fruit juice, but medical experts warned that doing so caused the solution to acidify and produce chlorine dioxide, a potentially lethal bleach used to strip textiles. The U.S. Food and Drug Administration warned that the product “used as directed, produces an industrial bleach that can cause serious harm to health.” It is banned in Canada.The British Food Standards Authority warned against the use of MMS and said it could cause nausea, vomiting, diarrhea, reduced blood pressure, or damage the gut or cause respiratory failure.There has been one death linked to MMS and several cases of those taking it reporting serious health problems. However, the substance remains available to purchase on the internet.
To reduce costs Texas officials slash special education enrollment --The drop in the percentage of Texas public school students receiving access to special education services has been so stark that it has brought a warning from the US Department of Education.On January 11, 2018, the federal education department issued a letter to Commissioner Mike Morath of the Texas Education Agency (TEA), stating that the 32,000 drop in the number of students receiving special education between 2003 and 2016 is “noteworthy.” The drop comes even though the student population in Texas public schools increased by more than 1 million, bringing it to 5,359,127—a number larger than the population of 23 states.On the basis of a yearlong investigation, the DOE’s Office of Special Education Programs (OSEP) found that the TEA failed “to ensure that all children … in need of special education…were identified, located and evaluated,” “to ensure that a free appropriate public education (FAPE) was made available to all children,” and that the state’s school districts lived up to the Individuals with Disabilities Education Act (IDEA).In the school year of 2003-04, the state provided special education to 11.6 percent of its students, already one of the nation’s lowest percentages. Now, according to data gathered as part of a 2016 expose by the Houston Chronicle, only 8.6 percent of Texas school children have access to special education programs, the lowest level in the country. Basing itself on national averages, the Chronicle estimates the number of students affected by TEA’s failure is 250,000, many of whom may be entitled to compensatory education or tuition reimbursement. It is even worse in large Texan cities. In 2016, Houston provided special education services to 7.4 percent of its students, and Dallas to only 6.9 percent. By way of contrast, 19 percent of children in New York City receive special education services. Dallas and Houston are not alone. Indeed, of “the 100 largest school districts in the US, only 10 serve fewer than 8.5% of their students. All 10 are in Texas,” the Chronicle notes.
Puerto Rican Governor calls for the closing of a quarter of the island’s public schools - Last Wednesday, Puerto Rico Governor Ricardo Rosselló presented his government’s fiscal spending plan for 2018, which calls for $1.5 billion in cuts, including more than $300 million to education. These cuts will require the closure of 300 of the 1,100 K-12 schools on the island and could lead to a decrease of 27,500 students and 7,300 teachers by 2022.This attack on education and other social services comes four months after Hurricane Maria devastated the island. Students at every level have lost at least a semester of their education since the storm hit. Due to the completely inept “recovery” aid provided by the local and federal governments, 30 percent of residents are still struggling without running water or electricity—including about 30 percent of public school buildings, which are still operating on half-day schedules.In addition to the physical damage to school buildings and the resulting loss of school days, students have lost their clothing, schoolwork, books, and notes. Many educators have left the island permanently, exacerbating an already severe teacher shortage. One school just outside of the capital city of San Juan, the Rio Grande High School, is reporting classes of 90 students, with only one teacher responsible.In addition to the closures, most schools are now operating without enrichment programs, such as physical education, and with shorter hours. In many cases, the teachers themselves have had to purchase food, clear away debris, repair broken walls and roofs, and buy teaching supplies to get the schools up and running. The devastating effect of the hurricane on education stretches far deeper than just physical damage and the lack of resources. The immense poverty that existed on the island before the hurricane has been greatly exacerbated, causing further strain on students, teachers and their families. Before Hurricane Maria, 80 percent of public school students in Puerto Rico came from households below the poverty line.
Chicago Public Schools appoints new CEO - On January 24, the Chicago Public Schools (CPS) Board of Education appointed Janice Jackson as its new CEO after the previous school chief, Forrest Claypool, resigned in the midst of an ethics probe and charges of a cover-up. The change in leadership takes place as CPS faces public opposition over revelations about secretive cuts to special education as well as protests against school closures in one of Chicago’s poorest neighborhoods. Claypool—a close political ally of Chicago Democratic Mayor Rahm Emanuel and a former member of Barack Obama’s presidential media campaign team in 2008--resigned on December 8 before Jackson, his widely anticipated heir, took over as interim CEO. Claypool was forced to step aside after CPS Inspector General Nicholas Schuler published a report showing that he violated CPS’s Code of Ethics. Schuler also made clear that Claypool orchestrated a “full-blown cover-up,” in response to the investigation.According to the report, Claypool hired his longtime friend and political ally Ronald Marmer in 2016 to manage a $250,000 contract with his former employer, the law firm Jenner & Block. Marmer received severance pay from his former employer totaling $1 million as he worked for CPS as its general counsel. The firm had been hired by Marmer ostensibly to sue the state of Illinois over holding back education funds during the Illinois state budget impasse, which threatened vital public services, schools and universities. However, the suit was never filed as the state approved a paltry stopgap budget. Schuler opened an investigation after the Chicago Sun-Times published an article on July 28, 2016 uncovering a relationship between Marmer and the law firm. The district’s official ethics code states that there can be no “business relationship” between employees of CPS and other parties they are in negotiation with. The issue for Schuler was not simply that Claypool hired Marmer but that he intentionally tried to work around the ethics code to get Marmer the position. Additionally, Claypool lied repeatedly in an attempt to throw off the Inspector General’s investigation.
Idaho Lawmakers Continue To Balk At New Science Standards-- New K-12 science standards received push back from Idaho lawmakers for the third year in a row on Thursday, despite continued efforts to downplay the negative impacts of human activity on climate change to appease Republican members. Education officials have long pleaded with the GOP-dominant legislature that the state's science standards are vague and outdated, but lawmakers have refused to adopt permanent new changes and instead have called for more vetting and public comments. On Thursday, House Education Committee members met to review the latest proposed standards and listen to public testimony. While more than 100 people were in attendance, just seven people were allowed to testify during the two-hour hearing because lawmaker spent the majority of the time balking at the inclusion of human behavior and climate change nestled inside the standards. "Geologic history shows that temperatures have gone up and down before, so that's one of the challenges that some people have run into," said Rep. Lance Clow, a Republican from Twin Falls, who sits on the committee. "We know that solar activity, volcanic activity, things like that contribute. The implication of the standards right now is that it's only human impact that contributes to rising temperatures." Meanwhile, Rep. Ron Mendive, a Republican from Coeur d'Alene, raised concerns to a reference to "new species" because he said he was unaware that a new species was possible.
The Truth About Teen Suicide -- Teenage suicide is back in the headlines, as it has been many times. In 1913, authorities variously blamed these “tragedies of childhood” on moral decay, harsh schooling, feminism, “cheap theaters,” “pessimistic literature,” and “sensational stories.” In 1927, a “wave” of college suicides was attributed to newly cynical, materialistic youth. In the 1980s, analyses of national vital statistics reports revealed that suicide rates among teenagers “tripled” since the 1950s, inciting dire reports by health interests and news media. Tipper Gore, wife of then-senator Al Gore, launched a crusade blaming teen suicide on metal and punk musicians like Metallica, Ozzy Osbourne, and Judas Priest. Now, San Diego State University psychology professor Jean Twenge is winning considerable attention arguing depression and increased suicide among teens is driven by social media, especially smartphones. The smartphone has “destroyed a generation,” she claims in a widely read piece in the Atlantic. She cites several surveys indicating teens who use more social media also report being more depressed; depression among teens is rising, as is suicide; the increases in both track the introduction of the smartphone in 2012; therefore, the smartphone must be causing or contributing to more teens killing themselves. Twenge’s theories have resonated amid rising fears of cyberbullies, Facebook trolls, and online threats. The problem with her claims is that they are simply correlational. That is, they assume that because smartphone use and teen depression are occurring at the same time, the first must be causing the second.
West Virginia teachers hold one-day strikes and statewide protests --Thousands of teachers across West Virginia staged one-day strikes or protests on Friday to demand a decent pay increase and protection of their benefits. Teachers from the historic coal mining battlegrounds of Logan, Mingo and Wyoming counties defied state law and carried out one-day strikes.Approximately 2,000 educators converged on the state capitol, filling the rotunda as the state Senate considered a proposed paltry one percent pay increase. The striking teachers, who were bussed up from the southern part of the state, were joined by bus drivers, custodial workers, cafeteria workers, other public employees, as well as by other educators from across the state.The derisory pay package, Senate Bill 267, passed 33-0, as protestors looked on. Teachers in the state have not had a pay increase since 2014 and are presently ranked 48th out of 50 US states in average salary. Moreover, the pay “increase” is actually a pay cut, as it is accompanied with demands for increased deductibles and copays to health insurance as well as attacks on seniority. The Senate bill will now go to the House of Delegates.Districts in Kanawha, Boone, Monongalia and Berkeley counties organized “walk-ins” and rallied with students and parents prior to the start of school in defense of teachers’ rights. Similar actions and continued protests are scheduled throughout the weekend and next week. Strike votes in additional counties are expected soon.Many students also rallied to show their support for educators. At South Charleston High School, about 30 students started the day in the parking lot in front of their school holding signs in support of their teachers. At Martin Middle School in Cabell County, teachers, parents and students held a protest, all wearing purple, and lining the roads, demonstrating their support for pay increases for educators.
In L.A., resources grow for homeless community college students -- Innovative ideas – from food pantries on campus to the first homeless shelter for college students – are on the rise in Los Angeles. Those involved with higher ed say they have a moral duty to meet the basic needs of learners so they can succeed. Community colleges like Los Angeles Valley College have traditionally been a popular and effective route for lifting Americans out of poverty. But the lack of affordable housing across the country is preventing or delaying students from obtaining the degrees and certificates that they need to improve their future. Among community college students nationwide, two in three students are food insecure (meaning they often go hungry), half are housing insecure (meaning they often can't pay their full rent or utility bills), and almost 14 percent are homeless, according to a 2016 survey by the Wisconsin HOPE Lab in Madison. And in California, the state with the greatest homelessness problem, housing crises among students enrolled in Los Angeles Community College District’s nine colleges are the norm: almost one in five indicated they had experienced homelessness in the past year, based on a 2016 survey. Community colleges may only get funded to instruct students, but education leaders in Los Angeles say that their moral and ethical duties go beyond the classroom. And while there are no present state or federal plans to fund housing on community college campuses, faculty, staff, and students in and around Los Angeles are piecing together their own solutions. “It’s not just about getting an ‘A’ or a ‘B,’ ” says Ellie Rabani, director of LAVC’s CalWORKs program and one of the faculty members who first called attention to the problem of homelessness on campus. “If you are hungry, you can't study. If you don't have a place to sleep, you can’t study. If we want them to transfer and become whoever they want, we have to provide these things to them.”
White Supremacists Are Targeting Colleges "Like Never Before," Researchers Say -- White supremacists are targeting colleges "like never before," with the number of posters, banners, and other messages on campuses up 258% in 2017, according to a new report by the Anti-Defamation League. “They see campuses as a fertile recruiting ground, as evident by the unprecedented volume of propagandist activity designed to recruit young people to support their vile ideology," ADL CEO Jonathan Greenblatt said in a statement. Comparing the fall semester of 2016 (Sept. 1 to Dec. 30) to that of 2017, the ADL found that the number of instances of white supremacists putting up stickers, posters, and banners on college campuses went from 41 to 147, an increase of 258%.The ADL said it had recorded 346 incidents of white supremacists putting up their materials on college campuses since September 2016 across 216 colleges and universities in 44 states, with 147 of those happening in 2017. Texas was hardest hit, with 61 incidents. Oren Segal, the director of the ADL's Center on Extremism, told BuzzFeed News he believes white supremacists target college campuses to find isolated students. "When the groups focus on the 'threat' of multiculturalism, diversity and liberalism, they’re hoping that some students who feel that that atmosphere on campus is too much for them will view white supremacist groups as an alternative," he said. But sometimes it's less about the students than the school, he added. "They also just want to troll campuses," Segal said. "Part of it is just about getting a reaction from the school itself. They’ll also post their flyer images on social media to make it seem like they have a much bigger reach than they do." One white supremacist group, Identity Evropa, which focuses on colleges almost exclusively, was responsible for 158 of the incidents, according to the report. Vanguard America, the group that the alleged car attacker marched with in the deadly march in Charlottesville, Virginia, posted flyers on campuses 46 times since September 2016, the ADL found.
The Sackler family made billions from OxyContin. Why do top US colleges take money tainted by the opioid crisis? - A controversy is enveloping one of America’s wealthiest families. It involves the fraught relationship between pharmaceutical companies at the heart of the opioid crisis and the nonprofits they fund.In this case, the company is Purdue Pharma, which is owned by the Sackler family. Their wealth exceeds $13bn, and over the years, the family have been generous patrons of medical research at the nation’s leading universities, including Columbia, Cornell, Tufts and Yale. Purdue Pharma produces the opioid OxyContin. Purdue told doctors the drug had a low addiction rate, because it was a time-released medication. Alas, this was not the case. According to the Centers for Disease Control and Prevention, the death toll from OxyContin and related prescription opioids now exceeds 200,000. The federal government estimates that 2.4 million Americans currently suffer from opioid addiction disorders. Purdue Pharma pleaded guilty in 2006 in federal court to marketing OxyContin “with the intent to defraud or mislead”. At the time, the company paid a $600m fine – widely seen as a slap on the wrist – while executives paid additional fines of $34.5m.Over the years, some of America’s leading universities have accepted large sums of money from the Sacklers for science research and the Sackler name is prominently attached to their institutions. So, in light of recent revelations about the origins of the Sackler wealth, will these universities attempt to somehow hold the Sacklers to account? For now, they are not saying. Four universities contacted declined requests for an interview.
"This Does Not Represent The Views Of the University..." - I know that I am not the first person to ask this, but when did universities start having “views”? When some professors indulge their rights to free speech or put academic freedom into practice, they can sometimes express views that some members of the public find controversial, distasteful, or reprehensible. In such cases, one frequently reads their university administrations publishing memos to the effect that, “Professor X’s views on Subject Y do not represent the views of the university”. What does that mean? Has “the university” studied the subject to the same degree as the professor, thus allowing it to conclude its views are the correct ones? Was the professor supposed to be instructed on the correct views to represent, since the job of professor apparently means not having an independent mind? Does it mean that Professor X does not represent the views of all professors and students at the university? How could anyone ever assume that one professor spoke for all others? Does it instead mean that the professor does not represent the views of those in the administration? The support staff? If so, who cares? And where exactly did the university administration publish its “party line”? When I was twice hired for tenure-track positions, the one thing I recall no Dean ever telling me was: “Here is a list of the views of the university. Only if you uphold these views can you consider working here. Should you ever express any differing views, you may be subjected to disciplinary action”. Nonetheless, the attitude of some university administrations in North America is that they have a right to publicly castigate faculty for not toeing the line. It is as if “the university” has been reduced to working as a mere cell of a ruling political party. One could ask similar questions as above, only in reverse. What entitles administrators to speak for the university as a whole? How do they know that Professor X’s statements really do not reflect the views of the university? Did they ever consult faculty and students? Where is all the survey data that reveal the views of faculty on any subject? How is “the university” defined? Is it just the board of governors? Whose views does the university represent? Since I work in a public university - Canada only has public universities, with maybe one or two little exceptions - can we then assume that the “views of the university” neatly align with the broad majority of the public that we presumably are meant to serve? Is it the job of professors to simply reflect the views of others? Since when did it fall to professors to “represent” their universities - and will they get paid extra for doing PR work?
She has no home, car or job after bankruptcy, but still owes for student loans - Vera Thomas scraped together enough money with the help of about $7,000 in student loans to attend community college for two semesters to try to better her job prospects.That was in 2012. Two years later, unemployed and steeped in debt because of a worsening health condition called diabetic neuropathy, she quit paying on her loans. She has muscle weakness, pain and numbness.Thomas, 62, filed for bankruptcy last year. Her credit card balance, medical bills, car loan and other expenses were wiped away. But the one debt that’s hounded her the most — her student loans — is still there.Bankruptcy for Thomas and others like her is not the fresh start for which it was designed.“I’m walking on eggshells every day,” she said. “I have applied for so many jobs. I think they look at my age, and I haven’t had any luck.”Thomas has few belongings. Everything she owns can fit inside a mid-size sedan. She’s on food stamps, and her two-year job hunt hasn’t gone well. Her case illustrates how difficult it is for borrowers to discharge student loan debt in bankruptcy even when they are poor, unhealthy and facing a bleak financial future. Consumer advocates say that’s due to outdated laws Congress created years ago as well as judges who have strictly and narrowly interpreted the law. Judge Harlin Hale, the Dallas bankruptcy judge in Thomas’ case, said he felt a “great deal of sympathy” for Thomas in his December 2017 order but said that his hands are tied due to legal precedent. The “demanding standard” adopted by federal courts in the 5th Circuit that includes Dallas says borrowers must show “total incapacity” to pay their student loan now or in the future in order to erase the debt, the judge said.
Republicans Are Killing Social Security One Tiny Service Cut at a Time - Nancy Altman reminds us that Social Security is NOT off the table for Republicans via this post Republicans Are Killing Social Security One Tiny Service Cut at a Time at Slate:Republicans have made no secret of their long-standing desire to destroy Social Security as we know it. Indeed, Sen. Marco Rubio revealed just before Christmas that congressional Republicans plan to go after Social Security yet again.Their strategy includes both direct and stealthier efforts—death by a thousand cuts to services. And Republicans are poised to plunge the knife in again soon.Republican politicians are making it increasingly difficult, time-consuming, and aggravating to access our earned Social Security benefits, in the hope of undermining support for the extremely popular program, and eventually ending it as we know it.…Since 2010, when Republicans took back control of the House of Representatives, SSA’s operating budget has been cut by 11 percent. For 2018, the Republican-controlled Senate Appropriations Committee has proposed limiting Social Security’s administrative budget even more, this time, by another $492 million—4 percent of SSA’s operating budget, on top of an already enacted 16 percent cut, after inflation, since 2010.… Republicans like to say that government should be run like a business. Any private business as successful and popular as Social Security would be opening branches, not closing them. If congressional Republicans simply allow SSA to spend just another one- or two-tenths of a percent of Social Security’s large and growing surplus, the agency can provide the exemplary, first-class service for which it has always been known.
Medicaid covers nearly 104 million medical visits, but that may soon change — Unable to walk or talk, barely able to see or hear, 5-year-old Maddie Holt waits in her wheelchair for a ride to the hospital. Her parents can’t drive her. They both have disabling vision problems; and, besides, they can’t afford a car. When Maddie was born in 2012 with the rare and usually fatal genetic condition called Zellweger syndrome, Meagan and Brandon Holt, then in their early 20s, were plunged into a world of overwhelming need — and profound poverty.“We lost everything when Maddie got sick,” said Meagan Holt, now 27.More than 1 in 5 Americans — about 74 million people — now rely on Medicaid to pay for their health care. Multiple times each month, Maddie sees a team of specialists at Seattle Children’s Hospital who treat her for the condition that has left her nearly blind and deaf, with frequent seizures and life-threatening liver problems. The only way Maddie can make the trip, more than an hour each way, is through a service provided by Medicaid, the nation’s health insurance program started more than 50 years ago as a safety net for the poor. Called non-emergency medical transportation, or NEMT, the benefit is as old as Medicaid itself. From its inception, in 1966, Medicaid has been required to transport people to and from such medical services as mental health counseling sessions, substance abuse treatment, dialysis, physical therapy, adult day care and, in Maddie’s case, visits to specialists. More than 1 in 5 Americans — about 74 million people — now rely on Medicaid to pay for their health care. The numbers have grown dramatically since the program expanded in 32 states plus the District of Columbia to cover prescription drugs, health screening for children, breast and cervical cancer treatment and nursing home care. With a Republican administration vowing to trim Medicaid, Kaiser Health News is examining how the U.S. has evolved into a Medicaid Nation, where millions of Americans rely on the program, directly and indirectly, often unknowingly.
Highly Experienced Physicians Leaving Medicine Due to Electronic Medical Records - naked capitalism - Yves here. We’ve posted off and on for at least the past five years, via the dogged coverage at the Health Care Renewal website, over the way that electronic medical records are undermining the delivery of health care. Some readers instinctively reject that idea, but that is due to not understanding that these systems are entirely about billing, not about diagnosis or treatment, and regularly force doctors to navigate through numerous irrelevant screens before they get to the parts that are relevant to their patient. That wastes time and dilutes the doctor’s focus. For instance, from a 2014 post, quoting a physician: The fact of the matter is that the EMR [electronic medical record] remains in the United States a tool for maximization of reimbursement and as such is not a technological destination but rather a technological dead end. The driver for proliferation of this ‘dead end’ is the government being willing to fund its expansion with their fervent hope that it will be their magic bullet for finding the cheats and cheaters of Medicare…. The reality is the train has left, those of us addicted to patient care watch in dismayed horror as our productivity plunges and we struggle to restructure not our workflows but our clinical thought processes to badly designed, logically flawed, and obscenely overpriced documentation tools that distract the expert clinician from a high quality clinical encounter. Fast forwarding to today, see another example, this post at Health Care Renewal, Physicians Harassed by Overwhelming Levels of Messaging From Electronic Medical Records. Key section (emphasis original): As previous studies have shown, physicians are spending much more time in non-direct patient care and less time with patients. This is bad for everyone involved. Targeting methods to decrease this burden would be important in improving patient care and physician wellbeing … We are planning on examining the messages sent directly from patients more closely, hoping to target higher risk patients todecrease post and inter-visit messaging.
Patient Dumping: A “New” Cost Savings Strategy for Hospitals -- On a cold December night in Santa Cruz, California, a hospital employee at Dominican Hospital wheeled a patient out of the emergency room and left the patient on a bus bench in front of the hospital. The patient, a homeless man clothed only in a hospital gown was rescued by a passerby who realized that the patient had no clothing, no shoes, and no possessions and was unable to seek shelter or clothing.A nearly identical incident occurred in Baltimore around the same time. This patient was “discharged” from the University of Maryland medical Center Emergency Room clothed only in a hospital gown and was unable to seek help or shelter. That patient too was rescued by a good Samaritan passerby who documented these events on his cell phone.Both incidents were eventually reported by the media, and the Baltimore rescuer was interviewed by the host of “The Takeaway” on NPR. NPR also interviewed, Arthur Caplan, a well-known medical ethicist. He stated that these “hospital dumping” events have been occurring with increasing frequency in recent years, in spite of a specific federal prohibition against this behavior. He was referring to the Emergency Medical and Active Labor Act of 1986 which requires hospitals to provide emergency care irrespective of the patient’s ability to pay for that care. Over the years, the law has been interpreted to specifically prohibit discharging patients from the emergency room or the hospital if they do not have the means to obtain shelter, and personal and medical necessities such as food, medicine and follow up care. I was surprised to read about these incidents and to learn that they are not isolated events. I worked for 30 years providing surgical care in hospitals which served large numbers of indigent, homeless, mentally impaired, addicted and otherwise socio-economically disadvantaged patients. In my experience, hospitals routinely made “social admissions.” That is, patients who were without access to shelter and other basic needs were admitted to the hospital or kept in the emergency room until a “safe” discharge plan could be put in place. Of course, many patients left, did not make it to their follow up appointments and otherwise ended up in a revolving door of social admissions, discharges and readmissions. However, in my 30 years, I never saw an instance of patient abandonment such as described in the two incidents above.
Amazon, Berkshire, JPMorgan partner to cut US healthcare costs (Reuters) - Amazon.com Inc, Berkshire Hathaway and JPMorgan Chase & Co said on Tuesday they will form a company to cut health costs for hundreds of thousands of their U.S. employees, setting up a major challenge to an inefficient U.S. healthcare system. The move by three of the best-known U.S. business leaders - Amazon’s Jeff Bezos, Berkshire’s Warren Buffett and JPMorgan’s Jamie Dimon - would take on the world’s most expensive healthcare system, whose mounting costs have hurt corporate profits. Shares in U.S. healthcare companies fell across the board. The new, not-for-profit venture will initially focus on technology for “simplified, high-quality and transparent healthcare” for their more than 500,000 U.S. employees. They did not elaborate on their strategy, but said they are searching for a chief executive officer. Healthcare industry experts say the new entity could eventually negotiate directly with drugmakers, doctors and hospitals and use their vast databases to get a better handle on the costs of those services. That could undercut the industry’s “middlemen,” from health insurers to pharmacies and benefits managers. “The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.” ISI Evercore analyst Michael Newshal said the selloff in healthcare stocks reflected the fear of disruption in a sector helped by rising prices year after year, but is under growing scrutiny from U.S. consumers, regulators and politicians.
Amazon, Berkshire, JPMorgan Link Up to Form New Health-Care Company - It’s no secret Jeff Bezos has been looking to crack health care. But no one expected him to pull in Warren Buffett and Jamie Dimon, too. News Tuesday that Bezos’s Amazon.com Inc., Buffett’s Berkshire Hathaway Inc. and JPMorgan Chase & Co., led by Dimon, plan to join forces to change how health care is provided to their combined 1 million U.S. employees sent shock waves through the health-care industry. The plan, while in early stages and focused solely on the three giants’ staff for now, seems almost certain to set its sights on disrupting the broader industry. It’s the first big move by Amazon in the sector after months of speculation that the internet behemoth might make an entry. The Amazon-Berkshire-JPMorgan collaboration will likely pressure profits for middlemen in the health-care supply chain. Details were scant in a short joint statement on Tuesday. The three companies said they plan to set up a new independent company “that is free from profit-making incentives and constraints.” It was enough to sink health-care stocks. Express Scripts Holding Co. and CVS Health Corp., which manage pharmacy benefits, slumped 6.9 percent and 4.9 percent, respectively. Health insurers such as Cigna Corp. and Anthem Inc. and biotechnology companies also dropped. The group announced the news in the very early stages because it plans to hire a CEO and start partnering with other organizations, according to a person familiar with the matter. The effort would be focused internally first, and the companies would bring their data and bargaining power to bear on lowering health-care costs, the person said. Potential ways to bring down costs include providing more transparency over the prices for doctor visits and lab tests, as well as by enabling direct purchasing of some medical items, the person said. “I’m in favor of anything that helps move the markets a bit, incentivizes competition and puts pressure on the big insurance carriers,”
Corporate giants announce partnership to cut employer health care costs -- Three of the biggest corporations in the world—Amazon, Berkshire Hathaway and JPMorgan Chase—sent shockwaves through the US health care industry Tuesday with a joint announcement of plans to form a company dedicated to cutting employer health care costs. The press release issued by Amazon CEO Jeff Bezos, Berkshire head Warren Buffett and JPMorgan Chief Executive Jamie Dimon provided few details beyond a general goal of utilizing advanced technology to slash the cost of providing health care for the firms’ combined US work force of over 1 million. However, Dimon, who heads America’s biggest bank, hinted that their ambitions went beyond their own employees when he said, “Our goal is to create solutions that benefit our US employees, their families and, potentially, all Americans.” The initiative heralds a further monopolization of health care by a handful of billionaire-run corporations and a further subordination of social needs to Wall Street. Health care in the US is a $3.3 trillion industry that accounts for 18 percent of the American economy. Whoever controls it stands to pocket untold billions in personal wealth. Despite the companies’ talk of improving the availability and quality of health care for workers, the initiative announced Tuesday signals a further rationing of care for the working class. Its overriding purpose is to cut business costs and increase profitability, and that means restricting further the access of workers to quality care. Even before Tuesday’s announcement, the monopolization of health care in the US was accelerating, encouraged by the market-based “reform” enacted by the Obama administration in the form of “Obamacare.” Last year saw a wave of hospital mergers, the largest of which combined Dignity Health and Catholic Health Initiatives, uniting their 139 hospitals and 700 care sites across 28 states. A number of major mergers of health insurers and pharmacy companies were announced, topped off by the $69 billion purchase of insurance giant Aetna by the CVS drug store chain.
This chart of surging US health-care costs explains why these titans of business are getting involved - Warren Buffett, Jeff Bezos and Jamie Dimon are launching their new health care initiative because health care costs are soaring for millions of their employees and Americans overall. The average American spends nearly $4,000 toward health care each year, a number expected to balloon to more than $5,000 in 2023, according to Evercore ISI and the Centers for Medicare and Medicaid. "We find this morning's announcement fascinating as three behemoths are banding together to tackle a massive and highly complex problem. On a personal level the mission seems remarkably well placed as the government has failed at managing costs in healthcare for decades," Evercore's Ross Muken wrote to CNBC Tuesday.The companies made headlines Tuesday morning after their announcement."The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints," said the press release from Amazon, Berkshire Hathaway, and J.P. Morgan.The U.S. government now anticipates the health share of GDP to rise from 17.8 percent in 2015 to 19.9 percent by 2025. Prescription drug spending is projected to grow an average of 6.3 percent per year over the same time. "While we expect much of the debate amongst investors to center on the impact to drug pricing or insurance rates given all of the public discourse, the reality is that is only a small portion of costs in the system," Evercore's Muken added. "Ultimately this effort will likely take many years to come to fruition and we hope the aim is to add transparency, efficiency and most importantly technology to healthcare, which we argue it broadly needs."
How Chase, Amazon tech could transform health care payments - JPMorgan Chase and Amazon have demonstrated substantial power to digitize their industries, even influencing the strategy of others. But automating and streamlining health care — as outlined in an announcement the companies jointly issued Tuesday — will be a particularly tough task. In the past, governments and corporations have at best made only tepid progress. "The challenge in health care isn't the payment made by the patient," "Patients can utilize credit cards and bill payment systems once billed. The problem is the extremely convoluted and highly paper-based business process that exists between the health care giver and the insurance company." JPMorgan Chase and Amazon are collaborating with Warren Buffett's Berkshire Hathaway to improve access and the financing of health care. Beyond forming a distinct, "free from profit" organization, the terms of the collaboration are vague. It's not clear, for example, if the companies intend to offer health care services to other companies. Other than references to technology development, there's not much about a product road map. And the three parties would not provide additional details or comments beyond their press release. But there is considerable power the three participants have to influence finance and alter retail strategies of other companies. Buffett's ability to drive narratives in the investment community is well known, and Amazon and Chase are both substantial brands with sizable merchant customer bases. Amazon and Chase possess considerable tools that remove navigation, paper and labor from transactions, data management and processing. Amazon's cashierless store is barely off the ground and it has already inspired a part of the fintech industry dedicated to supporting retailers' response. Amazon's moves into conversational commerce have spread to retailers and its low-navigation checkout has become a standard in e-commerce. JPMorgan Chase has a diverse mobile-driven strategy that is changing the way it, and other financial institutions, engage with consumers. Chase Pay has already won support among retailers, building on the foundation of the Merchant Customer Exchange, a retailer-focused mobile payment system. It's also built on ChaseNet, a collaboration between Chase and Visa to support transaction automation and other merchant services. The value of ChaseNet is that it streamlines workflow of processing payments, removing costs by removing several of the parties normally involved in handling a transaction. If this system is applied to health care, it could connect patients, medical care providers and insurance companies.
It's Time for Republicans to Rethink Healthcare Policy – Ed Dolan - Writing in the New York Times, Peter Suderman, features editor at Reason magazine, urges Republicans to start over on healthcare: If the halting, messy debate over legislation to overhaul health care has taught us anything so far, it’s that when it comes to health care, Republicans don’t know what they want, much less how to get it.He suggests three principles to guide the rethinking process.First, give up on universal coverage. I think what he means is give up on having everyone’s healthcare paid in full by the government. I don’t think he means giving up on universal access—the idea that no one should find themselves entirely locked out of the healthcare system. Second, any plan should include unification of our healthcare system, now a bewildering kludge that is fragmented among employer-based coverage, Medicare, Medicaid and the individual market. Third, health coverage should be viewed as a financial product, that is, as “a backstop against financial ruin.” For middle- and upper-income households, that means assuming responsibility for routine medical expenses, making it possible to “focus government assistance on the poorest and sickest.”This should be obvious, and yet it is not. Our system subsidizes workers with six-figure salaries and wealthy retirees while sidelining the poor and the sick with Medicaid, a system that many doctors won’t participate in because of low reimbursement rates. As it happens, there is a policy option out there that perfectly fits Suderman’s three principles: universal catastrophic coverage. UCC would provide everyone now covered by Medicare, Medicaid, employer-based or individual coverage with an insurance policy that has a deductible scaled to income, say, ten percent of the amount by which household income exceeds the poverty level. That would protect the middle-class against financial ruin while leaving them responsible for routine care; it would largely remove subsidies for top-earners; and it would provide full coverage for the poorest and sickest. Suderman mentions catastrophic coverage in passing, but, in my view, it should be the centerpiece.
- There are 25 million people in the US living with chronic pain. Some turn to devices or non-opioid painkillers, others to yoga or meditation. But many have found relief only from opioid painkillers.
- As the US opioid crisis escalates, those who suffer from chronic pain and take opioid-based painkillers are feeling pressure from new policies that limit prescriptions.
- "They completely forgot about the people who have to live with chronic pain every day," one patient told Business Insider.
- At the same time, access to less addictive pain-management treatments remain out of reach for many as insurers ask their members try more addictive medications first.
Doctors Refuse to Treat Trans Patients More Often Than You Think - On January 18, the US Department of Health and Human Services proposed new regulations and announced the creation of a “Conscience and Religious Freedom Division,” both focused on supporting healthcare providers who refuse to perform certain healthcare services on religious or moral grounds. "Not more of this shit," thought Marian, the mother of a transmasculine teen named Julian who lives in rural Georgia. (Marian chose to withhold her and Julian’s full names due to safety concerns.)In 2016, Marian said a nurse practitioner in a local supermarket's walk-in health care clinic had repeatedly and intentionally misgendered Julian while administering his testosterone injection, asking, "What kind of a doctor would prescribe this to a girl?" As far as Marian could see, the provider’s disgust was evident—and a week later, the provider called to inform her there would be no staff available to perform the procedure in the clinic for Julian's next injection, suggesting they instead try a different clinic in a nearby town. While the nurse practitioner’s reasons for refusing Julian care were ambiguous, her actions were legal; according to Georgia state law, a pharmacist may “refuse to fill any prescription based on professional judgment or ethical or moral beliefs.” Marian wasn't taking any chances; instead of risking another refusal, she opted for the 200-mile round trip to Julian’s doctor's office in Atlanta. To those who have been denied health care on religious or moral grounds, the HHS announcement may have felt like the reopening of an old wound. But healthcare workers refusing to provide care to sexual minorities—and transgender people in particular—are nothing new, and neither are the laws allowing them.
UK doctors select first women to have ‘three-person baby’ - Doctors in Newcastle have been granted permission to create Britain’s first “three-person babies” for two women who are at risk of passing on devastating and incurable genetic diseases to their children. The green light from the fertility regulator means that doctors at the Newcastle Fertility Centre will now attempt to make healthy embryos for the women by merging fertilised eggs created through standard IVF with DNA from female donors. MRT is an experimental treatment that was made legal in Britain in 2015. It aims to prevent serious disorders from being passed to children, caused by mutations in mitochondria, tiny structures that provide energy inside cells. Children inherit all their mitochondria from their mothers. MRT uses healthy donor mitochondria to replace the faulty ones. The child therefore has the usual 46 chromosomes from its parents, plus additional DNA from the donor's mitochondria. To perform MRT doctors fertilise an egg from the affected woman with her partner's sperm using normal IVF techniques. But instead of letting the egg then develop into an embryo, the chromosomes are taken out and dropped into a healthy donor egg that has had its own chromosomes removed. The resulting embryo now has DNA from both parents, as usual, plus mitochondrial DNA from the donor.
The head of the CDC resigns after report says she purchased shares of a tobacco company while in office - The director of the Centers for Disease Control and Prevention just resigned. Dr. Brenda Fitzgerald, who had served as director since July, had financial interests that recused her from much of her duties. Politico reported Tuesday that Fitzgerald purchased stock in Japan Tobacco while serving as CDC director. Fitzgerald had also bought shares of the pharmaceutical companies Merck and Bayer and of the health insurer Humana. The purchase of the tobacco shares especially raised concerns, because one of the CDC's goals is to prevent smoking. "You don’t buy tobacco stocks when you are the head of the CDC," Richard Painter, a former chief ethics officer under President George W. Bush, told Politico. "It’s ridiculous; it gives a terrible appearance."
Fitzgerald’s resignation comes as CDC faces huge funding cuts - Dr. Brenda Fitzgerald's resignation as director of the Centers for Disease Control and Prevention comes at a precarious time for the agency. It's trying to address a flu epidemic while bracing for possible deep cuts to its funding.HHS announced Fitzgerald's resignation Wednesday one day after Politico reported that she had invested in shares of a tobacco company after joining the agency last July.A CDC spokesperson said Dr. Anne Schuchat, CDC principal deputy director, would serve as interim director until a permanent replacement is named. Dr. Umair Shah, executive director of the Harris County Public Health Department in Texas and president of the National Association of County and City Health Officials, said the White House should name a permanent director soon to help advocate against funding cuts as the threat of a second government shutdown looms if Congress fails to pass a spending bill by Feb. 8. "You cannot rely on an interim director for an extended period of time without over time having an impact on activities within that organization and outside of that organization," Shah said. During the last government shutdown, HHS planned for more than 60% of CDC's staff to be furloughed, according to the department's contingency staffing plan. If a similar plan is put in place this time, the CDC could get hit badly just as it's trying to track and respond to one of the worst flu seasons in years. Another funding crisis could take place in March if lawmakers do not agree to raise the debt ceiling to avoid the government from defaulting on its loans. But many experts see President Donald Trump's pending budget as having the biggest potential impact on the CDC. The Trump administration suggested cutting the agency's annual budget by more than $1.2 billion. The president's next draft budget is due Feb. 5.
CDC to cut back disease work in foreign countries: report | TheHill: The Centers for Disease Control and Prevention is planning to significantly reduce its overseas work to fight disease due to coming funding cutbacks, according to an internal email reported by The Wall Street Journal. Unless it gets new funding, the CDC will be cutting down its work against diseases from 49 countries to 10 countries starting in October 2019, the Journal reported. The cuts are necessary because five years of funding spurred by the Ebola outbreak in 2014 will be coming to an end in 2019, the article said. The CDC “will have to scale its global health security portfolio to focus efforts based on existing resources,” Rebecca Martin, director of the CDC’s Center for Global Health, wrote in the email reported by The Wall Street Journal. “Faced with this anticipated fiscal reality, we have had to make some very difficult decisions.” The cutbacks could be reversed, at least to some degree, if more funding becomes available down the line, the Journal reported. The 10 countries where the CDC will continue its work are India, Thailand, Vietnam, Kenya, Uganda, Liberia, Nigeria, Senegal, Jordan and Guatemala, the Journal reported. The CDC said it is starting to plan now to make transitions in the countries it cannot continue the work in.
One chart shows how this year’s flu season is the scariest in years - This year’s flu season is proving to be the worst epidemic in nearly a decade. Schools in at least 11 states have closed, and the dominant strain of flu this season, H3N2, has resulted in the deaths of at least 37 children. More deaths are expected in the next weeks, the Centers for Disease Control and Prevention said on Friday. H3N2 is a variant of the H1N1 virus from 2009, known then as swine flu. An estimated total number of deaths due to the flu won’t be available until next season, but this week hospitalizations, which are a predictor of the death rate, rose to 41.9 people per 100,000, up from 36.9 the week before. Flu-related visits to the doctor have been skyrocketing for weeks, as this chart from The Wall Street Journal shows. As of mid-January, outpatient visits by people with the flu have surpassed every season except 2009-10, when the H1N1 strain caused a global pandemic, according to the Journal. The CDC estimates that every year since 2010, influenza has resulted in 9.2 million to 35.6 million illnesses, 140,000 to 710,000 hospitalizations, and 12,000 to 56,000 deaths in the U.S.The H1N1 virus sent 274,304 people to the hospital in the U.S. from April 2009 to April 2010. In that same time period, 25% of people worldwide contracted the illness. This year’s flu season is particularly intense due to a mutation of the virus that made the original iteration of the flu vaccine less effective. Preliminary data suggest the shots are likely about 30% effective against H3N2 and closer to 40% against all viruses that they include, according to the CDC. The epidemic has also been exacerbated by fluids shortages across the country. Health workers were reportedly scrambling to meet the demand for IV bags as more dehydrated flu patients enter hospitals.
The Flu Is Far Worse Than We're Being Told - I have been pouring over numbers and reports over the past few days, and it’s actually even worse than we’re hearing about. Tens of thousands of Americans are dying. It’s now worse than the 2009 swine flu outbreak and is on track with the 2014-15 strain. And it’s not showing any signs of slowing down.Despite this, the media is downplaying the severity of the flu and the government makes the statistics pretty difficult to find. Are they trying to avoid a panic? Do they know something we don’t?Here’s what you need to know about why this year’s flu is so dangerous.
- This Year’s Flu Strain Is More Deadly. The dominant Influenza strain this year is H3N2. This particular strain has a history of causing more hospitalizations and more deaths. According to the CDC:In the past, H3N2-predominant seasons have been associated with more severe illness and higher mortality, especially in older people and young children, relative to H1N1- or B-predominant seasons. Between 1976 and 2007, for example, CDC estimates that an average of 28,909 people died from flu during H3N2 seasons, compared to 10,648 people during non-H3N2 predominant years.
- The Current Flu Has Already Killed 44,116 People In comparison, the current flu has already resulted in 44,116 deaths this flu season. To give that number some meaning, this year’s flu has already led to more deaths than the average for H3N2 years. Furthermore, we aren’t even in the middle of cold and flu season yet. At 44,116 deaths and counting, we are already nearly to the high end (49,000 people) of the normal flu-associated deaths range.
This Flu Season Is the Worst in Nearly a Decade - This year’s flu season is now more intense than any since the 2009 swine flu pandemic and still getting worse, federal health officials said on Friday. Nationally, the number of people falling ill with flu is increasing. More worrying, the hospitalization rate — a predictor of the death rate — has just jumped. It is now on track to equal or surpass that of the 2014-2015 flu season. In that year, the Centers for Disease Control and Prevention estimates, 34 million Americans got the flu, 710,000 were hospitalized and about 56,000 died. “We’ll expect something around those numbers,” Dr. Daniel B. Jernigan, director of the C.D.C.’s influenza division, said during a telephone news conference Friday. This week, the deaths of seven children were reported to the C.D.C., bringing this season’s total to 37. In 2014-2015, there were 148 pediatric deaths — which the agency tracks individually, not by estimates as it does with death totals. It is too early to estimate how many children will die this season, Dr. Jernigan said, because it still has weeks to run, and because the agency often does not learn of deaths — especially of children who die at home — until weeks after they take place. Despite the late date, the agency still recommends that Americans get flu shots. Because some doctors and pharmacies have none left, Dr. Jernigan suggested checking vaccinefinder.org to find providers with stocks. Some areas also have shortages of antivirals like Tamiflu, he said, and the C.D.C. is trying to help the supply chain move medicines to where they are needed most. As is typical, people over 65 are the most likely to be hospitalized. But in an unusual twist, those aged 50 to 64 — rather than infants — are the age cohort right behind the elderly.
Flu widespread and deadly, claiming the lives of 37 children: Statistics released by the CDC on Friday show that 37 children have perished from flu-associated illnesses as of last Saturday—and the flu season is on track to be one of the worst in 15 years, the Washington Post reports. Health officials are also reporting a total of 11,965 laboratory-confirmed influenza-associated hospitalizations were reported between October 1, 2017, and January 20, 2018. Among those hospitalized, influenza A virus was responsible for (10,612) 88.7 percent of the hospitalizations while Influenza B was responsible for (1,295) 10.9 percent of the hospitalizations. Flu activity is said to high or even extremely high in 39 states, including New York City and Puerto Rico, with flu activity minimal in Maine and Montana, and at low levels in Utah. Health officials also fear the final pediatric death toll might exceed the 148 deaths recorded in the 2014-15 season. Dr. John Williams, a professor and division chief of pediatric infectious diseases at the Children's Hospital of Pittsburgh at the University of Pittsburgh Medical Center spoke with NBC News about the already high number of pediatric deaths. Dr. Williams said, "Every year in the U.S., somewhere between 100 to 300 pediatric deaths from the flu are reported. And that's likely an underestimate. We might have more deaths than usual this year. We don't know what's going to happen with the rest of the season. We probably haven't peaked yet."
Things to Know About the Global Superbug Crisis --The global superbug crisis is a complicated, long-term problem. The video below explains how it starts, spreads and its impact. But there are many other—sometimes surprising—aspects to this crisis. There is one key way in which superbugs start. Whether it is in animals or humans, the initial point is where antibiotics kill off drug-susceptible bacteria, leaving drug-resistant bacteria to multiply. These bacteria contain drug-resistant genes. It is the spread of bacteria among both animal and human populations that then creates superbugs. These superbugs don't respond to our available antibiotics. The end result is that many standard procedures—from caesarean sections to chemotherapy—may become too risky to undertake. It is projected that millions of people may die of what were once treatable infections. Although overuse of antibiotics in the human population is a problem for creating drug-resistant bacteria, humans aren't the only creatures given antibiotics. In fact, livestock is a much bigger problem. Around 70 percent of antibiotics in the U.S. are consumed by animals. The consumption of antimicrobials by animals is projected to rise by 53 percent from 2013 to 2030, according to a paper published in Science : from an estimated 131,000 tonnes to 200,000 tonnes. As the chart below shows, the main increase will be in China, unless measures are taken to prevent the overuse.While throwing money at a problem is no guarantee of results, it is an indicator of how seriously governments and policymakers take it. Antimicrobial resistance (AMR) can be prevented by simple solutions such as better sanitation and sensible use of antibiotics, measures that cost comparatively little. However, AMR and drug-resistant genes require research too—into the development of new drugs, the spread of bacteria and other measures that could be costly.Treating a drug-resistant strain of TB can cost nearly 30 times more than TB that responds to conventional medicine. The full treatment can also take up to two years and 14,000 pills, as well as six months of daily injections. As the chart below shows, antibiotic research doesn't start to pay off until year 23 of developing a new drug. After that point, the drug patent soon runs out and off-patent sales mean profits are much lower. Every area of the world will be affected by superbugs—but in terms of population impact, as the chart shows Asia and Africa will not only suffer more deaths, but more deaths per population.
Are there zombie viruses in the thawing permafrost? -- In the past few years, there has been a growing fear about a possible consequence of climate change: zombie pathogens. Specifically, bacteria and viruses — preserved for centuries in frozen ground — coming back to life as the Arctic's permafrost starts to thaw. The idea resurfaced in the summer of 2016, when a large anthrax outbreak struck Siberia.A heat wave in the Arctic thawed a thick layer of the permafrost, and a bunch of reindeer carcasses started to warm up. The animals had died of anthrax, and as their bodies thawed, so did the bacteria. Anthrax spores spread across the tundra. Dozens of people were hospitalized, and a 12-year-old boy died. On the surface, it looked as if zombie anthrax had somehow come back to life after being frozen for 70 years. What pathogen would be next? Smallpox? The 1918 flu? Anthrax has been "rising up" from soils all over the world for millennia, even longer. The bacteria survive by hibernating in the ground until conditions are right and then spring back to life. Back in the Middle Ages, it was common to see fields of dead sheep in Europe, wiped out by "zombie" anthrax. The French called these fields champs maudits, or the "cursed fields." Now there are some tantalizing hints that the Arctic is, indeed, a frozen champ maudits, filled with pathogens even more dangerous than anthrax. Across the permafrost — which covers an area twice the size of the U.S. — there are tens of thousands of bodies preserved in the frozen soil. Some of these people died of smallpox. And some died of the 1918 flu — a strain of influenza that swept the globe and killed more than 50 million people. But is there actually any evidence that these deadly viruses could survive a "gentle thaw" and then start a new outbreak
VW faces inquiry call over diesel fumes test on monkeys -- Volkswagen's supervisory board called for an immediate inquiry into who commissioned tests in which monkeys were exposed to toxic diesel fumes, while the German government said such studies were unjustifiable."I will do everything possible to ensure that this matter is investigated in detail," Volkswagen supervisory board Chairman Hans Dieter Poetsch said in a statement on Monday."Whoever is responsible for this must of course be held accountable," Poetsch said in response to a New York Times report on Friday that German carmakers had used an organization called European Research Group on Environment and Health in the Transport Sector (EUGT) to commission the tests.The study, conducted in 2014, was designed to defend diesel following revelations that the fuel's exhaust fumes were carcinogenic, the newspaper reported.Reuters could not immediately confirm the details and purpose of the study and EUGT, which was dissolved last year, could not be reached for comment. EUGT received all of its funding from VW and fellow German carmakers Daimler and BMW, the New York Times said. Volkswagen, Daimler and BMW on Saturday denounced the study, whose revelation is the latest aftershock from the VW emissions-rigging scandal, which continues to rock the auto industry. On Monday Volkswagen said that some staff members, whom it did not identify, including some in its legal department, at the VW brand's technical development division and at Volkswagen of America, had been aware of the tests at the time.
Naked mole rat found to defy Gompertz's mortality law -- A team of researchers at Google-owned Calico Life Sciences LLC has found that the naked mole rat defies Gompertz's mortality law. In their paper published in eLife, the group describes their study of the unusual-looking rodent and describe some of its unusual traits. Naked mole rats are very nearly hairless. They evolved that way by living in a harsh underground environment. They are also almost ectothermic (cold blooded). And now, it seems they do not age—at least in the traditional sense. Reports of long-lived mole rats prompted the team at Calico to take a closer look—they have a specimen in their lab that has lived to be 35 years old. Most "normal" rats, in comparison, live to be just six years old, and they age as they do so. Naked mole rats also have some other interesting biological features—they very rarely develop cancer, they experience very little pain and they have been found able to survive without oxygen for up to 18 minutes by going into a plant-like vegetative state. Also, they never reach menopause, and can have offspring right up until their death—and their hearts and bones never show signs of aging. But it was their longevity that was the focus of this new effort.
Large beetles are shrinking, thanks to climate change -- If you’re afraid of giant insects, climate change has a silver lining for you. A new study shows that as temperatures have increased over the past century, the world’s biggest beetles may have been shrinking, some downsizing by as much as 20% in 45 years. This new work “is a powerful demonstration of how climate change is influencing this group of beetles,” says Rhonda Snook, an evolutionary biologist at Stockholm University who was not involved in the study. Michelle Tseng, an evolutionary ecologist at the University of British Columbia in Vancouver, Canada, and her undergraduate students found 19 studies that indicated at least 22 beetle species shrank when raised in warmer than normal temperatures. The ground beetles, which in include tiger beetles and beetles that eat millipedes, shrank 1% of their body weight for every 1°C increase in rearing temperature. To see whether this pattern held true in the wild, the team made use of the university’s 600,000-specimen insect collection, which included thousands of bugs collected locally since the late 1800s. Five of the eight species have shrunk over the past century, Tseng and her students report today in the Journal of Animal Ecology. “We were surprised,” Tseng says. She had thought that changes in the availability of food and the presence of predators would have such a strong influence on the size of the beetles that her team would not see any trends when comparing just their size and climate change. But they did, especially after they sorted the beetles into size categories. The four largest species of beetles, including the snail-killer carabid Scaphinotus angusticollis, shrank 20% in the past 45 years, they report. In contrast, smaller beetles were unaffected or have even slightly increased in size.
Is This the Year the Florida Grasshopper Sparrow Goes Extinct? - This year the U.S. could experience its first bird extinction in more than three decades.That's the warning from the scientists and conservationists working to protect the critically endangered Florida grasshopper sparrow ( Ammodramus savannarum floridanus ). Once common in the grasslands of central Florida, this geographically isolated subspecies has experienced a catastrophic population decline since the 1970s, mostly due to habitat loss and degradation. Although the tiny birds have been protected by the Endangered Species Act since 1986, their numbers have continued to fall—to the point where recovery now seems next to impossible. A survey last year found that j ust 22 females and 53 males remained in the wild —and that was before 2017's hurricane season and record-setting winter cold snaps."Extinctions really happen," warned Paul Reillo , zoologist and president of the Rare Species Conservatory Foundation in Loxahatchee, Florida. "This is going to be North America's next extinct bird if we do nothing."Reillo said there's just one option left to save the Florida grasshopper sparrow: the captive-breeding program that began in 2015. "Captive breeding is never anyone's desire, and it's always the approach of last resort," he said. "Given the collapse of the wild population it's not only the last option, but it's the last of the last options." Getting to this point took several years of debate among the various government agencies and partner organizations working to protect the birds. Finally the first sparrow eggs and juvenile birds were brought into captivity at the Rare Species Conservatory and the White Oak Conservation Center plantation near Jacksonville in 2015 and 2016, respectively.
Group Sues to Stop Roundup of 10,000 Wild Horses -- Animal rights group Friends of Animals has filed a lawsuit over a planned wild horse roundup in Nevada. The suit was filed Thursday in U.S. District Court in Reno, the Associated Press reported. It claims that the U.S. Bureau of Land Management (BLM) violated the National Environmental Policy Act and other laws by approving the removal of nearly 10,000 mustangs over 10 years in a 4,900-square-mile expanse of federal rangeland near the Nevada-Utah border. Michael Harris, director of the group's Wildlife Law Program in Colorado, said the roundups could occur without public notice or comment and without site-specific analysis of each individual gather. The "roundup decision is unprecedented in size and scope," the suit states, and would allow BLM to "continually roundup, remove, drug and castrate wild horses for 10 years after the initial roundup." Friends of Animals President Priscilla Feral told the AP that castration puts male horses at risk of hemorrhaging and infection, and those that survive the process "will be robbed of their natural behaviors, putting them at a disadvantage on the range in terms of survival." “This is the definition of animal cruelty," Feral added. "These are wild animals, not domesticated dogs and cats."
Kentucky community suffering severe water shortage could now see huge water bill increase - Martin County in rural eastern Kentucky has faced water quality and access issues for years. This month, county Judge Executive Kelley Callaham declared a state of emergency in response to the widespread water outages in the area. And any water that residents do get is often too contaminated to drink. Now the community — which has a 40 percent poverty rate and widespread unemployment — faces a nearly 50 percent rate increase to their annual drinking water bill.On Friday, the Public Services Commission will hold an emergency hearing to decide whether the proposed rate increase will go into effect. If it does, it would add roughly $237 per year onto a typical household’s bill and make it the second highest rate in the state. So far PSC has received almost 50 written complaints in response to the proposed rate change, the commission told ThinkProgress.“This is a fundamental justice matter,” Mary Cromer, an attorney with the Appalachian Citizens’ Law Center, told ThinkProgress. “People don’t want to pay any more for water they can’t drink and that they don’t have a consistent supply of.”The rate increase of 49.5 percent for Martin County Water District customers was announced earlier this month. The news came at the same time as the water district began shutting off water service each night during the second week of January due to water shortages. This left about 1,000 people entirely without running water for several days.There is also a countywide issue of two chemicals polluting the water: trihalomethanes and haloacetic acids. According to the local Lexington Herald Leader, there are warnings on the district’s water bills suggesting that elderly people, infants, and those with compromised immune systems consult their doctors about their exposure risk. Overall, there are 88 water quality violations listed on record on the Environmental Protection Agency’s online database for the county — 26 of these were first reported since 2015. People in Martin County have been relying on bottled water for years. “Folks who live on $750 a month can’t really afford to be buying [bottled] water but that’s the reality of the situation,”
Flint, Michigan court hearings highlight widespread collusion in water crisis cover-up -- High-placed Michigan state environmental and health officials obstructed the investigation into Flint’s water supply and the connection with the catastrophic outbreak of Legionnaires’ disease, according to the environmental engineering expert tasked with the study. Wayne State University professor Shawn McElmurry testified in a Flint district court last week that officials attempted to prevent him from gathering data on Legionella and other bacteria in the Flint River water supply in 2016. McElmurry was appointed by the state to lead a team of experts to determine if the Flint water switch in April 2014 had led to a regional Legionnaires’ outbreak in 2014-2015. The outbreak eventually led to at least 12 deaths and more than 80 confirmed illnesses. McElmurry has testified multiple times in the preliminary hearings for Michigan Department of Health and Human Services (DHHS) Director Nick Lyon, who has been charged with involuntary manslaughter and misconduct in office over the death of Flint-area man Robert Skidmore from Legionnaires’ disease. During and after the switch of Flint’s water supply from the Detroit Water and Sewer Department source to the corrosive Flint River, Lyon oversaw the state’s top health agency. The proceedings against Lyon are part of the series of slow-moving lawsuits first filed by Michigan Attorney General Bill Schuette beginning in 2016, largely to give the appearance of “providing justice for the people of Flint.”In testimony throughout the week, McElmurry claimed that Lyon, as well as officials from Republican Governor Rick Snyder’s office and other state health departments, repeatedly discouraged his team from pursuing tests of the water supply.“I’ve testified that the state in general did not want to find Legionella,” McElmurry said Wednesday. “I said we thought it was a good opportunity to capture Legionella.” McElmurry testified that Lyon, state medical executive Eden Wells—who has also criminally charged in relation to the Flint water crisis—and Snyder’s top aide Richard Baird all opposed his plans to pursue an aggressive testing of the water supply for bacteria proposed during an August 5, 2016, meeting.
WATCH: New Short Documentary Spotlights Michigan’s Water Wars - This week, The Story of Stuff Project, producer of the award-winning Story of Stuff, released its latest short documentary on fights to secure safe, affordable, public water in communities across the country. A Tale of Two Cities shows how citizens of two very different Michigan communities — picturesque, small town Evart and gritty, industrial Flint— have come to see their futures, and the future of their water, as inextricably linked. As the lead-tainted water emergency in Flint drags on, many in that city continue to rely on bottled water for drinking and other household needs, a “wet Band-Aid,” as one resident puts it. But just 128 miles away in rural Evart, the same state government that has proven incapable of providing Flint residents with clean drinking water is considering a request by Nestlé. The world’s largest water bottler is attempting to draw millions of gallons of additional water from wells in Evart for just a tiny permitting fee. In A Tale of Two Cities, we meet the members of a growing grassroots movement in Michigan who see water privatization as a growing threat, shared by the state’s urban and rural residents alike. What happens when a precious resource like water is managed like a business? And how can we ensure water stays under the democratic control of the people? In A Tale of Two Cities, we explore those questions and more.
Lake Michigan has become dramatically clearer in last 20 years — but at a steep cost - Decades ago, Lake Michigan teemed with nutrients and green algae, casting a brownish-green hue that resembled the mouth of an inland river rather than a vast, open-water lake.Back then, the lake’s swampy complexion was less than inviting to swimmers and kayakers, but it supported a robust fishing industry as several commercial companies trawled for perch, and sport fishermen cast their lines for trout. But in the past 20 years, Lake Michigan has undergone a dramatic transformation. In analyzing satellite images between 1998 and 2012, researchers at the Michigan Tech Research Institute were surprised to find that lakes Michigan and Huron are now clearer than Lake Superior. In a study published late last year, the researchers say limiting the amount of agricultural and sewage runoff in the lake has had an immense impact. However, the emergence of invasive mussels, which number in the trillions and have the ability to filter the entire volume of Lake Michigan in four to six days, has had an even greater effect. “When you look at the scientific terms, we are approaching some oceanic values,” said Michael Sayers, a research engineer at Michigan Tech and co-author of the study. “We have some ways to go, but we are getting a lot closer to Lake Tahoe. A lot of times, you’ll hear from people that the water is so blue it compares to something in tropical areas.” While appealing, the clarity comes at a significant cost to wildlife. In filtering the lake, the mussels have decimated the phytoplankton, a single-celled, green algae that serves as the base of the food chain. For much of the past decade, prey fish, like alewives, have remained at historic lows, prompting state managers to scale back the annual stocks of prized predators, such as king salmon. “Clearer is not necessarily better,” said Robert Shuchman, co-director of the Michigan Tech Research Institute. “Clearer water means less phytoplankton in the water column, and they’re the basic building block in the food web. The idea is, the little fish eat algae, and the bigger fish eat the little fish. The food web could totally collapse because you don’t have the various organisms you need to sustain it.”
EPA Blocks Clean Water Rule to Replace With 'Industry-Friendly' Alternative - The U.S. Environmental Protection Agency ( EPA ) put a two-year suspension on the Clean Water Rule , an Obama-era policy defining which waters can be protected against pollution and destruction under federal law.Last year , President Trump declared the 2015 law, also known as Waters of the United States (WOTUS), "a horrible, horrible rule," tasking EPA Administrator Scott Pruitt to replace it with a looser and more "industry-friendly" definition, the New York Times reported.WOTUS was supposed to take effect in the coming weeks after the Supreme Court decided last month that cases regarding the matter should be heard by district courts. However, Pruitt's action on Wednesday halted the rule from implementation."Today, EPA is taking action to reduce confusion and provide certainty to America's farmers and ranchers," Pruitt said. "The 2015 WOTUS rule developed by the Obama administration will not be applicable for the next two years, while we work through the process of providing long-term regulatory certainty across all 50 states about what waters are subject to federal regulation."The 2015 rule protected large water bodies like lakes and rivers but also listed smaller waterways such as streams, ponds and wetlands for federal protection.The EPA boss is now crafting its own Trump administration version, which according to the New York Times, "is expected to include much looser regulatory requirements on how farmers, ranchers and real estate developers must safeguard the streams and tributaries that flow through their property and into larger bodies of water."
Study shows wetlands provide landscape-scale reduction in nitrogen pollution - In agricultural regions such as the U.S. Midwest, excess nitrate from crop fertilizer makes its way into rivers and streams through subsurface drainage channels and agricultural ditches. High nitrate concentrations in waterways can be harmful to ecosystems and human health, contaminating drinking water and eventually flowing downstream far enough to increase the size of the Gulf of Mexico's "dead zone."A study published today in the journal Nature Geoscience by National Science Foundation (NSF)-funded researchers offers new insights into this problem: Multiple wetlands, or "wetland complexes" in a watershed, are extremely effective at reducing nitrate levels in rivers and streams.Wetland complexes can be five times better at reducing nitrate than the best land-based nitrogen mitigation strategies, the scientists say. "Agricultural productivity benefits the economy, but is often accompanied by environmental costs," says Tom Torgersen, director of NSF's Water, Sustainability and Climate program, which funded the research. "This study demonstrates that retaining or restoring wetlands in intensively managed agricultural watersheds would reduce nitrate in rivers and improve local water quality, while also reducing nitrate exports to the Gulf of Mexico hypoxic [dead] zone."
Seine River bursts its banks in Paris after days of non-stop rain -- Exceptionally heavy rains have caused power outages and forced about 400 evacuations from homes in the suburbs along the Seine. (photo essay, 26 photos)
Floodwaters hit peak in Paris, now threaten Normandy -- Floodwaters peaked in Paris on Monday and were threatening towns downstream as the rain-engorged Seine River winds through Normandy toward the English Channel. Rivers swollen by France's heaviest rains in 50 years have engulfed romantic quays in Paris, swallowed up gardens and roads, halted riverboat cruises — and raised concerns about climate change. The Meteo France weather service said January has seen nearly double normal rainfall nationwide, and the rains in the past two months are the highest measured for the period in 50 years. Flood monitoring agency Vigicrues said the water levels in Paris hit a maximum height of 5.84 meters (19 feet, 2 inches) on the Austerlitz scale early Monday. That's below initial fears last week, and well below record levels of 8.62 meters in 1910, but still several meters above normal levels of about 1.5 meters on the Austerlitz scale. And the waters are expected to stay unusually high for days or weeks. Overall, Paris is better prepared than when it was last hit by heavy flooding in 2016, and Parisians have largely taken disruptions in stride this time. Other towns on the surging Seine have seen it much worse. The floods have caused damage in 242 towns along the river and tributaries already and more warnings are in place as the high waters move downstream.
Five months after Harvey, Texas is getting dangerously dry - When Hurricane Harvey dropped up to 60 inches of water over southeastern Texas, who would have guessed the state would be experiencing a drought less than half a year later? Certainly not John Nielsen-Gammon, the state climatologist and a professor at Texas A&M University. He’s been Texas’ climatologist for nearly 20 years, and he didn’t expect a drought to follow Hurricane Harvey. That being said, it’s not like he’s exactly surprised, either. After all, drought is a normal occurrence in the state. This type of event typically follows La Niña, and that’s what the Tropical Pacific is currently experiencing. During La Niña, which sees a cooling effect throughout the Pacific, Texas sees drier and warmer conditions. That means less rain. The thing that gets Nielsen-Gammon, however, is that the dry winter extends back to September. La Niña, on the other hand, doesn’t begin until November.“La Niña doesn’t typically affect our weather that time of year,” he told Earther. And this winter dry spell has lasted quite the while in some parts of the state. In North Texas, barely any rainfall has hit the soil in more than 100 days, according to the National Weather Service. The region is so dry that it’s under a wildfire warning. These are parts of the state that missed the wrath of Hurricane Harvey. However, the Beaumont-Port Arthur area,where Harvey rainfalls broke previous records, hasn’t been so lucky to miss the drought’s wrath (it’s in moderate drought).Nearly 50 percent of the state is in drought right now, according to the U.S. Drought Monitor. When including regions that are “abnormally dry,” that number jumps to 85 percent. The statistics are a stark contrast to the conditions last year around this time when most of the state was in the clear.
Drought deja vu: California snowpack at 30 percent of normal -- California’s Sierra Nevada is plunging deeper into a warm, dry winter that shows little sign of a turnaround. Mile-high mountainsides were low on snow Monday and alpine skies remained a stubborn summer blue. The forecast called for above-average temperatures and virtually no precipitation through at least the first 10 days of February — the third and final month of the state’s peak wet season. When state water officials march into the high country Thursday to take their monthly measurements of snow, they’re going to find a deficit nearly as acute as what they found during the depths of the recent drought. At the start of the week, statewide snowpack averaged just 30 percent of normal for the date, not far from the 25 percent logged at the same time in 2015, a record-low year. “It’s disappointingly dry,” said Doug Carlson, a spokesman for the California Department of Water Resources. “We’re just barely above that very bad year.”State water officials say the situation is not as dire as 2015, because the drought-ending storms last winter helped refill rivers and reservoirs after five dry years. Nonetheless, the lack of snow has begun to trigger some concern.The seasonal snowmelt in the Sierra, which accounts for about a third of California’s water supply, was projected earlier this month to come in short — 71 percent of average in the San Joaquin River watershed and 89 percent in the Sacramento River watershed. Those estimates are expected to slip further with this week’s snow measurements.If the weather continues to be warm and dry through the first week or two of February, as forecasters expect, even less water will come from the mountain snow. “Right now we have a snowpack that is very close to the all-time record low for this time of year,”
California and Beyond: The State(s) of The Expanding Drought - As day after sunny day goes by, Californians are having uncomfortable flashbacks to a drought that seemed to be well in the past. One of the driest five-year periods in California history (2011-16) was promptly followed by one of the wettest (2016-17). Many reservoirs are still flush from the hydrologic bounty of last winter, but they could be hurting again later this year. The state is wrapping up one of its driest October-to-January periods on record, and there’s little hope of moisture through at least mid-February.The situation was brought home Thursday as the California Department of Water Resources carried out its monthly high-profile check on snowpack at the benchmark Phillips Station in the central Sierra Nevada. The survey found snowpack at just 14 percent of the historical average, or just 13.6”. The five weather stations that make up the Central Sierra precipitation index ended January at their third-driest wet season on record. “No seasons that have been this dry or drier have ended the full season with at least normal rainfall,” reported Jan Null (Golden Gate Weather Services). The same holds true for the Northern Sierra (29th driest) and Southern Central Sierra (31st driest), according to Null. He stresses that there’s still time to recover from this dismal start to the water year if rains kick in soon. Moreover, the water stored in California’s reservoirs last year will go a long way toward blunting drought-related water scarcity. Even so, the outlook for the first half of February is harrowing. Both the European and GFS models insist on steering Pacific storms to the north of California, which would leave most of the state bone-dry for at least the next 10 days. In the weekly U.S. Drought Monitor valid January 30 and released on Thursday, more than two-thirds (67.10%) of the contiguous U.S. was abnormally dry—the largest fraction in five years. The area covered by severe to exceptional drought more than doubled in January alone. “Mountain snowpack was abysmally low, reaching record low levels for this time of year in parts of New Mexico and Colorado,” the report said.
California insurance dept estimates nearly $12 billion in wildfires claims (Reuters) - Insurers have received nearly 45,000 insurance claims of about $11.79 billion in losses from the wildfires that occurred in California in October and December, the California Department of Insurance said on Wednesday. The wildfires had damaged or destroyed more than 32,000 homes and over 8,200 vehicles, watercraft, farm vehicles and other equipment, California Insurance Commissioner Dave Jones said in a statement.
Cape Town's 'Day Zero' Looms as Dam Levels Drop - After three years of unprecedented drought , the South African metropolis of Cape Town is at risk of becoming the first major city in the world to run out of water . Dam levels fell to 26 percent capacity on Wednesday , compared to 26.3 percent on Monday and 26.6 percent last week. Once the dams reach 13.5 percent, the municipal water supply shuts off for all but essential services, such as hospitals and key commercial areas. Persistent warnings of "Day Zero"—when the taps run dry—have forced a new individual water limit of 50 liters a day starting in February. That target could be difficult to fulfill, as only 55 percent of Cape Town's four million residents could meet the previous and much higher limit of 87 liters per day. The water crisis has raised tensions and sparked a fight this week that resulted in an arrest at the Newland spring, southeast of the city center."A physical conflict broke out and a person was arrested by the South African Police Service," said city security chief, councillor Jean-Pierre Smith in a statement."Congestion and noise from cars and persons visiting the site at all hours of the day and night is causing many complaints." According to the New York Times :"Cape Town has grown warmer in recent years and a bit drier over the last century, according to Piotr Wolski, a hydrologist at the University of Cape Town who has measured average rainfall from the turn of the 20th century to the present."Climate models show that Cape Town is destined to face a drier future, with rains becoming more unpredictable in the coming decades. 'The drier years are expected to be drier than they were, and the wetter years will not be as wet,' Mr. Wolski said." Greenpeace Africa said it could take four years of good rain before dam levels are restored and is calling on South Africa President Jacob Zuma to declare Western and Eastern Cape Provinces disaster areas immediately.
Overlooked Tiny Air Pollutants Can Have Major Climate Impact - Pollution in the form of tiny aerosol particles—so small they've long been overlooked—may have a significant impact on local climate, fueling thunderstorms with heavier rainfall in pristine areas, according to a study released Thursday.The study, published in the journal Science, found that in humid and unspoiled areas like the Amazon or the ocean, the introduction of pollution particles could interact with thunderstorm clouds and more than double the rainfall from a storm.The study looked at the Amazonian city of Manaus, Brazil, an industrial hub of 2 million people with a major port on one side and more than 1,000 miles of rainforest on the other. As the city has grown, so has an industrial plume of soot and smoke, giving researchers an ideal test bed."It's pristine rainforest," said Jiwen Fan, an atmospheric scientist at the Pacific Northwest National Laboratory and the lead author of the study. "You put a big city there and the industrial pollution introduces lots of small particles, and that is changing the storms there." For years, researchers largely dismissed these smaller particles, believing they were so tiny they could not significantly impact cloud formation. They focused instead on larger aerosol particles, like dust and biomass particles, which have a clearer influence on climate. More recently, though, some scientists have suggested that the smaller particles weren't so innocent after all. Fan and her co-authors looked at what happens when thunderstorm clouds—called deep convective clouds—are filled with the tiny particles. They found that the small particles get lifted higher into the clouds, and get transformed into cloud droplets. The large surface area at the top of the clouds can become oversaturated with condensation, which can more than double the amount of rain expected when the pollution is not present. "It invigorates the storms very dramatically," Fan said—by a factor of 2.5, the research showed.
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.
'Chemtrail' conspiracy theorists: The people who think governments control the weather - BBC News: Those white lines in the sky trailing behind jet planes are puffy plumes of water vapour. But online, some have twisted them into evidence of a secret plot to control weather or poison the environment. Why are wild theories about contrails and other phenomena so persistent on social media? Suzanne Maher doesn't like the term "conspiracy theory". When I use it - on a phone call to arrange an interview - she tells me that it was invented by the CIA to discredit those who question the government. But as the founder of Bye Bye Blue Sky - a group established to raise awareness of so-called "chemtrails" and what she claims is a massive, secret government conspiracy to control the weather - it's one the Canadian is used to hearing. "Twenty to thirty years ago we never saw these trails. We had a beautiful blue sky." . "Chemtrail" conspiracy theorists vary in their claims. But some of the most popular include the belief that governments control the weather on a massive scale, that scientists carrying out legitimate research about how to counteract climate change through a process called geo-engineering are secretly poisoning us, or even that secret powerful groups are spraying us with chemicals to make us pliant and easy to control. The trails she's talking about are those you'll have seen yourself - plumes of white that form behind aircraft. Suzanne Maher isn't correct when she says they're a new phenomenon: you can see condensation trails left behind aircraft in images from the Battle of Britain during the Second World War. But what most people call "contrails" Suzanne and other conspiracy theorists call "chemtrails" - and in them they see evidence of a clandestine globalist conspiracy involving a pick-and-mix selection of the UN, the military, national governments, the Rothschilds, climate scientists, pilots and big business.
Is warming in the Arctic behind this year's crazy winter weather? - Damage from extreme weather events during 2017 racked up the biggest-ever bills for the U.S. Most of these events involved conditions that align intuitively with global warming: heat records, drought, wildfires, coastal flooding, hurricane damage and heavy rainfall.Paradoxical, though, are possible ties between climate change and the recent spate of frigid weeks in eastern North America. A very new and “hot topic” in climate change research is the notion that rapid warming and wholesale melting of the Arctic may be playing a role in causing persistent cold spells.It doesn’t take a stretch of the imagination to suppose that losing half the Arctic sea-ice cover in only 30 years might be wreaking havoc with the weather, but exactly how is not yet clear. As a research atmospheric scientist, I study how warming in the Arctic is affecting temperature regions around the world. Can we say changes to the Arctic driven by global warming have had a role in the freakish winter weather North America has experienced? Weird and destructive weather was in the news almost constantly during 2017, and 2018 seems to be following the same script. Most U.S. Easterners shivered their way through the end of 2017 into the New Year, while Westerners longed for rain to dampen parched soils and extinguish wildfires. Blizzards have plagued the Eastern Seaboard – notably the “bomb cyclone” storm on Jan. 4, 2018 – while California’s Sierra Nevada stand nearly bare of snow. A warm, dry western North America occurring in combination with a cold, snowy east is not unusual, but the prevalence and persistence of this pattern in recent years have piqued the interests of climate researchers. The jet stream – a fast, upper-level river of wind that encircles the Northern Hemisphere – plays a critical role. When the jet stream swoops far north and south in a big wave, extreme conditions can result. During the past few weeks, a big swing northward, forming what’s called a “ridge” of persistent atmospheric pressure, persisted off the West Coast along with a deep southward dip, or a “trough,” over the East.
Hanoi enjoyed just 38 days of clean air in 2017: report - Vietnam’s capital, Hanoi, enjoyed little more than one month of clean air last year as pollution levels rose to match China’s smog-prone capital, Beijing, preliminary findings of a new report showed. Annual average air pollution in Hanoi in 2017 was also four times higher than those deemed acceptable by the World Health Organization’s air quality guidelines, according to a report by the Green Innovation and Development Centre (GreenID). And the situation is likely to get worse, according to the Hanoi-based non-profit organization. “A bit more than one month were days with good air quality,” said Lars Blume, technical advisor at GreenID, which analyzed air monitoring data compiled at the United States embassy in Hanoi. “It is out of people’s control - they have to go out and work - and in many cases it is hard to really feel whether air is good or bad,” Blume told the Thomson Reuters Foundation. Air pollution in Hanoi is due to a number of factors, including a rise in construction works, an increase in car and motorcycle use, and agriculture burning by farmers, Blume said. But research in the report suggests that heavy industries, like steel works, cement factories and coal power plants in areas near the capital, are also significant contributors. Hanoi’s air pollution is now worse than the Indonesian capital Jakarta, the report showed, and things are unlikely to improve as Vietnam pushes ahead with plans to build more coal power plants. Exposure to high levels of air pollution, especially over the long term, can affect human respiratory and inflammatory systems, and can also lead to heart disease and cancer.
Climate change and deforestation threaten world’s largest tropical peatland -- Just over a year ago, scientists announced the discovery of the world’s largest intact tropical peatland in a remote part of the Congo’s vast swampy basin. The Cuvette Centrale peatlands stretch across an area of central Africa that is larger than the size of England and stores as much as 30bn tonnes of carbon. Now, the same research team has published a new study finding that future climate change, along with deforestation, could threaten the peatlands’ ability to soak up and store large amounts of carbon. If left unaddressed, these threats could cause the Congo peatlands to turn from a carbon sink to a carbon source, the study says. This means that the peatlands could contribute to climate change by releasing more carbon than they are able to absorb. The Cuvette Centrale, which spans both the Republic of the Congo and the Democratic Republic of Congo (DRC) (see map below), is the second-largest tropical wetland in the world The peatlands within the Cuvette Centrale covers 145,500 sq km and contains 30% of the world’s tropical peatland carbon, according to the 2017 Nature paper. This is equivalent to about 20 years’ worth of US CO2 emissions from burning fossil fuels. Across the world, peat covers just 3% of the land’s surface, but stores one-third of the Earth’s soil carbon. Future climate change presents one of the largest threats to the Congo peatlands, the new study finds.
A volcano in the Philippines is threatening a major eruption -- Magma swelled beneath the Mount Mayon volcano in the Philippines on Thursday and a column of ash more than a mile high spewed out, forcing 75,000 to flee. Officials are warning that a major eruption could happen any day now. It’s the latest action in what’s already been a very rowdy week along the Ring of Fire, the geological region that follows the 25,000-mile perimeter of the Pacific Ocean and is home to 90 percent of the world’s earthquakes. Mayon, the most active volcano in the Philippines, has erupted 50 times in the past 500 years; its current eruption, which has been slow so far, began on January 13. Volcanologists are worried that larger eruptions may still be on the way — the Philippine Institute of Volcanology and Seismology updated its threat level to 4 this week, meaning that a hazardous eruption is imminent. Once a major eruption starts, the threat level will be raised to 5. Tuesday also saw the eruption of Mount Kusatsu-Shirane, 100 miles northwest of Tokyo, which killed one soldier in an avalanche and injured a dozen at a ski resort. And further south, Indonesia’s Mount Agung, which has been spewing ash since November, had four distinct eruptions. A magnitude 4.0 quake jolted some Southern Californians awake early Thursday morning. And a magnitude 6.1 earthquake rumbled 100 miles southwest of Jakarta, Indonesia, on Tuesday, the same day a magnitude 7.9 earthquake struck off the coast of Alaska. (A tsunami warning was issued, and subsequently canceled, for the entire West Coast of the US.) Could some of these events be related? “The short answer is yes, earthquakes and volcanoes can interact,” said Emily Brodsky, a professor of earth and planetary sciences at the University of California Santa Cruz. But she noted it’s too early to connect the dots between all the activity we’ve seen this week, and it’s hard to say how much one event has influenced another.
The next big volcano could briefly cool earth--NASA wants to be ready - A quarter-century ago, Pinatubo, a volcano in the Philippines, blew its top in a big way: It spewed a cubic mile of rock and ash and 20 million tons of sulfur dioxide gas into the atmosphere. The gas spread around the world and combined with water vapor to make aerosols, tiny droplets that reflected some sunlight away from the Earth. As a result, average global temperatures dropped by about one degree Fahrenheit for several years. Powerful volcanic eruptions like Pinatubo’s in 1991 are one of the biggest natural influences on climate. So NASA researchers and other scientists are planning a rapid-response program to study the next big one. But the climate impact of a Pinatubo-size eruption is also a natural analog of an idea that has existed on the fringes of science for years: geoengineering, or intervening in the atmosphere to deliberately cool the planet. One geoengineering approach would use high-flying jets to spray similar chemicals in the stratosphere. So by studying the next big volcanic eruption, scientists would also gain insights into how such a scheme, known as solar radiation management, or S.R.M., might work. “This is important if we’re ever going to do geoengineering,” said Alan Robock, a Rutgers University researcher who models the effects of eruptions and who has been involved in discussions about the rapid-response project. “But even if there were no such thing as geoengineering, it’s still important to understand how volcanoes affect climate.” The rapid-response effort would involve high-altitude balloon flights and other methods to gather data about an eruption as soon as possible after it begins and for several years afterward.
2017 Breaks Climate Records Despite No “El Niño Boost” - Gaius Publius - This is an update on the coming climate train wreck. The numbers are in for 2017, not just the global temperature itself (see graph above), but also the clearly climate-related damage that was done — the fires, hurricanes and other extreme-weather events. 2017 ranks in the top five hottest years on record, and broke the record for climate-related damage.About global temperature in 2017, look at the chart above and note three things. First, the two most recent “super El Niño” events, in 1997-98 and 2015-16, clearly represented peaks or spikes in global warming, while the intervening years hung close to the 12-month and 132-month running means.Not so in 2017. Despite the lack of El Niño conditions in 2017, the year still placed second on the list of the hottest years ever recorded. Dr. James Hansen:Global surface temperature in 2017 was the second highest in the period of instrumental measurements in the Goddard Institute for Space Studies (GISS) analysis. Relative to average temperature for 1880-1920, which we take as an appropriate estimate of “pre-industrial” temperature, 2017 was +1.17°C (~2.1°F) warmer than in the 1880-1920 base period. The high 2017 temperature, unlike the record 2016 temperature, was obtained without any boost from tropical El Niño warming. This should be concerning to everyone, for the reason explained below.(By the way, note that the statement above covers only “global surface temperature” and not oceanic warming as well, especially deep oceanic warming. The entire planet is being heated by our use of fossil fuel, not just the surface.) Second, this data means we may be entering a period of accelerated warming. I think most people assume that global warming and its effects will be linear, will proceed along a roughly straight line that allows us to calculate how much we can delay in dealing with it. Not so. I’ve argued for some time that linearity is not guaranteed, is in fact highly unlikely, and that the chief cause of global warming, the injection of CO2 into the atmosphere, seems already to have accelerated. See “Atmospheric CO2 Jumps +4 ppm in June Compared to June 2015“.
In 2017, the oceans were by far the hottest ever recorded - Among scientists who work on climate change, perhaps the most anticipated information each year is how much the Earth has warmed. That information can only come from the oceans, because almost all heat is stored there. If you want to understand global warming, you need to first understand ocean warming. This isn’t to say other measurements are not also important. For instance, measurements of the air temperature just above the Earth are really important. We live in this air; it affects us directly. A great commentary on 2017 air temperatures is provided by my colleague Dana Nuccitelli. Another measurement that is important is sea level rise; so too is ocean acidification. We could go on and on identifying the markers of climate change. But in terms of understanding how fast the Earth is warming, the key is the oceans. This important ocean information was just released today by a world-class team of researchers from China. The researchers (Lijing Cheng and Jiang Zhu) found that the upper 2000 meters (more than 6000 feet) of ocean waters were far warmer in 2017 than the previous hottest year. We measure heat energy in Joules. It turns out that 2017 was a record-breaking year, 1.51 × 1022 Joules hotter than any other year. For comparison, the annual electrical generation in China is 600 times smaller than the heat increase in the ocean. The authors provide a long history of ocean heat, going back to the late 1950s. By then there were enough ocean temperature sensors to get an accurate assessment of the oceans’ warmth. Their results are shown in the figure below. This graph shows ocean heat as an “anomaly,” which means a change from their baseline of 1981–2010. Columns in blue are cooler than the 1981-2010 period, while columns in red are warmer than that period. The best way to interpret this graph is to notice the steady rise in ocean heat over this long time period.
The 2017 hurricane season officially rewrote the record books - According to the NOAA official list of billion-dollar hurricanes, Harvey tied with 2005's Hurricane Katrina for the most costly on record, coming in with an estimated $125 billion price tag. The damage was largely tied to the storm’s record-setting rains which swamped Houston, the fourth-most populous city in the U.S. Just over five feet of rain fell on the metro area over six days in August, turning the city into a Venetian-looking disaster. More than 300,000 structures and 500,000 cars were drowned in the floodwaters. Scientists have shown that the rains, which were dubbed a 1-in-a-1,000 year event, were driven to such extremes in part by climate change. When adjusted for inflation, Katrina edges Harvey as the most costly storm in U.S. history, but NOAA researchers are still wading through the data to pin down the exact damage total for the storm. The $125 billion number is the best estimate, but the range is anywhere from $90 to $160 billion. NOAA hurricane forecaster Eric Blake told Earther there’s a 10 percent chance Harvey could eventually claim the title of costliest storm with the next official data update coming in April. Coming in at an estimated $90 billion, Maria is the third-most expensive storm in U.S. history, but it holds the dubious distinction of being the most expensive non-mainland storm. Prior to Maria, the most costly non-mainland hurricane was 1998's Georges, which cost a comparatively paltry $3.5 billion. Both Puerto Rico and the U.S. Virgin Islands are still struggling to recover from the storm under the weight of crushing debt, a slow and shady relief response, and struggles to get a firm, equitable plan for long-term recovery in place. Hundreds have already died, there are concerns about a murder surge and unsafe drinking water in some places. Sandwiched between these two storms, it feels like Irma, which clobbered Florida, barely gets mentioned. In almost any other year, it would’ve been the blockbuster storm to remember but it’s almost become a footnote in 2017's terrifying hurricane season. The storm racked up a $50 billion price tag, making it the fifth-most costly storm.
Plastics Sicken Coral Reefs --Jerri-lynn Scofield - Recently, global warming has severely stressed many of the world’s coral reefs– via a phenomenon known as coral bleaching. When sea temperatures rise, corals expel the symbiotic algae– zooxanthellae– that live in their tissues, and the coral itself turns a ghostly white. During the last two years, the Great Barrier Reef has been worst affected, according to the Guardian, with more than two-thirds of it now damaged. Recent forecasts suggest that the southern part of the reef is also now at risk, according to another Guardian report, making the prospects of recovery of this natural wonder of the world unlikely.At a larger level, the health of the world’s coral reefs is another indicator of the state of planet, and that is bleak. But bleaching is only one threat that coral reefs face. A study reported this week in Science, Plastic waste associated with disease on coral reefs, chronicles another rising threat to reefs: plastics. Dr. Joleah Lamb and ten other researches– herein after Lamb et al.– surveyed 159 coral reefs in the Asia-Pacific region and found that billions of plastic items were entangled in the reefs. Damage was worst in those reefs with spikey coral species, as their spikes were more likely to snag plastic. Once a reef was draped in plastic, disease likelihood increased 20-fold. The scientists noted that plastic debris stresses coral by depriving it of light, allowing the release of toxins, and thus providing pathogens with a foothold for invasion. Reefs are not only worth preserving for their beauty alone. The Lamb study notes that they provide US $375 million in goods and services annually through fisheries, tourism, and coastal protection. These benefits and the reefs themselves are threatened by the estimated 4.8 million to 12.7 million metric tons of plastic waste enter the ocean in a single year. The resulting influence on disease susceptibility in the marine environment was before this study unknown.
Why Amazon Go should be a no-go: We will drown in a sea of plastic -- The whole pitch of Amazon Go is that it is so convenient and quick, so easy to buy more than you need, so useful to give Amazon ever more detail about your most personal habits. Manoj Thomas, a professor of marketing at Cornell University, tells the Star: "We know that when people use any abstract form of payment, they spend more. And the type of products they choose changes too." But this convenience has a cost, not only to your wallet and your privacy, but also to the climate and the oceans -- because everything in the store, even the oranges and vegetables, have to be individually packaged and labeled. The artificial intelligence and machine learning, all those sensors on the ceiling, may figure out that you have picked up a tomato, but it can't figure out what it weighs. If you read The New Plastics Economy from the World Economic Forum, you find that by 2050 oceans are expected to contain more plastics than fish (by weight), and the entire plastics industry will consume 20% of total oil production and 15% of the annual carbon budget. If you read David Roberts' truly scary recent article about climate change, and realize that plastics are essentially solid fossil fuels, then you have to make a direct connection between climate and the manufacture of every plastic bottle and plastic-wrapped product you buy.
50 percent of US military bases report climate extremes, new Pentagon study says -- About half of U.S. military facilities around the world have experienced climate extremes and threatening weather, according to a new Pentagon survey obtained and published Monday by a climate security think tank.The survey, which was the first of its kind and was shared with Congress, said about half of the 3,500 sites it contacted reported effects from six key categories of extreme weather, such as storm surge, wildfires and droughts. The study was requested by Congress in 2015 and completed this month.The nonpartisan Center for Climate and Security posted the full report on its website Monday. It provides a wealth of data and begins to paint a preliminary “picture of assets currently affected by severe weather events ... as well as an indication of assets that may be affected by sea level rise in the future.” The report on the survey was conducted by the Pentagon’s undersecretary of defense for acquisition, technology and logistics.The results do not point to specific effects of climate change but do identify particular bases where extreme weather is already reported as a problem, said John Conger, a senior policy adviser with the Center for Climate and Security who helped kick off the survey effort during his time as an assistant secretary of defense.“If there are increases in climate change, this sort of points them in the right direction,” Conger said. The Pentagon could also use the data as it compiles a new study for Congress on its 10 facilities most vulnerable to climate change, along with plans and costs of protecting them, he said.
Zinke Moves to Build Road Through Alaska Wilderness Area -- While the world was distracted by the government shutdown last Monday, Jan. 22, Interior Sec. Ryan Zinke signed a land-swap agreement with the King Cove Native Corporation to trade 500 acres of federal land in the Izembek National Wildlife Refuge, on the southern tip of the Alaska Peninsula, for tribal land of equal value. The land will be used to build a 20-mile gravel road connecting King Cove to the nearby city of Cold Bay for medical evacuations in poor weather, 11 miles of which will pass through the wildlife refuge. Although many Alaskan legislators and King Cove residents celebrated the agreement, the land swap has faced opposition from environmental groups, subsistence communities and sportsmen. Izembek National Wildlife Refuge was the first area in the U.S. to be named a Wetland of International Importance at theRamsar Convention in 1986. Even though it is the smallest of the 16 national wildlife refuges located in Alaska, Izembek contains more than 200 wildlife species, including brown bears and caribou. Millions of migratory birds, including 98 percent of the world's Pacific black brants and the entire global population of emperor geese , rely on the vast stores of eel grass in the lagoons to feed during their journey along the Pacific Flyway. "It is a very unique and extremely important ecosystem," said Nicole Wittington-Evans, Alaska regional director of the Wilderness Society. The road "would really change the entire feel and wilderness character of this area."
'Outrageous' Gold Rush-Style Grab of Public Lands to Begin Friday --Despite protests from conservationists, local tribe leaders, Democratic lawmakers and even the United Nations' expert on Indigenous rights, at 6 a.m. on Friday the Trump administration will allow citizens and companies to start staking claims on sections of the Bears Ears and Grand Staircase-Escalante national monuments in Utah so the new stakeholders can conduct hard rock mining on the formerly protected lands. "It is outrageous to witness the dismantling of the Bears Ears national monument, in what constitutes a serious attack on Indigenous peoples' rights in the United States," said Victoria Tauli-Corpuz, UN Special Rapporteur on the rights of Indigenous peoples. Tauli-Corpuz noted that the previous administration's decision to create the monument "protected thousands of sacred sites which are central to the preservation of regional Native culture." He warned that Trump's decision to reduce Bears Ears by about 85 percent "exposes thousands of acres of sacred lands and archaeological sites to the threats of desecration, contamination and permanent destruction." Critics have turned to social media to denounce the " modern land run ." In spite of widespread opposition, the Trump administration's Bureau of Land Management ( BLM ) plans to move forward with allowing stakeholders to claim plots of land on Friday, and has determined the process will be governed by the General Mining Law of 1872, which covers mining for metals such as copper, gold, silver and uranium (but not coal and petroleum). "The process for staking a claim remains much as it did during the Gold Rush," Reuters reported : A prospector hammers four poles into the ground corresponding to the four points of a parcel that can be as big as 20 acres, and attaches a written description of the claim onto one of them. A prospector then has 30 days to record the claim at the local BLM office ... The costs of claiming are low: a $212 filing fee, and an annual maintenance fee of $150. Unlike laws governing petroleum extraction, there are no environmental guidelines specific to hard rock mining, and no requirement to pay a royalty. The claims provide prospectors mineral rights but not ownership of the land.
Records show EPA chief’s role in removing climate web pages | TheHill: Environmental Protection Agency (EPA) Administrator Scott Pruitt was personally involved in the process to remove sections on climate change from the agency’s website, records obtained by a green group show. The Environmental Defense Fund (EDF) said the records it obtained via the Freedom of Information Act show a high degree of involvement by Pruitt in the April process of removing climate sections and replacing several of them with a section on President Trump’s executive order to roll back the Clean Power Plan. Environmentalists have been highly critical of the EPA’s decision to remove the pages, some of which still haven’t been replaced and instead forward to a page about the removal process. In one April email to colleagues in the EPA’s communications office, Lincoln Ferguson, an adviser to Pruitt, asks how close they are to removing and replacing the Clean Power Plan section. “The Administrator would like it to go up ASAP. He also has several other changes that need to take place,” Ferguson wrote. J.P. Freire, then the head of communications, responded, “You can tell him we ... are just finishing up.” Ferguson then asked if the change could happen that day: “Just asking because he is asking.” In another email change, Susan Fagan in the EPA’s Office of Environmental Information asks another staffer if people searching for the Clean Power Plan can be directed to the section on Trump’s climate executive order, which the staffer obliged.
Trump says Earth is 'too cold' and ice is expanding - President Trump expressed deep skepticism about mainstream climate science in his first international TV interview since taking office, making incorrect statements about global temperatures and Arctic sea ice. The statements, made in an interview with Piers Morgan during the World Economic Forum in Davos, Switzerland, are some of the lengthiest Trump has made on climate change since his inauguration more than a year ago. They suggest that his time in the White House hasn't corrected his views on global warming. Trump has amplified misinformation related to climate science over the years — primarily through Twitter — and he resumed echoing debunked concepts yesterday. "There is a cooling, and there's a heating. I mean, look, it used to not be climate change, it used to be global warming," he said in the interview, which aired yesterday on ITV. "That wasn't working too well because it was getting too cold all over the place." The world, in fact, is getting warmer — not colder. Global temperatures are steadily rising. NASA and NOAA said that 2017 was the 41st consecutive year of above-average global temperatures and that the pace of warming has accelerated. NASA recently identified last year as the second warmest since record keeping began in 1880, while NOAA said it was the third warmest — a notable feat given the lack of an El Niño, which typically raises temperatures. The warmest years on record are 2016 and 2015..
Trump shared his thoughts on climate change, and surprise, they’re dumb - Speaking at the World Economic Forum in Davos last week, French President Emmanuel Macron made headlines for poking fun at his American counterpart’s well-documented history of climate change denial. Now, remarks from President Donald Trump on the issue, which were also recorded in Davos but aired in Britain Sunday evening, are providing additional context to Macron’s spot-on mockery. “There is a cooling and there’s a heating,” Trump told Piers Morgan in an interview with Britain’s ITV. “I mean, look, it used to not be climate change, it used to be global warming. That wasn’t working too well because it was getting too cold all over the place.”He then addressed the subject of polar ice cap melting. “The ice caps were going to melt, they were going to be gone by now, but now they’re setting records,” Trump said. “They’re at a record level.” In reality, human-made global warming has far outpaced any short-term cooling. Nevertheless, climate change skeptics regularly cherry-pick such data points that fail to account for long-term trends, which consistently show that the planet’s temperature is rising.Like Trump’s past musings on global warming, his latest observations fly in the face of overwhelming scientific evidence. They also recall a May Politico report in which Trump fell for a hoax Time magazine cover that supposedly warned about a coming ice age. K.T. McFarland, the former deputy national security adviser, reportedly snuck the fake cover onto Trump’s desk with the intention of irritating Trump on the topic of climate change.
EPA chief under Nixon and Reagan: GOP’s climate denial is ‘killing everything’ - The nation’s first Environmental Protection Agency chief, who returned as administrator in 1983 under President Ronald Reagan, excoriated his own party on Friday, warning that Republicans’ ideological opposition to widely-accepted climate science would prove lethal. “It’s a threat to the country,” William Ruckelshaus, whom President Richard Nixon appointed in 1970 to lead the newly-created EPA, told HuffPost in a wide-ranging interview by phone from his home in Seattle. “If you don’t step up and take care of real problems, and don’t do anything about it, lives will be sacrificed.” “They certainly are killing everything,” he added, noting that President Donald Trump’s assault on climate change policies would be a cornerstone of his legacy. Ruckelshaus, 85, has emerged over the past year as a fierce critic of current EPA Administrator Scott Pruitt. In March, less than a month after Pruitt was sworn into office, Ruckelshaus cautioned the former Oklahoma attorney general against gutting regulations and coddling polluting industries. He compared Pruitt’s zeal for deregulation to Anne Gorsuch, Reagan’s first EPA administrator, whom Ruckelshaus replaced after she resigned and was held in contempt of Congress. On Friday, he again drew parallels between the two. “They don’t believe in the mission of the agency,” he said, adding that Pruitt is the only EPA administrator he has never met. “Neither one of them did. Anne Gorsuch did not, and I don’t think Pruitt does either. They think we’re over-regulating.”
Is complex society on the brink of collapse? - George Monbiot - It’s a good question, but it seems too narrow. “Is Western civilisation on the brink of collapse?”, the lead article in this week’s New Scientist asks. The answer is probably. But why just Western? Yes, certain Western governments are engaged in a frenzy of self-destruction. In an age of phenomenal complexity and interlocking crises, the Trump administration has embarked on a mass deskilling and simplification of the state. Donald Trump might have sacked his strategist Steve Bannon, but Bannon’s professed intention, “the deconstruction of the administrative state”, remains the central – perhaps the only – policy. Defunding departments, disbanding the teams and dismissing the experts they rely on, shutting down research programmes, maligning the civil servants who remain in post, the self-hating state is ripping down the very apparatus of government. At the same time, it is destroying the public protections that defend us from disaster.A series of studies published in the past few months have started to explore the wider impact of pollutants. One, published in the British Medical Journal, suggests that the exposure of unborn children to air pollution in cities is causing “something approaching a public health catastrophe”. Pollution in the womb is now linked to low birth weight, disruption of the baby’s lung and brain development, and a series of debilitating and fatal diseases in later life.Another report, published in the Lancet, suggests that three times as many deaths are caused by pollution as by AIDS, malaria and tuberculosis combined. Pollution, the authors note, now “threatens the continuing survival of human societies.” A collection of articles in the journal PLOS Biology reveals that there is no reliable safety data on most of the 85,000 synthetic chemicals to which we may be exposed. While hundreds of these chemicals “contaminate the blood and urine of nearly every person tested”, and the volume of materials containing them rises every year, we have no idea what the likely impacts may be, either singly or in combination. As if in response to such findings, the Trump government has systematically destroyed the integrity of the Environmental Protection Agency, ripped up the Clean Power Plan, vitiated environmental standards for motor vehicles, reversed the ban on chlorpyrifos (a pesticide now linked to the impairment of cognitive and behavioural function in children), and rescinded a remarkable list of similar public protections.
CO2 removal 'no silver bullet' to fighting climate change-scientists (Reuters) - Technologies to remove carbon dioxide from the atmosphere to help tackle global warming only have limited potential and more effort should be made to reduce emissions, European scientists said in a report on Wednesday. Proposals to use climate technologies, ranging from spraying sun-dimming chemicals high above the Earth to capturing and storing carbon dioxide underground, have been gaining more attention as the urgency to act on climate change mounts. Under the 2015 Paris Agreement, world governments have agreed to limit global warming to well below 2 degrees Celsius above pre-industrial levels but a large gap remains between countries’ emissions plans and the reductions needed. The European Academies’ Science Advisory Council (EASAC), formed from national science academies of EU members, has reviewed scientific evidence about several options for removing carbon dioxide (CO2) from the atmosphere with so-called negative emission technologies. Examples of such technologies include the direct capture of CO2 and trapping it underground (carbon capture and storage); afforestation and reforestation; land management to increase and fix carbon in soils and ocean fertilization. The EASAC, which advises European policymakers, said these technologies have “limited realistic potential to remove carbon from the atmosphere” and not at the scale in some climate forecasts, such as several gigatons of carbon each year after 2050. The idea has gained some urgency in recent weeks, since Mount Agung, a volcano in Bali, began erupting at the end of November. Agung’s last major eruption occurred in 1963, and should it fully blow with similar fury it could pump enough sulfur dioxide gas high enough into the atmosphere to have a measurable cooling effect. A huge eruption could also temporarily damage the ozone layer, which scientists would also study.
‘Silver bullet’ to suck CO2 from air and halt climate change ruled out - Ways of sucking carbon dioxide from the air will not work on the vast scales needed to beat climate change, Europe’s science academies warned on Thursday. From simply planting trees to filtering CO2 out of the air, the technologies that some hope could be a “silver bullet” in halting global warming either risk huge damage to the environment themselves or are likely to be very costly. Virtually all the pathways laid out by the UN’s Intergovernmental Panel on Climate Change (IPCC) to reach the targets in the Paris agreement require huge deployment of so-called negative emissions technologies (NETs) in the second half of the century. This is because cuts in CO2 are expected to be too slow to hit zero emissions quickly enough, so the overshoot has to be recaptured later by NETs. The IPCC calculates that about 12bn tonnes a year will need to be captured and stored after 2050 – the equivalent of about a third of all global emissions today. “You can rule out a silver bullet,” said Prof John Shepherd, at the University of Southampton, UK, and an author of the report. “Negative emissions technologies are very interesting but they are not an alternative to deep and rapid emissions reductions. These remain the safest and most reliable option that we have.” The new report is from the European Academies Science Advisory Council (EASAC), which advises the European Union and is comprised of the national science academies of the 28 member states. It warns that relying on NETs instead of emissions cuts could fail and result in severe global warming and “serious implications for future generations”. The report assesses the range of possible technologies, including “bioenergy with carbon capture and storage” (BECCS), on which the IPCC scenarios rely heavily. BECCS involves growing trees, which take CO2 from the atmosphere, and then burning them to produce electricity while capturing the emissions and burying them.
Chemical sunshade to slow warming may not be feasible: U.N. draft (Reuters) - The idea of spraying a haze of sun-dimming chemicals high above the Earth as a quick way to slow global warming faces so many obstacles that it may not be feasible, a leaked draft U.N. report says. The U.N. review of a planetary sunshade, mimicking how a big volcanic eruption can cool the planet with a veil of debris, is part of a broad study of climate technologies ordered by almost 200 nations in the 2015 Paris Agreement. Proposals by some scientists to spray chemicals such as sulfur high in the atmosphere from aeroplanes have won more attention since Paris as a relatively cheap fix, costing perhaps $1 billion to $10 billion a year. But such geo-engineering may be “economically, socially and institutionally infeasible,” according to a draft obtained by Reuters covering hundreds of pages on risks of droughts, floods, heat waves and more powerful storms. The draft, by the Intergovernmental Panel on Climate Change (IPCC) about ways to limit warming to 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial times, is due for publication in October. It could still change substantially, the IPCC said. Problems involved with “solar radiation management” include testing and working out rules for a technology that could be deployed by a single nation, or even a company, and might disrupt global weather patterns. And it “would result in an ‘addiction problem’; once started, it’s hard to stop,” the draft says. A halt after several years could lead to a jump in temperatures because greenhouse gases would continue to build up in the atmosphere. “To deploy it safely ... would take many decades,” said Myles Allen, a professor of geosystem science at Oxford University. He said it was “completely misleading” to suggest it could be an easy short-cut to slow warming. Given the long time needed for research, it would be better to focus on ways to limit greenhouse emissions, he said.
Is a Transition to Renewable Energy on the Verge of Being Unstoppable? - Wharton -- As the world inches towards using more renewable energy and less fossil fuel for generating electricity, intermittency is an often-cited constraint to scaling up — that is, the availability of many renewables, such as wind and solar, cannot be controlled. But now there may be a workaround, according to Steve Kimbrough, Wharton professor of operations, information and decisions, and Michael McElfresh, a professor from Santa Clara University. Critics point out that when using many renewables, coal, nuclear or natural gas must take up any slack. What’s more, once idle, coal and nuclear sources require long ramp-up times. But natural gas has the flexibility to blend well with renewables. That, combined with probably long-lasting low natural gas prices, is beginning to look like a game-changer, Kimbrough and McElfresh note in the following opinion piece. Meeting inherent technical “challenges successfully … would make the transition to renewable energy unstoppable.”
Report: White House Wants to Cut Renewable Energy Programs by 72% -- President Donald Trump —who remarked Tuesday that his administration ended the nonexistent "war on beautiful clean coal"—really wants to make fossil fuels great again.The White House plans to ask Congress to cut the Department of Energy's renewable energy and energy efficiency programs by a massive 72 percent in fiscal 2019, according to draft budget documents obtained by the Washington Post .The Office of Energy Efficiency and Renewable Energy's (EERE) current spending level is set at $2.04 billion for the current fiscal year ending on Oct. 1. But the Trump administration will significantly lower that amount to $575.5 million for 2019, the Post reported.The EERE supports the development of sustainable transportation, renewable power, and energy-efficient homes, buildings and manufacturing. Its SunShot Program has significantly reduced the total costs of solarenergy.The draft budget document calls for a number of cuts, including:
- A staff cut of 680 in the enacted 2017 budget to 450 in 2019.
- Reducing research in fuel efficient vehicles by 82 percent.
- Cutting research into bioenergy technologies by 82 percent.
- Shrinking research into solar energy technology by 78 percent.
This is the second year Trump has targeted clean energy spending. Last year, he proposed cutting the office's budget by two-thirds to $636.1 million, which Congress later rejected .
The Unintended Consequences Of Trump’s Solar Tariffs - There may not be blood, but there will be plenty of losses for those who still hold hope for an age that is passing away..Soon after the Trump Administration announced a tariff would be imposed on imports of Chinese PV cells and modules, The New York Times ran a headline declaring this was a ‘threat’ to solar. What struck me was not that President Trump had done so much to harm solar, but that the Times knew so little about why this action will amount to nothing in the grand scheme of things — where the outcome is no longer in doubt that renewables will sweep all contenders (even the mightiest fossil fuels) from the playing field. A click upon the headline in question produced an improved result: the threat level was downgraded to ‘cloudy’. Well, yes, there are clouds in springtime, even in Seattle and London, but there are no hurricanes or tornadoes. (Not so far, anyway; pump a few more degrees into the oceans and that could change). As for the tariff itself, apparently the threat from Chinese PV production is slightly less grave than that from washing machines. On the same day, the most knowledgeable among us, signaling from their lofty Colorado eyrie, pointed out that 50-cent per watt PV installations were coming around the mountain; it didn’t say if they would be riding six white horses — but let’s just assume that’s the case. Of course, they could be gold, in which case, four should suffice. India is exempt from the tariffs. While we are on the subject of knowledgeable sources, consider listening to the Greentech Media podcast on this matter (at the 11:05 minute mark). While we Americans are whining about ‘unfair’ trade practices (which has always been code for “those guys are better at this than us”), and Russians interfering in the decision-making process that millions of people go through before pulling the lever on the voting machines, the Chinese and their formidable leader, Xi Jinping, are building the next Silk Road.
Trump’s environmental rollbacks were fast--it could get messy in court — As the head of the federal agency controlling billions of acres of public lands and waters, Interior Secretary Ryan Zinke has spent the past year making bold policy proclamations to advance President Trump’s energy agenda: He would open coastal waters to drilling, shrink national monuments, lift Obama-era fossil fuel regulations and reduce wildlife protections. But legal experts say many of the moves were made without fully considering the laws and procedures governing changes like these, making them vulnerable to legal challenges that could delay or block them. They say many of the proposals may follow the fate of other bold and hasty moves by the Trump administration, such as the attempts to limit travel from countries with sizable Muslim populations on security grounds. “They’re acting in a hurry, appealing to the base, and trying to seem decisive,” said Patrick Parenteau, a professor of environmental law at Vermont Law School. But, he added: “They’re not following the prescribed steps of the law. They’re creating errors for themselves as they go, sowing the seeds for the legal attacks.” It is not unusual for major policy changes to be hit by lawsuits from opponents. The Obama administration’s own environmental regulations were sometimes controversial because they relied on creative interpretations of decades-old laws to rein in smokestack pollution or stop oil, gas and coal exploration. Some Obama-era rules have been blocked or delayed by courts. But there is one big difference, Mr. Parenteu said. Even though some rules “pushed the edges of legal authority,” the Obama administration mustered a stronger defense by assembling “thousands of pages of support and technical analysis, laid out in mind-numbing detail,” he said. “Here, you have much more ad hoc, knee-jerk decision-making.” A spokesman for the Justice Department declined to comment on the legal foundations for Mr. Zinke’s moves.
Do Mainstream Democrats Really Want to Eliminate Carbon Emissions and Fossil Fuel Use? -- Gaius Publius - I raise the following questions because, as regular readers know, the coming climate disaster is regularly on my mind. Do mainstream (corporate) Democrats really want to eliminate carbon emissions and fossil fuel use? Or do they, like President Obama, want an “all of the above” energy strategy that maintains fossil fuel use (and continually enriches Big Oil firms) into the indefinite future? Let’s consider.As a candidate in the 2016 Democratic primary, Hillary Clinton pointedly and angrily refused to stop taking money from fossil fuel lobbyists, nor would she commit to banning fracking.For the 2018 cycle, very few Democratic candidates for national office support a ban on fracking, and very few (about 45 candidatesby my count) have signed the pledge not to take money from Big Oil in any of ways it hands out money: “Taking the pledge means that a candidate’s campaign will adopt a policy to not knowingly accept any contributions over $200 from the PACs, executives, or front groups of fossil fuel companies”.Just 45 candidates have signed at last count, among literally hundreds of Democratic Party primary and general election candidates. And most of the signers are of the rebellious “Bernie Sanders” stripe — Randy Bryce, Ro Khanna, Doug Applegate, Kevin de Léon, to name a few — people, in other words, generally unwelcome at Party leadership tables and events.And now comes the “official” Democratic Party response to Trump’s State of the Union address to Congress — from good-looking, groomed-for-Party-success Rep. Joe Kennedy III (Mass.) — and not one word about the climate.
Heat wave leaves thousands of Australian homes without power (Reuters) - More than 10,000 homes in Australia’s second most populous state were stuck without power on Monday as a surge in demand amid scorching heat overloaded the grid, in the latest blow to the nation’s stretched power sector. The outages on distribution networks, which hit more than 50,000 homes on Sunday, came less than a year after Australia’s biggest city, Sydney, was hit by blackouts during a heatwave, and 16 months after a state-wide outage in South Australia. The latest blackouts, however, were caused by grid failures, rather than supply shortages, which had sparked a national debate over the nation’s rush to adopt renewable energy at the expense of coal-fired generation. Temperatures topped 40 degrees C (104°F) over the weekend in the state of Victoria, driving up power demand as homes cranked up their air conditioners and pool pumps and even forcing the Australian Open to close the stadium roof for the men’s championship match on Sunday night. Crews worked through the night to restore power, but some homes were likely to remain affected until Monday evening, United Energy, majority-owned by Hong Kong’s CK Infrastructure Holdings, said. “The prolonged high temperatures and humidity through the weekend ... resulted in multiple power outages,” a United Energy spokeswoman said, adding that the main cause was fuse faults at overloaded substations. The Australian Energy Market Operator, which coordinates energy supply from power stations and has been monitoring supply after last year’s failures, said there was ample supply over the weekend, when demand hit a record for a Sunday. Grid data in Thomson Reuters Eikon showed that Victoria required electricity imports from neighboring South Australia and Tasmania to meet its record demand.
Tesla’s giant battery in Australia made around $1 million in just a few days -- The Powerpack system built by Tesla and operated by Neoen as part of their nearby wind farm is used on two different levels.Neoen has access to about 30 MW/ 90 MWh of the capacity to trade on the wholesale market, while the government has access to the rest to stabilize the grid.The battery demonstrated its capacity for the latter by reacting to a crashed coal plants in milliseconds last month.But this month, it’s Neoen that is making full use of its Powerpack capacity thanks in part to the volatile Australian energy market and warm temperatures.The Powerpack system is able to switch from charging to discharging in a fraction of a second, which allows Neoen to take advantage in the large swings in energy prices in the country – especially during high demand periods.Last week, Tesla’s massive battery was paid up to $1000/MWh to charge itself and now it could have cleared up to $1 million in the last few days. Australia’s Renew Economy reports:“Another view of this data is presented below, showing the actual price achieved during the buying (charging) and selling (generation). It’s hard to be sure, but it might have made around $1 million over the two days from the wholesale market.”Here’s the chart:
Australian heat wave adds $400 million to electricity costs - The cost of electricity for the 18 and 19 January two day heat wave may be found from data on the AEMO website. The extra cost of 18 and 19 January can be estimated by finding the cost differences from the average daily costs over the period 1 to 17 January after adjusting these costs to match the higher demand on 18 and 19 January. The AEMO website dashboard gives average daily prices that are not weighted by the change of demand and price during the day. The costs have been calculated using the weighted electricity prices. The total extra electricity cost is some $400 million. This is an amazing example of the problems resulting from the introduction of too much renewable energy and the closure of coal burning power stations. The changes in prices can be clearly seen in the figure below with South Australia and Victoria having price spikes at the same time (AEMO data). New South Wales and Queensland had no such trouble.
Climate Skeptic Takes Charge Of EU Environment Policy - Neno Dimov, the man who took over as the president of the EU's Environment Council on Jan. 1, got an earful yesterday when he appeared before members of the European Parliament. Some of his past words were coming back to haunt him. Lawmakers were aghast that a man who once called climate change a fraud and described himself as an opponent of climate science was going to be coordinating the EU's environment policy for the next six months.“You personally have been questioning climate change and whether human activity is the cause; you even challenged the theory of sea-level rise,” Dutch Liberal MEP Gerben-Jan Gerbrandy said to him. Other MEPs demanded he clarify his personal stance. Dimov demurred. He would not say anything about his personal opinion on climate change, noting only that there is a "political consensus" within the EU on climate change and that he will "keep this consensus alive." However, he said, there is always room for "challenges and doubts." A vocal admirer of U.S. President Donald Trump, Dimov has in the past said global warming is being used as a tool of intimidation. So how did the EU end up with a climate-skeptic environment chief? Every six months, one of the EU’s 28 member countries takes charge of the Council of the EU. Bulgaria will take over the rotating EU presidency from 1 January 2018. Each of the Council’s policy configurations is chaired by the presidency country. As Bulgaria’s environment minister, Neno Dimov will chair the Environment Council until the end of July. This means he will set the agenda and conduct negotiations with the European Parliament on behalf of all the member states. Dimov became Bulgaria’s environment minister in May of last year, and shortly afterward he gave a TV interview saying that “climate change is a scientific debatе; there is no consensus, and every part has arguments.” In 2015 he said in an online video that global warming is a “fraud … used to scare the people.”
European Commission approves capacity markets to keep gas, coal plants in business - The European Commission has given limited backing for gas and coal power subsidies, which will boost conventional utilities caught out by a surge in renewable power, but may undermine carbon cuts. Renewables have depressed profits for utilities in countries with a large, growing base of wind and solar power, such as Germany. European wind and solar power are subsidised, have no fuel costs, and get priority grid access, meaning that when the sun is shining and wind blowing wholesale power prices can fall to near zero or even go negative, destroying the margins of gas and coal-fired power plants run by conventional electricity utilities. EU member states can now support fossil fuel generation, through so-called capacity markets, the Commission said on Wednesday updating its state aid rules. Under capacity markets, utilities can bid for payments to keep their gas and coal-fired power plants available, instead of decommissioning them. In turn, that can reassure grid operators that electricity supply will continue to meet demand. The Commission support will be a particular relief to Britain, which plans to hold its first capacity market auction for gas and coal power in December, pending state aid approval.
Can France Mix Nuclear and Renewable Power? - Electricite de France SA says its fleet of nuclear reactors aren’t just able to provide a steady stream of power, they’re flexible enough to complement a large fluctuating supply of renewable energy. Combined with a 25 billion-euro ($31 billion) solar plan and potential investments in huge batteries, the utility says it can ride out the energy upheaval, while also helping the French government fulfill its goal of cutting reliance on nuclear power. “Our nuclear is flexible, it’s variable,” said EDF Chief Executive Officer Jean-Bernard Levy. “Renewable energies are totally complementary.” The utility is already capable of offsetting a change in power flows as large as 21 gigawatts in less than 30 minutes — equivalent to more than 10,000 turbines falling still due to lack of wind — said Dominique Miniere, the company’s head of nuclear and thermal power generation.
Hydro-Quebec’s deal with Massachusetts hits snag --There’s a new problem for the multi-billion-dollar contract announced by Hydro-Quebec last week with Massachusetts. Hydro-Quebec had signed a 20-year deal to provide the U.S. state with hydroelectricity, but on Thursday, a Site Evaluation Committee in New Hampshire voted to deny a permit to build the transmission line needed for the project.Hydro-Quebec spokesperson Serge Abergel said the decision is disappointing, but it isn't the end of the process. "This was a known risk. The site evaluation committee has been ongoing for a year and a half now, and we knew they had to make a decision, so we submitted not just Plan A, which was Northern Pass, but also a Plan B and C to meet Massachusetts’ energy needs," said Abergel. He added that the committee's rationale for the rejection was that it felt it did not have enough information to approve the deal. Last week Hydro-Quebec's president said he believed New Hampshire would approve the deal. Eversource, Hydro-Quebec's American partner in the deal, was much harsher in its response to the rejection and said the Site Committee's Quebec Economy Minister Dominique Anglade said the setback was not insurmountable. If a deal with New Hampshire cannot be worked out, Hydro-Quebec will explore moving electricity through Maine or Vermont to reach Massachusetts.decision "failed to comply with New Hampshire law." Eversource has 30 days to appeal the decision and failing that can pursue other legal action. Quebec Economy Minister Dominique Anglade said the setback was not insurmountable. If a deal with New Hampshire cannot be worked out, Hydro-Quebec will explore moving electricity through Maine or Vermont to reach Massachusetts.
Update On Massachusetts' Plan To Bring Hydro-Electricity In From Canada -- February 2, 2018 - The continuing balkanization of America. See this note from January 28, 2018, for background. From Worcester Business Journal: A permit that the Northern Pass project had been counting on was denied by New Hampshire site evaluators on Thursday, jeopardizing the Bay State's newly minted plan to transmit hydropower from Quebec to Massachusetts. The New Hampshire Site Evaluation Committee's (SEC) unanimous vote occurred a week after Massachusetts officials and utilities selected the project – a joint effort of Eversource and Hydro-Quebec to run transmission through the White Mountains – after a major renewable energy procurement. My thoughts, not ready for prime time, when a reader sent me that note: Some years ago I suggested (to myself) that we were seeing the Balkanization of the US. I don't recall what was happening then that made me think of the balkanization of the US but it certainly seems that is what we are seeing here. I thought the balkanization of America would end at the regional level (south vs north; west vs east; west vs midwest; etc) but now we are seeing it intra-regionally: states with similar values and background are unable to come together to help each other out. It seems Massachusetts could find some help from the federal government but because the "trade" is coming from Canada, maybe there is no case of "restraint of interstate trade." The New Hampshire vote appeared not to be close.
Cold winters are testing the limits of US energy grid | TheHill: The arctic air that has frozen the northeastern U.S. over the first weeks of 2018 has prompted New Englanders to crank up the heat and New England’s utility companies to scramble for fuel. This season’s above-average heating and electricity demand has tested grid reliability at a time when the topic has had particular political salience. Most reporting on the matter has lauded the resilience the grid has shown, but a fuel-security analysis performed by the group that oversees New England’s power system delivers a pessimistic chill. ISO New England’s analysis reveals that in winters to come fuel insecurity will plague the region.What makes ISO New England’s report so tragic is that the United States is now a veritable world energy superpower. Ten years ago, concerns about energy prices and fuel security were a standard element of the national zeitgeist. But a decade removed from the oil price peak of $147 per barrel in July 2008, our national concern over resource depletion has been rendered moot. Spurred by the high prices of the mid-2000s, American companies embarked upon nothing less than a domestic energy renaissance. Since 2005, oil production in the United States has increased by 50 percent, oil exports have seen a tenfold increase, and oil imports have fallen by a quarter. More critically for electricity, however, have been the gains made on the concomitant natural gas front. Natural gas production has soared over the past decade by 50 percent and in late 2017 the United States became a net-natural gas exporter — meaning that America now sells more to foreign countries than it buys from them. Given the positive developments that have left markets awash with energy resources, one would expect American utility companies would be well-positioned to meet the needs of their customers. Instead we are now being warned by ISO New England that in future winters utilities will be unable to meet demand during bouts of frigid weather. The group’s projections in almost every future scenario forecast the implementation of rolling blackouts — the sequential disconnection of blocks of customers from power — to protect the grid from outright disaster.
Former Obama energy secretary cold on energy storage potential - The ex-head of the Obama administration’s energy department believes energy storage will remain too expensive to meet long term urban power storage needs, and believes chemical alternatives will need to be found. Professor Steven Chu is reported in the Australian as saying that the huge lithium-ion battery built in South Australia by Tesla boss Elon Musk had cost about 40 times as much as an equivalent power plant using an existing hydro-electric dam. He said while the costs of building battery plants were likely to halve over the next decade, the approach would never be cheap enough to accommodate the big seasonal shifts in renewable power production. He said batteries could prove viable for storing power produced during the day for use during night hours, and “maybe” up to a week later, but not over seasonal timeframes.“You need other new technologies to convert cheap renewable energy into chemical fuel when the sun is shining or the wind is blowing,” he told The Australian. “If you make really cheap hydrogen from renewables and store it underground, then you have something very different.”While Chu’s current research encompasses batteries, he said fuel cells held more promise for urban power storage — particularly those based on liquid hydrocarbon. “We don’t have that technically economical today, but that is also part of my research.”
Americans are saving energy because fewer people go outside -- Americans are saving energy because they don’t go outside as much anymore, researchers say. It’s a plus for the environment, though in another light (no pun intended), it’s just sad. In 2012, Americans spent an extra eight days at home compared to 2003, according to the American Time Use Surveys. Being at home means using more energy by keeping the lights on and watching TV. But it also means less travel, and it means that fewer people are outside operating offices and stores. So overall in 2012, we saved 1,700 trillion British thermal units (BTU) of heat, or 1.8 percent of the national total, according to an analysis published today in the journal Joule. That’s about how much energy Kentucky produced in all of 2015. Specifically in 2012, Americans spent one day less traveling and one week less in buildings other than their homes when compared to a decade earlier. The trend of staying indoors is especially strong for those ages 18 to 24: the youths spent 70 percent more time at home than the general population. At the other end of the age spectrum, those 65 and older were the only group that spent more time outside the home compared to 2003. Next, the researchers want to look at energy consumption changes in other countries as a result of lifestyle changes. It’s tricky to pinpoint the exact reasons for these changes, but the authors suggest it’s a combination of remote work and services like streaming video and online shopping. With the rise of flexible work-from-home privileges, Amazon Prime, two-day shipping, and Netflix, there seems to be fewer and fewer reasons to venture outside the front door. But scientists have long said that spending time outdoors is good for us. Being in nature is helpful for reducing stress, and going to see a friend helps us maintain relationships, which is also key for well-being. Reducing energy use is a good thing, but so is going out into the world every once in a while.
Four months of life in the dark after Hurricane Maria -- More than four months have passed since Hurricane Maria hit Puerto Rico, and for many of us it seems like nothing has changed since the first days. Electricity has been slowly restored and limited to places mainly in urban centers. A great part of the population, especially people who live in rural areas, are still living without power and potable water. For many, the only shelter they have from the elements is provided by a blue tarp covering where the roof used to be.The prevailing conditions and the sense of government indifference to the recovery efforts has been fueling social anger. A popular local news radio station that I listen to regularly has started airing calls from residents who talk about what their situation has been like since Maria. All of the calls are stories of people asking how much longer they will have to live without electricity. One can hear anger and anguish in their voices, especially the ones for whom power is a necessity due to medical conditions.The situation is difficult even for those who own emergency generators, as it is very expensive to keep them running. Gasoline and diesel prices are very high and continue to rise every day.In the area where I live, a rural community in a city just outside of San Juan, bundles of cables and downed power posts can still be seen littered on roadsides. Some places are predicting that power might not be fixed until March or later. Lack of power also means lack of running water, since water pumps are needed for communities high in the mountains. This means that we have to save rainwater for bathing, do our washing by hand in a nearby creek and use bottled water for cooking. Washboards are the new rage. It is a common sight to see people with buckets when it rains or after one of the many trips to the river. My grandmother and other elders from the area comment on how life has returned to how it was when they were kids back in the 1930s and 1940s. The excuse that government officials give for the slow recovery is a lack of materials. It is hard to understand how materials such as powerline poles could not be acquired after four months. Meanwhile, we are just left to wait and hope that someday the power comes back on.
After Four Months, Much of Puerto Rico Still Dark and Damaged - Atlantic - Hurricane Maria devastated the U.S. territory of Puerto Rico in late September of last year, and residents are still struggling to regain their footing. Approximately 450,000 of Puerto Rico’s 1.5 million electricity customers are still without power, and those who do have electricity suffer frequent blackouts. Locals are doing what they can, some stringing their own power lines, others looking to solar power and other renewable sources for short-term lighting use, and long-term, larger-scale planning. While work continues slowly on restoring power, the tremendous destruction has resulted in a cascade of further problems, including job losses, foreclosures, a decrease in neighborhood police presence and a resulting increase in violent crimes. Reuters photographer Alvin Baez spent much of the past two weeks in Puerto Rico, documenting what life is like for the survivors of Hurricane Maria who remain on the island months later. (photoessay; 30 photos)
FEMA to stop distributing emergency food and water to Puerto Rico -- Four months after Puerto Rico was devastated by a pair of hurricanes, the Federal Emergency Management Agency (FEMA) said it will stop distributing food and water on the island beginning Wednesday, angering some who say Puerto Rico is far from recovered and in desperate need of more federal help, not less. In a stark contrast to the government’s decision, President Trump, in his State of the Union speech Tuesday, told Puerto Ricans and residents of states decimated by hurricanes and wildfires last year that “We are with you, we love you, and we will pull through together.” FEMA said it will turn over all remaining supplies on the island to the Puerto Rican government and nonprofits for allocation, part of a transition from emergency response to recovery. The agency said that grocery stores and other businesses that sell supplies are now open and sufficiently stocked. Banks, ATMs and gas stations are also functional, agency officials said. The announcement angered many who said they believe FEMA has not provided a sufficient response to an island where about one-third of residents still lack power and, in rural areas, have difficulty obtaining clean water and food. The government of Puerto Rico said it was not forewarned about the change. “We were not informed that supplies would stop arriving, nor did the Government of Puerto Rico agree with this action,” Héctor M. Pesquera, state coordinating officer for the Puerto Rican government, said in a statement. He added that discussions about a transition period have not been finalized.
Why are a million Puerto Ricans still in the dark? -- When Puerto Rico’s governor Ricardo Rosselló announced last week his plan to privatize the nation’s largest electric utility, he justified the move as a remedy to the ongoing humanitarian catastrophe being inflicted upon the population. “The Puerto Rico Electric Power Authority (PREPA) has become a heavy burden on our people, who are now hostage to its poor service and high costs,” he said. “What we know today as [PREPA] does not work and cannot continue to operate like this.”The present electrical blackout in Puerto Rico is without precedent in modern American history. More than four months after hurricane Maria triggered the collapse of the already failing grid, over 30 percent of residential and commercial customers remain without power—equivalent to approximately a million people. Even where power has been nominally restored, the system remains extremely unstable and subject to outages at any time.US Army Corps of Engineers Col. John Lloyd, who is overseeing power restoration for the federal government, recently told PBS Newshour, “I think by the middle of March, end of March, we’re going to see the majority of customers with power.” Governor Rosselló acknowledged some areas may remain off the grid for an additional four months. Those without power have been thrown back a century, with simple tasks like storing perishable foods, accessing drinking water and maintaining contact with loved ones a daily struggle. Generators and rigged car batteries have become the temporary power suppliers, at least for those who can afford the high cost of gasoline. Hundreds of thousands have simply fled the island, seeking refuge on the mainland, in no small part because of the lack of power and other basic necessities of contemporary life. The official response to the catastrophe has been a collective shrug. President Trump uttered but a single contemptuous reference to Puerto Rico during his State of the Union address Tuesday, professing love for those still struggling to recover. Trump’s silence has been matched by the Democrats, who refuse to make an issue of the continuing humanitarian crisis, and instead focus their political energies on seeking to damage Trump with an anti-Russia campaign and whipping up a sexual harassment hysteria.
Shell buying spree cranks up race for clean energy (Reuters) - Royal Dutch Shell has spent over $400 million on a range of acquisitions in recent weeks, from solar power to electric car charging points, cranking up its drive to expand beyond its oil and gas business and reduce its carbon footprint. The scale of the buying spree pales in comparison to the Anglo-Dutch company’s $25 billion annual spending budget. But its first forays into the solar and retail power sectors for many years shows a growing urgency to develop cleaner energy businesses. The investments are not limited to renewables such as biofuels, solar and wind. Shell, as well as rivals such as BP, Exxon Mobil and Chevron, are betting on rising demand for gas, the least polluting fossil fuel, to power the expected surge in electric vehicles in the coming decades. To that end, Shell agreed in December to acquire independent British power provider First Utility for around $200 million, according to several sources close to the deal. The value of the acquisition had not been previously disclosed. Shell declined to comment. With First Utility, the company hopes to find an outlet for its gas supplies via the retail power market, betting on rising demand as drivers charge electric vehicles at home. Earlier this month, the company ventured back into solar after a 12-year hiatus when buying a 43.86 percent stake in Silicon Ranch Corporation for $217 million. A passenger plane flies over a Shell logo at a petrol station in west London, in this January 29, 2015 file photo. REUTERS/Toby Melville/Files In the last three months of 2017, Shell also invested in two projects to develop charging stations for electric vehicles across Europe’s highways. It has also signed agreements to buy solar power in Britain and develop renewables power grids in Asia and Africa. According to analysts at Bernstein, Big Oil has invested over $3 billion on renewables acquisitions over the past five years, most of which went towards solar. “Green” merger and acquisition (M&A) activity today averages 13 percent of total energy M&A activity, they said. “However greater scale is needed for the majors to effectively operate and leverage their trading skills in this market, necessitating more M&A,” they said in a note.
Trump touts end of 'war on beautiful, clean coal' in State of the Union - President Trump spent little time on energy issues during his first State of the Union address, but the two sentences directed at the sector were enough to spark critiques from fact checkers and energy analysts. Energy analysts and industry voices joined in on Twitter to critique the statement. Former Obama DOE official Tyler Norris noted that the Trump administration's budget proposal would slash funding for carbon capture and storage (CCS), technology that typically defines the term "clean coal." Trump last night claimed his admin "ended the war on beautiful, clean coal." The reality is the opposite. His admin has tried to dismantle the carbon capture & fossil R&D budget. Arguably no admin has done more to damage prospects for "clean coal." @bradplumer @vsiv @JesseJenkins pic.twitter.com/IUsywPkW9N — Tyler Norris (@tylerhnorris) January 31, 2018 Trump did not mention CCS technologies in his speech, raising questions over his use of the "clean" descriptor. As the White House looks to cut CCS funding, leaders at DOE and the Environmental Protection Agency have stepped up talk of ultra-supercritical coal plants in recent months, which are more efficient, modern generators, but do not necessarily capture their emissions. Energy Secretary Rick Perry reportedly indicated that when the administration uses the term "clean coal," it also refers to the more efficient combustion technologies. Increasing efficiency of existing coal plants is expected to be the bedrock of Pruitt's replacement for the Clean Power Plan, an Obama-era pollution regulation. Instead of pushing coal plant owners to invest in lower-emitting fuel sources, the replacement rule is likely to only require modest efficiency upgrades at existing plants. That regulation would align with calls from some influential members of the coal industry to reduce federal focus on CCS research. In a memo delivered to the White House last year coal magnate Bob Murray called CCS a "pseudonym for no coal" and urged an elimination of funding. A number of Trump administration actions on energy have aligned with the memo, including the DOE's proposal to lend cost recovery to coal and nuclear plants.
Donald Trump says the US is an energy exporter, and he’s wrong - “We have ended the war on American energy and we have ended the war on beautiful clean coal,” US president Donald Trump said in his State of the Union address tonight. “We are now, very proudly, an exporter of energy to the world.” Not so fast: While the US sells energy abroad, in the form of petroleum, natural gas, coal and electricity, the country is still buying more foreign energy than it sells abroad, according to the most recent government statistics. The US is moving toward becoming a net exporter of energy products—but only because of a decision made by the Obama administration. This is a chart of how much energy the US had to import last year, measured in quadrillions of BTU—a “quad” being equal to the energy produced by 170 million barrels of crude oil, or a pile of coal ten feet thick, three miles long and one mile wide. The US imported about six quads of energy during Trump’s first nine months in office, through October 2017. Imports are trending down, and have been since the end of the Bush administration. The biggest factor is a 2015 decision by Congress to end a ban on exporting crude oil that had been in place since the 1970s. In July, the US exported more than one million barrels of crude oil for the first time, and the government estimates the US is likely a net exporter by 2026 or sooner, but thanks to oil and natural gas recovered by fracking, not coal.
Despite Trump's Remark, There Is No War On Coal and It's Definitely Not Clean -- President Donald Trump 's line, "We have ended the war on beautiful, clean coal " drew some of the biggest claps and cheers from Republican lawmakers at last night's State of the Union address. Energy Sec. Rick Perry , who wants to bail out uncompetitive coal plants , quickly bopped up with a standing ovation. Interior Sec. Ryan Zinke , who wants to open federal lands to mining , stood up shortly after. You can watch their enthusiastic reaction here: But there are a few problems with their boss' remark. First, there is no war on coal. Market forces, thecountry's glut of cheap natural gas , increased energy efficiency and renewable energy have all contributed to the coal industry's decline. While the Trump administration has aggressively pushed for fossil fuels and has rolled back a number of regulations, including the Clean Power Plan , to prop up domestic energy, the policies haven't revived the coal sector. Vox noted that "mining jobs have crashed from a high of 800,000 workers in the 1920s to about 76,000 today." Additionally, U.S. coal consumption fell by 2.4 percent in 2017 —the lowest level in nearly four decades. Secondly, there's no such thing as clean coal. Coal is one of the world's most polluting fossil fuels and its combustion is a major contributor to air pollution and climate change . The Associated Press fact-checked Trump's statement, and wrote: "According to the Energy Department, more than 83 percent of all major air pollutants—sulfur dioxide, carbon dioxide, toxic mercury and dangerous soot particles—from power plants are from coal, even though coal makes up only 43 percent of the power generation. Power plants are the No. 1 source of those pollutants.'
Trump official tells coal group he’s ‘an advocate for the coal industry’ | TheHill: A senior Trump administration official in the Energy Department told a coal industry gathering Wednesday that he aims to be a strong advocate for coal. “The good news is I'm with the federal government and I'm here to help,” Doug Matheney, a special adviser in the Energy Department’s Office of Fossil Energy, said at the West Virginia Mining Symposium, according to S&P Global. “I went to Washington, D.C., for one purpose and that was to help create coal jobs in the United States. That's my total purpose for being there,” he said. “I’m not a researcher, I'm not a scientist, I'm an advocate for the coal industry.”Matheney, who once worked for the industry-backed Count on Coal initiative, told attendees that he hoped to continue Trump’s aggressive deregulatory agenda. He also said that the Energy Department is working on a new plan to boost coal as a replacement to the failed Federal Energy Regulatory Commission proposal to require higher electricity payments to coal and nuclear power plants. President Trump has frequently promised throughout his presidential campaign and since taking office that he would boost the coal industry. He declared at his first State of the Union address Tuesday that his administration has “ended the war on clean, beautiful coal.” United States coal production ticked up last year, due almost entirely to foreign demand growth.
Washington Activists Sue For Right To Ban Fossil Fuel Trains - Activists in Spokane, Washington, filed a lawsuit against the United States government alleging the government is violating the “constitutional right” of Spokane residents to a “livable climate” by prohibiting bans against the transportation of fossil fuels by rail.The Community Environmental Legal Defense Fund calls the lawsuit a “first-of-its-kind case directly challenging federal preemption as an infringement of constitutional rights.”Dr. Gunnar Holmquist, one of the plaintiffs in the lawsuit, stated, “This lawsuit will inevitably be the first of many which seek to begin to align state and federal laws with the realities of global warming—liberating communities to begin to take the difficult steps necessary for our continued survival on this planet.”Multiple plaintiffs in the case are activists, who were arrested in August and September 2016, when they occupied a railway line. They were charged with trespassing on BNSF Railway property for their direct action intended to call attention to the threat of fossil fuel trains, sometimes referred to as “bomb trains.”On June 10, 2016, according to the complaint [PDF], Holmquist proposed a citizens’ initiative to the clerk of the city of Spokane to ban “transportation of coal or crude oil by rail.” The initiative maintained such trains violated the “right of the people of Spokane to a healthy climate.”That month the city council took no action. Holmquist submitted a new version of the initiative the following month and learned the city council would not place it on the ballot because officials were concerned about “federal preemption.” The Spokane City Council passed a resolution and requested the Spokane County auditor hold a special election on November 8 for the ballot proposition. In spite of this support from elected city officials, the hearing examiner for the city concluded, if adopted, federal law would supersede the initiative. “It is well established that a state or local law that permits a non-federal entity to restrict or prohibit the operations of a rail carrier is preempted,” the hearing examiner asserted. “The proposed ban on the transport of oil and coal by rail is therefore outside the scope of the initiative power.” The lawsuit additionally argues Spokane residents have the “right of local community self-government” and that right “may be exercised collectively by the residents of the city of Spokane to make binding law.” It adds “self-government is essential to the individual liberties in our society, and is deeply rooted in our nation’s history and tradition.”
Coal firms plead to courts, Trump for West Coast export terminals (Reuters) - The ailing U.S. coal industry is ramping up its political and legal offensive to win approval for West Coast export terminals that could provide a lifeline to lucrative Asia markets. Coal producers filed two recent lawsuits against governments in Washington state and California challenging local decisions to block port projects on environmental grounds. The industry is also lobbying the Trump administration to override the local bans. The fight reflects the sector’s desperation to boost exports as U.S. utilities continue their shift away from coal-fired power - despite Trump policies aimed at helping miners. The proposed port projects are crucial to industry growth, said Hal Quinn, president of the National Mining Association. “It’s worth fighting these battles,” he said. The strategy could be a long-shot. Courts have tended in the past to side with local authorities in similar cases, and the administration’s policy options for forcing coal infrastructure on unwilling local governments remain unclear. Officials at the White House and Department of Energy did not respond to requests for comment. The coal industry has eyed the West Coast as a gateway to the global market for years, with plans for as many as seven terminals on the books a decade ago. But five of those projects were canceled amid volatile Asian demand and bitter opposition in left-leaning California, Washington, and Oregon. Coal producers are fighting for the remaining two proposed projects – in Oakland, California and Longview, Washington - and have filed two recent lawsuits, including one this month, amid rising coal demand in Japan, China and Korea. “There are 45 new coal plants planned or under construction in Japan alone,” said Rick Curtsinger, a spokesman for Gillette, Wyoming-based Cloud Peak, which mines in Montana and Wyoming.
China blizzards snarl railroads, coal deliveries amid power worries (Reuters) - China’s worst blizzards this winter have snarled the country’s railroads and highways, cutting off critical supplies of thermal coal, and fuelling a rally in prices to record highs and raising concerns about potential heating and electricity shortages. The chaos, with coal piling up at mines and ports after a week of heavy snowfall, comes two weeks before the week-long Spring Festival holiday, when hundreds of millions of people travel vast distances home to celebrate with their families. The severe weather and congestion prompted four of China’s top utilities to warn last week of heating and electricity shortages due to tight supplies of coal ahead of and during the Lunar New Year holiday. Beijing has worked for years to wean the nation off its favourite fuel, but coal still accounts for most of the electricity generated. Average daily coal demand at utilities hit a winter-time record on Sunday of 818,000 tonnes, almost double a year ago due to soaring residential heating demand as temperatures in some regions - including the two most populous cities Shanghai and Beijing - plunged to below-average levels. . China Railway Corp issued orders in recent days restricting freight trains in some parts of the north from heading south to Yunnan, Guizhou, Guangxi and Guangdong, so they don’t get trapped due to bad weather, an official at the railroad’s customer service hotline said. It’s not clear how long the limits will be in place, she said. Coal deliveries have been made a priority, she added, underscoring growing concern in the government as cold weather sweeps across swathes of the nation. The transport congestion, which will take time to clear, will also affect grain and fertiliser shipments. Thermal coal futures on Monday rose more than 1 percent to 679.8 yuan ($107.49) per tonne, their highest since the contract launched in 2015.
China aims to boost rail freight capacity to ensure coal supplies (Reuters) - China will add at least 200 million tonnes of rail freight capacity in 2018, including at least 150 million tonnes of thermal coal capacity, a senior government official told Reuters on Wednesday. Lian Weiliang, deputy head of the National Development and Reform Commission, also said the government is working with the national rail operator to ensure coal supplies after a surge in demand for power. China is trying to push more transportation of goods from coal to agricultural produce onto the rail network and reduce transport by road as part of its effort to reduce pollution. Adding 200 million tonnes to the rail network would mark an increase of 5 percent from 2017 rail cargo volumes of 3.69 billion tonnes. That’s still much lower than volumes by road, by far the most popular way to transport freight, of almost 37 billion tonnes. Lian, speaking at a briefing ahead of China’s Spring Festival starting Feb. 16, also said the government and rail operator are prioritising current coal deliveries for power plants. Utilities have warned of heating and electricity shortages after blizzards snarled railroads and highways, cutting off critical supplies of the fuel ahead of the upcoming holiday. “We have worked with China Railway Corp to outline measures to target power plants that have less than seven days of coal stocks,” Lian told reporters, adding that checks had been carried out on 26 such plants. “The railway departments will prioritise coal to guarantee that supplies are within the safe range,” he said. Currently coal stocks at power plants nationwide are enough for 15 days, “within the safe range”, he said.
The US may back a Vietnam coal plant, and Russia is already helping -- With help from a Kremlin-connected Russian bank, Vietnam is building a coal-fired power plant called Long Phu 1 that will produce an estimated 5.4 million tons of carbon dioxide a year, generating enough electricity to power millions of homes. But the project needs something else first: help from the United States government.The plant’s state-controlled owner has applied for assistance with the project from the Export-Import Bank of the United States. If the bank agrees, American taxpayers will shoulder the financial risk behind Vietnam’s purchase of millions of dollars’ worth of turbines and other equipment from General Electric.The bank has not yet decided whether it will back the project. If it did, it would show that the Trump administration’s commitment to using more coal at home also extended overseas. Critics say it would also challenge a growing global consensus that developed nations and groups like the World Bank should stop funding high-polluting energy projects in developing countries. Britain’s equivalent of the Export-Import Bank has already declined to participate in the project. In addition, it would provide American backing for a project partly funded by a Russian bank that has endured sanctions by the United States government since 2014 because of Moscow’s military intervention in Ukraine.
South Africa plans to add more natural gas, renewables to its energy supply mix – EIA - South Africa is one of the world’s leading emitters of energy-related carbon dioxide (CO2), ranking fifteenth globally in 2015 and accounting for more than any other country in Africa. In an effort to reduce CO2 emissions, South Africa is planning to diversify its energy portfolio, replacing coal with lower CO2-emitting fuels such as natural gas and renewable sources. South Africa relies primarily on coal for electricity generation, and coal accounted for about 70% of the country’s primary energy consumption in 2016. However, aging coal-fired power plants and insufficient investment in power infrastructure have led to recurring power outages. Scheduled power cuts for certain customers during peak electricity demand periods occurred frequently between 2013 and 2015, which, according to the International Monetary Fund, negatively affected the country’s industrial and economic growth. In response, South Africa’s government is expanding its electric generating capacity to include more efficient coal-fired capacity and encouraging more private sector investment. Over the next five years, South Africa plans to replace some of its outdated coal-fired capacity with nearly 10 gigawatts (GW) of supercritical coal units, which are more efficient because they operate at higher temperatures and pressures than conventional coal power plants. The country also plans to add more generating capacity fueled by natural gas and renewable energy by 2030. Insufficient natural gas production and infrastructure have meant that consumers in the country must import a large portion of their supply. More than three-quarters of South Africa’s natural gas supply is transported by pipeline from Mozambique. Natural gas primarily supplies the state-owned gas-to-liquids facility at Mossel Bay on the country’s southern coast.
Is the U.S. Too Reliant on Foreign Uranium for Nuclear Power Plant Fuel? - According to the International Atomic Energy Agency, 58 reactors are currently being built around the world. Although the drivers are in place for uranium demand to increase substantially, uranium prices continue to remain near decade lows—around $22/lb. Very few, if any, uranium mines can cover the costs of production at that price. As a result, very little investment has been made in uranium exploration and mining. The US nuclear reactor fleet requires about 50 million pounds of uranium per year to operate. However, U.S. mines are currently on pace to produce less than 1 million pounds of uranium this year. That means roughly 98% of the fuel must be imported. Much of the uranium available in the market comes from nations such as Kazakhstan, Niger, Russia, and Uzbekistan—not exactly countries the U.S. should feel comfortable relying on.
Fukushima heroes on both sides of Pacific still fighting effects of radiation, stress and guilt -Christmas Day saw dozens of masked men descend on Futaba, in the northeast of Japan’s main island of Honshu. They moved deliberately along deserted streets, clearing triffid-like undergrowth and preparing to demolish derelict buildings. Their arrival marked the beginning of an estimated four-year government-led project to clean up Futaba, which has succumbed to nature since its residents deserted almost seven years ago. Despite 96 per cent of Futaba still being officially designated as uninhabitable due to high radiation levels, the government has set spring 2022 as the return date for its 6,000 or so residents. That the government has also built a 1,600-hectare facility to store up to 22 million cubic metres of nuclear waste in the town has led to doubts that many will return. On the other side of the world, members of a different and larger group of people than the Fukushima 50 are suffering health problems, ostensibly as a result of the disaster. For more than seven weeks following the catastrophe, the United States mounted a massive disaster relief mission, dubbed Operation Tomodachi (the Japanese word means “friend”). The initiative directly or indirectly involved 24,000 US service personnel, 189 aircraft and 24 naval ships, at a total cost US$90 million.While the mission was lauded a success by the US and Japanese governments, during Operation Tomodachi, thousands of US sailors were inadvertently exposed to a plume of radiation that passed over their ships, which were anchored off the Pacific coast of Japan. Since then, several hundred have developed life-changing illnesses, such as degenerative diseases, tumours and leukaemia, and defects have been detected in foetuses of some pregnant women. All are a result, they claim, of being irradiated by the plume.The sailors, however, knew nothing of their exposure and were literally marinated in the radiation According to one report, 24 sailors, who were in their late teens or 20s at the time, are living with a variety of cancers. At least six have died since 2011, while others suffer post-traumatic stress disorder (PTSD).
"One Typhoon Away From Full Breach" - US Nuke-Test Dome Leaking Fatal Radiation Into Pacific Ocean - Before the 1970s, the United States and other nuclear-armed countries conducted more than 500 atomic weapons tests in the atmosphere. The costs associated with nuclear tests for any country have been quite devastating for surrounding communities. Take, for instance, the Enewetak Atoll, a large coral atoll of 40 islands in the Pacific Ocean, where the U.S. government detonated 30 megatons of weapons – equivalent to 2,000 Hiroshima blasts – between 1948 and 1958. In total, sixty-seven nuclear bombs detonated on Enewetak Atoll and Bikini Atoll of the Marshall Islands in the Pacific Ocean. Beginning in 1977, more than 8,000 people worked to clean up the Marshall Islands, shifting 110,000 cubic yards of contaminated soil and debris into a blast crater. This thirty-foot-deep crater is called the Runit Dome, on Enewetak Atoll, also called “Cactus Dome” or locally “The Tomb.” The dome of death spans 350-feet across with an 18-inch concrete cap covering radioactive debris from 12-years of U.S. government nuclear tests. Despite the U.S. government’s resettlement efforts of radioactive debris in the 1970s, some parts of the Marshall Islands today, have elevated radiation levels deemed dangerous for human life. The Daily Star reports that the death dome’s concrete structure is rapidly deteriorating. This is allowing the tides of the ocean to pump water into the dome and then pump radioactive water out. Paul Griego, who was a specialist at the dome site blames the radiation for his health problems today. “During my 10-hour work day I witnessed the water level in the crater rise and lower as the tide came in and out.” He continued: “No attempt was made to drain the crater or line it before the radioactive waste was dumped into it.” “The coral that created the island is porous and the shock from numerous nuclear weapon tests had also fractured the coral.” “From the first day forward, the water has flowed out of the lagoon with the tide, creating a gigantic radioactive toilet that is flushed about twice each day into the Pacific Ocean.” Griego then warned, “The dome could be just one typhoon away from a breach.”
Wayne National Forest oil, gas leases are being auctioned - Parkersburg News — Two extraction leases for parcels in the Wayne National Forest in Monroe County and in Noble County, both near the boundary of Washington County, are being auctioned with proposals to be opened March 22. The auction is part of the joint effort between the national forest and the Bureau of Land Management to allow access to energy production companies to public lands and generate revenue for the federal agencies and state government. The leases are offered quarterly and the most recent in December, when leases were sold on five parcels in Monroe County totaling just more than 350 acres, generated nearly $1 million, according to the bureau’s Eastern States sale summary records. The successful bidder on all the parcels was Triad Hunter LLC, with an office in Marietta, according to the records. Proceeds from the leases are split with the federal government receiving a 12.5 percent royalty on proceeds from extraction and the state government receiving a minimum of 25 percent of the bonus bid and royalty revenue. The March auction will include about 306 acres in Monroe County, just east of the Washington County line past New Matamoras, and about 40 acres in Noble County. The Noble County leases include stipulations to plug 14 abandoned gas wells and remove two tanks and associated oil field equipment. The sales are opposed by several environmental groups, including the Sierra Club and the Ohio Environmental Council, a coalition of which filed a complaint in federal court in May. The lawsuit alleges that the Forest Service and the BLM failed to adequately assess the environmental impact of oil and gas extraction on public lands in lease offerings. The Wayne National Forest covers about 240,000 acres of land in southeast Ohio, and about 40,000 acres is available for oil and gas leasing.
Quake attributed to natural causes - Marietta Times -- Though the small earthquake Friday was barely noticed by local residents, it was enough to catch the attention of those with political aspirations. The 2.6-magnitude quake was noted by the U.S. Geological Study at 8:20 a.m. just south of Ohio 676 between Hickman and Smith roads in Palmer Township. Werner Lange, a Democratic congressional candidate who plans to run against U.S. Rep. Bill Johnson in the Sixth congressional District, blames the oil and gas industry. “Dangerously close (to) that area is one of the most intense fracking (hydraulic fracturing) operations in the entire nation, and man-made earthquakes directly connected to fracking are on the rise,” said Lange. “The time to impose a moratorium on fracking is now. The time for a full-scale independent investigation into this earthquake is now.” Meanwhile, retired Marietta College petroleum engineering professor Bob Chase noted that no hydraulic fracturing is occurring within the vicinity of the shaker. “Bah, humbug,” said Chase. “There’s no horizontal drilling going on in that area and therefore no hydraulic fracturing there… But there are active faults in Washington County, especially along the rivers and the Burning Spring Anticline.” The Ohio Department of Natural Resources confirmed Tuesday that the earthquake was “natural seismicity.”
Land sales in the Wayne National Forest worry environmental groups - The Bureau of Land Management Eastern States announced in January that it will be leasing 345 acres of land in the Marietta Unit of the Wayne National Forest for oil and gas manufacturing. Those oil and gas leases could lead to fracking in Ohio’s only national forest. Hydraulic fracturing — or fracking — is a process in which pressurized liquid fractures rock to release gas. Developers who lease the land have up to 10 years to submit an Application for Permit to Drill, which includes a map, drilling plan and other means of obtaining oil and gas, which could include fracking. Although it may provide jobs in the area, fracking can have severe environmental consequences, Ohio University Environmental Studies Outreach Coordinator Loraine McCosker said. The process impacts the local water system because it uses 5 million to 10 million gallons of water per frack, McCosker, said.“There are concerns about the enormous amount of water used for fracking,” Wendy Park, a senior attorney with the Center for Biological Diversity, said. “(Fracking) could dry out animals’ habitats.”Fracking can also pollute water systems in the Wayne National Forest. There are concerns about the large amounts of hazardous chemicals that are used in the fracking process, Park said. “People that depend on water resources and the health of the forest will be affected by fracking operations,” Mathew Roberts, info and outreach director at environmental group UpGrade Ohio, said in a previous Post report. “People are afraid their water could get contaminated.”Transporting the chemicals used in fracking is also a concern for environmental groups. “There’s a massive amount of chemicals being used to produce gas and oil,” Park said. “Transporting chemicals can subject streams to spills, and many of the chemicals being used are toxic.”
Letters to the editor | Sunday, Jan. 28 - Mansfield News Journal – In recent weeks, many residents of the Clear Fork Valley have received a letter from Cabot Oil & Gas. This letter tells those who have an existing lease with Columbia Gas Transmission for the mineral rights on their land, that Cabot has entered into a sublease agreement with Columbia Gas Transmission, LLC. to “explore, and hopefully develop, the potential resources below Columbia’s natural gas storage fields.” Cabot is working together with the same Columbia Gas that acquired some local mineral rights a few years ago through eminent domain in the Clear Fork Valley. Cabot states that leases need to be amended “to allow for pooling and unitization and support oil and gas development … by allowing for horizontal drilling.” Injecting fluids into the horizontal drilling is often referred to as “fracking.” Please know that you are not required to sign the amended lease agreement. If contacted by a Western Land Management agent, feel free to ask for a copy of your original lease and the amended lease agreement from Cabot. As with the original leases, this amended lease is forever, so it is vital to examine closely how these provisions will affect what happens on your land. Area landowners are getting together for an informational meeting in the near future, but in the meantime, don’t be pressured to sign by hearing that your neighbors have signed, or that you will miss out on an opportunity for big money. For questions or more information, please contact CFlandowners@gmail.com. The agreement was written to protect the interests of Cabot Oil and Columbia Gas. The control of your land now and forever into the future is too important to make this decision without more information.
Utopia Pipeline Sending Ohio Valley Ethane to Canada - Wheeling Intelligencer - — After hundreds of eminent domain lawsuits, several route adjustments and at least $500 million worth of investments, Kinder Morgan is pumping Marcellus and Utica shale ethane from the Cadiz area to Michigan for export to Canada via the Utopia Pipeline. Despite continuing efforts to bring a $6 billion ethane cracker to Belmont County, proposals by China Energy to build $83.7 billion worth of petrochemical projects in West Virginia and ongoing construction on the Royal Dutch Shell plant north of Pittsburgh, there is still no end-user for ethane in the Marcellus and Utica region. The Utopia is the latest pipeline to send ethane — drawn from fracked shale wells across Ohio, West Virginia and Pennsylvania — to other regions for processing. The Utopia joins these pipelines in shipping ethane out the Marcellus and Utica area:
- ∫ the Enterprise Products Partners ATEX Express pipeline, which sends ethane to the Gulf Coast;
- ∫ the Sunoco Logistics Mariner East pipeline, which sends ethane to the East Coast for export to Europe; and
- ∫ the Sunoco Mariner West pipeline, which sends ethane northwest to Canada.
The 12-inch diameter Utopia conduit has a current capacity of 50,000 barrels per day, but this volume could eventually be expanded to 75,000 daily barrels. For perspective, West Virginia University Energy Institute Director Brian Anderson recently said Shell ethane cracker set for Beaver County, Pa. will likely consume about 100,000 barrels of ethane each day. He also said the potential PTT Global Chemical project at Dilles Bottom, as initially proposed, would use about 70,000 barrels each day. However, according to the U.S. Energy Information Administration, the nation’s ethane production should reach 1.7 million barrels per day this year. This is an increase of 450,000 barrels per day compared to 2016 yields, so the production increase could leave plenty of ethane in place to run the proposed local petrochemcial projects.The Utopia stretches northwest from the MarkWest Energy Harrison County facilities into Michigan. Plans call for the ethane to then be shipped across the border into Ontario, Canada for cracking by NOVA Chemicals Corp., which already receives ethane from the Mariner West line.
Study Fills in Missing Data on Homes, Schools, Habitats at Risk from Shell's Falcon Pipeline - DeSmog (blog) - At the end of 2017, Shell ran slightly afoul of Pennsylvania state regulators after filing a pipeline permit application to the state and the U.S. Army Corps of Engineers that failed to show sensitive environmental areas in the path of its proposed Falcon ethane pipeline. Now, a concerned nonprofit has pieced together the details Shell should have included (and more), revealing hundreds of homes, schools, streams, and wetlands in the path of the fracking products pipeline. The 97-mile Falcon Ethane project will carry more than 107,000 barrels a day of a flammable plastics precursor to a small town in Pennsylvania where Shell is building an ethane “cracker” facility. In a region poised to be transformed by petrochemical development, this huge plastics plant will superheat the ethane and “crack” it as it manufactures over a million tons per year of tiny plastic beads of ethylene or polyethylene. Shell's pipeline plan lacked maps that would show area creeks, rivers, waterways, and other sensitive areas like wildlife sanctuaries and preserved lands, the state Department of Environmental Protection said after it issued “incompleteness letters” to the plant in October, a local newspaper, The Times Online, reported. Now, in a rare detailed look at this early stage of pipeline planning, the FracTracker Alliance, a nonprofit focused on “the risks of oil and gas development,” has published a Falcon Public Environmental Impact Assessment Project, detailing the impacts and risks the Falcon pipeline will bring to Pennsylvania, West Virginia, and Ohio. FracTracker's analysis found that, assuming the project is built as planned, the Falcon pipeline will cross 319 streams and 174 wetlands and that “550 family residences, 20 businesses, 240 groundwater wells, 12 public parks, 5 schools, 6 daycare centers, and 16 emergency response centers are within potential risk areas.” Those risks include both explosions and vapor leaks. “Should a leak occur, ethane is not easily detected because it is a colorless and odorless gas,” FracTracker Alliance's new site reports. “Slightly heavier than air and extremely flammable, triggers such as ignition of a car engine, cell phones, doorbells, or light switches can provide an effective ignition source if concentrations are high enough.”
Enbridge prepares to replace pipeline in Michigan (AP) — A natural gas distribution company is preparing to replace a pipeline that runs underneath a river in eastern Michigan. Enbridge Energy's Line 5 pipeline cuts through Marysville and the St. Clair River, The Times Herald reported . The company is working to secure the proper state and federal permits for the project, said Paul Meneghini, a senior manager at Enbridge. The line crosses the U.S.-Canadian border so the company must also acquire Canadian permits. Construction likely won't start until the end of next year, Meneghini said. "All dependent on permitting," he said. "But the intent is to move forward as soon as we can, as practical as we can once all the permits are in hand." The work is expected to take about two months to complete. Activists and officials across the state have been calling for the line's decommissioning amid concerns of its condition. The company has seen nothing to spark concern about the line's integrity, Meneghini said. Kellie Randolph lives near the pipeline. She said her family is concerned about the project's timeline. "We were concerned about safety and are still concerned about safety," she said. "Just the concern that it's a pipeline and I don't know what's going to happen with that." Workers will use a drill to tunnel underneath the river for the new pipe. The new pipe will be connected to the existing system on the Canadian side. The current pipeline was laid in 1953 and is 4 to 15 feet (1.22 to 4.57 meters) below the river, Meneghini said. The replacement line will be 30 feet (9.14 meters) or more below the bottom of the river.
Snyder rejects advice to shut down Line 5, extends deal with Enbridge - Gov. Rick Snyder has rejected three recommendations from a state advisory board tied to operation of Enbridge's Line 5 oil pipeline, including one that proposed a temporary shutdown where it crosses the Straits of Mackinac.In a Jan. 26 letter to members of the Pipeline Safety Advisory Board, Snyder thanks them for the resolutions put forward at the board's Dec. 11 meeting before explaining why he is not acting on any of them.Mike Shriberg, executive director of the National Wildlife Federation's Great Lakes Regional Office and member of the Pipeline Advisory Board, criticized the governor's response."Governor Snyder's response to the resolutions which passed his Pipeline Safety Advisory Board appears to be kicking the can down the road while the Great Lakes remain at risk," Shriberg said in a statement. "The state's failure to produce a timely and effective risk and alternatives analysis should not be an excuse for defensiveness and inaction."The December advisory board meeting came in the wake of a new agreement between Enbridge Inc. and the state government, intended to improve safety and transparency issues tied to the 64-year-old twin underwater pipelines crossing the Straits of Mackinac.In an apparent rebuke of that deal, three advisory board resolutions asked for revisions of the agreement, a new analysis of the public need for Line 5 and a temporary shutdown until damage to the pipeline's protective coating can be inspected and repaired. The 645-mile Line 5 pipeline, built in 1953, runs from Superior, Wisc., to Sarnia, Canada, and transports up to 540,000 barrels of light crude oil and natural gas liquids per day. Enbridge has faced harsh scrutiny in recent years from environmental advocates and government officials alike over the viability of the aging pipeline.
Gov. rejects shutdown of great lakes oil pipeline that's losing its coating - Michigan Gov. Rick Snyder has rejected the recommendation of an independent pipeline safety advisory board to shut down an aging crude oil pipeline that has been losing sections of its protective coating where it crosses beneath the Great Lakes.The board called for an immediate, temporary shutdown of the 65-year-old pipeline in December after Enbridge, the Canadian company that owns and operates the line, notified the board that sections of anti-corrosion coating had come off the dual pipelines that run along the bottom of the Straits of Mackinac. Line 5 has had more than two dozen leaks over its lifetime, and there have been concerns about the pipeline's outer coatings, but as recently as March, company officials said the pipelines were in as good of condition as the day they were installed."Line 5 is violating its easement right now because the coating for the pipeline is not intact," said Mike Shriberg, a member of the board and the executive director of the National Wildlife Federation's Great Lakes Regional Office. "They have bare metal exposed to water, and they can't tell us anything significant about the extent of the problem."Snyder downplayed any imminent threat in his January 26 letter to the board."While the coating gaps remain of key concern and must be addressed, review of the recent hydrotest results of Line 5 through the Straits indicate there is not a risk of imminent failure, and that test was done when these coating gaps existed," Snyder wrote. The governor stated that further inspections and repairs could not be completed until summer because of ice on the Straits, which connect Lake Michigan and Lake Huron. He also said: "It is highly unlikely that Enbridge would agree to voluntarily suspend pipeline operation for months pending further external coating inspections and repairs."
As Siberian Gas Awaits US Landing, a Second Ship May Be Coming -- A second tanker carrying Russian natural gas may be on the way to the U.S., following in the footsteps of a ship now sitting near Boston Harbor with a similar cargo. The Gaselys tanker, which has been sitting for two days in the waters outside of Boston, carries liquefied natural gas originally produced in Siberia, according to vessel tracking data. The ship, poised to dock at Engie SA's Everett import terminal, would be the first LNG shipment from anywhere other than Trinidad and Tobago in about three years. Now Engie is poised to pick up a second Russian cargo from northern France that may land in Massachusetts on Feb. 15, according to Kpler SAS, a cargo-tracking company. The tankers would arrive at a time when New England is paying a hefty premium for supplies as pipeline capacity limits flows of cheap shale gas from other parts of the country in the peak demand season. The tanker named Provalys was sailing to France's Dunkirk terminal to pick up LNG on Friday and unload a small amount of it nearby in Belgium before heading across the Atlantic, the cargo tracker said. Engie couldn't be immediately reached for comment about this shipment. Gaselys loaded its cargo at the Isle of Grain terminal near London, where another tanker had unloaded the Russian LNG. French energy giant Engie bought the cargo on the spot market "due to the high natural gas demand during the recent record cold snap," Carol Churchill, a spokeswoman at Engie's Everett terminal said in an email Wednesday. LNG produced from Trinidad was already committed, so Engie looked for uncommitted cargoes with the proper fuel quality that could be delivered by tankers compatible with the Massachusetts terminal, she said. "Boston needs it because there are constraints on pipeline capacity from the Gulf Coast to the Northeast and no one has been able to build pipelines from the shale plays in the Northeast to demand centers,"
Murphy Announces Support for Fracking Ban in the Delaware River Basin | Observer - On Thursday, Gov. Phil Murphy announced that New Jersey would be joining the governors of Pennsylvania, New York and Delaware in support of a ban on hydraulic fracturing—AKA fracking—in the Delaware River Basin. In September of 2017, the Delaware River Basin Commission (DRBC) proposed changes to its regulations that would ban fracking in the watershed and discourage both the export of water for fracking outside the basin and the import of fracking wastewater. New Jersey—under former Gov. Chris Christie—was the only Delaware River Basin state to withhold support by abstaining from the vote. “New Jersey is reversing course,” Murphy said at a news conference on the banks of the Delaware in Phillipsburg, according to NorthJersey.com. “Fracking puts our health and safety and the health and safety of our environment in our communities at risk. It is a direct threat to our water and runs counter to our values.” Fracking—a method of extracting oil and natural gas by injecting highly pressurized liquid into the earth—has been linked to contaminated ground and surface water, air pollution and induced seismic activity. A 2016 Environmental Protection Agency (EPA) report found “scientific evidence of impacts to drinking water resources at each stage of the hydraulic fracturing water cycle.” Murphy’s Thursday announcement was accompanied by a letter to Pennsylvania Gov. Tom Wolf, the chair of the DRBC, pledging to uphold the ban as the DRBC moves toward a permanent decision on fracking. “My administration is resolute in our commitment to protecting the environment and natural resources of the Delaware Rive Basin, and we will not allow dangerous exploratory activities to put them at risk,” the letter reads. “We stand with you and our sister states New York and Delaware in our responsibility to protect the Delaware River Basin.”
Mountain Valley seeks federal permission to start pipeline work in Giles County - In a letter Friday to the Federal Energy Regulatory Commission, an attorney for the Mountain Valley Pipeline asked for what’s called a notice to proceed — the final go-ahead needed before work can start. The request, for parts of the 303-mile pipeline that are in Giles County, is the first of its kind to be made in Virginia. FERC granted a similar request last week for five counties in West Virginia. Mountain Valley wants approval from the agency by Thursday, a date that it has said in court papers must be met in order to satisfy deadlines imposed by federal wildlife protections. However, it’s unclear whether a few remaining regulatory and legal pieces to the puzzle will fall into place for preliminary work to begin by then. A federal judge in Roanoke has yet to rule on Mountain Valley’s attempt to use the controversial process of eminent domain to run the pipeline through private property. More than 200 landowners are fighting the company’s efforts to obtain forced easements through their property. The Virginia Department of Environmental Quality has yet to sign off on erosion and sediment control plans that must be in place before work can begin, a spokeswoman for the agency said late last week. And there’s no guarantee that a final FERC order will come by Thursday; the agency took nearly three weeks to issue the first notice to proceed that Mountain Valley asked for in West Virginia, which was limited to work on access roads and construction yards.
Federal judge puts a pause on Mountain Valley Pipeline construction plans - With just a few hours remaining until Thursday, the day that Mountain Valley Pipeline had hoped to start work on a natural gas pipeline through Southwest Virginia, a judge put a pause to those plans. The decision by U.S. District Court Judge Elizabeth Dillon came during a proceeding in which Mountain Valley had sued nearly 300 property owners who refused to surrender their land for the controversial project. Although the laws of eminent domain give Mountain Valley the power to obtain forced easements for its buried pipeline, Dillon ruled, she rejected the company’s request for immediate access to the parcels. “This is a victory for the landowners along the pipeline, absolutely,” said Stephen Clarke, one of their attorneys. “There’s no way that they [Mountain Valley] can start construction on a vast majority of the properties,” he said — at least not now. Facing a tight deadline to have trees felled along the pipeline’s route by March 31 to meet federal wildlife protections, Mountain Valley executed what’s called a quick-take condemnation. That process might have allowed the company to start work by Thursday on the disputed properties. But first, Mountain Valley was required to demonstrate it could pay the property owners just compensation for the easements — at prices to be determined at trials later, likely well after construction had begun. Such a demonstration would have included paying a bond or deposit with the court. At a hearing earlier this month, Mountain Valley presented appraisals for just nine of the nearly 300 properties, which Dillon said was insufficient information on which to base an appropriate bond amount. “Until MVP can provide a more fulsome basis on which the court can assure that just compensation will be paid, the court cannot allow immediate possession at this time to nearly all of the properties,” Dillon wrote in a 52-page decision released shortly before 6 p.m. Wednesday. The judge gave the company seven days to report back to her with a timeline of how long it might take to conduct more appraisals and gather additional information needed to determine a bond. Only after that happens would Mountain Valley be allowed access to the land it needs in the counties of Giles, Craig, Montgomery, Roanoke, Franklin and Pittsylvania for its 303-mile pipeline. In the meantime, Dillon allowed immediate entry on the nine properties that were appraised, but only after a bond of three times their established value is posted.
First natural gas export terminal opens on East Coast -- Dominion Energy opened the first natural gas export terminal on the East Coast the day after President Trump touted energy exports as a national priority in his State of the Union speech Tuesday night. Dominion announced Wednesday that its Cove Point liquefied natural gas export terminal in Lusby, Md., was beginning production, with Shell providing the natural gas for export into the global market. “Today marks an important day, not just for Cove Point, but for the U.S. LNG industry," said Charlie Riedl, executive director of the trade group Center for LNG. "Cove Point’s production of LNG represents a fast-emerging industry providing thousands of jobs at home and environmental and geopolitical benefits abroad." Trump played up the fact that the U.S. has become a net exporter of natural gas in his Tuesday night address to Congress. The administration also held a meeting with the Mideast nation of Qatar Tuesday about the energy giant's plans to invest in an LNG facility in Texas. The U.S.'s recent status as both a leading oil and natural gas producer as a result of the shale energy boom is attracting investment and making the country a global player across energy markets. The $4 billion Cove Point facility is one of the largest construction projects in Maryland, providing more than 10,000 jobs, with $565 million in payroll, the trade group said. Dominion, which is a large utility based in Virginia that serves the Washington area, confirmed that "construction is complete," and natural gas for processing into liquefied form for export has been brought to the facility. The LNG the facility will produce is destined for Japanese and Indian customers who have signed 20-year contracts to take the fuel.
Obama Alums Are Pushing Fracked Gas Exports. That’s Exactly What Trump Wants -- During his State of the Union address, President Donald Trump exclaimed that the “war on American Energy” had ended and that “we are now an exporter of energy to the world.” What Trump did not say, though, is that several former senior energy officials from the Obama administration — the one Trump said had declared a “war on American Energy” — now either lobby or work as executives for companies making his “energy dominance” agenda possible. At least five of these Obama officials now work for natural gas export companies, four of them for Cheniere and another for Tellurian. One of those Obama alums, former top White House climate and energy staffer Heather Zichal, now sits on the Board of Directors for Cheniere. She also recently was named managing director of corporate engagement for the environmental group The Nature Conservancy. In her book This Changes Everything: Capitalism vs. The Climate, Naomi Klein reveals that The Nature Conservancy actually owns an oil well in Texas and uses the financial earnings which come from it as part of its funding stream. Further, both BP and Chevron sit on The Nature Conservancy's Business Council. As DeSmog previously reported, White House meeting logs show that Zichal met twice with Cheniere officials in 2013 while she was working under Obama. Not only was Cheniere the first company to receive an LNG export permit from the Obama administration in 2012, it was the first to receive such a permit in over 50 years. While E&E News reported that Zichal “served” on the board of directors for Cheniere, company spokesperson Eben Burnham-Snyder confirmed with DeSmog that Zichal still serves on the board. According to forms filed with the U.S.Securities and Exchange Commission (SEC), Zichal earned $90,000 for her service on the board in fiscal year 2016 and another $90,014 worth of stock options, for a total of about $180,000 in compensation. Cheniere CEO Jack Fusco was part of the CEO delegation which accompanied President Trump and U.S. Commerce Secretary Wilbur Ross on their recent trade mission to China. Cheniere also recently signed a Memorandum of Understanding (MOU) with China National Petroleum “on Long-term LNGSale and Purchase Cooperation.”
NC approves Atlantic Coast Pipeline permit through 8 counties -- A key state permit for the Atlantic Coast Pipeline was approved by state regulators Friday, clearing a major hurdle for the interstate natural gas project to move ahead in North Carolina. The state Department of Environmental Quality announced its long-awaited decision more than a year and a half after Duke Energy and other partners filed their application. Opponents immediately vowed legal challenges to try to block the project. The approval for the underground pipeline comes with a number of conditions for testing, monitoring and inspections. “DEQ left no stone unturned in our exhaustive eight-month review,” DEQ Secretary Michael Regan said in the agency’s announcement. “Our efforts have resulted in a carefully crafted permit that includes increased environmental protections, while giving us the tools we need to continue close oversight of this project as it moves forward.” The Atlantic Coast Pipeline has already received several federal permits, as well as approvals from Virginia and West Virginia regulators, leaving North Carolina as the last major hurdle. The project still requires several minor state approvals in North Carolina: an air-quality permit to operate a compressor station in Northampton County, as well as stormwater permits for Nash and Cumberland counties.
Atlantic Coast Pipeline moves forward despite controversy and criticism | McClatchy - U.S. Senator Tim Kaine wants a do-over. The Virginia Democrat has asked the Federal Energy Regulatory Commission to reconsider its approval of the $5 billion Atlantic Coast Pipeline that will ferry fracked natural gas from West Virginia to Virginia and North Carolina. Two of five commission seats were vacant when the panel approved the project by a 2-1 vote in October 2017. Noting the commission is back at full staff, Kaine wants a re-vote saying “there is a real concern about whether the divided rulings by a partial Commission fairly reflect the FERC position.” A handful of environmental groups, property owners and even a North Carolina state agency also want FERC — for various reasons — to reconsider their approval of the project. Along with issues related to greenhouse gasses, eminent domain and damage to wetlands and rivers, opponents also question whether a legitimate economic need exists for the ACP, and numerous other pipelines, that FERC has greenlighted to move natural gas from the Marcellus-Utica shale basin in Ohio, Pennsylvania, and West Virginia. The project also reflects another growing dispute in America: Whether economic development projects have a disparate impact on communities of color.
DC Circuit ruling could shut down pipeline - A federal court may shut down a Southeast natural gas pipeline in a stunning rebuke of government regulators who approved the project. The U.S. Court of Appeals for the District of Columbia Circuit yesterday refused to revisit its 2017 ruling that the Federal Energy Regulatory Commission should have taken a closer look at climate impacts from the Sabal Trail pipeline. As soon as the court issues a formal mandate finalizing the decision, Sabal Trail's federal certificates will be void, and operations will come to a halt. The D.C. Circuit is expected to issue the mandate next week. It's unclear, however, what FERC and pipeline backers could do to attempt to stall the process, and it's possible any interruption in pipeline operations would be short-lived. Still, the court's decision is the strongest legal rebuke of FERC's oversight since the rush to build out natural gas pipelines began several years ago. The case centers on a Sierra Club lawsuit that alleged, among other things, that regulators failed to study greenhouse gas emissions from the burning of natural gas delivered by Sabal Trail and the broader Southeast Market Pipelines Project, which cuts across Alabama, Georgia and Florida. The D.C. Circuit sided with the environmental group in an August 2017 decision that ordered FERC to analyze the issue. In the meantime, the ruling said, underlying project permits would be vacated.
Bayou Bridge Pipeline's controversial construction begins - Construction of the controversial Bayou Bridge oil pipeline has begun at multiple sites on its 163-mile route from St. James Parish to Lake Charles. Energy Transfer, the parent company of the pipeline announced last week that it recently finished a two-year permitting process and immediately set to work. The company declined to provide specifics about construction sites or the timing of construction. The pipeline would eventually connect with the controversial Dakota Access pipeline carrying Bakken oil from North Dakota. Environmental groups opposed to the project say the route imperils the Atchafalaya Basin, considered one of the largest swamps in America, and poses human health risks in dozens of communities. In an email, Energy Transfer called the pipeline an "investment into safe and reliable transportation for energy in our country." Atchafalaya Basinkeeper and other groups filed a lawsuit in federal court to block the pipeline construction permits awarded by the Army Corps of Engineers. The suit contends the corps did not adequately address the project's environmental risks. A state district court judge on Friday (Jan. 26) rejected a separate claim that Energy Transfer should make many of the project's documents publicly available. The judge ruled that Louisiana's public records rules do not apply to private companies.
Judge Rejects Bid to Suspend Louisiana Pipeline Construction (AP) — A federal judge refused Tuesday to order a temporary halt to construction of a crude oil pipeline through a river swamp in south Louisiana, a setback for environmental groups challenging the project. U.S. District Judge Shelly Dick denied the groups' request for a temporary restraining order that would have suspended pipeline construction in the environmentally fragile Atchafalaya Basin pending a hearing next week. Environmental groups sued the U.S. Army Corps of Engineers on Jan. 11. The lawsuit accuses the Corps of violating the Clean Water Act and other environmental laws when it approved a permit for the Bayou Bridge pipeline project in December. The Corps completed an environmental assessment for the project before issuing the permit. The groups' lawsuit claims that review was "plainly inadequate" and ultimately wants the court to vacate the permit. Judge Dick, however, said she reviewed the Corps' 92-page environmental assessment and "cannot find that the Corps was arbitrary and capricious" in its review. "Simply having an opposing opinion, or disagreeing with the mitigation plans imposed, is insufficient to establish a substantial likelihood of success on the merits, especially in light of the high deference that the law requires the Court to afford the Corps," she wrote. Dallas-based Energy Transfer Partners plans to build the 162-mile-long (261-kilometer), 24-inch-wide (60-centimeter-wide) pipeline from Lake Charles to St. James Parish, a path that crosses the basin. Dick scheduled a Feb. 8 hearing for environmental groups' request for a preliminary injunction that would block construction of the pipeline through the basin until their lawsuit can be resolved. In the meantime, the groups had asked for a "short-term delay in construction." The groups didn't ask the court to suspend pipeline work outside the basin.
US refiners talk expansion after reaping billions in tax gains --The biggest independent refiners in the U.S. are lining their pockets with billions of dollars in tax reform windfalls just in time to invest in equipment that meets ever-tightening domestic and global environmental rules, making the “liquid freedom” they export cleaner than ever.“The reduction in the corporate tax rate is a catalyst for incremental investment in the business,” said Gary Heminger, CEO of Marathon Petroleum Corp during the company’s fourth quarter earnings call. Marathon’s 2018 capital investment plan includes $950 million in refining upgrades to make cleaner fuels and export enhancements. Its projects aim to satisfy International Maritime Organization rules that require lower sulfur in distillate by 2020, and U.S. based Tier-3 gasoline standards intended to clean up the air.Valero Energy Corp will pour $1 billion into growth projects this year, including a $400 million refinery unit that churns out octane to make premium gasoline. It now has $1.9 billion in extra spending cash from the Republicans’ tax overhaul.U.S. refiners exported staggering amounts of diesel and gasoline last year, hitting records in both categories while continuing to eye more opportunities to expand. But meeting the stringent rules of IMO 2020 promise double-digit returns on investment, according to Marathon’s Heminger. “And that’s being very conservative on IMO,” he said early Thursday. “We do believe that there is significant upside opportunity with IMO.”
Billions from Trump tax cuts supercharge fossil fuel industries - Oilmen, wildcatters and particularly refiners are reaping billions in gains from President Donald Trump’s tax overhaul, helping boost the staying power of old-style energy even as the world searches for cleaner fuels. The tax adjustments come as crude prices have rallied 54 percent since June. Together, the price rise and the new tax code have supercharged the oil industry in ways that could test the resolve of money managers who’ve vowed to divest from companies that have powered the world’s economic engines for two centuries. The top four refiners this week reaped $7 billion in gains, led by a $2.7 billion jump announced Friday by the biggest, Phillips 66. Meanwhile, the tax overhaul appears to be a mixed bag for solar purveyors and wind farms. They could face higher borrowing costs because the federal tax credits they retain probably won’t be as attractive to large banks that now have lower tax liabilities. “Oil is a resilient industry and it isn’t going away any time soon,” . “Tax reform, in the long run, only increases their profitability.”
'Major' Deep Offshore Oil Discovery Made in US Gulf of Mexico -- Chevron Corporation announced Wednesday that a ‘major’ oil discovery has been made at the Ballymore prospect, located deep offshore in the U.S. Gulf of Mexico. The Ballymore well reached a total measured depth of 29,194 feet and encountered more than 670 feet of net oil pay with ‘excellent’ reservoir and fluid characteristics, Chevron said in a statement on its website. A sidetrack well is currently being drilled to further assess the discovery, which is already deemed commercially viable. “The Gulf of Mexico deepwater is an integral part of our company’s long-term strategy,” Jeff Shellebarger, president of Chevron North America Exploration and Production, said in a company statement. “This discovery is an important addition to our portfolio, especially with its combination of size, quality and proximity to existing infrastructure,” he added. Located approximately three miles from Chevron’s Blind Faith platform, the Ballymore prospect is situated in water depth of about 6,540 feet, 75 miles from the Louisiana coast, and covers four blocks in the Norphlet play. Total, which acquired a 40 percent working interest in Ballymore as part of an exploration agreement with Chevron signed in September 2017, said it was thrilled to reveal its latest find.
Under Rauner, penalties sought against Illinois polluters have plummeted - Well before the Trump administration began shifting responsibility for enforcing environmental laws to the states, Illinois already had slowed down the policing of air and water pollution under Gov. Bruce Rauner. A Tribune analysis of enforcement data shows that since the Republican businessman took office in 2015, penalties sought from Illinois polluters have dropped to $6.1 million — about two-thirds less than the inflation-adjusted amount demanded during the first three years under Rauner’s two predecessors, Democrats Pat Quinn and Rod Blagojevich. Rauner’s enforcement record during the past three years also pales in comparison to the final year in office of the state’s last Republican governor, George Ryan. Adjusted for inflation, the penalties sought since Rauner took office are less than half the amount demanded as Ryan wrapped up his four-year term in 2002. One of the main reasons enforcement is on the decline statewide is the Illinois Environmental Protection Agency has cut back sharply on using its most powerful tool: referring cases to the state attorney general’s office for civil or criminal prosecution. One case that highlights the state’s sluggish enforcement system is unfolding in downstate Champaign County, where natural gas from a Peoples Gas storage facility has seeped into an aquifer that provides drinking water to 850,000 people across a wide swath of central Illinois.In December 2016, shortly after the company alerted the EPA and other regulatory agencies about a leak from one of its gas wells, people living nearby began reporting milky bubbles in well water sputtering from their faucets — a sign of natural gas contamination.Several homeowners in a rural area north of Mahomet said they were able to light their tap water on fire. Despite the obvious threat to the facility’s neighbors and evidence suggesting natural gas might have spread farther into the Mahomet Aquifer, state officials did not refer the case to the attorney general’s office until October 2017.
The potential impact of hydraulic fracturing on streams -- Concerns over hydraulic fracturing, an oil and gas extraction method that injects millions of gallons of freshwater and chemicals into shale, have largely focused on potential impacts on water quality. But, as scientists report in ACS' journal Environmental Science & Technology, "fracking" operations could have impacts on water quantity because they are withdrawing these large amounts of water from nearby streams, which house aquatic ecosystems and are used by people for drinking and recreation. On average, more than 5 million gallons of freshwater is used to fracture one gas well in the U.S. That's more than enough to fill seven Olympic-size swimming pools. Small streams are a major source of water for these operations. Some of these streams also provide drinking water for communities and homes for species with already declining populations. However, little is known about the amount of water that can be sustainably withdrawn from these sources. Sally Entrekin and colleagues wanted to flesh out this picture for the Fayetteville Shale play, an active gas field in Arkansas where more than 5,000 gas wells were drilled using fracking techniques between 2004 and 2014. The researchers estimated the water stress that hydraulic fracturing might place on streams in the gas field based on water usage and timing for fracturing wells and data on nearby stream flow rates. The streams in the area studied help supply drinking water to thousands of people in the region and are home to 10 aquatic species that are declining at a concerning rate. The team's calculations revealed that freshwater usage for fracking could potentially affect aquatic organisms in 7 to 51 percent of the catchments, depending on the month. If 100 percent of the wastewater were recycled, the potential impact drops, but 3 to 45 percent of catchments could still be affected. The researchers conclude that improved monitoring and access to water withdrawal and streamflow data are needed to ensure protection of streams as drinking water sources and valuable habitat in the future.
5 Million Gallons of Freshwater Used to Frack Just One Well - A lot has been said about the toxic slurry of fracking fluids and its impact on water quality, but what about the millions of gallons of water that's sucked up by the drilling process and its impact on water quantity ? A new study highlights how the five million gallons of freshwater used to fracture just one gas well in the U.S.—or more than enough to fill seven Olympic-size swimming pools—has depleted water levels in up to 51 percent of streams in Arkansas, as Motherboard reported from the research.The paper, published in the American Chemical Society 's journal Environmental Science & Technology, also finds that high-volume, short duration water withdrawals used for fracking fluids creates water stress to aquatic organisms in Fayetteville Shale streams. These streams—which also supply drinking water to thousands of people in the region—are home to 10 aquatic species that are declining at a concerning rate, according to a release on the study. Depending on the time of year, freshwater usage for fracking could potentially affect aquatic organisms in 7 to 51 percent of the catchments, the research team found. Even if 100 percent of the fracking wastewater were recycled, between 3 to 45 percent of catchments could still be affected. In the summer especially, drawing out millions of gallons of water from a stream for fracking fluids likely has a significant impact on stream temperatures and stream flow, which affects aquatic insects, fish and bottom-dwelling mussels, the study said. . "Little is known about how much water can be withdrawn from these streams without impacts on fish and other aquatic species," lead author Sally Entrekin, a biologist at University of Central Arkansas, told the publication. "We don't know if there has been an impact on the streams because there isn't any site-specific monitoring," she added.
U.S. crude oil exports increased following hurricane-related refinery disruptions - From late August through September 2017, Hurricane Harvey caused disruptions to the U.S. Gulf Coast refining sector, resulting in record-high U.S. crude oil exports when export facilities reopened after the storm and before many refineries returned to pre-storm levels of utilization. In October 2017, crude oil exports from the United States reached a monthly record of more than 1.7 million barrels per day (b/d). EIA’s Petroleum Supply Monthly data for October 2017 show that the largest increases in U.S. crude oil exports were to Asia, followed by Europe. Exports to Asian countries accounted for 35% of total U.S. exports of crude oil in the first eight months of 2017, averaging 312,000 b/d. In September and October, exports to Asia accounted for 40% of total U.S. exports of crude oil, averaging 636,000 b/d, or more than double their pre-Harvey levels. Similarly, exports to European countries accounted for 22% of total U.S. exports of crude oil in the first eight months of 2017, averaging 193,000 b/d. In September and October, exports to Europe averaged 510,000 b/d, which accounted for 31% of U.S. exports of crude oil. In previous years, Canada received most of the U.S. crude oil exports because it was exempt from restrictions on exporting U.S. crude oil. When certain restrictions on U.S. crude oil exports were lifted in December 2015, U.S. exports of crude oil increased and began reaching more destinations. Aside from Canada, countries in Asia and Europe have been some of the largest recipients of U.S. crude oil since the restrictions were lifted. However, because of the way U.S. Customs and Border Protection export data are reported, some nations listed as receiving crude oil exports from the United States in EIA statistics, such as Singapore and Netherlands, may not be final destinations. Most crude oil exports in October also went to Asia, providing evidence that the marginal competitive market for U.S. crude oil is Asia. According to data in EIA’s Weekly Petroleum Status Report, from late October through the end of 2017, exports of crude oil and inputs to Gulf Coast refineries remained relatively high, resulting in a continued decrease in Gulf Coast crude oil inventories.
Texas oil and gas workforce at 7-year low - Houston Chronicle: The Texas oil industry's attempt to do more with less may have left the state's oil and gas workforce permanently smaller. Since crude prices collapsed more than three years ago, U.S. shale drillers have cut costs, gotten discounts on oil field services and drilled in more prolific sweet spots in an effort to pump more crude at lower costs. Drillers in Texas are on the cusp of beating the state's 45-year-old oil-production record, even though the workforce supporting the oil industry in Texas is about the size it was in 2011. In fact, several measures of economic activity in the Texas oil industry – the number of working rigs, drilling permits, bringing wells into production – have come in pretty low recently, Amarillo economist Karr Ingham said. Seven years ago, as the U.S. economy recovered from a downturn, oil companies had just managed to transfer the technology and techniques that opened up once-inaccessible U.S. shale gas reserves into the nation's oil patches. The workforce was around the same size it is today. By December 2014, the Texas oil and gas workforce grew to its largest size in decades, at about 300,000 employees. But after the oil-market crash, that workforce shrank by more than a third, to 192,000 workers by September 2016. Since then, with higher oil prices supporting Texas drilling activity, the state's oil and gas headcount has grown to only 223,000. But the Texas Petro Index, which tracks the various leading indicators of oil activity, is still well below its peak in 2014, thanks to more efficient oil and gas output. But Texas oil producers are expected to harvest 1.42 billion barrels in 2018, beating the 1972 record of 1.26 barrels. The index "is nowhere close to where it was in late 2014," Ingham said. "What are the chances it's going to get back to that level anytime soon? Pretty slim, frankly."
Exxon plans fivefold rise in Permian Basin shale oil production - ExxonMobil, the largest US energy group, plans to increase its shale oil production in the Permian Basin of Texas and New Mexico fivefold to 500,000 barrels a day in 2025, the company said on Tuesday. It is the latest sign of how large international companies are increasingly pinning their hopes for future growth on “unconventional” resources in North America. Rivals including Chevron and Royal Dutch Shell are also planning for expansion. Exxon has been building up its position in the Permian Basin with a series of acquisitions, including a deal a year ago to buy drilling rights on 250,000 acres from the Bass family for up to $6.6bn. It has also been working to cut production costs, and says it can develop the resources profitably “at a range of prices”. Its development and production costs in the region are less than $15 a barrel of oil and gas, Exxon said. Total oil production in the Permian basin has roughly tripled in the past seven years as a result of the shale boom, from under 1m b/d a day at the start of 2011 to about 2.8m b/d today, and Exxon’s plans suggest there is still potential for many more years of growth. Most US shale companies have struggled for profitability, and the industry as a whole has consistently lost money since the first successful shale oil wells were drilled in 2008-09. Exxon itself lost $439m on oil and gas production in the US in the first nine months of 2017.
Oklahoma is seeing hundreds of earthquakes every year — and a new study found a scarily direct link to fracking - Over the course of a few days in August, Oklahoma was pummeled by seven earthquakes. The wave started on a Tuesday night, when five quakes struck the central part of the state in less than 28 hours. The shaking continued extended into the early hours of Thursday as two more hit. Although none of those quakes was severe enough to cause significant damage, scientists are increasingly concerned about their cause. Rather than emanating from natural tectonic shifts deep inside the Earth, these temblors appear to be the result of human activity. Hydraulic fracturing, more commonly known as fracking, involves jamming water deep into the Earth's layers of rocks to force open crevices and extract the oil or gas buried inside. For several years, researchers have shown a link between wastewater injection, a process that's used to dispose of waste fluids from a number of industrial activities and is similar to fracking, and the incidence of earthquakes in a region, but a new study highlights just how strong that connection is. The authors of the latest paper, published this week in the journal Science, found that they could use the depth of the wastewater injection sites to roughly predict how big the earthquake they caused would be. In other words, the deeper the injection site, the stronger the quake. The researchers were confident enough in their assertions to make a recommendation:"Reducing the depth of injections could significantly reduce the likelihood of larger, damaging earthquakes," Thomas Gernon, an associate professor of earth science at the University of Southampton, wrote in an article for The Conversation.
Oklahoma Quakes Linked to Wastewater Injection Depth - The alarming string of earthquakes that have shaken Oklahoma for years has long been tied to the large volume of fracking wastewater dumped into the state's injection wells. And while state regulators have taken numerous measures to reduce wastewater disposal volumes to prevent such "induced" earthquakes, they might want to consider another measure—restricting how deep wastewater gets sent underground. A new study , published Thursday in the journal Science, finds that Oklahoma's earthquakes can also be triggered by wastewater injection depth. The research was conduced by researchers at the University of Bristol and involved the University of Southampton, Delft University of Technology and Resources for the Future. After analyzing the state's 10,000-plus wastewater injection wells, the researchers concluded that the amount of wastewater injected and the depth are key to understanding the state's unusual seismic activity, the Associated Press reported from the study. Oklahoma regulators could reduce the number of quakes by half by restricting deep injections in the ground, lead author Thea Hincks, an earth scientist at the University of Bristol, told the AP. Wastewater should not be injected within 600 to 1,500 feet of the geologic basement, where earthquake faults can generally be found. The AP reported: "Previous studies had pinpointed the amount of fluids injected into wells as an issue. Gernon said volume does trigger earthquakes, but when volume levels were reduced the number of quakes didn't drop as much as had been expected. That's because where the stuff is put matters slightly more, he said." Oklahoma's wastewater reduction regulations have worked to a certain degree . While the Sooner State has dropped from two quakes a day to less than one a day, the post-regulatory quakes have been large and damaging. Two big ones happened in 2016: the 5.0-magnitude temblor that struck Cushing, one of the largest oil hubs in the world, and a 5.8 that hit near Pawnee, the largest ever recorded in the state.
Chesapeake Energy reportedly lays off about 400 employees - Local news outlets in Oklahoma are reporting that Chesapeake Energy has announced it will lay off hundreds of employees as the debt-burdened natural gas driller continues to overhaul its business.In a letter to employees, Chesapeake said it will let go about 13 percent of its workforce. The Oklahoma City-based company employed 3,247 people as of September, which suggests it will trim back about 400 positions.The layoffs will occur primarily at Chesapeake's Oklahoma City campus.Chesapeake did not immediately respond to requests for confirmation by phone and email.Chesapeake CEO Doug Lawler said the job cuts were the result of asset sales that the company has made in recent years. He explained that Chesapeake did not initially cut staff after selling the assets because it had entered into transition arrangements with buyers, which required workers to remain in their positions.However, with those arrangements coming to an end, Chesapeake needed to "respond accordingly," Lawler said. Chesapeake rose to prominence under founders and shale drilling pioneers Aubrey McClendon and Tom Ward, who borrowed heavily to buy vast swaths of land to produce natural gas. The company has sold off about 25 percent of its wells in recent years in order to shrink its debt load, improve profit margins and operate its business within the confines of its cash flow, Lawler noted in his letter.
Why Is The Shale Industry Still Not Profitable? -- Echoing the criticism of too much hype surrounding U.S. shale from the Saudi oil minister last week, a new report finds that shale drilling is still largely not profitable. Not only that, but costs are on the rise and drillers are pursuing “irrational production.” Riyadh-based Al Rajhi Capital dug into the financials of a long list of U.S. shale companies, and found that “despite rising prices most firms under our study are still in losses with no signs of improvement.” The average return on asset for U.S. shale companies “is still a measly 0.8 percent,” the financial services company wrote in its report. Moreover, the widely-publicized efficiency gains could be overstated, at least according to Al Rajhi Capital. The firm said that in the third quarter of 2017, the “average operating cost per barrel has broadly remained the same without any efficiency gains.” Not only that, but the cost of producing a barrel of oil, after factoring in the cost of spending and higher debt levels, has actually been rising quite a bit. Shale companies often tout their rock-bottom breakeven prices, and they often use a narrowly defined metric that only includes the cost of drilling and production, leaving out all other costs. But because there are a lot of other expenses, only focusing on operating costs can be a bit misleading. The Al Rajhi Capital report concludes that operating costs have indeed edged down over the past several years. However, a broader measure of the “cash required per barrel,” which includes other costs such as depreciation, interest expense, tax expense, and spending on drilling and exploration, reveals a more damning picture. Al Rajhi finds that this “cash required per barrel” metric has been rising for several consecutive quarters, hitting an average $64 per barrel in the third quarter of 2017. That was a period of time in which WTI traded much lower, which essentially means that the average shale player was not profitable. Not everyone is posting poor figures. Diamondback Energy and Continental Resources had breakeven prices at about $52 and $37 per barrel in the third quarter, respectively, according to the Al Rajhi report. Parsley Energy, on the other hand, saw its “cash required per barrel” price rise to nearly $100 per barrel in the third quarter. A long list of shale companies have promised a more cautious approach this year, with an emphasis on profits. It remains to be seen if that will happen, especially given the recent run up in prices.
Interior rolls back oil drilling policies for federal land | TheHill: The Interior Department implemented a new policy Thursday aimed at streamlining the oil and natural gas drilling process on federal land by cutting back on the opportunities for drilling opponents to slow down the process.A memo signed Wednesday and released Thursday by the Bureau of Land Management (BLM) states that it is the agency’s policy to “simplify and streamline the leasing process to alleviate unnecessary impediments and burdens, to expedite the offering of lands for lease,” and to ensure drilling rights sales happen regularly. The changes include setting a 60-day deadline for processing proposed lease sales, leaving public participation in certain reviews up to low-level officials, limiting protest periods for sales to 10 days and repealing an Obama administration policy that let other land users, like hunters and anglers, object. The memo is part of a wide-ranging plan at Interior and elsewhere to tear down barriers to domestic production of oil, natural gas and other fossil fuels. Conservationists slammed the policy change, calling it a threat to the environment and to other users of federal land. “Not only is the administration rolling back safeguards for fish and wildlife and other natural resources, it’s also making it harder for Americans to weigh in on decisions about their own public lands by decreasing opportunities for input,” Tracy Stone-Manning, the National Wildlife Federation’s associate vice president for federal lands, said in a statement. “The headlong rush to prioritize energy development above all other uses is nothing but a giveaway to the oil and gas industry. It’s bad for wildlife, bad for public lands and bad for future generations,” she said.
Trump administration tears down regulations to speed drilling on public land -- The Trump administration is aggressively sweeping aside regulations protecting public land to clear a path for expanded oil and gas drilling. A memorandum from the Interior Department, made public Thursday, directs its field offices “to simplify and streamline the leasing process” so that federal leases to the oil and gas industry can be expedited “to ensure quarterly oil and gas lease sales are consistently held.”According to the memo, which was dated Wednesday, doing so will ease such “impediments and burdens” as months-long environmental reviews that assess the impacts of drilling and potential spills on land and wildlife.The new approach requires the Bureau of Land Management to process a proposed lease within 60 days. Once-mandatory public participation in safety reviews is now left to the discretion of the agency’s field representatives. Public protests of finalized leases will be shortened to 10 days, and a sale can move forward even if disputes are unresolved, according to the memo.Interior also ended “Master Lease Plans” implemented under the Obama administration to give hunters, anglers and groups hoping to protect cultural artifacts a voice in how public land should be managed when parcels are proposed for leasing. The moves are consistent with an executive order President Trump issued in his first days in office to fulfill his campaign goal of “expediting environmental reviews and approvals” to fast-track efforts to fix the country’s roadways and bridges. Trump’s order was later followed by a similar order from Interior Secretary Ryan Zinke.
Utah spent $33 million on a pipeline application it never finished--the feds approved it anyway. -- If you’re hoping to understand Utah’s drive to build the massive Lake Powell pipeline and what it might cost you, don’t start with the state’s explanation of it all to the U.S. government. The thousands of pages Utah produced to justify the 140-mile, multibillion-dollar pipeline from Lake Powell to water districts in two southwestern Utah counties are inscrutable to most involved — the project’s opponents, government regulators, and even some of the people who wrote the documents. “It has been confusing for everyone,” said Jane Whalen, a Hurricane-based environmentalist who has followed the project closely. “Even the lead attorney for the water district seems confused.” Indeed, records obtained by The Salt Lake Tribune indicate those state documents — prepared at a cost of more than $33 million — were part of a decadelong ordeal for the engineers who produced them, particularly in the final months as they feverishly sought to correct years of procrastination and disarray. Now that Utah’s bid for a license to build and operate the Lake Powell pipeline has been cleared for further study, Utah water managers are hoping that they can put the documents’ troubled past behind them. But a new snag has emerged over precisely which federal authorities will approve Utah’s bid, raising prospects of further delays and added costs. If state officials are feeling spooked, it could be because their application is arguably still incomplete — and because one of its major omissions is Utah’s vanished analysis of whether it can actually afford the project. Utah’s leaders have been on a 10-year quest to build the interstate pipeline, meant to draw millions of gallons of Colorado River water out of Lake Powell and pump it through a series of reservoirs and hydroelectric generators for delivery to up to 13 southwestern Utah communities, including St. George.
North Dakota Oil Output on Track to Hit New Record in 2018 -- As per North Dakota’s oil regulator, the state’s daily crude output rose 0.9% in November after climbing 6.9% in the previous month. The North Dakota Department of Mineral Resources’ ("DMR") latest data said that oil production in November averaged 1,194,920 barrels a day, up 11,110 barrels a day from October.Reflecting a healthy increase, the newest numbers confirm the resurgence in volumes extracted from North Dakota, centered on the Bakken Shale formation. As daily output consolidated above 1 million barrels for the tenth month in a row, the state’s total number of producing wells numbered 14,324 at the end of November, a new all-time high. Interestingly, natural gas output was up 1.4% in November to 2,095,342 thousand cubic feet per day – another record – as operators scrambled to the core areas of the Bakken where wells tend to produce more gas along with crude. Some 54 drilling rigs were active in the state in November. The all-time low of 27 was set in May 2016, while a year ago, North Dakota had just 37 rigs operating. A closely watched yardstick of North Dakota oil industry's strength, the year-over-year improvement in the number of units searching for oil and gas in the region indicates essentially steady drilling activities and production. However, the rig count is still down considerably from the peak of May 2012 when North Dakota had 218 units drilling. More rigs in operation and stable production not only confirms the positive developments for the state of North Dakota, but also points to the rising flood of U.S. shale-driven production.Now at a financial equilibrium, the shale firms are putting more rigs and employees back to work. Throughout the downturn, producers (in North Dakota and particularly the Permian Basin in Texas) worked tirelessly to cut costs down to a bare minimum and look for innovative ways to churn out more oil from rock. And they managed to do just that by improving drilling techniques. With these efforts, many upstream companies have repositioned themselves to adapt to the new $50-$60 oil reality and even thrive at those prices. In other words, while OPEC's moves to trim output and rebalance the demand-supply situation has stabilized the market to a large extent, in the process it has incentivized shale drillers to churn out more.
Washington Governor Inslee Rejects Major Oil-by-Rail Project - On Jan. 29, Washington Gov. Jay Inslee rejected a permit required for Tesoro-Savage to build the Vancouver Energy oil-by-rail facility, the largest such project in the nation, at the Port of Vancouver, along the Washington-Oregon border. The governor explained the basis of his decision, which followed a several year long process, in a letter to the state Energy Facility Site Evaluation Council: "When weighing all of the factors considered against the need for and potential benefits of the facility at this location, I believe the record reflects substantial evidence that the project does not meet the broad public interest standard necessary for the Council to recommend site certification."Vancouver Energy, a joint venture of Tesoro and Savage, has not yet commented on the decision but has 30 days to file an appeal. Local environmental groups, however, were quick to applaud the news. "This project was absurdly dangerous and destructive, and Governor Inslee saw these risks clearly," said Dan Serres, conservation director of Columbia Riverkeeper . "The threat of an earthquake or accident creating an oil spill in the Columbia River poses far too great a risk to the Columbia, its salmon and its people." Serres and the governor both outlined why many oil-by-rail projects have been fiercely opposed by local communities: The projects offer huge risks and very little reward for the communities where they are located. The Vancouver Energy terminal would have resulted in oil train traffic hauling more than 131 million barrels of oil along the Columbia Gorge and transferred to ships bound for West Coast refineries. The governor's decision came a week after three rail employees involved in the deadly Lac-Mégantic, Quebec, oil-by-rail disaster were acquitted, a situation which makes the potential risks of moving explosive oil through communities readily apparent.
What Northwestern tribes say about the Jordan Cove pipeline - In 2007, the Canadian company Veresen Inc. applied for a U.S. permit to build a natural gas terminal in Coos Bay, Oregon, and a 229-mile pipeline connecting gas-rich basins in the Interior West to the coast. The proposed pipeline, branching off the existing Ruby Pipeline, raised both job prospects and alarm bells for tribal communities and towns in Oregon, while encouraging export hopes for Colorado, Wyoming and Utah. The Obama administration denied the permit several times, but President Donald Trump’s vision of U.S. energy dominance has given the Jordan Cove LNG project another chance. Veresen reapplied last year and is now undergoing the permitting process under a new Federal Energy Regulatory Commission board. This has renewed concerns over the use of eminent domain, as well as construction impacts on ancestral tribal territory, fragile salmon habitat and forestland. While it’s unclear whether FERC will approve the application (it denied a proposed Energy Department coal policy earlier this year, partly because of climate change concerns), Pacific Northwest tribes have been vocal and actively involved, setting the stage for future battles if the pipeline is approved. With the exception of coastal Oregon tribes, who have remained neutral, most tribes near the proposed route are opposed to it. (infographic map)
5 Ways This Company Misinforms Consumers About Oil Wastewater Use - The Wonderful Company, maker of Halos mandarins and POM products, continues to give consumers misleading information about their use of oil wastewater to irrigate crops. Last October we reported on the response the company gave to consumer concerns. Fast forward over a year since we launched the campaign to tell the company to stop using oil wastewater and the company is still trying to be slick (pun intended). While the company spouts claims of "filtered" we know the waters are murky, so to speak. While The Wonderful Company claims to use " filtered " water, exactly how it is filtered we do not know, and we do not know what chemicals make it through their filters. Part of their process involves blending the water with freshwater, which is designed to reduce the concentration of chemicals, not eliminate them, so it is more than likely that their filtration process is not removing all of the chemicals. The water is tested but not for all the chemicals that we believe are possible in the wastewater. There is also no adequate state oversight of this type of irrigation to ensure the process is safe. Oil wastewater is not gray water, at least not in the way we regard gray water as being recycled water. Gray water is wastewater generated from residential, commercial, and industrial bathroom sinks, bath tub shower drains, and clothes washing equipment drains (excluding water streams from toilets). Instead, oil wastewater is a byproduct of the oil extraction process. As such, it has a very particular exposure to toxic chemicals that would not be expected in normal gray water. There has been extremely limited testing of crops to determine whether it contains toxic chemicals from the oil wastewater; we're working on getting more testing done, along with our campaign to have more (all) of the possible chemicals disclosed. It is hard to test for something without knowing what you are looking for. A recent report examined the chemical additives used in the oil operations that supply wastewater for crop irrigation. The result is alarming. They found that a total of 173 different chemical additives were used in oil and gas fields, of which 38 percent were not sufficiently identified for preliminary hazard evaluation.
Trump: 'I Never Appreciated ANWR' Until Oil Industry Friend Called - The political battle over whether to open the Arctic National Wildlife Refuge ( ANWR ) for oil and gas exploration has raged for decades. Despite the majority of Americans opposing drilling in ANWR, pro-drilling Republicans have tried more than 50 times open up the pristine wilderness to energy development.But President Trump was apparently indifferent to the matter until an oil industry friend told him that past presidents, including conservative icon Ronald Reagan, couldn't get drilling done."I never appreciated ANWR so much," Trump said Thursday during a speech at a Republican retreat in West Virginia. "A friend of mine called up who is in that world and in that business. He said, 'Is it true that you're thinking about ANWR?' I said 'Yeah, I think we're going to get it but you know …' He said, 'Are you kidding? That's the biggest thing by itself. Ronald Reagan and every president has wanted to get ANWR approved.' And after that I said 'Oh, make sure that is in the bill. It was amazing how that had an impact."Congress lifted a 40-year drilling ban on the refuge after the Republican tax reform bill was approved in December. This " backdoor drilling provision ," as environmentalists have dubbed it, was added to the tax reform package to secure the key vote of Alaska Sen. Lisa Murkowski, who introduced the measure and haslong championed the cause.Trump's remarks, however, implied that he was the driving force behind the provision's inclusion. "I really didn't care about it," he said. "Then when I heard that everybody wanted it, for 40 years, everybody tried to get it approved, 'Make sure you don't lose ANWR.'"
U.S. monthly crude oil production exceeds 10 million barrels per day, highest since 1970 - EIA - U.S. crude oil production reached 10.038 million barrels per day (b/d) in November 2017, according to EIA’s latest Petroleum Supply Monthly. November’s production is the first time since 1970 that monthly U.S. production levels surpassed 10 million b/d and the second-highest U.S. monthly oil production value ever, just below the November 1970 production value of 10.044 million b/d. Within the Lower 48 states, November 2017 production reached a record high in Texas at 3.89 million b/d, followed by North Dakota at 1.18 million b/d. Production in the Federal Gulf of Mexico reached 1.67 million b/d, up 14% from the October 2017 level as the region recovered from Hurricane Nate. The production values presented here are based on EIA’s monthly survey of crude oil production, which, for reasons explained in a webinar presented earlier this week, are considered more comprehensive and reliable values of U.S. crude oil production than the preliminary estimates presented in EIA’s Weekly Petroleum Status Report.U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tight rock formations including shale and other fine-grained rock using horizontal drilling and hydraulic fracturing to improve efficiency. EIA estimates of crude oil production from tight formations in November 2017 reached 5.09 million b/d, surpassing a previous high of 4.70 million b/d in March 2015. These formations also produce considerable volumes of natural gas associated with the crude oil. Liquid production—both crude oil and condensate—from tight rock currently accounts for about 51% of total production. A decade ago, in November 2008, production from tight formations accounted for only 7% of total U.S. production. Non-tight oil production has been mostly constant over the previous decade. Tight oil production can be sensitive to changing oil prices. After increasing relatively steadily since 2011, tight oil production began to decline after the West Texas Intermediate (WTI) crude oil price decreased from $105 per barrel (b) in June 2014 to a low of $30/b in February 2016. WTI prices were about $60 a barrel in January 2018. Production continued to increase through these price fluctuations in three formations in the Permian Basin—the Spraberry, Bone Spring, and Wolfcamp plays that span parts of western Texas and eastern New Mexico—and in the Bakken formation in the Williston Basin in North Dakota and Montana.
US oil production tops 10 million barrels a day for first time since 1970 - U.S. oil production broke 10 million barrels a day for the first time in 48 years in November, according to new monthly data released by the government on Wednesday.While U.S. production has been rising as prices rose, the 10 million barrel mark is an important milestone that reinforces America's place in the energy big leagues and also its aspiration to use its new oil dominance in diplomacy.The U.S. last produced 10 million barrels a day in November, 1970, just when production peaked before a very long decline, according to U.S. Energy Department monthly data. Unlike 1970, U.S. oil production in 2018 is on an upswing, and U.S. shale and other producers are expected to add more than 1 million barrels a day this year alone for an average production rate government forecasts put at 10.3 million barrels a day."This is significant in market terms, and it's very significant psychologically. The U.S. is back big time as an oil producer and could be by next year the largest in the world. We're one of the big three now, and we could be number one," said Daniel Yergin, vice chairman IHS Markit. Saudi Arabia was producing 10.6 million barrels a day before it cut back production to steady the oil price by reducing new supply, and Russia has been drilling about 11 million barrels a day. The U.S. produced 10.038 million barrels a day in November, and produced 10.044 million in November, 1970. In weekly EIA data that will be revised, the U.S. produced 9.92 million barrels a day last week, up sharply from 8.9 million barrels a day a year ago.
Hydraulically fractured horizontal wells account for most new oil and natural gas wells --In 2016, hydraulically fractured horizontal wells accounted for 69% of all oil and natural gas wells drilled in the United States and 83% of the total linear footage drilled. The combination of horizontal drilling and hydraulic fracturing has increased the rate of recent U.S. crude oil, lease condensate, and natural gas production. Hydraulically fractured horizontal wells became the predominant method of new U.S. crude oil and natural gas development in October 2011, when total footage (in linear feet) surpassed all other drilling and completion techniques. The combination of horizontal drilling and hydraulically fracturing has contributed to increases in crude oil and natural gas production in the United States, which are both expected to reach record levels in 2018. The process involves drilling a well vertically to a certain depth and then bending the path of the drilling until it extends horizontally. Because they are longer, and the drilling process is more complex, a horizontal well is generally more expensive to drill than a vertical well, but it is expected to produce more crude oil and natural gas. Horizontal drilling allows more of the wellbore to remain in contact with the producing formation, increasing the amount of oil or natural gas that can be recovered. This method also results in horizontal wells having more drilled footage than vertical wells—hence total footage drilled using horizontal drilling techniques surpassed vertical footage before the actual number of horizontal wells surpassed the number of vertical wells. In 2016, total drilled footage reached nearly 13 million feet, about 10.7 million of which were hydraulically fractured and horizontally drilled. The length of the horizontal section, or lateral, can range from a few hundred feet to several miles. Hydraulically fractured horizontal wells have accounted for most of all new wells drilled and completed since late 2014. As of 2016, about 670,000 of the 977,000 producing wells were hydraulically fractured and horizontally drilled.
Texas shale tests North Sea crude as oil benchmark (Reuters) - Surging shale oil production in Texas and North Dakota is being felt on trading desks in Chicago, Houston and New York, where a brisk business in West Texas Intermediate crude futures is far outpacing contracts for London-based Brent crude. As the United States approaches a record 10.04 million barrels of daily production, trading volumes of so-called “WTI” futures exceeded volumes of Brent crude in 2017 by the largest margin in at least seven years. A decade ago, falling domestic production and a U.S. ban on exports meant that WTI served mostly as a proxy for U.S. inventory levels. Two changes drove the resurgence of the U.S. benchmark. One was the boom in shale production, which spawned a multitude of small producers that sought to hedge profits by trading futures contracts. Then two years ago, the United States ended its 40-year ban on crude exports, making WTI more useful to global traders and shippers. As U.S. production and exports grow, global firms that increasingly buy U.S. oil are offsetting their exposure by trading in U.S. financial markets. That also gives U.S. shale producers more opportunity to lock in profits on their own production. The U.S. boom has reignited a competition over oil trading that began in the 1980s between two of the world’s biggest exchange operators - Intercontinental Exchange, and the New York Mercantile Exchange, or NYMEX, which was acquired by Chicago-based CME Group in 2008. For ICE and CME, energy represents the second-biggest source of revenue, trailing only stocks and interest rate trading, respectively. ICE is based in Atlanta, but is known for its European contracts after it bought London’s International Petroleum Exchange and its Brent futures contract in 2001. Energy products including WTI brought in $790 million in revenue for CME in 2016, the latest annual data available. Brent crude futures and options alone contributed nearly $300 million to ICE’s revenues in 2016.
Trump hints at energy dominance as US producers cross historic threshold - President Donald Trump said Tuesday that the "war" on American energy is over in a State of the Union speech given as US crude oil output is set to reach levels not seen in more than 47 years.The speech barely touched on energy. Trump did not even mention oil and much of the growth in US output took place while President Obama was still in the White House. But this month, US production is expected to average more than 10 million b/d for the first time since November 1970. The output jump is already altering US foreign relations and bolstering the Trump administration's calls for energy "dominance."But those watching the path of US crude production closely remain uncertain over just how much America's relatively newfound supply wealth benefits future diplomatic efforts and how much influence US producers can possibly have over the ever-growing global oil market. In addition, domestic infrastructure constraints, shifting trade policy, and mounting demand could all blunt the impact of the increase in US output.So, just what does America's breach of the 10 million b/d mean? "It's obviously a symbolic milestone, but it symbolizes the re-emergence of the US as one of the world's energy superpowers," At last week's World Economic Forum in Davos, Switzerland, Russian oil minister Alexander Novak, Saudi oil minister Khalid al-Falih and US energy Secretary Rick Perry shared a stage. Rather than a discussion on efforts to keep foreign crude flowing into the US to dampen potential increases in gasoline prices, the panel focused on the role of US shale in "spoiling" efforts by OPEC, Russia and other producers to cut oil output and the likelihood of more US sanctions aimed at Russia's oil sector. "It's a different conversation now," said Bordoff. This new status as a global energy superpower has augmented the Trump administration's push to for US energy "dominance," a vague move away from the rhetoric of previous administrations to be energy independent.
Exxon to invest over $50 billion after Trump tax cuts -- Exxon's CEO says the oil company will invest more than $50 billion over the next five years to expand its business in the U.S. Chairman and CEO Darren Woods said Monday that the investments are possible because of the company's strength, helped by the recent law that cut taxes on corporations. In a blog on the Exxon website, Woods said that Exxon plans to increase oil production in the Permian basin in Texas and New Mexico, build new manufacturing plants and expand current operations. He said the initiatives will create "thousands" of jobs and increase energy security. "These investments are underpinned by the unique strengths of our company and enhanced by the historic tax reform recently signed into law," Woods said. Exxon reported $11.3 billion in profit in the first nine months of 2017, already far surpassing its earnings for all of 2016 as oil prices recovered from a two-year slump. Still, Exxon profits are down sharply from the $44.9 billion it posted in 2012. Woods said the new investments are in addition to Exxon's $20 billion plan to build refining, chemical and export facilities along the Texas Gulf Coast over 10 years. Last March, the company and President Donald Trump praised each other for making those investments possible, although some of them began more than three years before Trump became president.
Shell profits more than double thanks to soaring oil prices - Oil giant Royal Dutch Shell has hailed a “strong” annual performance after profits more than doubled thanks to the surging cost of crude. The group posted underlying earnings of $15.8bn (£11.2bn) for 2017, up from $7.2bn the previous year. Shell said bottom line profits jumped to $12.1bn, up from $3.5bn in 2016, while fourth quarter underlying earnings rose 140 per cent to $4.3bn. The group’s results have benefited as oil prices have risen past $70 a barrel for the first time in more than three years, boosted by supply curbs from oil cartel Opec, a record run of declines in US crude inventories and a weaker US dollar. The group said its annual earnings, which came in just higher than City expectations, were bolstered by the oil price rally and higher production levels from new oil fields, which offset declines from existing fields as well as its mammoth asset-selling programme.
The end of natural gas is near – Amidst the madness of 2017, a bigger shift was missed than probably any other — right at the commanding heights of the economy: Natural gas fizzled out of the plan for the future.That’s major.Natural gas is no longer a contender or pretender, just a relic of the past, likely to fall as far and as fast as Old King Coal, and maybe faster. This has repercussions for the economy of many states and nations, and the politics of the transition in terms of what we ask for and what we will get.The big signal that got some coverage in the pink pages (FT) and energy-wonk trade press in November was the closure of Siemens and GE’s gas turbine-making capacities. Just to recap for those that missed it, first Siemens, the giant European champion of the electric power revolution, laid off 7,000 workers. It reported that it had a capacity to make 400 100MW gas turbines annually but only had received orders for 110 in 2017. Ouch. Retrain!And then GE: Two weeks later, it laid off 20,000 workers in its gas-related business, including turbine-making teams around the world. Remember, just about five years ago Siemens and GE battled for the gas business of Alstom, the French descendent of the same companies GE came out of in the early 20th century. GE paid $10 billion for it and declared a coup.But now, they’re writing it off. Their strategic choices under Jeff Immelt are being questioned by the market: while the Dow is up about 30 percent over the past 12 months, GE’s stock is down about 45 percent. (Indeed, GE won the "honor" of being the Dow Jones Industrials worst-performing stock of 2017.) If we can build large-scale storage that can do all the functions of a fast-ramping gas turbine in less than six months for less money, there will be no market for gas turbines peaking services.
NYMEX Feb natural gas futures fall 10.9 cents to $3.396/MMBtu ahead of contract expiry - NYMEX February natural gas futures tumbled in profit taking overnight leading up to Monday's open and the contract's roll off the board at the close of business. At 6:52 a.m. ET (1152 GMT) the contract was 10.9 cents lower at $3.396/MMBtu. March futures, set to take the lead position, were 8.0 cents lower at $3.095/MMBtu. February gas picked up 32 cents in total last week after ending higher in four out of the five business days, but sentiment of overbought conditions pervade the market and have since begun to prompt a round of selling despite predominantly bullish fundamentals. Strong withdrawals from stocks of late prompt worries over end-of-season inventories, with the US Energy Information Administration noting that net stock drawdowns over the last four storage report weeks totaled 1,036 Bcf, besting the previous four-week draw record of 980 Bcf that occurred in the period between January 17, 2014, and February 14, 2014, during a polar vortex. Total working gas stocks currently sit at 2,296 Bcf, or 519 Bcf below the year-ago level and 486 Bcf below the five-year average of 2,782 Bcf, after the EIA outlined a 288 Bcf withdrawal for the week ended January 19 that tied as the second-largest stock drawdown since the data collection began. It was above the full range of estimates coming into the day, as well as both the 164 Bcf five-year average pull and a 137 Bcf year-ago draw. The EIA said that if storage draws were to match the five-year average for the remainder of the heating season, working gas stocks would total 1,216 Bcf on March 31, or 29% lower than the five-year average.
NYMEX March natural gas futures up 3.4 cents at $3.201/MMBtu - NYMEX March natural gas futures were on the offensive overnight ahead of the Tuesday, Jan. 30, open, as colder weather in store spelled elevated heating demand and additional large storage draws.At 6:49 a.m. ET (1149 GMT) the contract was 3.4 cents higher at $3.201/MMBtu. Updated National Weather Service outlooks show a wide swath of below-average temperatures encompassing the bulk of the central and eastern US through both the upcoming six- to 10-day and eight- to 14-day periods, hemmed in by bands of average temperatures stretching over a few areas of the South into portions of the Midwest and a small section of the Northwest. Above-average temperatures are called only for much of the West, parts of the west-central US and fringes of the Southeast. Weather as projected suggests stronger demand for heating that would ramp up anew the amount of natural gas drawn from underground storage facilities, following an anticipated slowdown in the pace of stock erosion in the forthcoming inventory data fueled by evidence of diminished demand amid milder weather. The US Energy Information Administration's latest "Natural Gas Weekly Update" for the week ended January 24, much of which will be reflected in the next weekly storage data that will cover the week to January 26, detailed a 19% week on week decline in total US natural gas consumption, as temperatures rose across the contiguous US Total working gas stocks currently sit at 2,296 Bcf, or 519 Bcf below the year-ago level and 486 Bcf below the five-year average of 2,782 Bcf, after the EIA outlined a 288 Bcf withdrawal for the week ended January 19. The reported withdrawal tied as the second-highest stock drawdown on record, putting the two largest weekly withdrawals ever since data collection began in the last three weeks.
NYMEX Mar natural gas ticks higher to $2.900/MMBtu after further steep decline - NYMEX March natural gas futures ticked higher in buying at lows overnight in the US ahead of Friday's open. At 7:10 am ET (1210 GMT) the contract was 4.4 cents higher at $2.900/MMBtu, having shed 13.9 cents the previous day. March gas crumbled for the second consecutive session Thursday after the US Energy Information Administration outlined a net 99 Bcf withdrawal during the week ended January 26 that was below both the average anticipated 102 Bcf draw and the 160 Bcf five-year average pull. Lackluster demand in the subsequent days suggests another modest withdrawal from stocks in the current week as the EIA's latest Natural Gas Weekly Update for the week ended January 31 shows a 2% week-on-week slump in total US gas consumption. Seasonable to colder-than-normal weather in midrange outlooks suggests elevated heating demand and a ramped up rate of weekly storage draws but only briefly, as moderating conditions in longer-range projections suggests renewed demand weakness and a reprise of a slower rate of inventory erosion as winter transitions to spring.
South Africa could turn into major market for US natural gas -- South Africa, the largest producer of greenhouse gas emissions on the African continent, is undergoing an energy transition that will mean demand for natural gas will rise, according to a new report from the Energy Information Administration. “In an effort to reduce [carbon dioxide] emissions, South Africa is planning to diversify its energy portfolio, replacing coal with lower CO2-emitting fuels such as natural gas and renewable sources,” the EIA analysis says.Energy Secretary Rick Perry visited South Africa in October to meet with African leaders about importing more natural gas in 2018, several months before President Trump emphasized energy exports in his first State of the Union speech Tuesday night. Much of the transition to natural gas is being driven by South Africa’s commitment to the Paris Agreement. The country plans for carbon emissions to peak by 2025, remain flat for the next decade, and then begin to drop around 2035, the EIA said. Energy Secretary Rick Perry visited South Africa in October to meet with African leaders about importing more natural gas in 2018.
Why Canada Is The Next Frontier For Shale Oil (Reuters) - The revolution in U.S. shale oil has battered Canada's energy industry in recent years, ending two decades of rapid expansion and job creation in the nation's vast oil sands. Now Canada is looking to its own shale fields to repair the economic damage. Canadian producers and global oil majors are increasingly exploring the Duvernay and Montney formations, which they say could rival the most prolific U.S. shale fields. Canada is the first country outside the United States to see large-scale development of shale resources, which already account for 8 percent of total Canadian oil output. China, Russia and Argentina also have ample shale reserves but have yet to overcome the obstacles to full commercial development. Together, the Duvernay and Montney formations in Canada hold marketable resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator. Canada's shale output stands at about 335,000 bpd, according to energy consultants Wood Mackenzie, which forecasts output should grow to 420,000 bpd in a decade. The pace of output growth could quicken and the estimated size of the resources could rise as activity picks up and knowledge of the fields improves, according to the Canadian Association of Petroleum Producers. Seven Generations and Encana Corp, also based in Calgary, are among leading producers developing the two regions. Global majors including Royal Dutch Shell and ConocoPhillips - who pulled back from the oil sands last year - are also developing Canadian shale assets. Chevron Corp announced its first ever Canadian shale development in the Duvernay in November. Spokesman Leif Sollid called it one of the most promising shale opportunities in North America. ConocoPhillips sees potential for the Montney to deliver significant production and cash flow to the company, executive vice president of production drilling and projects Al Hirshberg said in November. Shell will invest more money this year in the Duvernay than any other shale field except the Permian Basin in West Texas, the most productive U.S. shale play, spokesman Cameron Yost said.
Canada's Trudeau says Kinder Morgan pipeline expansion to proceed: radio (Reuters) - Prime Minister Justin Trudeau said on Thursday his government would ensure Kinder Morgan Canada’s Trans Mountain oil pipeline expansion is built and added the C$7.4 billion ($6 billion) project is not a threat to Canada’s West Coast. Trudeau reiterated the government’s position in two separate radio interviews. His comments came two days after British Columbia proposed new laws that would temporarily ban increased shipments of crude oil through the West Coast province, adding another hurdle to the delayed Trans Mountain expansion project. “That pipeline is going to get built. We will stand by our decision,” Trudeau said in an interview on 630 CHED radio in Edmonton, Alberta. “We will ensure that the Kinder Morgan pipeline gets built.” The Alberta province pledged on Wednesday to sue its western neighbor over the planned legislation, calling on the federal government to step in as it has jurisdiction over inter-provincial infrastructure projects. The federal government approved the expansion in 2016. Kinder Morgan Canada is pushing to start construction on the Trans Mountain expansion, which will nearly triple capacity on the existing 1,147-kilometer (712 mile) line to 890,000 barrels per day. “We know that getting our oil resources to new markets across the Pacific is absolutely essential,” Trudeau said in a separate interview with CBC Radio, also in Edmonton. “We can’t continue to be trapped with the price differential we have in the American market. We need this pipeline and we’re going to move forward with it responsibly like I committed to.” Earlier this month Kinder Morgan delayed the start up of the project, which extends from Alberta’s energy heartland to a port in suburban Vancouver, to December 2020, due to continued difficulty obtaining permits. The project is considered crucial for Canada’s oil industry, but is fiercely opposed by British Columbia, many municipalities, some Aboriginal groups, and environmental activists concerned about possible oil spills.
Refined-Product Delivery And Storage Infrastructure In Mexico, Part 3 -- The opening of Mexico’s refined-products sector to competition after 80 years of Pemex monopoly is spurring the development of new motor fuel-related distribution infrastructure on both sides of the U.S.-Mexico border. A number of these pipelines, rail loading/unloading facilities, storage and other projects aren’t advancing as quickly as their developers may have hoped — replacing the old order with the new is taking time. But the need for new infrastructure is evident. Today, we continue our series on efforts to facilitate the transportation of motor fuels from U.S. refineries to — and within — Mexico, this time focusing on rail-related projects. This is the third episode of our series. In Part 1, we discussed the points that until April 2016, state-owned Petróleos Mexicanos (Pemex) was the only entity that could import gasoline and diesel to Mexico, and that until early 2017, independent/third-party importers could not use Pemex’s refined-product distribution and storage network. We also noted that competition is being introduced to Mexico’s energy markets during a trouble-filled period for Pemex’s six refineries. Due to operational and other problems, the refineries’ production of gasoline and diesel is off sharply, and Mexico has been importing more motor fuels from the U.S. and other sources to keep pace with rising demand. In the first 10 months of 2017, U.S. exports of gasoline to Mexico averaged 377 Mb/d, up 58% from 2015, while U.S. exports of diesel south of the border averaged 232 Mb/d, up 65% over the same two-year period.
Pemex woes, presidential race stall Mexican oil joint ventures (Reuters) - Mexico will likely have trouble finding international oil firms willing to partner with state-owned Pemex due to hefty fees, low oil prices and uncertainty ahead of a presidential election in July, a blow to efforts to reform the energy sector and boost government revenue. The government of President Enrique Pena Nieto enacted a wide-ranging reform in 2013-2014 to encourage foreign investment and end the slide in oil output to multi-year lows. The reform ended Pemex’s 75-year monopoly over the energy sector, which is one of the key generators of revenue for the government. Mexico has opened oil and gas exploration and production to foreign investors, as well as fuel retail in Latin America’s second-largest economy. On Wednesday, Mexico will auction 29 areas in the Gulf of Mexico, the biggest chunk of oil and gas wealth on offer since the reform. The rights were offered to companies including Royal Dutch Shell Plc, Exxon Mobil Corp and China National Offshore Oil Corp, without obliging them to tie up with Pemex. However, Pemex is struggling to achieve another of the reform’s goals - luring foreign oil firms to develop what were considered potentially lucrative oil fields at two offshore sites. Foreign oil firms saw the cost for buying into the joint ventures as high, officials and oil executives said, because the fees include a share of what Pemex has already spent in exploring oil and gas at those fields. Fully transferring exploration costs incurred by the inefficient state-run oil company put the profitability of such partnerships at risk and has been the main obstacle to finding partners, along with the opacity of Pemex’s accounts, the sources said. “Pemex is well known for inefficiency,”
Shell sweeps nine of 19 blocks awarded in Mexico oil auction (Reuters) - Royal Dutch Shell (RDSa.L) snapped up nine of 19 Gulf of Mexico oil and gas blocks awarded in a Mexican auction on Wednesday, as the global oil major raised its big bet on Latin America’s deep waters. Mexican officials estimated the auction, the most important since the country’s energy sector opened to foreign firms in 2014, could bring $93 billion in investment to the country as oil firms develop the areas they won. The stakes were high for Mexican President Enrique Pena Nieto and his struggling party, which wants to showcase the results of its energy liberalization ahead of a presidential election in July. (Graphic: Mexico readies deepwater auction - tmsnrt.rs/2DGpgnB) With oil prices at a three-year high, conditions were better for this auction than any of the previous eight sales in Mexico since 2015, lending weight to Pena Nieto’s argument that opening up the sector would bring the investment needed to turn around a dilapidated state-run oil and gas industry. Shell bid aggressively despite fears that Pena Nieto, who will not run in July, could be succeeded by a leftist leader who may revise the terms of energy contracts. The company also won blocks in Brazil’s Atlantic waters just three months ago, which require heavy investment. Both Mexico and Brazil have benefited from a revival in interest from the world’s top energy firms in big-ticket deepwater projects, as the industry emerges from a three-year recession. “We wanted a presence in both countries,” said Alberto de la Fuente, president of Shell Mexico. “We are a big player in deep water worldwide. This is excellent news for Mexico and is a strong commitment for Shell in Mexico.” The higher oil price helped Shell put together solid bids, de la Fuente said to reporters at the auction. Mexican officials called the auction a success. Ahead of the bid round, the government had said it expected only seven of the 29 blocks on offer to be awarded. In the end, nineteen were awarded. Aside from Shell, the biggest winners were Malaysia’s state oil firm Petronas, which participated in six winning bids, and Qatar Petroleum, which participated in five. Some firms bid alone, and others in consortia.
Touted Energy “Reform” Goes Awry in Mexico - Four years ago, Mexico’s government passed a sweeping energy reform aimed at opening up Mexico’s long-protected oil and gas sectors to global competition and expertise for the first time in over 70 years. The reforms would lead to lower energy prices for domestic consumers as well as thrust Mexico into a more prominent position in the global hydrocarbons market, the government confidently predicted.Instead, the opposite has happened: prices of gas, diesel and natural gas have soared while Mexico’s heavily indebted state-owned energy giant, Petróleos Mexicanos, or Pemex, got tangled up in the oil bust, lost $9 billion in 2016, received a bail-out, and after making money in Q1 and Q2 of 2017, lost another $5.5 billion in Q3 2017. In other words, it has been tough on Pemex.Production at Pemex dropped 9.5% in 2017 to 1.94 million barrels per day, its lowest level since 1980. At the same time 71.6% of the gasoline used by Mexicans last year was imported. It’s a humbling statistic for a country that not so long ago boasted the world’s second biggest oil field by production, the Canterfell. On average, 570,600 barrels per day were bought from abroad in 2017, 60% more than in 2013. Much of it came from the US. As for Diesel, 237,500 of the 317,600 barrels sold each day came from another country — an import rate of 75% — while an average of 67% of the 2,623 million cubic feet of natural gas sold per day was imported from abroad.
Venezuela Skirts U.S. Sanctions With Chinese Oil-For-Cash Loans - Oil-for-loan deals between Beijing and Caracas are preventing American sanctions from having their full effect on Venezuela’s economy, according to David Malpass, U.S. treasury under-secretary for international affairs.“Most of the blame for Venezuela’s economic collapse and humanitarian disaster falls squarely on Venezuela’s rulers, but China has been by far Venezuela’s largest lender, supporting poor governance,” Malpass said at the Center for Strategic and International Studies, Bloomberg reported. “The result will raise the ultimate cost to the international community once Venezuela returns to democracy and economic reforms.”Because China expects payment in barrels of oil, the dollar amount of the loans are difficult to ascertain. “This has the effect of masking the exact amount of payments that China made to Venezuelan officials and that Venezuelans are expected to make to China in the future,” Malpass added. “China offers the appearance to an attractive path to development, but in reality this often involves trading short-term gains for long-term dependency.”China also has an open invitation to join the Community of Latin American and Caribbean States, which the Asian giant could exploit for its One Belt, One Road initiative aiming to bring large developing countries together, economically. Despite assistance from Beijing, Venezuela is still suffering economically. The ongoing crisis in Venezuela has caused output to fall and reliable customers to find new supplies. Cuba recently signed a deal with Algeria to increase the amount of oil products it imports from the North African country because its main supplier, Venezuela, is struggling to stay afloat. The country sitting on the world’s largest oil reserves saw its crude oil production drop by 649,000 bpd in 2017—a 29-percent annual plunge—and probably the worst loss of oil production in a single year in recent history.
BP finds North Sea oil and gas at two separate wells — On Wednesday, British energy major BP announced oil and gas discoveries in the North Sea, in a boost for the company and local industry. The discoveries were made in Capercaillie in the central North Sea, and in Achmelvich, west of Shetland, the company said in a statement. BP fully owns the Capercaillie well, while the Achmelvich well is a partnership between operator BP (52.6%), Royal Dutch Shell (28%) and US peer Chevron (19.4%). The Capercaillie well was drilled to 3,750m and found oil and gas. The Achmelvich well was drilled to 2,395m and located oil. "These are exciting times for BP in the North Sea as we lay the foundations of a refreshed and revitalised business that we expect to double production to 200,000 barrels per day by 2020, and keep producing beyond 2050," said Mark Thomas, BP North Sea regional president. "We are hopeful that Capercaillie and Achmelvich lead to further additions to our North Sea business."
BP expects gas to overtake oil as main energy source in 2040 (Reuters) - BP expects gas to overtake oil as the world’s primary energy source in around 2040 as demand for the least polluting fossil fuel grows, its vice president for strategic planning said on Wednesday. “We see it (gas) take over from coal in the early 2030s... We think there is a very good case for gas actually overtaking oil post 2040 or just before 2040,” Dominic Emery told a gas conference in Vienna. Emery highlighted estimates for demand growth for gas in China of around 15 percent year-on-year last year and said BP expects overall gas demand to grow around 1.6 percent a year for years to come, compared with 0.8 percent for oil. “We do see a very strong chance that (gas) is going to be the largest source of primary energy into the future... By gas we mean natural gas, but also ... we mean biogas, we mean biomethane, we mean power-to-gas...” In terms of demand for gas from different sectors, Emery singled out industry as especially resilient and transport as fast-growing, albeit from a low base, at annual rates of three to four percent. BP is due to reveal more details in its next energy outlook on Feb. 20. In its last outlook it said it saw gas overtaking coal’s share in the primary energy market to become the second-largest fuel source by 2035. BP’s previous forecast to 2035 forecast oil’s share shrinking from around 33 percent to around 30 percent and gas’ share grow from the low 20s to the mid 20-percentage range. Emery said one of the biggest challenges for the gas industry was reducing methane leakages from pipelines, which he said was estimated at around 1.3 to 1.4 percent. “Once (methane leakage) exceeds 3 percent it means that gas, certainly in the nearer term, over a few decades, is actually worse than coal from a (greenhouse gas) perspective,” he said.
BP reshapes portfolio to ensure oil assets aren't left undrilled - BP Plc is looking to a future beyond oil as it concedes some crude will be left in the ground. “Not every barrel of oil in the world will get produced,” Bernard Looney, head of the company’s upstream division, said Tuesday. “We’re facing competition from alternative sources of energy like we’ve never had before.” The world’s energy giants face mounting pressure from investors and environmental activists who deem fossil-fuel growth risky as governments tighten climate regulations and renewable sources proliferate. For BP and many of its peers, the prospect of waning demand for crude has prompted an increased focus on natural gas as a bridge toward a cleaner energy future. Gas will be “the fastest-growing hydrocarbon in the world over the next 20 to 30 years,” Looney said at a conference in Florence, Italy. “So you’ll see us shifting and growing our gas position,” among other businesses. BP on Tuesday also announced an investment in electric-car charging company FreeWire. The comments from the upstream chief expand on a warning from BP a year ago, when it said oil supplies will remain abundant in the coming decades and demand may peak in the mid-2040s. Nevertheless, its Chief Economist Spencer Dale in May rejected the notion that the company itself will be left holding assets it can’t drill. Looney’s remarks on Tuesday didn’t repeat that certainty. “We have more oil than the world needs,” he said. “The change is structural. The change is here to stay and competitiveness is, in our view at least, the way forward."
INTERVIEW-BP vows to be tight-fisted despite oil price rally (Reuters) - BP will not change its spending plans because of rising global oil prices and is preparing to approve projects this year that can make money with prices below $40 a barrel, the head of its oil and gas division Bernard Looney told Reuters. Irishman Looney, 46, is seen across the industry as one of the strongest candidates inside BP to succeed Chief Executive Bob Dudley, 62, who is expected to serve at least a few more years in the job. Like its rivals, BP is set to enjoy a strong increase in revenue from the 50 percent rise in oil prices since the middle of last year to around $70 a barrel. But Looney, in a rare interview, said the British company would retain the spending discipline it achieved through deep cost cuts and more efficient work patterns during the three-year downturn from 2014. BP said last year it would have annual capital expenditure of $15-17 billion until 2021. “Discipline has to remain the word and we shouldn’t be seduced by the oil price,” Looney told Reuters on the sidelines of the Baker Hughes conference in Florence. “We’re not going to say that now that the oil prices are back up, let’s do more, let’s spend more,” Looney said. The company, which still faces billions in penalties over the deadly 2010 Deepwater Horizon spill, is now able to generate profit with oil prices in the $50s per barrel, halving the break-even from earlier in the decade. BP will approve more new projects this year, which will all generate profits at oil prices far lower than current levels, Looney said. “You’ll see us continue to invest, but we will always do that when the project meets our threshold and we believe it is the best it can be,” he added. “It has to be resilient in what is a different world and it has got to be built to make money at less than $40 a barrel for sure.”
Hackers Create "Perfect Virus" - Put Oil Companies On Edge -- Russian security services have arrested a local hacker who planted malware at gas stations across Russia’s southern regions that had been cheating drivers out of the gasoline that they pumped in their cars in a major fraud scheme that later resold the stolen fuel. Russia’s Federal Security Service (FSB) have arrested the creator of the malware, Denis Zayev, who had gas stations employees working with him to trick the software systems to selling less fuel to the customers, while reselling the fuel that was stolen. This fraud was one of the largest such scams uncovered by the Russian services, a source in law enforcement told news outlet Rosbalt. The scheme extended to almost all regions in the south of Russia, with dozens of gas stations infected with the malware. Zayev has created a “perfect virus” that couldn’t be detected by either security controls that oil companies have used to remotely monitor gas stations, or by specialists at the Ministry of Internal Affairs, according to the police source who spoke to Rosbalt.The virus planted in the systems allowed the hacker and his accomplices to steal up to 7 percent of the fuel. Zayev acted not only as the “seller” of the malware at some stations, but also as co-owner of the channel to steal fuel, and received a cut from the proceeds from the re-sale of the stolen fuel.
Dutch Gas Rocked By Earthquakes - Dutch gas dreams have ended with a bang after Dutch independent regulator SodM presented its recommendation to the Dutch government to cut existing natural gas production at the Groningen field from 21.6 bcm to a historical low level of 12 bcm. The Netherlands (until the mid-1990s, one of the world’s top natural gas producers and exporters), holding an ambition of becoming the main European gas roundabout, can now start to lick its wounds, as not only gas production at Europe’s largest continental gas field is set to end soon, but the government budget is also hit. Global markets and energy transition can’t be blamed, but only a simple physical phenomenon: earthquakes. The latter hasn’t only shaken houses, but has also broken down the defensive walls of international oil giants Shell (NYSE:RDS.A) and ExxonMobil (NYSE:XOM) and the Dutch government. A popular uprising in the Groningen Province (Northeast Netherlands), combined with an offensive of green movements, has built up a momentum strong enough to end the Netherlands’ pivotal role in global gas. Still, the real discussion is far from over. Not only does the Dutch government need to assess the SodM recommendations, but it also must set up a rational and feasible strategy to wean the Dutch economy and its citizens from natural gas in the coming years. This will be an enormous task. Removing natural gas from Dutch society is shaking its societal structure, as more than 7 million households are on the gas network, and almost all industries in the Netherlands rely on gas supplies. At the same time, due to the fact that Groningen gas opened up the European continent to a gas-based future in 1953, existing long-term contracts with customers in Germany, Belgium and the north of France have still to be fulfilled. The government and its main stakeholders, Gasunie en GasTerra, will have to discuss a reduction in export volumes and contracts the coming years. Some even have called to put a point on the horizon to end exports totally. The cost of this all will be enormous. After decades of a Dutch disease, an earthquake migraine is the only thing that is left.
US says planned Russian pipeline would threaten European energy security (Reuters) - The United States sees the planned Nord Stream 2 gas pipeline between Russia and Germany as a threat to Europe’s energy security, U.S. Secretary of State Rex Tillerson said on Saturday. Poland, Ukraine and Baltic states fear the pipeline would increase Europe’s dependence on Russian gas and provide the Kremlin with billions of dollars of additional revenue to finance a further military build-up on European Union’s borders. “Like Poland, the United States opposes the Nord Stream 2 pipeline. We see it as undermining Europe’s overall energy security and stability,” Tillerson said at a joint news conference with the Polish foreign minister in Warsaw. “Our opposition is driven by our mutual strategic interests,” he said. The United States has already sanctioned Russian companies over Moscow’s involvement in the Ukraine crisis, and foreign companies investing in or helping Russian energy exploration. Poland, an EU member since 2004, sees Russia as its biggest potential threat, especially since Moscow annexed the Crimean peninsula from neighboring Ukraine in 2014. Russia is also engaged in the long civil war in Syria, which has killed hundreds of thousands of people, driven millions from their homes, and fueled a refugee crisis in the European Union. Nordic nations have already voiced security concerns over the pipeline being laid near their shores under the Baltic. But Germany and Austria have focused more on the commercial benefits of having more cheap gas, arguing there could be little harm from an additional pipe. “Any additional gas infrastructure can contribute to increased supply security in Europe,” Germany’s economy ministry spokesman said, adding Berlin’s stance was that Nord Stream 2 was a commercial venture that must comply with relevant laws.
European Pipeline Wars: Realpolitik Meets Geography - The headlines are ablaze this month with news from all over about new pipeline projects coming into Europe. Never one to miss an opportunity to do the U.S. State Department’s bidding in how it presents pipeline politics, Oilprice.com published a howler of a piece about the Southern Gas Corridor.Titled, “Is This the World’s Most Critical Pipeline?” the piece is pure marketing fluff designed to make you think that Azerbaijani gas will change the face of European gas politics.The beginning is the most telling, “Europe wants to become less dependent on Russian gas and use more clean energy…” This is a lie.Europe doesn’t want this as a continent, the leaders of the European Union who are aligned with the United States who view Russia as the enemy want to become less dependent on Russian gas. Most of Europe wants Russia to supply them with natural gas because it is 1) cheap and 2) plentiful. For geopolitical reasons the U.S. doesn’t want an ascendant Russia. The EU technocracy agrees because a strong Russia owning more than 40% of European gas sales is a Russia that can’t be destabilized through currency and proxy wars. The Southern Gas Corridor is a nearly 4000km (2500 mile) gas pipeline project to bring Caspian Sea natural gas into southern Europe. It is slated, when completed with all the side projects tying into it, between 60 and 120 billion cubic meters of gas annually (bcma) starting with an unknown amount from Azerbaijan in 2019. That number comes from an announcement in the Financial Times circa 2008. A better number for it is closer to just 16 bcma.It’s estimated cost at the time of negotiation was over $41 billion. Today, it’s $45 billion with corruption and graft likely to take that number higher. This is the very definition of a solution in search of a problem. It is nothing more than a $45 billion bribe to both the U.S.-favorable regime in Azerbaijan and BP who is sitting on the major Shah Deniz gas deposit with out a market to sell it to. The U.S has been using EU countries hostile to Russia, namely the Baltics and Poland, to delay or scuttle new Russian gas projects into Europe; projects that countries like Italy, Greece and Bulgaria are screaming for.
Bangladesh Signs Deal With Indonesia For LNG Imports - (Reuters) - Bangladesh signed an agreement with Indonesia on Sunday to open talks on imports of liquefied natural gas (LNG), as the South Asian country turns to the supercooled fuel to fill a shortfall of domestic natural gas. A letter of intent was signed between two state energy companies, Petrobangla and Pertamina, after a meeting between Prime Minister Sheikh Hasina and Indonesian President Joko Widodo, who arrived in Dhaka on Saturday. Bangladesh, a country of more than 160 million people, may import as much as 17.5 million tonnes of LNG a year by 2025, as its domestic gas reserves dwindle and demand grows. Petrobangla is finalising several floating storage and regasification units, the first of which is expected to commence operations in April 2018. In September, Bangladesh signed its first ever LNG import deal with Qatar, underscoring the rise of South Asia as a new market for the fuel. Widodo's visit comes as Bangladesh is struggling to cope with an influx of around 688,000 Rohingya refugees who have fled an army crackdown in Myanmar's Rakhine state since last August. "He reiterated his country's support to the safe, dignified return of the displaced persons to the Rakhine State," a joint statement said after Widodo visited a refugee camp in the Cox's Bazar region of southern Bangladesh. Hasina "appreciated Indonesia's supportive role, including the humanitarian assistance for the displaced persons from Rakhine State sheltered in Bangladesh," the statement said. Myanmar and Bangladesh agreed earlier this month to complete a voluntary repatriation of the refugees in two years.
Asian oil products demand to outweigh refinery capacity by 2025: McKinsey - Asian demand for oil products will outweigh current and upcoming refinery capacity by 2025, Tushar Tarun Bansal, Director at McKinsey, told attendees at S&P Global Platts annual Middle Distillates Conference in Antwerp Thursday. In particular, China and India were singled out as two of the largest consumers that will move from a current oil product balances to an oil product deficit by 2025. In China, demand continues to rise, and refining capacity will be incapable of keeping pace resulting in China being reduced to a net importer, Bansal said. Beyond 2020, international players might see a revival in refining investment opportunities in China. Bansal expects demand in China to grow by 5% per year between 2010 and 2018, changing to 2% per year by 2025 as the country moves from an industrial economy to a more service-oriented economy. Current capacity will see 1% per year added over 2018-2025 creating a deficit between demand and capacity of around 180,000 b/d. In India, demand will grow by 6% per year from 2010-2018 with a forecast of 4% per year growth until 2025. Diesel will drive a significant proportion of this demand growth, Bansal said. Addressing questions as to whether recent growth in India is purely attributed to a low flat price environment, Bansal said demand in India is both structural and strong, and not merely a product of recent low crude prices. With strong growth until 2025, the current surplus will continue to reduce up to 2020, resulting in India becoming a net importer -- mostly of LPG and naphtha -- after 2020. The wider Southeast Asian market will mirror the growth expected in China and India. Demand in Southeast Asia will grow by 3% per year from 2010-2018 with forecasts predicting 2% per year growth until 2025.
Asia Is About To Be Hit By The “Worst Oil Tanker Spill In Decades” - The Sanchi disaster is even worse than many initially expected, according to a chilling new report published by Britain's National Oceanography Centre that shows the ship's cargo - the equivalent of nearly 1 million barrels of ultra-light crude, plus its own fuel - snaking across the East China Sea into the northern Pacific, according to a series of visualizations created by Reuters. The Panama-registered vessel burst into flames after colliding with a cargo ship off the east coast of China while on its way to South Korea. The disaster, which took place in the East China Sea, is the worst oil spill since Exxon Valdez.The Sanchi tanker and a cargo ship collided 260km (160 miles) off Shanghai on Jan. 6. Afterward, the tanker - which burned for a week before exploding and sinking - then drifted south-east towards Japan.At the time, the Iranian press reported that all 32 crew members - 30 Iranians and two Bangladeshis - died in the accident. The tanker was carrying 136,000 tonnes of ultra-light crude. The always-credible Chinese media claimed that no oil slick had formed.Authorities have had trouble pinning down how big the spill is, as it changes by the day amid strong ocean currents. But concerns are growing about the potential impact to key fishing grounds and sensitive marine ecosystems off Japan and South Korea, which lie in the projected path of the oil, according to Britain’s National Oceanography Centre."An updated emergency ocean model simulation shows that waters polluted by the sinking Sanchi oil tanker could reach Japan within a month," the center said a report posted on Jan. 16. "The revised simulations suggest that pollution from the spill may be distributed much further and faster than previously thought, and that larger areas of the coast may be impacted."According to Reuters, which examined the data, first, the toxic ultra-light crude would probably dissolve, forming a poisonous plume under the sea surface. However, it remains unclear how long condensate would stay in the water, with South Korean officials believing it would most likely evaporate. However, the heavy fuel used to power the ship could wind up washing ashore, as depicted in the map below...
Sanchi Oil Spill Has Already Caused 'Serious Ecological Injury' -- The Sanchi oil spill in the East China Sea could potentially be one of the worst tanker spills in decades, experts are warning, even though the spill has now largely disappeared from news reports. Work by scientists from the National Oceanography Centre (NOC) and the University of Southampton, who have plotted where the condensate ends up, believe that the spill could even reach Japan within a month. In doing so , it could severely impact locally important reefs , fishing grounds and protected marine areas.An Iranian tanker, the Sanchi sank on Jan. 14 after colliding with a cargo ship and setting fire. The ship was carrying 136,000 tons of ultra-light condensate when it sank. What is puzzling scientists is where this will end up and how much damage will be caused.The scientists from Southampton predict that the condensate could enter the regionally important Kuroshio current and then be "transported quickly along the southern coasts of Kyushu, Shikoku and Honshu islands, potentially reaching the Greater Tokyo Area within 2 months. Pollution within the Kuroshio may then be swept into deeper oceanic waters of the North Pacific." According to the scientists, "The revised simulations suggest that pollution from the spill may be distributed much further and faster than previously thought, and that larger areas of the coast may be impacted." Their recent simulations "also shift the focus of possible impacts from South Korea to the Japanese mainland, where many more people and activities, including fisheries, may be affected.""It's not like crude, which does break down under natural microbial action. This stuff actually kills the microbes that break the oil down."
Oil Spill From Sanchi May Have Reached Japan - Oil from the stricken oil tanker Sanchi, which exploded and sank in the East China Sea, may have now reached the shores of Japan, according to the country's Coast Guard.Reuters reported Friday that residents on the Japanese Amami-Oshima islands, famed for pristine beaches and reefs , have reported black oil clumps being washed up.Officials are now checking to find out whether the oil is from the Iranian registered tanker, which was carrying an estimated 136,000 tonnes of condensate when it sank in mid-January, with the loss of all 32 members of the crew. It also had nearly 1,900 tonnes of bunker fuel oil on board.It is unknown if the ultra light condensate could form black oily clumps or if indeed this is even the heavier bunker oil. But if the oil has come from the Sanchi, then this would be a serious setback for Japanese authorities, who said last month that there was little chance the spill would reach the county's shores.This optimism, however, was contradicted by scientists from the National Oceanography Centre (NOC) and the University of Southampton in the UK. As I reported earlier in the week, they plotted the path of the spill and believed it could reach Japanese shores "within a month."
Minister: Iraq To Comply With OPEC Deal Despite Oil Export Capacity Rise -- Reuters) - Iraq will comply with the OPEC-led deal on reducing output even though Baghdad is working hard to increase its oil export capacity from the north and south of the country, its oil minister said on Monday. Jabar al-Luaibi told a Chatham House conference in London that Iraq's export capacity was nearing 5 million barrels per day (bpd), including 4.6 million bpd from the south. Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, has had to limit output in line with OPEC's commitment to cut output by about 1.2 million barrels per day (bpd) as part of a deal with Russia and others. "Iraq has made it clear at every time and every event that Iraq will comply with OPEC declarations in good spirit, genuine spirit," the minister said. "We are determined that we will reach 5 million bpd export capacity by the end of this year." The OPEC cut has boosted oil prices, which last week topped $71 a barrel for the first time since 2014. OPEC members are enjoying the rally and extra revenue, and say prices are not too high. Luaibi described prices as "reasonable" so far. He said Iraq hoped to more than double production from the northern Kirkuk oilfields with the help of BP. Iraq said this month it had signed a memorandum of understanding with BP to boost capacity at the fields. While exports from the south are at record levels, output in northern Iraq is down after falling in mid-October when Iraqi forces retook control of oilfields from Kurdish fighters who had been there since 2014. This has had the side-effect of boosting Iraqi compliance with the OPEC cuts in recent months. Last year, Iraq's compliance lagged Saudi Arabia and other large OPEC producers. The minister said the market was nearing "good stability" and Iraq was pumping 4.35 million to 4.36 million bpd of oil. Assuming Iraqi output of that level in January, the country has cut supply by 206,000 bpd and delivered 98 percent of its pledged reduction of 210,000 bpd under the OPEC deal, according to a Reuters calculation.
The case for Russian membership of Opec - Russia may be willing to work with Opec beyond 2018 to manage oil markets. Unprecedented co-operation has reversed a slump in prices and drained overflowing global inventories. Making their temporary alliance permanent would now bring wider benefits for both sides.Opec with Russia as a permanent member could regain its swing-producer status, which has been eroded by the rapid growth of US shale. Moscow would also potentially gain from taking a prominent role at the centre of an internationally recognized intergovernmental organization, and by gaining even more strategic influence among the group’s Middle East members, which control at least half the world’s proven reserves.However, the foremost benefit of permanent Opec membership would be the added pricing clout Russia brings to the table. The slump in prices triggered in 2014 has forced producers within the 14-member group to tighten their economic belts and radically cut spending. Real GDP growth in the core Arabian Gulf states – which combined account for about two-thirds of Opec capacity – may have fallen to 0.5 per cent last year, from 2.2 per cent in 2016, according to the International Monetary Fund. Russia’s flexible exchange rate and larger industrial economic base has helped to soften the blow somewhat, but the country has still suffered. Although no longer in recession, economic growth is expected by the IMF to remain tepid at around 1.5 per cent over the next five years. Boosting oil prices and ensuring market stability remains financially imperative for all sides. Their cooperation, which started at the end of 2016, has reversed the price slump. Brent crude has gained 32 per cent to trade at around US$70 per barrel since Opec with the help of Russia and a clutch of smaller producers outside the grouping. Combined cuts of 1.8 million barrels per day – of which Russia contributes about a sixth – have also drained inventories. Global crude stockpiles have dropped by 220 million barrels since the beginning of last year.
Oil Is Looking Unstoppable as Hedge Funds Take Bets to New High (Bloomberg) -- The enthusiasm in the oil markets is breaking records. Hedge funds reported record wagers on continued price increases for both U.S. and global oil benchmarks, along with gasoline and diesel. Meanwhile, producers are hedging production at record rates as oil experiences its best January since 2006. “There is a lot of interest in the direction of crude oil,” Rob Thummel, managing director at Tortoise Capital Advisors LLC, which handles $16 billion in energy-related assets, said by telephone. “The long oil trade continues to be the place to be.” The tailwinds propelling futures to three-year highs increasingly converge: OPEC has shown unprecedented discipline in sticking to output cuts, Russia and Saudi Arabia are doubling down on their commitment to wipe out the global supply glut, U.S. stockpiles are on their longest downhill slide ever, and last week a boost from a weaker dollar was added to the mix. Another significant sign the oil crash is behind us, is the clear shift in the futures curve. Both in New York and London, the closer the delivery, the higher the price all the way through 2022. That pattern, known as backwardation, is typical of times when demand is rising and supplies are tightening, and it hadn’t been so marked since 2014. At the World Economic Forum in Davos last week, Marco Dunand, the head of trading house Mercuria Energy Group Holding SA, said the crude market will remain in backwardation throughout this year with prices trading between $60 and $75 a barrel. BBL Commodities LP, one of the world’s largest oil-focused hedge funds, believes Brent crude will climb to $80 in 2018. Also in Davos, chatter emerged from Organization of Petroleum Exporting Countries oil ministers on the favorable state of supply and demand. OPEC Secretary-General Mohammad Barkindo said he sees the much-anticipated rebalancing of the market occurring this year, Russia’s Energy Minister Alexander Novak said that goal is almost in hand and Saudi Minister of Energy and Industry Khalid al-Falih said there are no signs of a significant slowdown in oil demand growth.
Hedge funds pile into oil despite rising risk of a correction: (Reuters) - Hedge funds continue to increase their bullish positions in oil, even as prices hit the highest level since the slump began in 2014, brushing aside concerns about overheated markets and the risk of a correction. Hedge funds and other money managers raised their net long position in the six most important futures and options contracts linked to oil by 44 million barrels to a record of 1,484 million in the week to Jan. 23.Portfolio managers have raised their net long position in Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil by the equivalent of 1,174 million barrels since the end of June.Hedge funds are more bullish on the outlook for petroleum than at any time on record, even though benchmark Brent prices have already nearly tripled over the last two years (http://tmsnrt.rs/2EifLfr).The ratio of hedge fund long positions to short positions has climbed to a record 11.51:1, up from a low of just 1.55 at the end of June. Since the start of 2015, such lopsided hedge fund positioning has usually preceded a sharp reversal in the recent price trend.But most fund managers seem unconcerned about the threat of a short-term reversal because the medium-term fundamentals appear solid.Oil consumption is growing rapidly as a result of synchronised growth in the major economies. OPEC and its allies have reiterated their commitment to output restraint. And global inventories are falling.Portfolio managers increased their bullish positions in every element of the petroleum complex in the week to Jan. 23.Net long positions rose in Brent (+14 million barrels), WTI (+8 million barrels), U.S. gasoline (+12 million), U.S. heating oil (+4 million) and European gasoil (+6 million).Net long positions are at record levels in every contract and in most contracts the ratio of long to short positions is at a multi-year highs.Brent prices are close to their 10-year average ($82 per barrel) and already above their average over the last complete cycle from 1998 to 2016 ($64).The implication is that petroleum prices are no longer cheap but still have room to rise further as the price cycle matures in 2018 and 2019 (http://tmsnrt.rs/2DIoGG6 and http://tmsnrt.rs/2EkJBQA).Oil consumption is expected to continue rising strongly thanks to fast growth in the global economy and world trade.The principal risks come from an acceleration in U.S. shale drilling, declining compliance in OPEC and its allies, increased production from non-OPEC non-shale sources, or a deceleration in demand owing to rising prices.None of these risks appears likely to materialise imminently but they will all increase the higher that oil prices rise.
Crude oil futures soften on US rig count, stronger dollar - Crude futures were softer Monday during mid-morning trade in Europe, with a bearish rig count in the US and to a lesser extent a stronger dollar weighing on prices. At 1220 GMT, ICE March Brent crude was down 66 cents from Friday's settle to $69.86/b, while the NYMEX March light sweet crude contract was 42 cents lower at $65.72/b. The US rig count rose by 12 over the last week to a total of 759, the latest data from Baker Hughes showed, making it the biggest weekly increase since March 2017. There are expectations that profit-taking could be around the corner, with further falls in prices. "If [Brent futures] fall by $2-3/b, greed will turn to fear," said Torbjorn Kjus, chief oil economist at DnB Markets, adding that a selloff by money managers could see prices drop up to $10/b. "Normally you see a big selloff between 2-4 times a year," he added. Kjus warned that the total value of money managed is now greater than in 2014 when oil prices exceeded $110/b before plunging to multi-year lows. Nonetheless, at the moment "speculative financial investors in the energy sector are betting on further price rises," Commerzbank analysts noted Monday, commenting on a rise in net long positions in Brent of 13,892 to a record 579,260 contracts in the week to January 23. Meanwhile, a recovering US dollar against the euro Monday, reacting to supportive comments by President Trump at the World Economic Forum in Davos last week, also played a role in pressuring crude futures lower. The US Dollar Index was up 0.25 at 89.28.
Oil settles lower after dollar strengthens, rising U.S. output - (Reuters) - Oil prices settled lower on Monday, pressured by a strengthening dollar and rising U.S. crude output, but prices remained on track for the biggest January increase in five years. Brent crude futures LCOc1 for March delivery settled down $1.06, or 1.5 percent, at $69.46 a barrel, after rallying to a session high of $70.64. U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 58 cents, or 0.9 percent, to close at $65.56 a barrel. The rally in oil prices has been buoyed by the U.S. dollar's six straight weekly slides. The greenback is set to fall 3 percent this month. .DXY Oil is priced in the U.S. currency, so a falling dollar can boost demand for crude from buyers using other currencies. The dollar index had been below $90 since Jan. 24. But the currency has rebounded 0.3 percent since Friday to $89.31, which has weighed on crude prices. "The strength in the dollar pushed some sellers in the market. There are some warning signs that maybe the rally is getting a bit overextended," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. Analysts expected U.S. crude supplies would post a weekly rise for the first time in 10 weeks, a preliminary Reuters poll showed on Monday. Industry group American Petroleum Institute posts its data on Tuesday and the U.S. Energy Information Administration reports on Wednesday. Crude prices also had drawn support from a large premium in the front-month Brent oil contract over those for future delivery, as investment in crude futures and options reached a record high last week. O/ICE Oil consumption is surging as a result of growth in major economies, while OPEC and its allies have made repeated commitments to limiting their crude output.
US oil and gas drilling costs rise as rig count climbs: Kemp (Reuters) - U.S. shale producers are facing rising costs for everything from drilling rigs to pressure pumping equipment and labour as the cyclical expansion in oil prices and drilling matures.The cost of drilling oil and gas wells has increased significantly over the last year, according to the latest provisional estimates from the U.S. Bureau of Labor Statistics.Drilling costs have increased by more than 10 percent since hitting a cyclical low in November 2016, though they are still 27 percent below the cyclical peak set in March 2014.Changes in drilling costs tend to follow changes in the number of rigs employed with a lag of around 1-2 months.The oil rig count itself tends to follow changes in the price of benchmark U.S. crude futures (WTI) with a lag of 4 months (http://tmsnrt.rs/2DLHaFC).In the current slump, however, drilling costs have recovered more slowly than normal as the market has absorbed a huge number of idled rigs.U.S. crude prices hit a cyclical low in February 2016, the rig count reached its nadir in May 2016, and drilling costs fell to their lowest point in November 2016.Since then, drilling costs have been on a gradual upswing as the number of rigs drilling for oil and gas has more than doubled from 404 in May 2016 to 947 in January 2018.The number of active rigs is still less than half its peak before the oil prices started slumping in the second half of 2014.But the rig market is tighter than it appears because many older rigs have been scrapped, cannibalised for spare parts, or are simply unsuitable for drilling the very long wells now favoured by shale producers.Producers increasingly favour new high-powered horizontal rigs that can drill ultra-long laterals as quickly as possible, so many of the older, lower-powered vertical or directional rigs are of marginal value.In other parts of the service sector, especially pressure pumping, shortages of equipment and trained crews are even more acute, and prices have been rising even faster. .Costs in the oil and gas industry have always been strongly pro-cyclical, which is why it makes no sense to talk about a long-run static breakeven price.During the slump, supposed breakeven prices tumbled as the costs for everything from labour, raw materials, royalties and service contracts were slashed. In the recovery, however, breakevens are rising as all these cost trends go into reverse, which is in turn offering some underpinning to oil prices at a higher level.
Crude oil futures: Crude dips on expectations for higher US inventories - Crude oil futures were lower in mid-morning trade in Europe amid expectations that imminent US data would show a build in crude and product stocks after 10 straight weeks of declines. At 1218 GMT, the ICE March Brent crude futures contract was 40 cents/b lower at $69.06/b, while NYMEX March light sweet crude was down 64 cents/b at $64.93/b. Analysts surveyed Monday by S&P Global Platts were expecting US crude stocks to have increased by 325,000 barrels in the week ended January 26. If confirmed by American Petroleum Institute and US Energy Information Administration data released later Tuesday and Wednesday respectively, this would end the long-running decline in US crude stocks which has seen them drop by 47.4 million barrels over a 10-week period to 411.58 million, the lowest level since February 2015. "Prices typically react to analyst expectations at the start of the week and recalibrate based on what the actual data shows, with the EIA figures carrying more weight," said Vandana Hari, founder of Vanda Insights. Distillates stocks were expected to decline 1.5 million barrels for the latest reporting week, while gasoline inventories were expected to rise by 1.05 million barrels. The rise in both crude and product inventories is to be expected ahead of scheduled refinery maintenance planned for February and March, said Michael Poulsen, a senior oil risk manager at Global Risk Management. "This will be part of a larger trend that we will come to see in the next weeks," said Poulsen, adding that ahead of the turnaround refineries would be looking to crack as much product as possible to replenish their inventories.
WTI/RBOB Drop After Surprise Crude Build - WTI/RBOB prices sank for the second day ahead of tonight's API as anxiety over a "slack demand period" builds and US production surges. While expectations were for a modest crude build, inventories jump over 3mm bbl - ending the 10-week draw-streak and sending WTI lower.. “The crude market is looking at the weakness in stock market. That’s making the oil traders a little nervous,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. At the same time, “there is an expectation that we will see the first increase in supply in a long time.” API:
- Crude +3.229mm (+900k exp) - biggest build since Sept.
- Cushing -2.383mm
- Gasoline +2.692mm (+2mm exp)
- Distillates -4.096mm
Party's Over - after 10 weeks of crude draws, API reported a big build and a 12th week of gasoline builds...
Oil prices take biggest hit of the year - Oil took its biggest tumble since early December as investors worry U.S. stockpiles started expanding again. Crude futures in New York slid 1.6 percent, while gasoline also traded lower in the wake of a Bloomberg survey suggesting stockpiles of both may have risen last week. As the spread tightens between West Texas Intermediate and Brent, crude exports from the U.S. may become less attractive, leading to storage buildups. Energy stocks fell amid a broader rout in U.S. markets. Nationwide crude inventories probably rose by 900,000 barrels last week, according to the median estimate of analysts. At the same time, U.S. crude output could top 10 million barrels a day at any time. "Exports are being hurt a bit by the reduction in the Brent-WTI spread, which should also help inventories replenish. This is the slack demand period," While the Organization of Petroleum Exporting Countries works to reduce output, concern that U.S. crude production will hit new records remains on investors' minds. Yet, OPEC and Russia will let oil prices climb as high as the market can bear, according to Gary Ross, global head of oil analytics at S&P Global Platts. American crude production reached 9.88 million barrels a day last week, the highest in weekly government data going back to 1983. While crude stockpiles have dropped for 10 straight weeks, gasoline supplies have been on the rise since early November, and analysts estimate they rose by another 2 million barrels last week. Inventory figures will be released by the Energy Information Administration on Wednesday.
Have Oil Prices Hit A Ceiling? - Oil prices posted some losses at the start of the week. The sharp jump in the rig count on Friday raised concerns about an acceleration in shale drilling. At the same time, the dollar stopped shedding value, removing one of the main positive drivers for oil prices over the past two months. Perhaps most importantly, there is growing speculation that inventories will start rising again in the near future. Poland’s Prime Minister said that he wants the U.S. to put sanctions on the Nord Stream 2 pipeline, which would carry Russian gas to Germany, doubling the existing line’s capacity to 110 billion cubic meters per year. “Yes, we talked about Nord Stream 2. We want the construction of the Nord Stream 2 pipeline to fall under the U.S. sanctions bill ...which includes, among others, sanctions against Russia,”. Meanwhile, on Monday, the Trump administration said it has decided not to put additional sanctions on Russia for now.. Last spring, two sites run by Anadarko Petroleum exploded, killing three people. That has raised the specter of tighter regulations to improve safety. As such, Bloomberg points out that while energy stocks of all types have posted strong gains in recent weeks, Colorado-focused drillers are not experiencing an upswing in their share prices. Extraction Oil & Gas and SRC Energy Inc. have undervalued share prices relative to their peers, which analysts argue is the result of fears over forthcoming regulatory pressure from the state. ExxonMobil said it plans to invest more than $50 billion in spending in the U.S. over the next five years, a level of spending that will be “enhanced by the historic tax reform recently signed into law.” Exxon said much of the spending will go to the Permian Basin, along with petrochemical projects along the Gulf of Mexico. The statement appears to be proof that the tax reform will entice new investment, but there is a hefty dose of corporate spin in the announcement. Exxon was already spending $10.5 billion in the U.S. per year from 2012 to 2016. The announcement means spending levels will simply rebound to about those levels after dipping in 2016 and 2017. It is unclear if the spending increase would have happened anyway as Exxon steps up its focus on shale drilling.
Oil Prices Fall After Strong Crude Inventory Build - As investment banks become increasingly bullish on crude oil, the Energy Information Administration reported a 6.8-million-barrel build in U.S. crude oil inventories for the week ending January 26. The report comes a day after the American Petroleum Institute surprised markets once again with an estimated build of 3.23 million barrels. Analysts had expected the EIA to report a draw of 1.6 million barrels, in keeping with a string of tenth consecutive weekly draws. Gasoline stockpiles, according to the EIA, fell by 2 million barrels, from a build of 3.1 million barrels for the previous week. Gasoline production last week averaged 9.6 million barrels, versus 9.7 million bpd in the week before. Refineries processed an average 16 million bpd of crude last week, compared with 16.5 million bpd a week earlier. With refinery maintenance season approaching, some analysts are starting to warn we will begin to see inventory builds and this could hurt prices for a while. Meanwhile, earlier this week the EIA took the trouble to defend its weekly numbers, which some industry watchers have shunned as lacking credibility. The weekly inventory and, more importantly, production numbers—which have strong market-moving potential—are taken by extrapolation from the EIA’s Short-Term Energy Outlook, the authority explained. This is necessitated by the fact that although oil producers report weekly data, it is impossible to gather enough of this data to make a calculation based purely on it within the very short reporting window: producers report on Monday and the Weekly Petroleum Status Report is published Wednesday. So the EIA uses its STEO figures, which are again forecast and not actual. While it would seem that estimating production numbers based on forecast data wouldn’t be too accurate, the EIA said that in hindsight the accuracy is very high, with the average difference between estimated and actual figures standing at 1.3 percent in absolute terms. In other words, all those doubting how accurate the numbers that the EIA releases every Wednesday can rest assured that they are, in fact, very accurate.
Crude Oil Prices Settle Higher Despite Massive Build in Supplies - Crude oil prices settled higher shrugging off data showing US domestic oil supplies rose for the first time in 11 weeks and production rose above 10 million barrels per day in nearly half a century. On the New York Mercantile Exchange crude futures for March delivery rose 23 cents settle at $64.73 a barrel, while on London's Intercontinental Exchange, Brent gained 0.44% to trade at $68.82 a barrel. Inventories of U.S. crude fell by rose 6.776 million barrels for the week ended Jan. 26, well above expectations for of a draw of 308,000 barrels. That was the biggest increase in US stockpiles in ten months. Gasoline inventories – one of the products that crude is refined into – fell by 1.980 million barrels, confounding expectations for a build of 1.877 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – unexpectedly fell by 1.940 million barrels, a steeper fall than the 1.454 million barrels expected. The sharp build in US oil supplies come as the spread between WTI crude and Brent continues to tighten, lessening demand for domestic crude exports, leading to a build in crude stockpiles. U.S. crude production rose to 10.04 million barrels a day set in November 1970, according to data released by EIA on Wednesday. That level brings the US closer to world's top producers Saudi Arabia and Russia.
March NYMEX natural gas keeps tumbling to $2.941/MMBtu on bearish storage outlooks - NYMEX March natural gas futures continued to decline overnight in the US ahead of Thursday's open and the midmorning release of the weekly storage data that is poised to show a slower pace of stock erosion. After tumbling by 20.0 cents Wednesday, the contract was a further 5.4 cents lower at $2.941/MMBtu at 7:15 am ET (1215 GMT) today. Weather that trimmed heating demand is expected to have driven a modest withdrawal from inventories when the US Energy Information Administration releases its next storage report for the week ended January 26. Traders and analysts anticipate a pull from stocks from 90 Bcf to 116 Bcf, with consensus formed at a 102 Bcf drawdown. That would signal a significant step down in the rate of weekly withdrawals, as it would come on the heels of the 288 Bcf draw the previous week that tied as the second-highest draw ever recorded. Weather in store suggests diverging demand that will likely encourage a fluctuation in the rate of weekly storage draws going forward, while longer-range weather projections reflect moderating weather likely to dampen demand anew and allow for a slower rate of storage withdrawals as winter transitions to spring.
Crude oil futures: Crude up on US product draws and Venezuelan production - Brent and WTI crude futures gained momentum in the European morning session Thursday, after trading sluggishly in Asia at levels slightly above Wednesday's close. At 1033 GMT, April ICE Brent crude futures were up 54 cents/b at $69.43/b, while the NYMEX March light sweet crude contract was 45 cents/b higher at $65.18/b. The increase was led primarily by a draw in US products in weekly data, eclipsing the bearish pull coming from a build in oil inventories. According to data from the US Energy Information Administration Wednesday, US crude stocks rose 6.776 million barrels in the week ended Friday, January 26, ending a streak of 10 consecutive weeks of declines. Analysts surveyed Monday by S&P Global Platts had expected US crude stocks to have increased by 325,000 barrels. Gasoline inventories fell 1.98 million barrels. Distillate stocks also fell, by 1.94 million barrels, according to the EIA data, compared with analysts expectations of a draw of 1.5 million barrels. "The draws in gasoline were supportive, WTI managed to hold onto its 20-day moving average and Brent has not broken the lows of January, so I think the complex is holding," said Jakob Olivier, founder of PetroMatrix. Furthermore, "high involuntary production outages in Venezuela pull OPEC production significantly below target in January," Commerzbank analysts said in a note, something which was also said to be supporting prices. "The resulting cut by 467,000 b/d was almost five times as high as necessary, and is nearly enough on its own to explain OPEC's substantial overcompliance. OPEC is, therefore, profiting considerably from the involuntary production outages in Venezuela at present, without which the oil market would be oversupplied," Commerzbank said.
U.S. oil production nears 47-year record as shale booms (Reuters) - U.S. crude oil production topped 10 million barrels per day (bpd) in November, according to monthly estimates published by the Energy Information Administration on Wednesday. Crude output was the highest in 47 years and just 6,000 bpd below the record set in November 1970 (“Petroleum Supply Monthly”, EIA, Jan. 31).Production has doubled over the last 10 years, from a low of around 5 million bpd in 2007, reversing decades of decline since the 1970s.The most recent surge in output confounded some observers, who had forecast production was about to level off, though the EIA had predicted it for some time.Crude production increased by almost 850,000 bpd in just the three months to November, according to the EIA. Nearly all the recent surge has come from the lower 48 states excluding federal waters in the Gulf of Mexico (http://tmsnrt.rs/2DSvXTy). Most of that increase has come from onshore shale plays in Texas (where output has risen by 500,000 bpd since August) and North Dakota (where output is up by more than 100,000 bpd). Production from the lower 48 excluding the Gulf of Mexico hit almost 7.9 million bpd in November, easily beating the previous peak of nearly 7.8 million bpd in March 2015. From an output perspective, the U.S. shale sector has fully recovered from the price and output slump that started in 2014 and 2015. Production has beaten its previous peak even though there are fewer than half the number of rigs drilling for oil compared with before the slump. Producers have pulled back from marginal areas to the most productive “core” parts of shale plays such as the Permian in western Texas and eastern New Mexico. Smaller, older rigs have been idled or replaced by newer, larger and more powerful equipment that can bore through rock faster and further. Rigs are increasingly drilling multiple wells from a single pad (avoiding downtime for moving in and rigging up) and individual wells have much longer horizontal sections (exposing more rock to each well). The result is that more oil is being produced with far fewer rigs and drilling teams.
Oil prices leap after Goldman Sachs hikes forecast to over $80 a barrel -- Crude climbed by the most in a week amid a wave of bullish sentiment pinned on expectations that tightening supplies and a rosy economic outlook will keep prices elevated. Goldman Sachs Group Inc. boosted a price forecast by a third and said global crude markets have probably rebalanced. The bank now estimates Brent will reach US$75 a barrel over the next three months and will climb to US$82.50 within six months, analysts including Damien Courvalin wrote in an emailed report. Their previous estimate for both time periods was US$62 a barrel. “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected,” Goldman’s analysts wrote. “The decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high OPEC compliance, heavy maintenance as well as collapsing Venezuela production.” Futures rose for a second day in New York, adding as much as 1.4 per cent. The dollar declined, further adding support to crude prices. As the Organization of Petroleum Exporting Countries trims production, U.S. oil output is surging. Production rose above 10 million barrels a day for the first time in more than four decades in November, while U.S. crude stockpiles broke a 10-week run of draw-downs last week, Energy Information Administration data showed Wednesday. The U.S. benchmark has remained above US$60 a barrel since late December, lending support for American drillers to pump more. West Texas Intermediate crude for March delivery advanced 72 cents to US$65.45 a barrel at 9:54 a.m. on the New York Mercantile Exchange. Total volume traded was about 27 per cent above the 100-day average. Brent for April settlement jumped 72 cents to US$69.61 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of US$4.37 to April WTI. The March contract expired Wednesday
Oil rises as OPEC compliance eclipses boom in US output (Reuters) - Oil rose on Thursday after a survey showed OPEC’s commitment to its supply cuts remains in place, even as U.S. production topped 10 million barrels per day (bpd) for the first time since 1970. On its first day as the front-month, Brent futures for April delivery gained 76 cents, or 1.1 percent, to settle at $69.65 a barrel, while U.S. West Texas Intermediate (WTI) crude for March delivery jumped $1.07, or 1.7 percent, to settle at $65.80. That put both crude futures contracts close to their highest levels since December 2014. In January, both benchmarks rose for a fifth month in a row with Brent up 3.3 percent and WTI up 7.1 percent, marking the strongest start to a year for Brent in five years and WTI in 12 years. “Oil is up today because of OPEC’s reinforced commitment for 2018,” said Brian Kessens, a portfolio manager and managing director at Tortoise in Leawood, Kansas. Oil output in the Organization of the Petroleum Exporting Countries (OPEC) rose in January from eight-month lows as higher output from Nigeria and Saudi Arabia offset declines in Venezuela and strong compliance with the OPEC-led supply pact, according to a Reuters survey. [OPEC/O] “The OPEC compliance for January was elevated but there are real questions going forward given the outsized participation of Venezuela,” John Kilduff, partner at energy hedge fund Again Capital LLC in New York, said. Oil output in Venezuela has been declining amid an economic crisis. The country produced about 1.6 million bpd in January, according to the Reuters survey, putting its output well below what it pledged to cut. Also supporting Thursday’s crude market was a note from Goldman Sachs boosting their oil price target. Goldman Sachs raised its three-month forecast for Brent to $75 from $62 and its six-month forecast to $82.50 from $75. Oil prices, however, are unlikely to advance much above $70 a barrel in 2018, given the tug of war between OPEC and the U.S. shale industry, a Reuters poll showed on Wednesday.
Oil Markets Are At A Stalemate -- Oil prices seesawed over the past few days, but look poised to close out the week flat compared to last week. High OPEC compliance and falling Venezuelan production more or less offset surging output from U.S. shale and an uptick in inventories. U.S. oil production tops 10 mb/d. The EIA said this week that U.S. oil production surpassed 10 mb/d in November, just shy of the all-time high set decades ago. There was a huge increase from October, a monthly increase of over 380,000 bpd. The surging output is clear evidence that the shale industry is ramping up production at an amazing pace, and could spoil OPEC’s plans to balance the market. Meanwhile, U.S. crude inventories also jumped last week, the first time that has occurred in several months. Goldman: Brent to $82 in 6 months. Goldman Sachs dramatically overhauled its forecast for oil prices this year, stating in a research note that the market is tightening much faster than expected. Moreover, the investment bank said that OPEC’s objective of bringing down inventories to the five-year average has probably already occurred. “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected.” The bank predicts that OPEC will stick with the cuts for the first half of the year, which could tighten the market more than the group intends, and push prices up above $80 per barrel by the summer. From there, OPEC might gradually ratchet up output. OPEC maintained high levels of compliance with the production cuts in January, with its compliance rate at 138 percent according to Reuters. However, that is largely the result of the meltdown from Venezuela, which offset the gains from Saudi Arabia and Nigeria. Barclays estimates that Venezuela’s production could fall by 700,000 bpd this year, averaging 1.43 mb/d. The crisis continues to erode the country’s production base, a drop off that accelerated at the end of 2017. Meanwhile, U.S. Secretary of State Rex Tillerson seemed to offer some measure of support for a military coup in the country. "There will be a change in Venezuela. We want it to be a peaceful change," Tillerson said on Thursday at the University of Texas-Austin, according to Argus Media. "We have not advocated for the regime change or removal of President Maduro," he tried to clarify. "Maduro could choose to just leave, that would be the easiest. He has friends in Cuba and they can give him a nice hacienda on the beach and he can have a nice life there."
The Oil Rig Count Rises Once Again - The number of active oil and gas rigs decreased this week, according to Baker Hughes data, by a single rig. This brings the total number of oil and gas rigs to 946, which is an addition of 217 rigs year over year.Still the number of oil rigs in the United States rose this week, by 6, with the number of gas rigs decreasing by 7. The number of oil rigs stands at 765 versus 586 a year ago. The number of gas rigs in the U.S. now stands at 181, up from 145 a year ago. At 12:14pm EST, the price of a WTI barrel was trading down $1.02 (-1.55 percent) to $64.78—almost $1.00 under this same time last week. The Brent barrel trading down $1.51 (-2.17 percent) to $68.14, almost $2 per barrel under last week. While inventory figures and OPEC data are the usual catalyst for oil price swings, this week the stronger dollar has pushed oil prices downward in what is one of the biggest weekly drops in months.U.S. crude oil production rose again, to 9.919 million bpd, from 9.878 million bpd the week before, setting another new high and getting dangerously close to that psychologically important 10.0 million bpd mark. Canada has added hundred of rigs in the last three weeks. This week, Canada added another 14 oil rigs, but the number of gas rigs in Canada declined by 10. The total number of oil and gas rigs is now 342, with the number of gas rigs still down year over year. The Permian basin rig count was flat this week, with the Haynesville basin seeing the biggest increase to the number of rigs, which was up by 2. At 1:08pm EST, WTI was trading at $65.23 (-$0.57) with Brent trading at $68.56 (-$1.09).
US drillers add oil rigs for second consecutive week - (Reuters) - U.S. energy companies added oil rigs for a second week in a row as crude prices hovered near their highest levels since 2014, prompting drillers to return to the well pad. Drillers added 6 oil rigs in the week to Feb. 2, bringing the total count up to 765, the highest level since August 2017, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 583 rigs were active after energy companies started to boost spending in mid-2016 as crude were recovering from a two-year price crash. U.S. crude futures traded around $65 a barrel this week, near their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016. Looking ahead, futures were trading around $63 for the balance of 2018 and $58 for calendar 2019. In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 30 of the roughly 65 E&Ps they track, including Hess Corp, have already provided capital expenditure guidance indicating a 5 percent increase in planned spending over 2017. Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent over what they planned to spend in 2016. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week slightly increased their forecast the total oil and natural gas rig count to an average of 1,006 in 2018 and 1,131 in 2019. Two weeks ago, they forecast 1,004 in 2018 and 1,128 in 2019. There were 946 oil and natural gas rigs active on Feb 2. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas. The U.S. Energy Information Administration in January projected U.S. production would rise to a record high annual average of 10.3 million barrels per day in 2018 and 10.9 million bpd in 2019, up from 9.3 million bpd in 2017.
Oil prices tally a loss for the week - Oil prices finished lower Friday to tally a weekly loss, as recent U.S. monthly data show domestic crude production in record territory.March West Texas Intermediate crude fell 35 cents, or 0.5%, to settle at $65.45 a barrel on the New York Mercantile Exchange. The contract rose 1.7% Thursday, the biggest single-session gain since Jan. 24, according to FactSet data. For the week, prices were about 1% lower. April Brent, the global benchmark, dropped $1.07, or 1.5%, to end at $68.58 a barrel on the ICE Futures Europe Exchange. The contract marked a weekly loss of roughly 2.2%.U.S. oil production, driven by shale extraction, surpassed 10 million barrels a day in November for the first time in nearly 50 years, according to data released this week by the U.S. Energy Information Administration, reigniting concerns the market is oversaturated with crude. On Friday, Baker Hughes reported that the number of active U.S. rigs drilling for oil climbed for a second week in a row, highlighting a rise in drilling activity. It rose by 6 to 765 this week.Oil prices were additionally pressured by a selloff in the stock market, . “The equity sell off, really fueled by the rise in the 10-year bond yield] has turned the most markets into a risk off posture,” he said. “With the heavily long crude market not surprising to see it spill over to the energy market.” But oil prices have still found support from adherence to OPEC’s deal to limit supply. Compliance by the Organization of the Petroleum Exporting Countries with the oil cartel’s agreement with other major producers to hold back production by 1.8 million barrels a day rose to 138% last month, according to a Reuters survey. That is a “sign of their steadfast commitment to eliminating the global supply surplus, according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. OPEC and 10 members outside the cartel, including Russia, first agreed in late 2016 to curb global crude output by nearly 2% in an effort to rein in a supply glut that has weighed on prices for over three years. The participants decided late last year to extend the deal through the end of this year. The current all-time U.S. output annual peak was in 1970 at 9.6 million bpd, according to federal energy data.
Saudi’s Aramco IPO dream could create shale oil nightmare -- Saudi Arabia’s dream of securing a $100bn windfall from the IPO of Aramco may be clouding its judgement. The kingdom needs higher oil prices to entice international investors to buy a stake in the state-owned company, which supplies almost all its crude. Using its OPEC clout to restrict global supplies and pump up the cost of its barrels makes the mega offering look more appealing but the move has also revived the kingdom’s biggest enemy in the form of US shale oil. Oil prices have climbed 33pc to trade around $70 per barrel since the Organisation of the Petroleum Exporting Countries (OPEC), with the help of Russia, agreed in late 2016 to shave 1.8m barrels per day (bpd) of crude from world supplies. That deal — brokered primarily by Riyadh — has now been extended for another year. The new timeline is conveniently synced with the scheme to offload up to 5pc in Aramco by the end of 2018. The danger with this strategy is that in emboldens US shale. The US Department of Energy predicts that America’s drillers will increase output by 1m bpd this year to average 10.3m bpd, rivalling Saudi Arabia and Russia in output terms. Despite these increases and the promise that US drillers could open their taps further, Riyadh remains unfazed. Rather than peaking anytime soon, it argues that global oil demand could grow a further 20% in the next 25 years, hitting 120 million b/d, with declines in smaller producing countries creating enough room for booming shale.
Saudi billionaire Twitter investor freed after settlement - BBC News: One of the world's richest men, Prince Alwaleed bin Talal, has been released two months after being detained in Saudi Arabia's anti-corruption purge. He was freed after a financial settlement was approved by the state prosecutor, an official said. Prince Alwaleed was held in November by a new anti-corruption body headed by the Saudi crown prince. More than 200 princes, politicians, and wealthy businessmen were detained in the crackdown. Since then, they have been held in the Ritz Carlton hotel in Riyadh, which is due to reopen on 14 February. Prince Alwaleed is the most high-profile detainee to have been released so far. Speaking to Reuters news agency before his release he said that no charges had been laid against him and expressed support for Crown Prince Mohammed bin Salman. The multi-billionaire has a vast array of business interests across the world, including holdings in Twitter and Apple. In November, Forbes estimated his net worth at about $17bn (£13bn), making him the 45th richest man in the world. Officials say he will remain as head of his company, Kingdom Holding. Other high-profile figures that have been set free include Waleed al-Ibrahim, the head of MBC television network, and Khalid al-Tuwaijiri, a former chief of the royal court. They have paid substantial financial settlements, reports say - though the amounts have not been made public.
Prince Alwaleed Finally Released From "Hotel Arrest" --Two weeks after we reported that Saudi Arabia's billionaire prince Alwaleed Bin Talal was reportedly carted off from the Riyadh Ritz Carlton to Saudi Arabia's highest security prison after refusing to pay a $6 billion "freedom fee" to Crown Prince Mohammed Bin Salman to secure his freedom, the flamboyant billionaire and Twitter investor appears to have finally cracked, and according to the WSJ, Saudi authorities on Saturday finally released Alwaleed, more than two months after he was detained in what was described to be a "widespread crackdown on corruption" in the kingdom but was really just a shakedown of some of the country's richest royals as well as arrests of MbS' political opponents. The FT quoted a colleague of bin Talal who said that He sounded very happy, well and the same"... if maybe a little bit poorer."Prince al-Waleed is already at his house in Riyadh and is expected to resume his business activities as normal", the WSJ reported citing sources. While it was previously disclosed that Saudi authorities demanded at least $6 billion from al-Waleed to free him, it wasn’t clear what if any "settlement" the prince agreed to pay; he has previously denied wrongdoing and fought allegations of bribery, extortion and money laundering.Alwaleed will remain in control of Kingdom Holding Co. after reaching the settlement a senior government official cited by Bloomberg, which would suggest that the amount of money exchanging hands was substantial. The official also declined to provide details of settlement, and "cannot confirm or deny" whether attorney general is convinced of Alwaleed’s innocence. "Settlements don’t happen unless the accused acknowledges violations and documents that in writing and pledges that he won’t repeat them. This is the general principle of all who were detained in corruption cases recently and not only Alwaleed bin Talal."
TEXT-Transcript of Reuters interview with Saudi Arabia's Prince Alwaleed bin Talal (Reuters) - Following are excerpts of a Reuters interview with Saudi Arabia’s billionaire Prince Alwaleed bin Talal, detained in the kingdom’s sweeping corruption probe. He spoke with Reuters for 30 minutes in a suite at Riyadh’s opulent Ritz-Carlton hotel, where he has been held since November. It was the first time the prince, one of the nation’s most prominent businessmen, has spoken publicly since his detention.
Saudi government says it's seizing over $100 billion in corruption purge -- Saudi Arabia's government has arranged to seize over $100 billion in financial settlements with businessmen and officials detained in its crackdown on corruption, the attorney general said on Tuesday. "The estimated value of settlements currently stands at more than 400 billion riyals ($106 billion) represented in various types of assets, including real estate, commercial entities, securities, cash and other assets," Sheikh Saud Al Mojeb said in a statement. The huge sum, if it is successfully recovered, would be a major financial boost for the government, which has seen its finances strained by low oil prices. The state budget deficit this year is projected at 195 billion riyals. The announcement also appeared to represent a political victory for Crown Prince Mohammed bin Salman, who launched the purge last November and predicted at the time that it would net about $100 billion in settlements. Dozens of top officials and businessmen were detained in the purge, many of them confined and interrogated at Riyadh's opulent Ritz-Carlton Hotel. In total, the investigation subpoenaed 381 people, some of whom testified or provided evidence, Mojeb said, adding that 56 people had not reached settlements and were still in custody, down from 95 early last week. Some cases are expected to go for trial, authorities have said previously. Over 100 detainees are believed to have been released. Billionaire Prince Alwaleed bin Talal, owner of global investor Kingdom Holding, and Waleed al-Ibrahim, who controls influential regional broadcaster MBC, were freed last weekend.
Saudi corruption purge winds down but scars will linger (Reuters) - Saudi Arabia’s stock market celebrated the release of some of the kingdom’s top businessmen from detention on Sunday but the after-effects of a purge of the business elite may last for years, deterring private investment. Billionaire Prince Alwaleed bin Talal, head of global investment firm Kingdom Holding 4280.SE, was among at least half a dozen tycoons freed at the weekend after over two months of confinement in Riyadh’s Ritz-Carlton Hotel. Their release signaled a massive anti-corruption drive, in which authorities detained over 200 people and said they aimed to seize $100 billion of illicit assets, was drawing to a close. The Ritz-Carlton is to reopen to the public in mid-February. But troubling questions about the purge have not been answered. Although few people doubt Saudi Arabia would benefit from less corruption, the scale and ferocity of the crackdown alarmed businessmen inside and outside the kingdom. Details of financial settlements between authorities and detainees have not been disclosed, leaving the public to wonder what the penalties are for large-scale corruption - and what allegations the detainees actually faced. The first major settlement was that of senior prince Miteb bin Abdullah, once seen as a leading contender to the throne, who was freed after agreeing to pay over $1 billion, according to Saudi officials. That fueled suspicion among foreign diplomats there might be political motives behind the purge. While the government says eliminating corruption will level the playing field for all investors, some local and foreign businessmen feel risks have risen, as they are not sure if local partners may become targets of another crackdown. “This was completely unprecedented – not only in Saudi Arabia, but among all Arab monarchies,” said Steffen Hertog, a leading Saudi Arabia scholar at the London School of Economics. “The appetite for big-ticket corruption among Saudi elites will certainly be a lot lower now. But many also believe, at least for the time being, that life has become less predictable for the private sector, which could make it harder to commit to long-term investment.”
Yemen separatists capture most of Aden, residents say - BBC News: Yemeni separatists have taken almost full control of the southern port city of Aden after days of fighting with government forces, residents say. PM Ahmed bin Daghar and members of his cabinet are believed to be holed up inside the presidential palace in Aden. There are reports of talks between the southern separatists and government forces, who were previously allies. The fighting opens up a new front in Yemen, splitting the alliance against Houthi rebels in the north. It has already led to the deaths of 40 people since Sunday, the Red Cross says. The separatists are also reported to have also seized Aden's military bases. Yemen's internationally-recognised government relocated to Aden in 2015, when President Abdrabbuh Mansour Hadi and his cabinet were forced to flee the capital, Sanaa, following an offensive by the Houthis. A assault on Sanaa prompted a Saudi-led multinational coalition to launch a military campaign to defeat the rebels. Since then, more than 9,245 people have been killed and 3 million displaced, according to the UN.
Saudi, U.A.E. Move to Quell Clashes Threatening Yemen Alliance - Saudi Arabia and the United Arab Emirates moved to contain deadly infighting between their Yemeni allies that threatens to jeopardize their common fight against Iran-backed Houthi rebels.The two Gulf states sent a “top military and security delegation” to the site of the clashes, the southern port city of Aden, to monitor implementation of a cease-fire between Yemen’s elected government and the secessionist Southern Transitional Council, the U.A.E.’s official news agency reported on Thursday. Thirty-eight people have been killed and 222 wounded since the fighting began Sunday, according to the International Committee of the Red Cross.The violence in Aden, where the government of ousted President Abd Rabbuh Mansur Hadi is based, threatened his control of the city and risked weakening the military coalition Riyadh and Abu Dhabi built three years ago to reassert his authority over the whole of Yemen. The clashes between the Saudi-backed Hadi and separatists supported by the U.A.E. had raised concerns the two Gulf nations’ alliance is fraying, and spurred criticism they had failed to agree on a unified vision for Yemen. In statements carried by Saudi and U.A.E. media outlets, the two nations emphasized a shared goal in Yemen: to preserve the integrity of the state. The conflict -- widely seen as a proxy war between Saudi Arabia and Iran -- has killed thousands, and created widespread illness, hunger and displacement in a country that was already among the world’s poorest.
Defence minister: Saudi, UAE intended to invade Qatar - Saudi Arabia and the United Arab Emirates had intentions to invade Qatar at the beginning of a diplomatic crisis that erupted in June, according to Qatar's defence minister.In an interview with the Washington Post on Friday, Khalid bin Mohammad Al Attiyah said his Gulf neighbours have "tried everything" to destabilise the country, but their intentions to invade were "diffused" by Qatar."They have intentions to intervene militarily," said Attiyah. When asked to confirm whether he thought such a threat still existed today, he responded: "We have diffused this intention. But at the beginning of the crisis, they had this intention. "They tried to provoke the tribes. They used mosques against us. Then they tried to get some puppets to bring in and replace our leaders." Attiyah, who met US Defense Secretary Jim Mattis last week during a visit to Washington, DC, described the beginning of the crisis by the Saudi-led bloc as an "ambush" that was "miscalculated".In June 2017, Saudi Arabia, the UAE, and Egypt and Bahrain cut off diplomatic relations with Qatar and imposed a land, sea and air blockade after accusing it of supporting "terrorism" and "extremism". Qatar has strongly denied the allegations.Attiyah said Qatar is the only country that has signed a memorandum of understanding with the US to counter terrorism in the region - namely in Iraq, Afghanistan, and Syria. Asked about Doha's relations with Saudi's rival, Iran, Attiyah noted that Qatar maintains "friendly relations with everyone".
Why Europe Must Reject U.S. Blackmail Over Iran’s Nuclear Agreement – The Trump administration has threatened to end the nuclear deal with Iran. In our last post we argued in detail that the attempt of the European 3, the United Kingdom, France and Germany, to soothe Trump by condemning Iran's ballistic missiles is itself a breach of the Joint Comprehensive Plan of Action and the UN Security Council Resolution 2231. The University of Alabama endorsed Moon of Alabama's legal reasoning. Professor Daniel Joyner, author of several books on international law, non-proliferation and the nuclear deal with Iran, responded to the piece: I examined 2231 in a chapter you can download here: Iran's Nuclear Program and International Law: From Confrontation to Accord, Chapter 7 I addressed the missile issue at pg. 240, and reached the same conclusion you do. Ellie Geranmayeh, a member of the European Council of Foreign Relations (a U.S. aligned institution), is also defending the nuclear deal and warns against endorsing its breach. She argues in Foreign Policy that the Europeans should not soothe Trump but take a strong stand against any U.S. attempt to put Iran back into the bad corner:Some European officials state in private that the best option is for Europe to muddle through in the hope that Trump will eventually shift his position. But muddling through just won’t do. Trump is likely to continue increasing his maximalist demands unless Europe flexes its political muscle.In order to protect its economic and security interests, Europe must not only reject Trump’s ultimatum — which would be a kiss of death for the nuclear deal — but also push back. Europe should put in place a viable contingency plan if the United States continues backtracking on the deal and let Washington know it’s ready to use it.The author puts forward a four point plan which would indemnify European companies which are dealing with Iran but threatened by secondary U.S. sanctions: Put simply, EU officials must tell Trump: If you fine our companies’ assets in the United States, we will reclaim those costs by penalizing U.S. assets in Europe. This would cause a major trade conflict that the Europeans want to avoid by all means.
Middle East’s Next Oil War? Israel Threatens Lebanon Over Hezbollah and Natural Gas - Israel has threatened to invade Lebanon amid a recent spat over natural resources and militant groups that, once again, raised tensions between the longtime foes.Addressing the Institute for National Security Studies at Tel Aviv University on Wednesday, Israeli Defense Minister Avigdor Lieberman said that Lebanon’s latest plans to drill in a disputed offshore oil and gas field known as Block 9 were “very, very challenging and provocative,” according to Reuters. In the same speech, the far-right minister threatened to wage a full-scale war against Lebanon if Hezbollah launched any attacks against Israel. The Iran-backed Shiite Muslim movement warned it would defend Lebanon’s natural resources at any cost. “We reiterate our firm and unequivocal position in decisively confronting any aggression against our oil and gas rights, defending Lebanon’s assets and protecting its wealth,” Hezbollah told Newsweek in an email statement. Israel has invaded Lebanon twice, the first time during the 15-year Lebanese civil war and a second time in 2006 in response to Hezbollah’s cross-border raids. In both instances, Hezbollah led the local resistance against Israel, which ultimately withdrew. In the latest crisis, Israel has warned foreign companies not to invest in Lebanese plans to explore the Block 9 offshore oil reserve located on the maritime border between Israel and Lebanon. Lebanon awarded bids last month to France’s Total Sa, Italy’s Eni SpA and Russia’s Novatek PJSC to drill for oil and gas in blocks 4 and 9 within Lebanon’s exclusive economic zone, but Lieberman warned this was a “grave mistake” and “contrary to all the rules” because Block 9 belonged totally to Israel, Bloomberg News reported, citing an Israeli Defense Ministry statement.
Miscalculations in Israel Could Pave Way to Wider War - Last week, Israeli political leaders were rolling with guffaws and ribbing each other in delight as Vice-President Mike Pence proved that, as a Christian Zionist, he was more Zionist than the Zionists in the Knesset (minus, of course, its evicted Arab members – see here). But one might wonder what the more sober Israeli security echelon figures were thinking as they listened to Pence’s Knesset speech, which was rife with Biblical references and declarations of his “admiration for the People of the Book.”Perhaps they were speculating how far they might be able to go in influencing Pence and his boss, Donald Trump, to wield U.S. military power to advance Israeli interests.Prime Minister Benjamin Netanyahu, via the Trump family go-betweens – Jared Kushner, and the Trump family lawyers – has certainly had an impact in Washington. The Middle East landscape has changed considerably over the last year as a consequence, but the nature of that change is what is at issue. How many of these changes have actually benefited Israel’s – or the U.S.’s – security interests?When Saudi Crown Prince Mohammad bin Salman (MbS) began his coup last June, ultimately resulting in this 31-year-old assuming absolute power, President Trump characteristically took full credit. “We’ve put our man on top!” he bragged to his friends, according to Michael Wolff in his book, Fire and Fury. Yes, Trump was right – partly. “Our man” came out on top, but it was Netanyahu, working the levers behind the scenes, and Mohammad bin Zayed (MbZ)’s “man” in Washington, United Arab Emeriates Ambassador Yousef al-Otaiba, who did the heavy lifting in order to change the U.S.’s settled preference for Prince bin Naif, as Successor to the Throne. And it was MbZ, in the first place, who had advised MbS that it was Israeli support that was both the necessary, and the sufficient condition, for him to become Crown Prince. Netanyahu (and Israel) cannot escape some responsibility for the condition in which the kingdom now finds itself.
Turkey Demands US Forces Leave Syria's Manbij Immediately - As Turkish and allied militant forces from the so-called Free Syrian Army (FSA) advance further upon Kurdish positions in northern Syria, Turkey has called upon the United States to vacate its military bases in the Syrian district of Manbij. Speaking to reporters on Saturday, Turkish foreign minister Melet Cavusoglu said that Ankara is calling upon the US, its official ally in NATO, to cease any and all support to Syrian Kurdish forces and militias. Cavusoglu’s statement came mere hours after an official telephone talk between Turkey’s Presidential Spokesman Ibrahim Kalin and US National Security Adviser Herbert Raymond McMaster about the ongoing Turkish invasion of Syrian soil. ] Though unconfirmed by officials in Washington, the US-funded Voice of America reports that McMaster "pledged to stop giving arms to YPG Kurdish forces in Syria" during the phone call. However, it is unclear what this would mean on the ground as the Pentagon has in the past attempted to make a linguistic distinction between the YPG per se (Kurdish "People's Protection Units") and the Syrian Democratic Forces (the former comprises the bulk of the latter), as well as a distinction between YPG operating in Afrin Canton and the rest of Kurdish forces in Rojava. While both Turkey and the United States are in violation of international law by entering Syria with military forces without permission by Damascus or a UN mandate, both countries have vastly different interests in the country.
US, Turkish Troops Headed For Military Showdown In Syria - Two days after we reported that Turkey valiantly demanded that US forces vacate military bases in the Syrian district of Manbij, when Turkey's foreign minister Melet Cavusoglu also said that Ankara is calling upon the US to cease any and all support to Syrian Kurdish forces and militias, not surprisingly the US refused, and on Monday a top American general said that US troops will not pull out from the northern Syrian city of Manbij, rebuffing Ankara demands to withdraw from the city and risking a potential confrontation between the two NATO allies. Speaking on CNN, General Joseph Votel, head of the United States Central Command, said that withdrawing US forces from the strategically important city is "not something we are looking into." Last week Turkish troops crossed into Syria in an push to drive US-backed Kurds out of Afrin. As part of the Turkish offensive, which is grotesquely code-named ‘Operation Olive Branch’, president Erdogan warned that the offensive could soon target “terrorists” in Manbij, some 100km east of Afrin. “With the Olive Branch operation, we have once again thwarted the game of those sneaky forces whose interests in the region are different,” Erdogan said in a speech to provincial leaders in Ankara last week. “Starting in Manbij, we will continue to thwart their game.”But not if the US is still there, unless for the first time in history we are about to witness war between two NATO members. And the US has no intention of moving.Colonel Ryan Dillon, spokesperson for the US-led coalition, told Kurdish media on Sunday that American forces would continue to support their Kurdish allies – despite Erdogan’s threats.
Why Turkey's battle for northern Syria matters - BBC News: Anyone who thought that the defeat of the Islamic State group would lead to an end or a simplification of the conflict in Syria was wrong. Just look at Turkey's controversial offensive in Syria's northern region of Afrin, intended to extend Turkey's existing buffer zone inside the country and to evict Kurdish fighters from a broad swathe of territory. The Ankara government sees the fighters as allies of Kurdish separatists inside Turkey. Indeed, despite various shifts in Turkish policy towards the conflict in Syria, opposition to Kurdish autonomy has been constant and absolute. The Turks will simply not tolerate what they see as the threat posed by an autonomous Kurdish zone on their southern frontier. And they are clearly willing to use significant force to remove it. But just how much force, and how far could this conflict in northern Syria go? The Kurdish fighters have long been trained and backed by the Americans, indeed, they have proved to be the most capable of Washington's allies in the struggle against Islamic State. And with IS defeated, at least as a territorial entity, the Kurds were able to consolidate control over a considerable region in the north. For Washington, the Turkish offensive raises difficult problems. It was poor messaging by a US military spokesman speaking about the creation of a Kurdish border force to maintain security in northern Syria that gave Ankara its immediate cause to launch its attack.This is an uncomfortable position for Washington: its Nato ally Turkey engaged in fierce combat with its main ally in Syria, the Kurds. And it could get worse.
The "Dirty Game" To Fuel Ethnic Proxy War Across The Greater Middle East -- Turkish allegations of Saudi, Emirati and Egyptian support for the outlawed Kurdish Workers Party (PKK) threatens to turn Turkey’s military offensive against Syrian Kurds aligned with the PKK into a regional imbroglio. The threat is magnified by Iranian assertions that low-intensity warfare is heating up in areas of the Islamic republic populated by ethnic minorities, including the Kurds in the northwest and the Baloch on the border with Pakistan. Taken together, the two developments raise the specter of a potentially debilitating escalation of the rivalry between Saudi Arabia and Iran as well as an aggravation of the eight-month-old Gulf crisis that has pitted Saudi Arabia and its allies against Qatar, the latter which has forged close ties to Turkey. The United Arab Emirates and Egypt rather than Saudi Arabia have taken the lead in criticizing Turkey’s incursion into Syria designed to remove US-backed Kurds from the border region and create a 30-kilometer deep buffer zone. UAE Minister of State for Foreign Affairs Anwar Gargash said the incursion by a non-Arab state signaled that Arab states would be marginalized if they failed to develop a national security strategy.Notably Egypt, for its part, condemned the incursion as a "fresh violation of Syrian sovereignty" that was intended to "undermine the existing efforts for political solutions and counter-terrorism efforts in Syria."Despite Saudi silence, Yeni Safak, a newspaper closely aligned with President Recep Tayyip Erdogan’s ruling Justice and Development Party (AKP), charged that a $1 billion Saudi contribution to the reconstruction of Raqqa, the now Syrian Kurdish-controlled former capital of the Islamic State, was evidence of the kingdom’s involvement in what it termed a "dirty game." Analysts suggest that Saudi Arabia may have opted to refrain from comment in the hope that it could exploit the fact that Iran, a main backer of Syrian president Bashar al-Assad, has refused to support the incursion. Nevertheless, Saudi, UAE and Egyptian support for the Syrian Kurds would jive with suggestions that the Gulf states are looking at ways of undermining regimes in Tehran and Damascus by stirring unrest among their ethnic minorities.
A Modest Proposal to dismember Syria … " ... the five countries called for a UN-supervised election for the -Syrians inside and outside the country and for radical changes in the Syrian constitution including stripping the Syrian presidency from most, if not all, of its powers.The five countries also suggested stripping the Syrian government from many of its powers and creating two parliaments that will have limited powers. This will leave most of the state’s establishments under the control of the local authorities in a decentralized political system.Syrian pro-government activists described the proposed constitution as an attempt to legalize the stateless situation in some parts of Syria in order to end the Syrian state once and for all. Bashar Jaafari, the Permanent Representative of Syria to the United Nations, rejected the Arab-Western plan and stressed that its content contradicts with the international resolutions, according to the Syrian Arab News Agency (SANA)." via SF. The French and British created the state of Syria in pursuit of their imperial interests and now, in association with the US and Saudi Arabia, they seek to destroy it. Jordan? This is laughable. Jordan is yet another artifact of the post WW1 re-structuring of the ecumenical empire that the Sublime Porte had more or less governed for hundreds of years in the name of Islam. For the Jordanians to sign on to the destruction of Syria is worse than a crime. It is stupid. Have the Jordanians no sense at all of what may be their fate when greater powers find them inconvenient.Saudi Arabia? Their obvious desire to subjugate the interests of the many religious and ethnic groups of Syria is clear. They have sought Wahhabi Sunni triumphalism and rule in the Levant for many years. Their participation in this foolish proposal is yet more of the same. Unless the Turks conquer a great deal of northern Syria and thereby make moot any such agreement, it is likely that in the end there will be some measure of autonomy granted to the Syrian Kurds by the SAG, but not more than that. Loosely confederated states are not favored in the Islamic World. They are thought to be inherently weak instruments of foreign meddling.
Hamas Founder Linked To Iran Dies After Mysterious "Accidental" Self-Inflicted Gunshot Wound - A senior Hamas official and one of the Palestinian terror group's founding fathers has died after suffering a head wound in what reports are describing as an "unexplained shooting" . Hamas announced that Imad al-Alami died Tuesday after being unconscious since a January 9 mysterious incident said to have occurred at his Gaza City home, which sparked widespread speculation over what happened.Fueling the speculation was a hasty Hamas statement released on January 9 which initially claimed he had died of "natural causes" but a subsequent statement was quickly issued saying he accidentally shot himself in the head while "inspecting his personal weapon in his home and is in critical condition." The 62-year old Alami, who also went by Abu Hamam, had been in critical condition in a Gaza hospital for the three weeks before his death. Alami was classified as a "specially designated global terrorist" by the US in 2003 after spending a career holding key posts within Hamas' policy-making body, which included years heading up Hamas headquarters-in-exile offices in Damascus, before returning to the Gaza strip in 2012. He also oversaw Hamas military operations in the West Bank during his time in Syria. More significant, however, is that he was among the most internationally connected of Hamas' founding members, having maintained extensive ties with Iran - a major financial sponsor and weapons supplier to Hamas - and with a close personal relationship with Hezbollah Secretary-General Hassan Nasrallah. Alami was further widely acknowledged to be in line as the designated successor to current Hamas head Ismail Haniyeh, and was active in operations as late as 2014, when he was seriously wounded - reportedly by Israeli airstrike during Israel's 'Operation Protective Edge' - which resulted in the loss of one of his legs. After the January 9 reported "self-inflicted gunshot wound" Israeli media also theorized that there may be more to the story. Israel's YNet News reported at the time: The circumstances behind the injury are still unclear. It is possible he tried to take his own life after being diagnosed with cancer a year ago, or that he was hurt in an assassination attempt. A third option is that his handgun accidentally discharged, hitting him.
In case I die: Why Afghans keep notes in their pockets -- Tucked away in Mujeebullah Dastyar's wallet is a piece of paper with several scribblings: emergency contacts' phone numbers, his blood type and work address. "If I get injured or even die in an attack, at least the doctors will have all the information about me," he tells Al Jazeera. Like most of Kabul's residents, the 28-year-old feels utterly hopeless after a Taliban-claimed assault on the Afghan capital killed more than 100 people and wounded 235."Many people after the Saturday attack were missing and their relatives kept looking for them," he says."One of my friends was also missing and we had to post on social media about him to know which hospital he was in, or whether he was alive or dead." With an acute sense of insecurity reeling through the city, the civil servant now frequently calls his parents - who are out of the country - to keep them aware of his whereabouts. "They worry about me a lot," he says, describing Saturday as "the worst day". "But I have seen this war since I was born, so I feel I am kind of ready for everything, I've been seasoned this way now." From the moment of attack, the sound of sirens has gripped the city. Fazila Shahedi, a 20-year-old student of political science who attends university in the capital, said fear seizes her when she hears an ambulance siren, reminding her of the deadly explosion. Shahedi also carries a piece of paper with important information. "I keep one in my purse and the other in my jacket pocket," she tells Al Jazeera, explaining that if one piece of paper is destroyed in an attack, the other should be readable.
Pakistan 'Pivots' To Purchase Weapons From China/Russia After Trump Halts Military Aid - President Trump’s decision to ring the New Year by simultaneously demonizing Pakistan on Twitter has mostly backfired.In an interview with the Financial Times, Pakistan’s defense minister Khurram Dastgir Khan said Pakistan is expanding its relationships with Russia and China, as relations with Washington deteriorate following the suspension over $2 billion in military aid to Islamabad. Khan said is his government is undergoing a “regional recalibration of Pakistan’s foreign and security policy,” which implies Pakistani defense forces will be buying military weapons from Russia and China, rather than the United States.“The fact that we have recalibrated our way towards better relations with Russia, deepening our relationship with China, is a response to what the Americans have been doing,” Khan stated.Khan’s comments to the Financial Times came three weeks after Beijing announced it would be building its second foreign military base near the Gwadar Port, in the Pakistani province of Balochistan.Plans call for the Jiwani base to be a joint naval and air facility for Chinese forces, located a short distance up the coast from the Chinese-built commercial port facility at Gwadar, Pakistan. Both Gwadar and Jiwani are part of Pakistan’s western Baluchistan province....The large naval and air base will require the Pakistani government to relocate scores of residents living in the area. Plans call for their relocation to other areas of Jiwani or further inland in Baluchistan province.The Chinese also asked the Pakistanis to undertake a major upgrade of Jiwani airport so the facility will be able to handle large Chinese military aircraft.Work on the airport improvements is expected to begin in July.
The Economist: Humanity teeters on the brink of world war -- The Economist magazine, the influential London weekly, has devoted its latest issue to discussing “The Next War” and “The Growing Threat of Great Power Conflict.” Its lead editorial opens with a chilling warning:In the past 25 years war has claimed too many lives. Yet even as civil and religious strife have raged in Syria, central Africa, Afghanistan and Iraq, a devastating clash between the world’s great powers has remained almost unimaginable.No longer … powerful, long-term shifts in geopolitics and the proliferation of new technologies are eroding the extraordinary military dominance that America and its allies have enjoyed. Conflict on a scale and intensity not seen since the second world war is once again plausible. The world is not prepared.The Economist envisages a dystopian, violent future, with the American military deploying to intimidate or destroy purported challenges to its dominance everywhere.The Economist predicts that in the next 20 years “climate change, population growth and sectarian or ethnic conflict” are likely to ensure that much of the world descends into “intrastate or civil wars.” Such conflicts will increasingly be fought at “close quarters, block by block” in cities ringed by “slums” and populated by millions of people. The future for large sections of humanity is the carnage that was witnessed during last year’s murderous battles over the Iraqi city of Mosul and the Syrian city of Aleppo. But more chilling are the series of scenarios it outlines for a major escalation in tensions between the United States and Russia and China, presented as Washington's strategic adversaries, which at any moment threaten to spiral into a nuclear holocaust.
U.S. general says North Korea not demonstrated all components of ICBM (Reuters) - North Korea’s nuclear program has made strides in recent months but the country has not yet demonstrated all the components of an intercontinental ballistic missile (ICBM), including a survivable re-entry vehicle, the vice chairman of the U.S. Joint Chiefs of Staff said on Tuesday. Air Force General Paul Selva’s remarks confirmed an assessment by Defense Secretary Jim Mattis in December that North Korea’s ICBM did not pose an imminent threat to the United States. “What he has not demonstrated yet are the fusing and targeting technologies and survivable re-entry vehicle,” Selva said, referring to North Korean leader Kim Jong Un. “It is possible he has them, so we have to place the bet that he might have them, but he hasn’t demonstrated them,” Selva, the second highest-ranking U.S. military official, added. In November, North Korea said it had successfully tested a new type of ICBM that could reach all of the U.S. mainland and South Korea. U.S.-based experts said data from the test appeared to support that. Selva said that if conflict were to break out, it was unlikely the United States would be able to get an early indication of North Korean launches. “It is very unlikely that in a tactical situation, we would get any of the indications and warning that would precede a launch other than if we got lucky and saw the movement of the launch mechanism to the launch platform,” Selva said. He added that by using mobile erected launchers, the warning time for the United States had decreased from up to an hour to about a dozen minutes. The Trump administration has said all options are on the table in dealing with North Korea, but debate on military options has lost some momentum in recent weeks after North and South Korea resumed talks ahead of next month’s Winter Olympics in the South.
North Korea Dials Back Military Exercises As Shortages Of Food And Fuel Worsen - Last week we noted the surge in North Korean officials ransacking homes and raiding farms in order to feed their starving army, and now North Korea's armed forces have reportedly scaled back their winter military exercises, which US officials have cited as a sign that the economic pressures brought by international sanctions are finally finding success, according to the Wall Street Journal - though North Korea has carried on a brisk black-market business with many countries, including China, despite these restrictions. South Korea recently agreed to suspend military exercises until April after the warring neighbors agreed to a detente ahead of the Winter Games in PyeongChang. In one of the most significant gestures of unity between the two countries in decades, South Korean President Moon Jae-in and North Korean leader Kim Jong Un agreed to field a joint women's field hockey team at the upcoming games. As WSJ points out, the military exercises, which typically run from December through March, were slow to get started and are less extensive than usual, according to American officials familiar with intelligence reports and experts outside the government. On one hand, the North, which has one of the largest standing armies in the world, could be trying to conserve resources after the UN Security Council passed sanctions last year banning the export of North Korean coal while severely restricting imports of oil, which the council hoped would help constrain the North's nuclear program. Already, observers are saying skimping on the exercises could detract from the army's "ground readiness."
Beijing locks sights on green dividend - The Barrel Blog: It might seem odd to speak of China’s economy as green when the country is far and away the world’s largest producer and consumer of coal, but there is no question that Beijing is combining industrial and environmental policies in a way that is more radical than most, if not all, Western governments. Moreover, given the sheer size of the Chinese economy, these policies are having — and will continue to have — huge impacts on commodity markets worldwide. When China decides to act, it acts big. As a state-directed economy, the allocation of capital is often inefficient, creating bad debts, which are unlikely ever to be repaid, but to Beijing the ends appear to justify the means, and the outcomes are impressive. Take for example the expansion of its refinery capacity, which grew from 5.4 million b/d in 2000 to 14.1 million b/d in 2016; China’s massive coal plant capacity, where utilization rates are now below 50%; its production of solar panels; its deployment of wind and solar; and now its output of electric vehicles. Its latest industrial endeavor has been the conversion of coal-fired heating in northern provinces to gas-fired heating. This program, known as the “2+26 cities program”, resulted in millions of residential and commercial coal-to-gas conversions in the space of less than a year, resulting in a surge in Chinese LNG imports as demand for gas outstrips the domestic network’s ability to supply it. This has been a key factor behind the rise in spot LNG prices in the Asia-Pacific region to their highest levels since November 2014, adding a permanent new element of seasonal volatility to LNG markets worldwide, not to mention the impact it is sure to have on Chinese coal prices and imports.
Command and control: China’s Communist Party extends reach into foreign companies - WaPo — American and European companies involved in joint ventures with state-owned Chinese firms have been asked in recent months to give internal Communist Party cells an explicit role in decision-making, executives and business groups say. It is, they say, a worrying demand that threatens to put politics before profits, and the interests of the party above all other considerations. It suggests that foreign companies are no longer exempt from President Xi Jinping’s overarching vision of complete control. “The creeping intrusion by the party apparatus into the boardrooms of foreign-invested enterprises has not yet manifested itself on a large scale, but things are certainly going down that path,” said James Zimmerman, a managing partner of the law firm Sheppard, Mullin, Richter and Hampton and former chairman of the American Chamber of Commerce in China, who is instructing clients to “push back.” The party’s demand would give its cells a formal role in approving management decisions, such as investment plans or personnel changes. And that is ringing alarm bells. At the same time, a campaign to reinforce China’s draconian censorship of the Internet is beginning to affect foreign companies. The twin efforts to keep tabs on foreign companies are an expression of the Communist Party’s constant paranoia about internal stability. But they also represent a shift in the balance of power here, as China feels itself to be stronger economically and Western businesses more dispensable.
Cardinal Zen: Vatican is now backing a ‘new…schismatic Church’ in China – China’s leading prelate, Cardinal Joseph Zen, is sounding the alarm that the Vatican "is selling out the Catholic Church in China" and that it is "giving the blessing on the new...schismatic Church" created by the Communists. "So, do I think that the Vatican is selling out the Catholic Church in China? Yes, definitely, if they go in the direction which is obvious from all what they are doing in recent years and months," the 86-year-old retired Bishop of Hong Kong wrote in a Jan. 29 letter addressed to “Friends in the Media,” in which he confirmed a report that the Vatican had asked legitimate Chinese bishops to step down in favor of communist-picked bishops. Cardinal Zen outlined how the Vatican's capitulation to China’s communist regime is only making the regime clamp down harder on faithful Catholics."The Communist Government is making new harsher regulations limiting religious freedom. They are now strictly enforcing regulations which up to now were practically only on paper (from the 1st of February 2018 attendance to Mass in the underground will no longer be tolerated)," he wrote. The Cardinal's letter comes days after news broke that the Vatican has allegedly asked legitimate bishops to step down from their post in order to make way for the installation of new, illegitimate bishops, hand-picked by the government.
China unveils its Arctic ambitions, declaring it’s a “near Arctic state”: China is ready to take its place at the top of the world, according to the country’s new Arctic policy paper. “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,” states the policy white paper, released last Friday, Jan. 26. In the policy, China says it’s a “Near-Arctic State,” one of the continental states that are closest to the Arctic. As well, “the natural conditions of the Arctic and their changes have a direct impact on China’s climate system and ecological environment, and, in turn, on its economic interests in agriculture, forestry, fishery, marine industry and other sectors,” the policy paper said. “The fact that the Chinese took the time to develop and present a public policy statement on the Arctic is important onto itself. This is an authoritarian government that does not need nor does provide public policy documents. This demonstrates the importance that the Chinese place on the Arctic,” Rob Huebert from the University of Calgary’s Centre for Military and Strategic Studies told Nunatsiaq News. The policy paper, issued by the State Council Information Office, lists all the ways China has already become involved in the Arctic, such as by hosting an Arctic Science Summit Week and sitting as an observer at the Arctic Council. China also lists the various areas where it wants to do more work: “practical cooperation in all fields, especially regarding climate change, scientific expeditions, environmental protection, ecosystems, shipping routes, resource development, submarine fiber-optic cables, cultural exchanges, and capacity building.”
S&P Global Ratings says China to see first bond default by a local government financing vehicle in 2018 | South China Morning Post: China is likely to see the first bond default by a local government this year, as Beijing tightens liquidity as a way of deleveraging an economy facing increasing financial risk, according to S&P Global Ratings. The implicit support for “local government financing vehicles”, known as LGFVS, will be tested as the nation’s top policymakers are adamant to control financial risk in the face of runaway debt in some regions, it said. “LGFVs deserve special attention,” the global rating agency added in a report released on Tuesday. “The risk of LGFVs defaulting on their bonds has increased, which is why we may well see the first LGFV default in the bond market.”S&P also expects the number of defaults in the world’s second-biggest economy to increase as companies fall victim to tightening liquidity. High leverage ratios have been one the great “enemies within” facing the mainland economy as debt-fuelled investments during the global financial crisis in 2008 led to increasing financial risk since some of the projects may not be able to repay the loans taken out to finance them. LGFVs were often able to roll over debt due to local government support, even though they showed poor operating fundamentals. Most of the financing platforms raised funds through bank loans, bond offerings and the issuance of wealth management products to fund the construction of infrastructure projects.
At Davos, the Real Star May Have Been China, Not Trump - NYT — President Trump used the World Economic Forum meeting to woo investors and business leaders by reassuring them that “America first does not mean America alone.” But it was clear in Davos, Switzerland, this past week that geopolitical momentum lay with Beijing, not Washington. At one end of town, President Michel Temer of Brazil welcomed an unexpected offer from Beijing for Latin American nations to work closely with a Chinese initiative, known as the Belt and Road, intended to spread its economic and diplomatic influence abroad. At the other end of town, a senior Chinese diplomat helped introduce the prime minister of Pakistan at a breakfast meeting. Prime Minister Shahid Khaqan Abbasi used his talk to praise the rapidly expanding Chinese investments in his country, including to build power stations and a large port. One of the best-attended speeches at the forum was that of Liu He, a member of China’s ruling Politburo, who promoted the Belt and Road initiative, also known as One Belt, One Road. Participants here said the Chinese initiative was already rivaling more established, traditionally American-led, international institutions. “The China One Belt, One Road is going to be the new W.T.O. — like it or not,” Belt and Road takes its name from the idea that Beijing is spreading its influence along the ancient Silk Road that once linked imperial China to the Roman Empire and to the medieval Europe of Marco Polo. But that was not the only push to extend its presence abroad that Beijing was trying to showcase. On Friday, the Chinese government used a policy document issued in Beijing to call for a “Polar Silk Road” that would link China to Europe and the Atlantic via a shipping route past the melting Arctic ice cap. Unveiled in Kazakhstan in 2013, Belt and Road started as a plan to revive economic investment and diplomatic links across Central Asia. The plan gradually extended to include the Mideast, Europe and eastern Africa, with Beijing promising hundreds of billions of dollars of investment in highways, rail lines, ports, power stations and other infrastructure, much of it through loans from Chinese state-owned banks.
$400 million of cryptocurrency disappeared on a Japanese exchange — and no one knows what happened - About $400 million worth of cryptocurrency has vanished and no one is sure exactly what happened. CoinCheck, a prominent cryptocurrency exchange based in Tokyo, said 500 million NEM coins vanished after they were "illicitly" transferred off the exchange, according to a Bloomberg News report. "Company officials said during a late night press conference at the Tokyo Stock Exchange that they didn’t know how the 500 million NEM coins went missing, but they’re working to ensure the safety of all client assets," the report said. The company halted trading of alt-coins and disabled all withdrawals on the platform at 4:33 p.m. local time, according to its website. Both bitcoin and NEM tumbled after the news broke. Bitcoin recouped its losses and by 11:14 a.m. ET was up 0.35% against the US dollar at $11,193 a coin, according to Markets Insider data. NEM, according to data provider CoinMarketCap, was trading down 8% at $0.86 a coin. Lukman Otunuga, a research analyst at FXTM, said the news adds to the storm of negative headlines cryptocurrencies and bitcoin have had to weather this week. "Sentiment towards the cryptocurrency is turning increasingly bearish amid regulation fears, with recent news of a massive exchange in Japan halting client withdrawals further souring investor appetite,”
Indian-Pakistani clashes in Kashmir put South Asia on knife’s edge -- Exchanges of cross-border fire by Indian and Pakistani forces manning the disputed Kashmir border have intensified since the beginning of the year. While cross-border artillery barrages have been frequent, often occurring daily ever since India mounted “surgical strikes” inside Pakistan in September 2016, recent weeks indicate tensions are mounting, raising the prospect of a catastrophic war between South Asia’s nuclear-armed rivals. At least five civilians and a soldier were killed on the Indian side on January 19, while two civilians were killed in Pakistan. During the preceding three days, six more Indian civilians and three soldiers and six Pakistani civilians had lost their lives. While there are discrepancies in the Indian and Pakistani casualty figures, it can be said with assurance that at least four Pakistani soldiers have been killed in cross-border exchanges since the beginning of 2018.The customary exchange of mutual accusations of “unprovoked firing” across the Line of Control (LoC) that divides Indian- and Pakistani-held Kashmir cannot disguise the fact that the situation is on a knife’s edge.The India-Pakistan rivalry is rooted in the reactionary communal partition of the subcontinent implemented in 1947 by South Asia’s departing British imperial overlords in connivance with the colonial bourgeoisie. Independent India and Pakistan have fought four wars, the last in 1999, and numerous skirmishes. However, it is US imperialism’s accelerating drive to make India a frontline state in its military-strategic offensive against China that has overturned the balance of power in South Asia. With the US providing numerous strategic favours to Indian, including access to its most advanced weapon systems, Pakistan has moved to strengthen its longstanding strategic ties with China. Increasingly, the region has been polarized into rival Indo-US and Pakistani-China blocs, adding an explosive new element to both the India-Pakistan and US-China conflicts, and raising the danger that a war between India and Pakistan could draw in the world’s great powers.
Why the Poor Will Not Be the True Beneficiaries of the ‘World’s Largest Health Programme’ - Health is being hailed as the biggest winner of Budget 2018, but a cursory look at the numbers shows that there is nothing to celebrate as far as the health budget is concerned. In fact, the Budget this year once again highlights the government’s complete lack of vision as far as ensuring ‘Health for All’ is concerned. The finance minister’s speech mentions two main interventions – health and wellness centres that “will bring healthcare system closer to the homes of people” and “a flagship National Health Protection Scheme to cover over ten crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to five lakh rupees per family per year for secondary and tertiary care hospitalisation”. The second aspect has made headlines today as being something ‘revolutionary’ in healthcare. Neither of these is a new initiative, nor are these likely to improve access to healthcare or reduce out-of-pocket expenditure. Given the noise that is being made around how much of a boost the health sector has been given, one’s led into believing that there is a major increase in the Budget. On the contrary, the allocation for the Department of Health and Family Welfare for 2018-19 is Rs 52,800 crore, an increase of about 2.5% from the revised estimate for 2017-18 – Rs 51,550.85 crore.Therefore, in real terms and as a percentage of GDP, there is a decline in the health budget this year. To achieve 1.5 lakh health and wellness centres, the finance minister has allocated a royal sum of Rs 1,200 crore ‘for this flagship programme’. This comes to Rs 80,000 per sub-centre – not enough to fill the gaps. Moreover, this is not a new initiative, as it featured in the 2017 Budget speech as well. There have been no reports on the experience from this in the previous year, neither is it clear what this actually means.
Australia shoots for bigger gun sales | Asia Times: Australia has no plans to tighten scrutiny of its arms trade under a controversial new export drive announced on January 29. While the government aims to ramp up foreign sales, rights groups fear that more Australian weapons will end up in the hands of repressive regimes, especially in Asia and the Middle East. The federal government said on Monday it will set aside funding of A$3.8 billion (US$3 billion) to lift Australia into the world’s top 10 weaponry exporting nations. It is now the 20th biggest arms supplier, according to Stockholm International Peace Research Institute data, with annual earnings of about US$1.6 billion.From 2012-2016, Australia accounted for a negligible 0.3% of world exports, with most its arms going to the United States (52%), Indonesia (21%) and Oman (10%). Other big buyers were India, Singapore, Japan, Indonesia, the Philippines, Yemen, Papua New Guinea, Saudi Arabia and the United Arab Emirates. Export incentives will mostly help local subsidiaries of multinationals like Thales Australia (France), BAE Systems Australia (UK) and Raytheon Australia (US). Other winners will include state-owned naval contractor ASC and shipbuilder Austal. Thales exports combat vehicles, munitions, command and control systems and optronics; Raytheon sells ship combat systems and BAE a range of autonomous and guided weapons systems. In 2016, the top 40 contractors generated a record turnover of A$10.384 billion (US$8.4 billion), an 11% increase on the previous year.
Migrant boat capsizes off Libya, 90 feared dead, mostly Pakistanis (Reuters) - An estimated 90 migrants are feared to have drowned off the coast of Libya after a smuggler’s boat capsized early on Friday, leaving three known survivors and 10 bodies washed up on shore, the International Organisation for Migration (IOM) said. Survivors told aid workers that most of the migrants on board were Pakistanis, who make up a growing number of those attempting the hazardous voyage across the Mediterranean to Italy from North Africa, IOM spokeswoman Olivia Headon said. “They have given an estimate of 90 people who drowned during the capsize, but we still need to verify the exact number of people who lost their lives during the tragedy,” Headon, speaking from Tunis, told a Geneva news briefing. “What has been reported to us is that it’s mostly Pakistanis who were on board the boat, but we still need to verify the nationalities and how many from what country,” she said. Ten bodies have washed up on Libyan shores so far, two of them Libyans and the rest Pakistanis, she said. “I believe the Libyan coastguard is looking for other survivors off the coast,” Headon added. Another IOM spokesman, Leonard Doyle, told Reuters Television that the boat was believed to have left shore on Thursday before capsizing early on Friday morning. The tragedy demonstrates the continued allure of Europe for desperate migrants fleeing conflicts and poverty, Doyle said, despite tighter surveillance of the main smuggling routes by the Libyan coastguard, backed up by European cash and know-how. “They (the migrants) are lured there by social media. They get onto a phone, they are promised El Dorado, they think life is going to be great. And before they know it, they are getting into the hands of awful criminal, extorting people - smugglers, traffickers, this dreadful, shocking torture,” he said.
Venezuelan Pirates Rule the Most Lawless Market on Earth - Venezuela and the island of Trinidad are separated by only 10 miles of water and bound together by the most lawless market on Earth today. Playing out at sea and on the coasts, it is a roiling arbitrage—of food, diapers, weapons, drugs, and women—between the desperate and the profit-minded. Government is absent, bandits are everywhere, and participating can cost you your life. But not participating can also mean death, because the official economy of Venezuela is in astate of collapse, and the people are starving. I’d planned to travel to the fishing villages of Venezuela’s northeast coast, in the state of Sucre, to see how the people there were managing amid violence and deprivation. I settled on the villages along the Gulf of Paria, an inlet of the Caribbean abuzz with stories of smugglers, contraband, and pirates. Clearly there were risks: On both of my previous reporting trips into Venezuela, I’d been detained for “illegal reporting,” first for interviewing an emergency room doctor without government permission and then for talking with mourners at a public cemetery. And that was before the onset of food riots, which began in Sucre in the summer of 2016, and also before fishermen began getting murdered by pirates. By the time of my trip, in late August, Venezuela had descended so far into chaos that I decided to move my focus across the narrow Gulf of Paria to Trinidad, where, immediately upon arrival in the capital, Port of Spain, I went to the fisheries ministry with a tourist map of the islands. I explained to an official there that I was a reporter interested in fishermen and wanted to know where to find the most scenic spots. After patiently listening to an overview of the island’s marvels, I asked him to show me where the smugglers are. The official drew his fingers south down the coast to Cedros and Icacos, a pair of fishing villages close to the shores of Venezuela. I went there directly. On the Cedros waterfront, I asked a group of men about the smuggling business. “I’m Mr. Flour, and this is Mr. Rice,” said Carlos, a burly truck driver, by way of introducing himself and a friend. Within minutes he was unlocking a cargo van to show off sacks of flour ready to be shipped to Venezuela. Five dollars’ worth of flour in Trinidad, Carlos said, was worth $20 across the gulf.
Guess Which 'Shithole' Has The World's Most-Overcrowded Prison System -- According to Bureau of Justice Statistics, the U.S. has a prison population of 2.2 million, 481 inmates per 100,000 of the population. The U.S. prison system has attracted headlines for overcrowding with 18 states reporting they were operating at over 100 percent capacity at the end of 2014. According to the World Prison Brief, the U.S. has an an occupancy level of 103.9 percent and only comes 113th worldwide when it comes to overcrowding in prisons. However, as Statista's Niall McCarthy details, somebody who gets arrested and jailed in Haiti will have to endure far tougher conditions. The Caribbean nation has the most overcrowded prisons of any country worldwide and its institutions are operating at 454 percent capacity. That has resulted in 80 to 100 men being crammed into a single cell at once, malnutrition and the spread of disease. Many of Haiti's inmates have not been convicted of a crime and the UN has condemned the situtation, saying inmates are subject to daily violations of their human rights.
Bomb Threats Target 25 Moscow Buildings, Force Evacuations Of Parliament, Stock Exchange - In an incident that recalls the "almost simultaneous" bomb threats across Russia back in September that resulted in the evacuation of 45,000 people, briefly disrupting life in Russia's largest city, a bomb threat targeting 25 buildings in Moscow prompted mandatory evacuations of Russia's upper house of Parliament and the city's stock exchange, according to TASS. The threats also targeted hospitals in the city, a source within the city's security services told TASS. "We received an anonymous call about an explosive device planted in the building. In line with the security requirements, the staff members were evacuated and checks at the building are underway," the statement said. Meanwhile, the State Duma, the lower house of parliament, received two bomb threats over the past four hours, the source said. Moscow's famed Bolshoi Theater has also been targeted... As we pointed out at the time, a wave of phone calls has swept across Russian cities and towns since September. The anonymous bomb threats targeted more than 4,000 facilities in 215 Russian cities, affecting more than 2.6 million people were evacuated. Emergency services combed through secondary and higher schools, shopping malls, airports, railway stations, hotels and governmental buildings.
Russian economy under Putin: Quality of life tripled, foreign debt fell 75% - Before Putin’s election in 2000, Russia had a $9,889 GDP per capita by Purchasing Power Parity (PPP). The figure had almost tripled by 2017, and has now reached $27,900. Russia has the highest GDP per capita among its fellow BRICS countries, with the next-highest, China, having just $16,624. The PPP takes into account the relative cost of living and the inflation rates of countries in order to compare living standards in different nations. The average nominal monthly wage has grown almost 11-fold from $61 to $652. Unemployment has contracted from 13 percent to 5.2 percent. Pensions have grown over 1,000 percent in the same period from $20 to $221. Russia is the sixth-largest economy in the world by PPP, with a $4-trillion GDP. PwC has predicted that, by 2050, the country will become the largest economy in Europe by this measure, leaving behind Germany and the United Kingdom.Back in 1999, the Russian economy by PPP was worth only $620 billion. So, in the last 18 years, Russian economic output in these terms has increased by 600 percent.Inflation rates have decreased from 36.5 percent to 2.5 percent by the end of 2017. The total value of assets of the Russian banking system has risen 24-fold to $1.43 trillion. Capitalization of the Russian Stock Market has grown more than 15-fold to $621 billion. When Putin was elected in 2000, Russia had just $12 billion in reserves, accompanied by a public debt, which was almost equal to the country’s economic output at 92.1 percent. Things have changed markedly in 18 years, as Russia’s public debt has now shrunk to 17.4 percent of GDP and reserves have increased to $356 billion. Low debt and growing reserves helped the country to live through the economic crisis of 2008 and the recession of 2014-2016, caused by a fall in oil prices and Western sanctions.
2018 global growth to roll to highs not seen in eight years: Reuters poll (Reuters) - The global economy is expected to grow at a robust pace this year and reach an altitude not seen since 2010, as momentum builds in developed economies and inflation revives, Reuters polls of over 500 economists showed. Major central banks are expected to move away from ultra-easy monetary policy this year, but borrowing costs are still accommodative and should underpin growth. The latest Reuters polls taken this month, covering more than 45 countries, not only underscored optimism on growth but also showed inflation forecasts were either upgraded or left unchanged in nearly 70 percent of those economies. “For the first time in a long while, global growth is speeding up away from its average rather than recovering back towards it,” said James Sweeney, chief economist at Credit Suisse. The global economy is predicted to grow 3.7 percent this year, the fastest since the 4.3 percent in 2010. That was an upgrade from the 3.6 percent predicted in October’s poll but lower than the International Monetary Fund’s outlook of 3.9 percent growth this year. Nearly 70 percent of over 140 respondents who answered an extra question said the global economic boom was more likely to gain momentum this year and push inflation higher than currently predicted. Those expectations were largely driven by growth in developed economies, particularly the euro zone and the United States - which may not be firing on all cylinders yet but enough to keep things rolling. Surging business and consumer confidence and steady job creation have left economists repeatedly raising growth estimates for the euro zone and its major economies. The rising euro poses a threat in Europe and could challenge the European Central Bank as it moves to end its money printing by the end of the year.
QE set for a $2.7 trillion last hurrah - Quantitative easing (QE) will pump almost $3 trillion extra into markets this year, analysts at State Street believe, before more central banks follow the US Federal Reserve’s example and start withdrawing the stimulus. “It is too early to call time on the market, because central banks are there,” said Antoine Lesné, top strategist and researcher in the finance group’s ETF arm. “They are continuing to push the expansion of balance sheets - we are at $21.3 trillion of assets purchased by the largest central banks, including China. We expect this will become $24 trillion by the end of this year. “There is still a lot of money being put into the market.” Even if bonds do fall and 10 year US Treasury yields rise to 3pc, this will just make them a particularly attractive investment for investors looking for low-risk returns, effectively limiting the rise in rates, he believes. Demographics too will cap rates. “From a long-term demographic standpoint, there are going to be more and more buyers of debt securities to lower the volatility of their portfolio and look for more stable income,” Mr Lesné said. “This increased demand for stable income from bonds will continue to be there, it is a long-term trend, and it should put a cap on where bond yields can go.” Although stocks are at record highs in areas such as the US, overall shares globally are not particularly over-valued, according to Tim Graf at State Street Global Markets.
ECB Officials Said To Assume QE Ends With Short Taper, Euro Slides - While hardly news to those who followed Mario Draghi's dovish press conference last week, moments ago "ECB officials" were once again on the tape trying to talk down the Euro, after a Bloomberg report that "ECB Officials Are Said to Keep Assumption QE Ends in Short Taper."According to Bloomberg, central bank policy makers are sticking to the assumption that their bond-buying program will be wound down over about three months rather than brought to a sudden halt. Even the more-hawkish members of the Governing Council, who are pushing for policy language that would signal the end of crisis-era stimulus measures, endorse a gradual slowing of asset purchases after the latest extension concludes in September, the officials said, citing informal discussions. They asked not to be identified as the deliberations are confidential, and noted that no decision has been taken.As Bloomberg adds, "Eight months before the end of the current phase, the l atest views suggest a consensus is hardening on the appropriate strategy for concluding the program in an orderly way without roiling markets."As a reminder, QE is currently scheduled to conclude in September 2018, which means a 3 month unwind is that QE will end in December 2018. This is in line with market expectations. Of course, the Governing Council reiterated after last week’s policy decision that "the program could be extended again if the inflation outlook is too weak."In other words, the ECB is trying to double down on its dovish undertones from last week which were drowned by Mnuchin's dollar-negative sentiment, and are taking advantage of today's USD strength to boost the Euro downside. And so far it is working as the chart below shows.
No more sub-zero: Euro zone bonds yields head for positive territory (Reuters) - Slowly but surely, the pool of euro-area government bonds with sub-zero yields is shrinking, a sign that some normality is returning to bond markets as central banks begin to unwind their extraordinary stimulus. Five-year bond yields DE5YT=RR in Germany, the bloc’s powerhouse economy and its benchmark debt issuer, rose above zero percent on Monday for the first time since late 2015. That marks a significant shift from two years ago, when massive monetary easing and record low interest rates in the wake of the financial crisis pushed bond yields to record lows -- and below zero percent -- in much of the developed world. Then, up to $13 trillion worth of debt globally was trading with yields of less than zero. But with the European Central Bank heading to the exit on quantitative easing (QE), economic recovery clearly underway and inflation expectations rising, investors are increasingly unwilling to effectively pay to lend to governments. A year ago, German bonds of maturities out to seven years had negative yields. In 2016 even 15-year bonds carried sub-zero yields, as concerns about deflation and weak growth weighed on markets, along with hefty ECB stimulus. Two-year bond yields remain in negative territory at minus 0.52 percent DE2YT=RR, but are at their highest since mid-2016. “We talk about negative interest rates but it’s only a negative 50 basis points. Think about it, we are going through a year where the ECB goes from being a net buyer of government bonds to no longer doing that,” said Doug Peebles, CIO for fixed income at Alliance Bernstein in New York. “Our base case is that the ECB raises rates in Q1 2019, so we could easily get to a positive level on the German two-year bond yield by the end of the year.” According to Deutsche Bank, 2018 will be the first year this decade that assets purchased under QE from the ECB, the U.S. Federal Reserve and the Bank of Japan will not increase relative to net government bond sales from these three regions. “How bonds cope with this will be one of the key drivers of assets in 2018,” the bank said in a note.
Erdogan Chief Advisor Threatens To "Break The Legs" Of Greece's PM - Yigit Bulut, chief advisor to Turkish President Erdogan, has threatened Greece over the disputed islet of Imia in the Eastern Aegean Sea.“Athens will face the wrath of Turkey worse than that in Afrin,” Bulut said in a Television show of a private network.“We will break the arms and legs of officials, of the Prime Minister and any Minister, who dares to step on the Kardak/Imia islet in the Aegean,” he claimed.Turkish president #Erdogan's chief advisor Yigit Bulut threatens #Greece, says Athens will face the wrath of #Turkey worse than #Afrin offensive, vows to break arms & legs of officials, PM or any Minister, who dare to land on disputed Kardak/Imia islet in Aegean. pic.twitter.com/XPmATUchnm— Abdullah Bozkurt (@abdbozkurt) February 1, 2018 Yes, the video is in Turkish but who cares to translate full 40 seconds of a delirium talk? As KeepTalkingGreece reports, Bultu’s threats come just a couple of days after Defense Minister Panos Kammenos sailed to Imia and threw a wreath into the sea to honor the three fallen soldiers during the Imia conflict in 1996.
Inquisition 2.0? Spanish Government Arrests Catalan-Based Critic Using "Hate-Speech Law" -- Spain's government has gotten into the business of regulating speech with predictably awful results. An early adopter of Blues Lives Matter-esque policies, Spain went full police state, passing a law making it a crime to show "disrespect" to law enforcement officers.The predictable result? The arrest of someone for calling cops "slackers" in a Facebook post.Spain's government is either woefully unaware of the negative consequences of laws like this or, worse, likes the negative consequences. After all, it doesn't hurt Spain's government beyond a little reputational damage. It only hurts residents of Spain.When you're already unpopular, thanks to laws like these and suppression of a Catalan independence vote, what difference does it make if you're known better for shutting down dissent than actually protecting citizens from hateful speech?One Catalan resident is getting the full "hate speech" rap-and-ride.A Catalan high school teacher, Manel Riu, appeared in court on Thursday accused of hate speech for his tweets and Facebook posts criticizing Spain, government members and the Guardia Civil police. Over a hundred people escorted him to court in Tremp, west of Catalonia, where he denied any wrongdoing and asked for the case’s dismissal.
‘This is over’: Puigdemont’s Catalan independence doubts caught on camera -- The ousted Catalan president, Carles Puigdemont, has admitted privately that his attempt to secure regional independence is over and claims he has been sacrificed by his own side, according to messages sent to a colleague and captured by TV cameras. On Wednesday, a Spanish TV show published messages that Puigdemont had sent to his former health minister Toni Comín while the latter was at an event in Leuven, Belgium, the previous evening. In a little over a decade, Carles Puigdemont has gone from obscurity to becoming the Spanish government’s bête noire and the pubic face of the Catalan independence movement. A staunch and long-standing independence campaigner who has been the regional president of Catalonia since January 2016, Puigdemont was born to a family of bakers in the Catalan province of Girona in 1962. He studied Catalan philology at university before becoming a journalist on the Girona-based daily El Punt and helping to launch Catalonia Today, an English-language paper. He was elected in 2006 to the Catalan parliament as an MP for the Convergence and Union party representing the Girona region and five years later became the mayor of Girona. Puigdemont found himself thrust into the Catalan presidency in January 2016 after his predecessor, Artur Mas, stepped aside to facilitate the formation of a pro-independence coalition government.
Dutch Police Plan to Take Clothes and Watches from People They Deem to be Dressed Too Well - Yves Smith - The hope is to roll out a scheme supposedly to intercept thieves by taking clothes and watches from those the police deem could not have gotten them by legitimate means. It is not hard to see how ludicrous and bigoted this is. The police are going to be in the business of judging…based on what? Age? Haircut? Skin color? Shoes? Where they happen to be?….that someone is “too poor” to be wearing the clothes they are wearing. And that’s before you get to the fact that even if the police correctly deemed someone to be low income, that they could have a rich relative or rich lover who gave them a nice gift, or they saved money to buy one nice outfit, say for job interviews, or they were smart enough to snag upscale clothes at a big discount at a resale store. The Independent reported on this scheme and its rationale last week:Police in the Dutch city of Rotterdam have launched a new pilot programme which will see them confiscating expensive clothing and jewellery from young people if they look too poor to own them.Officers say the scheme will see them target younger men in designer clothes they seem unlikely to be able to afford legally – if it is not clear how the person paid for it, it will be confiscated. The idea is to deter criminality by sending a signal that the men will not be able to hang onto their ill-gotten gains. Rotterdam police chief Frank Paauw told Dutch newspaper De Telegraaf: “They are often young men who consider themselves untouchable. We’re going to undress them on the street. “We regularly take a Rolex from a suspect. Clothes rarely. And that is especially a status symbol for young people. Some young people now walk with jackets of €1800. They do not have any income, so the question is how they get there.” He said the young men targeted often have no income and are already in debt from fines for previous convictions but wearing expensive clothing. The claim is that these young men are known suspects, members of a gang. But how often will there be false positives? And how hard will it be for someone incorrectly targeted to get their stuff back?
Germany To Stop Taking Migrants From Italy And Greece - Germany will no longer be accepting relocated asylum seekers from Italy and Greece, reports Die Welt citing the German Interior Ministry.The decision, announced Monday, ends Germany's participation in an EU relocation agreement launched in the wake of the 2015 migrant crisis. The agreement officially expired on September 26, 2017, and saw Germany take in over one-third of the total refugees distributed under the plan. "There are now virtually no more asylum seekers in Greece who could be considered for resettlement," according to the Ministry. To qualify, applicants had to be from a country where the chances of asylum are at least 75 percent.Last month, some 500 migrants were still waiting to be relocated from Italy to Germany, while in Greece the number less than 40. "The relocation scheme ended in September 2017, meaning all applicants arriving after that date will no longer be eligible for resettlement," Annegret Korff, a speaker for the Interior Ministry, said."Germany largely completed all outstanding relocations by the end of 2017. In the coming weeks, Germany will only carry out the odd resettlement case that was left outstanding from last year." -DW.comBased on the massive number immigrants arriving in Germany alone during the height of the migrant crisis - some 1.3 million in 2015 with 890,000 entering Germany, EU member states initially agreed to collectively take in some 160,000 refugees from Greece and Italy. That number, however, was revised down to 100,000 after officials realized that fewer people were eligible than originally thought. In total, only 33,000 migrants actually took part in the transfer program - with Germany taking in 10,265.
German industrial workers shut down auto sector as strikes spread - Industrial workers across Germany’s automotive and electrical industries are fighting for higher wages and a voluntary reduction of the workweek with a third day of 24-hour strikes. Yesterday, they shut down the entire auto industry in southern Germany. More than half a million workers have expressed their readiness to fight by taking strike action.Automakers impacted by the strike include Mercedes-Benz, Daimler, Porsche and Audi, as well as parts suppliers Bosch, Mahle, Schaeffler, Kolbenschmidt, Powertrain and ThyssenKrupp Rasselstein. Earlier, Ford workers at plants in Cologne struck and shut down all assembly lines.At almost all the 250 companies where IG Metall held strike votes, between 95 and 100 percent of the workforce backed strike action. This speaks volumes about the workers’ readiness for struggle. It is not merely a declaration of hostility to the executives in the boardrooms and their political representatives, but also the trade union itself, which is desperately seeking to restart talks with the corporations.“Talks could be continued on Monday so long as the opposing side shows significant movement,” said Roman Zitzelsberger, regional leader of IG Metall in Baden-Württemberg on Thursday. The union has already rented rooms in Stuttgart on Monday morning to host negotiations. This is further evidence of the contradiction that has dominated the three days of strikes. IG Metall would prefer to end the strike as soon as possible, above all to avoid hindering the formation of a new grand coalition, which will be a government of social attacks, militarism and the strengthening of the repressive state apparatus. By contrast, the working class is ready to take up the fight against extreme levels of social inequality.
Frankfurt in the Shadow of Brexit - SPIEGEL - The man who has been tasked with turning Frankfurt into a top-ranking international metropolis loves his "living room." That is what locals call the Römerberg, the square in Frankfurt that is the seat of the city's government, lovingly rebuilt with the half-timbered structures that graced the site prior to its World War II destruction. Frankfurt Mayor Peter Feldmann enjoys being photographed here, in front of his official residence. But on this pre-Christmas day, the mayor has to stay inside. The square is jammed with thousands of tourists from Asia, America and other parts of Germany shopping at the city's Christmas market. It is a fitting backdrop for Feldmann as he holds forth, eyes ablaze, about the opportunities and challenges facing his city. The mayor has discarded his suitcoat and leans across the table. "Frankfurt is the most international, the most global city in Germany," he says. He adds that it could soon become the first large city in Germany to completely rid itself of unemployment..Feldmann insists that none of what is currently coming into Frankfurt from London as a result of Brexit, or what may be coming in the future - the executives, the money, the growing apartment shortages and the foreign influences - is new for the old trading city. Its 730,000 residents, the mayor boasts, didn't even have trouble integrating the more than 5,000 refugees who arrived in the city. Not everybody in the city, though, is completely taken with Feldmann's ostentatious equanimity. Ever since the British voted to leave the European Union in the June 23, 2016 referendum, Frankfurt has been buzzing. The business elite want to see the mayor take advantage of Brexit and finally transform the city into the Continent's most important financial center. Speculators are excited about the possibilities - and particularly enthusiastic about the potential arrival of thousands of wealthy bankers with the salaries to rent expensive apartments and the expense accounts to fill up restaurants.
EU expands Brexit ‘no deal’ team as concerns grow in Europe over whether Theresa May can deliver - The European Union is beefing up its preparations for a ‘no deal’ Brexit, more than doubling the number of officials devoted to preparing for a breakdown in the talks, the Sunday Telegraph has learned. EU sources said the number of officials in the European Commission secretariat focussing on preparations for either a ‘no deal’ scenario or a 'hard Brexit' would expand from eight to 20 as concerns mount in Europe over whether Theresa May can deliver.The decision to grow the unit was in part a reflection of growing anxiety in Brussels that political divisions in the UK may make a deal impossible, EU sources said, particularly given the UK’s commitments to avoid a hard border in Northern Ireland. “The overall optimism that there can be a deal has decreased in the Commission given the events of this month,” said a senior EU source. Pressure is increasing daily on Mrs May to define what kind of future relationship the UK will seek with Europe after Brexit, with her cabinet now in open warfare over what direction to take. EU sources told The Sunday Telegraph the lack of clarity from the UK side was “highly disturbing” and that failure to set out what the UK wanted risked delaying the start of talks on the future EU-UK relationship.The EU has proposed releasing negotiating guidelines on trade and the future in March, but sources said this could now be delayed if the UK did not clarify its position, or continued to adopt a “cake and eat it” approach to the negotiations.Mrs May had been expected to make a speech in February setting out the UK position, but according to reports she is considering limiting the scope to the future EU-UK security relationship, not the question of trade.“If the speech is only on security, then there won’t be guidelines on trade in March. You cannot trigger these by silence,” said the source. “We cant be asked to make Brexit a success, to comfort Brexiteers and let their delusions survive. That assistance will not be offered.” The battle over whether the UK will embrace a hard or soft Brexit was thrust into the spotlight this week after CBI called for the UK to remain in a customs union with the EU and Philip Hammond, the Chancellor, said the UK’s relationship with the EU would only see “modest” changes. He was later publicly rebuked by Downing Street.
Fresh pressure for Theresa May as Brexit battle moves to Lords -Over the next two days, hundreds of peers of the realm who rarely speak in parliament will pack their bags and head for the House of Lords. The palace of Westminster is busy preparing for one of the biggest occasions in the long and illustrious history of the upper house. Its splendid bars and restaurants have stocked up with extra food and drink, and staff have been put on overtime for unusually late sittings. “I cannot recall in my time here so many on the speaking list,” said one senior figure in the Lords. “It is all great fun.” Approximately 185 peers are already down to speak on the EU withdrawal bill, which has its second reading on Tuesday and Wednesday.The two-day debate will pit the grandees of the Remain and Leave arguments against one another. In one sense, it will just replay, in a different location and in a more respectful manner, the same Brexit issues that have preoccupied MPs down the corridor in the Commons for months, and that are now crippling Theresa May’s crisis-riven government.“You could view it just as the Brexit battle reconvened on red benches, not green ones,” said one Tory peer. “That said, it is a huge occasion not just for the House of Lords but for the future of this country too. The question for us is not only the massive one of Brexit, but also of our role in the constitution. How far do we, can we, as unelected peers, go in taking on the government?” All the signs are that the Lords, where there is a clear majority for Remain, will go as far as they can to amend the bill – and that is grim news for a prime minister under intense pressure to steer huge volumes of legislation through parliament and deliver Brexit by 29 March 2019. As the clock ticks and the sheer complexity and workload of leaving the EU becomes more apparent by the day, both houses of parliament are more disunited than ever, and both main parties ever more split on exactly what leaving should mean. Inter-house warfare between Commons and Lords will play out against a background of civil war in the Tory party, and deep divisions in Labour. Tempers are already fraying in the Lords even before a single peer speaks.
Challenged on all fronts, Britain's May faces pressure over Brexit law (Reuters) - British Prime Minister Theresa May came under further pressure over her Brexit blueprint on Monday, with members of the upper house of parliament saying there were “fundamental flaws” in a law crucial to the departure. The law has also deepened splits in her Conservative Party, which has for years been divided over Britain’s relations with the European Union. It is yet another battle for a weakened prime minister whose leadership is being questioned after scandals within her party, gaffes and an ill-judged election that lost her party its majority in parliament. Facing calls to ax her finance minister, who favors a gentle Brexit, and criticism over a lack of big ideas to revive the fortunes of the Conservatives, May needs to drive through legislation to sever ties with the EU before March next year. The largely pro-EU House of Lords, which will start debating the European Union (Withdrawal) Bill on Tuesday, have made no secret of their opposition to the legislation which they say amounts to little more than a power grab by the government. It is designed to put current EU legislation into British law essentially in one move, allowing for changes later. “We acknowledge the scale, challenge and unprecedented nature of the task of converting existing EU law into UK law, but as it stands this bill is constitutionally unacceptable,” said Ann Taylor, head of the influential Constitution Committee. “The bill grants ministers overly-broad powers to do whatever they think is ‘appropriate’ to correct ‘deficiencies’ in retained EU law,” the committee said in a report. While many peers are opposed to the legislation, the House of Lords is not expected to veto the law after it was passed in the lower house of parliament. But more criticism over what even some government officials say was a hastily created bill to “copy and paste” EU rules and regulations into British law by the time it leaves the bloc next year underlines the size of the task facing May. In Brussels, EU ministers, whose unity in the negotiations has amplified the arguments in Britain, are due to formally endorse its guidelines for a transition period that will leave the relationship largely unchanged. But even with both sides mostly in agreement over the transition period bar a few questions over citizens rights and trade agreements, May faces criticism by Brexit campaigners for bowing to EU demands and accepting the status quo.
UK Political Pressures Rise….Because EU Does Exactly What It Has Been Saying It Would Do on Brexit -- Yves Smith - While what passes for the ruling classes in the UK has been even more predictable than Trump in its behavior with Brexit, engaging in denialism which is truly impressive in its impenetrability, it is much more worth of amateur psychologist attention. Trump has repeatedly had to contend with not getting what he wanted and having the press go after him. His responses are regularly childish, self-destructive, laughable…but he does engage in a response of sorts to unfavorable reactions, whether to issue a full-of-bluster tweet, lambaste a critic, or, say, try a Big Lie in response. By contrast, the Brexiteers act as if they keep repeating their fantasies, the environment will bend to accommodate their desires. Even Trump is more connected with reality than that. Astonishingly, the Brexit boosters have clung unwaveringly to their belief system despite over a year and a half of EU officials trying to penetrate their fog. The ritual of “EU official says no way do you get a pony” followed almost immediately by “David Davis [or functional equivalent] says EU agrees with us on ponies” or “Of course, EU has no choice but to give us ponies” has become so predictable that numerous commentators have compared it to the movie Groundhog Day. The political pressures within the Tory party seem to be rising to the boiling level even if there is no obvious place for all that energy to go. Even though May is hostage to the hard core Brexit wing, they don’t have the votes to force a leadership battle, much the less win one. And a snap election, after the last fiasco, runs the risk of putting Labour in power, a Tory nightmare.However, again returning to our steam cooker analogy, as you put more and more energy you put into a system, it hits the point where it undergoes a state change, as in goes chaotic. What that means in terms of British politics is way over my pay grade, but the pressures keep building as the Brexiteers keep taking what they see as humiliating failures due to their own unhinged misassessment of what was attainable. They are unable to lash out at, much the less affect, the true object of their ire, the fact that the EU does not care what they think, and has already factored in the losses they will take due to British recklessness and utter refusal to plan and negotiate. So they make Theresa May their substitute punching bag even though beating up on her accomplishes nothing.
EU to UK: You won’t set rules during Brexit transition - Politico. European Union ministers on Monday flatly rejected a demand by Britain for a continued say over EU policy during a Brexit transition period, rebuffing a proposal put forward Friday by the British negotiator, David Davis.The bloc’s remaining member countries expressed their unwillingness to consider any extension of the U.K.’s voting rights or other decision-making authority as they gathered in Brussels to approve the formal directives for the EU negotiator, Michel Barnier, to broker a transition deal with London.“If you leave, you leave,” said Sandro Gozi, the Italian undersecretary of state for EU affairs. “If you decided democratically to get out of the decision-making process — as the Brits decided to do with the referendum — you cannot remain in the decision-making process.”“When you have left the European Union, you have left,” said Ann Linde, the Swedish minister for EU affairs.The ministers, who were attending a meeting of the General Affairs Council, approved the draft negotiating directives with less than two minutes of discussion Monday. At a press conference after the meeting Barnier was emphatic: “The U.K. will no longer participate in the EU decision-making process.” “The decisions will apply, and the U.K. must know these rules of the game and accept them in the first place otherwise we will go towards what we fear for the future — divergence, and a sort of single market à la carte,” he added.
Brexit’s impact on small businesses: the experts may be spot on after all -- Brexit has the potential to fundamentally rewrite the rulebook governing how companies do business in the UK – and there’s certainly been no shortage of serious concern. Given the magnitude of the imponderables linked to Brexit it clearly has the potential to heighten uncertainty which can have damaging consequences for economic activity. The overwhelming weight of evidence predicts Brexit-induced uncertainty will have a significant negative effect on the UK economy. Economic forecasts are often inaccurate, however, so it’s important to look at corporate sentiment, too. Most academic and media focus surrounding Brexit examines its impact on big companies. The analysis has often examined what Brexit means for the future of large-scale foreign-owned manufacturing plants such as Nissan in north-east England.But there is little evidence related to how small and medium-sized firms (SMEs) are likely to be affected, despite the fact that they are often considered the backbone of the British economy. For this reason, a team of researchers at the universities of St Andrews and Essex sought to look into it. In the UK, there are some 5.7m SMEs, which account for over 99% of private sector firms and 60% of total UK private sector employment. SMEs also account for 73% of all net private sector job creation in the UK, creating about 2m jobs since 2010. Therefore, how SMEs respond to the uncertainty arising from Brexit has significant implications for the economy.To assess the impact of Brexit on SMEs, we analysed a major government survey of some 10,000 UK SMEs. The government had posed various questions to these businesses regarding Brexit and its likely affects on their future strategic intentions. Unlike the simulated data often used in economic forecasts, this has the advantage of being based on the real world views of entrepreneurs. So what do the results tell us? The larger, more innovative, more export-oriented and hi-tech an SME is, the more likely it is to have concerns regarding Brexit. Those operating in hi-tech and service-related industries are also those most concerned.
Brexit: where is that cake now, Boris? -- I managed to read the Davis speech with growing incredulity as he presented the EU fait accomplis as "the bridge that we plan to build, to smooth the path to our new relationship with the EU after Brexit". What we were calling the "vassal state" scenario long before Rees Mogg appropriated the term becomes a "strictly time limited implementation period, which forms a sound basis for the UK’s future prosperity". The fact that, even now, an extension is being talked of, and Mrs May is said to have abandoned her Lancaster House anniversary speech, is neither here nor there. According to Mr Davis, the EU's idea of transition "allows us to grasp the benefits of Brexit by setting in place the fundamental building blocks for the country as we leave". Of course, Mr Davis doesn't actually say it's all the EU's idea, and he's still prattling on about "implementation" rather than transition. This bridge, he says, "will give more certainty and clarity" for ports like Teesport (where he was speaking) and businesses right across the UK and Europe. Maybe Davis actually believes the sort of rubbish he's spouting, even if Pete was less than impressed. But, if it's even possible, Booker is even less impressed.Almost the only clear thing emerging from the murk shrouding our tortuous progress towards Brexit, he writes in his column, "is how completely we can now forget last year's fatuous claim by Boris Johnson that, on leaving the EU, we could somehow 'have our cake and eat it'".Unless you are Rees Mogg, gone are the days when we could fantasise that in March 2019 we shall "with one mighty bound be free": out of the EU and free to sign all those wonderful trade deals with the rest of the world. It has finally dawned on a goodly proportion of the population that extricating ourselves from the EU is far more complicated than our politicians ever realised it would be. Of course, a lot of us knew all along that that it was going to be complicated, but then us mere mortals clearly don't have the capability for self-delusion that sustains our political masters and their media handmaidens.
This Leaked Government Brexit Analysis Says The UK Will Be Worse Off In Every Scenario - The government's new analysis of the impact of Brexit says the UK would be worse off outside the European Union under every scenario modelled, BuzzFeed News can reveal. The assessment, which is titled “EU Exit Analysis – Cross Whitehall Briefing” and dated January 2018, looked at three of the most plausible Brexit scenarios based on existing EU arrangements.Under a comprehensive free trade agreement with the EU, UK growth would be 5% lower over the next 15 years compared to current forecasts, according to the analysis.The "no deal" scenario, which would see the UK revert to World Trade Organization (WTO) rules, would reduce growth by 8% over that period. The softest Brexit option of continued single-market access through membership of the European Economic Area would, in the longer term, still lower growth by 2%.These calculations do not take into account any short-term hits to the economy from Brexit, such as the cost of adjusting the economy to new customs arrangements.The assessment seen by BuzzFeed News is being kept tightly guarded inside government. It was prepared by officials across Whitehall for the Department for Exiting the European Union (DExEU) and is reportedly being presented to key ministers in one-to-one meetings this week ahead of discussion at the Brexit cabinet subcommittee next week. The other main findings of the analysis:
- • Almost every sector of the economy included in the analysis would be negatively impacted in all three scenarios, with chemicals, clothing, manufacturing, food and drink, and cars and retail the hardest hit. The analysis found that only the agriculture sector under the WTO scenario would not be adversely affected.
- • Every UK region would also be affected negatively in all the modelled scenarios, with the North East, the West Midlands, and Northern Ireland (before even considering the possibility of a hard border) facing the biggest falls in economic performance.
- • There is a risk that London’s status as a financial centre could be severely eroded, with the possibilities available under an FTA not much different to those in the WTO option.
- • On the plus side, the analysis assumes in all scenarios that a trade deal with the US will be concluded, and that it would benefit GDP by about 0.2% in the long term. Trade deals with other non-EU countries and blocs, such as China, India, Australia, the Gulf countries, and the nations of Southeast Asia would add, in total, a further 0.1% to 0.4% to GDP over the long term.
UK Consternation Over EU Not Accommodating City of London in Brexit…Just As It Said It Would Not Do -- Yves Smith --Yet again, we have the spectacle of various UK commentators getting their knickers in a twist over the EU doing what it had either said or had effectively said so often that the message could hardly have been considered to be in dispute. But even more so than on other fronts, the UK was particularly disinclined to hear what it did not want to hear regarding its lone national champion, the financial services industry.The UK’s misguided hopes on that front were dashed today, as we’ll discuss more specifically below.The EU had set forth the critical parts of its position early on: outside the EU means outside the EU. That means if you are a financial services firm, if you want to operate in the EU, that’s all well and good, but you need to get local licenses. That also means that for certain products, you need to have the individuals selling those products be licensed by the appropriate regulatory body. We have that sort of regime in the US for anyone selling securities, even to professional investors. This is hardly an exotic concept.The UK has continued pinning undue hopes on “passporting,” that UK financial services professionals would have their UK credentials recognized in the EU. But that had been given a thumbs down previously too. Another fudge the UK had hoped to get was “equivalence,” which was if UK financial services regs were kinda sorta aligned sufficiently with EU financial services rules, UK firms in those products/services could operate freely in the EU. One can see why the EU wouldn’t go for that. Unless the foreign country hewed precisely to the EU’s rules, “equivalence” equals ceding some, potentially a lot, of control over your own regulations to an unaccountable foreign country. Now admittedly, the EU has done that, in a couple of areas, commercial lending and some insurance products. But neither of these are heavily regulated activities and companies already shop for them across borders. 1 The idea that they’d extend equivalence beyond narrow bounds was never on save in the fevered brains of Brexit boosters.
Theresa May starts another fight she will not finish - As ever, Theresa May has prioritized short term headlines over long term strategy. She simply will not learn. She is incapable of self-improvement. She is making all the same mistakes in the second phase of negotiation which she made in the first.Speaking in China, the prime minister decided to start a fight with the EU over the terms of transition. She is going to resist demands that free movement continue during transition on the same terms that it did before."I'm clear there is a difference between those who came prior to us leaving and those who will come when they know the UK is leaving," she said. "What we're doing now is doing the job that the British people asked the government to do which is to deliver on Brexit. In doing that they did not vote for nothing to change when we come out of the EU." May is going to lose this fight for three reasons. The first is the EU's built in advantage. The UK does not have the infrastructure to act independently by March 2019. It does not have the customs checkpoints, or the roads on which they'll operate. It has not hired or trained the staff who'll man them, or created the management system under which they'll operate. It does not have the regulators in place to keep exporting goods and services to Europe. It does not have the capacity to handle nuclear material outside of Euratom. It does not have the bilateral agreements, with the EU or the US, to continue to fly to their territory. It would not have the regulators to certify medicines, for humans or animals. The second reason she will lose is that the transition deal only works if nothing has changed - a sentiment you would have thought she was sympathetic to given her difficulties during the election campaign. The basis upon which the EU is agreeing to transition is that of identical status, minus political influence. As soon as you make it bespoke, the entire purpose of the initiative falls apart. You might as well be negotiating the end state arrangements.
May and the ERG Ultras are manacled together -- There are perhaps 50 - I have seen estimates varying between 40 and 80 - Tory MPs in the so-called European Research Group (ERG; ‘so-called’ as this is not some anodyne bunch of researchers, but a group of fanatical, extremist ideologues). They include several Ministers, perhaps nine Cabinet members, and many of the media’s darlings for Brexit commentary including, of course, the ERG’s current chairman Jacob Rees-Mogg. Even before becoming its leader he seemed to appear on the BBC quite as often as any of the Corporation’s most senior journalists. Now, he might as well have his own dedicated studio. It is this group of, for the most part, middle-aged white men who are holding the government, and hence our country, to ransom. They speak – they speak splenetically - for themselves and no doubt some, possibly many, leave voters, but they purport to speak for all leave voters and hence, of course, for ‘the People’. May made a fatal miscalculation in thinking that the ERG Ultras would be appeased by hard Brexit. As Major and Cameron had found before her, every concession made to them only produced a new and even more extreme demand. Thus whereas before the Referendum many of them said that a soft Brexit (i.e. staying in the single market and having a comprehensive customs treaty) would be enough, immediately afterwards they insisted that only hard Brexit would do. But when that became the government’s policy, they started agitating for a no deal Brexit. By promising hard Brexit at the point that she was politically strongest, May created an impossible situation which has become clear now that she is so weak. What she accepted was that the lies of the Leave campaign could be made true. That is, that it would be possible to have all of the economic benefits of being in the EU without any of the politically unpalatable consequences in terms of, in particular, free movement of people and ECJ jurisdiction.
Cabinet explodes in a fresh row days before key meetings on Brexit trade deal - A FRESH Cabinet row has exploded over whether to forge a new customs union with the EU just days before a key four hour showdown on a Brexit trade deal.It has emerged that the PM’s advisers are drawing up plans for a permanent new no border posts arrangement for goods only rather than services as well.The PM’s advisers are drawing up plans for a new customs union with the EUOfficials backed by Chancellor Philip Hammond insist it would solve a host of problems, including the thorny dilemma over how to keep the Irish border open.Downing Street refused to rule out the move, saying that Mrs May is keeping “an open mind” on the negotiations.But just hours earlier, International Trade Secretary Liam Fox spoke out against any new customs union while on a visit to China.Speaking to Bloomberg TV, Dr Fox said: “It is very difficult to see how being in a customs union is compatible with having an independent trade policy.”International Trade Secretary Liam Fox is at odds with the PM and doesn't think a customs union will work for having an international trade policy“We would be dependent on what the EU negotiated, and we have to be outside of that to take advantage of those growing markets.”The revelation of the major new row heaped more pressure on Mrs May to make a decision on what Britain wants from a Brexit deal with the EU after she has been accused of dithering about it for months. The 10 members of the Cabinet’s deeply divided Brexit war committee meet on Wednesday and Thursday next week to try to finally thrash out a position.
Fallout from Carillion Collapse Hits KPMG -- As the rubble from the financial collapse of British infrastructure giant Carillion gradually settles, two powerful parliamentary panels are piling pressure on the world’s biggest audit firms to disclose the full extent of their involvement with the company. The big four auditors — Deloitte, Ernst & Young (EY), KPMG, and PricewaterhouseCoopers (PwC) — have received letters from the Business and Work and Pensions select committees demanding that they reveal all the work they carried out for Carillion since 2008.The move comes amid growing concern around the world about the power of the so-called Big Four — down from the Big Five after Arthur Andersen imploded in the wake of the Enron scandal — and the potential conflicts of interest that can arise between their myriad roles. In the case of Carillion, all four of the Big Four provided services of some kind or another to the now defunct company, but it was Dutch-seated KPMG that signed off on its accounts. This it did without fail, even in early 2017 when it was clear that Carillion had wafer-thin profit margins and was dangerously overloaded with debt, including £2.6 billion worth of pension liabilities. Between 2012 and 2016 Carillion ran up debts and sold assets just to continue paying out dividends to shareholders.Yet in Carillion’s last ever annual report, KPMG approved Carillion’s viability statement, certifying it as strong enough to survive for “at least three more years.” Within less than three months, Carillion’s management was forced to admit it had significantly overestimated revenues, cash and assets, prompting a stunning stock market meltdown from which it would never recover. A scathing letter to the Financial Times this week called for Carillion’s directors and KPMG to be investigated for the company’s collapse. Martin White, of the UK Shareholders Association, and Natasha Landell-Mills, of Sarasin & Partners, wrote:“Although fingers are being pointed in all directions, most are missing the real culprit: faulty accounts appear to have allowed Carillion to overstate profits and capital, thereby permitting them to load up on debt while paying out cash dividends and bonuses.” All of it on KPMG’s watch.
Clearing out Carillion's cupboards - Frances Coppola - Those excellent researchers at the House of Commons Library have produced a briefing paper on the Carillion collapse. It is clear, succinct and well-researched. And extremely grim. The researchers seem to have gone back through the reports & accounts to about 2009. And they conclude that Carillion was a basket case not just in the last year of its life, but from about 2011 onwards. I've now done the same exercise, and I agree with them. Carillion's cupboards were virtually bare, and the little that was in them stank. This chart summarises the mess that Carillion got itself into: We need to be a little careful with this chart, of course, since it is comparing stocks and flows. But what it shows is that a large uplift in loans in 2010-12 generated absolutely no additional net cash revenue - in fact cash revenue actually fell between 2009 and 2016. For a company whose entire business model relies on increasing net cash flow, this is disastrous. The distressed uptick in borrowing in 2016-17 is very evident, of course, but for me the real issue here is the steady excess of loans over cash revenue from 2013 onwards. The company was simply not generating enough money to reduce its indebtedness. Of course, if the loans are used for productive investment, the company can eventually grow its way out of indebtedness. But Carillion didn't manage to do that. All that borrowing delivered almost no asset growth: So, high debt, poor revenue and zero productive investment. Now where have we seen a similar situation before? Ah yes. Greece. On a longer timeframe, of course - in Greece's case, the increase in indebtedness mainly occurred in the 1980s. But the pattern is the same. High indebtedness relative to revenue (GDP, in Greece's case) is fragile. All that is needed is a shock to income, and the debt becomes unsustainable.
Two out of three UK pension schemes are in the red to the tune of £210bn - Two out of three pension funds are in the red – to the tune of a combined £210 billion, it has been revealed. Some 3,710 schemes are in deficit according to the Pension Protection Fund watchdog, putting a serious question mark over the retirement plans of millions of workers. The PFF has been called into action on two high profile occasions of late – working with Toys R Us to secure a near £10m injection into its ailing fund to protect the company’s short-term future and also sorting through the debris of the Carillion collapse. The giant contractor folded earlier this month with debts of above £1.3bn, including an estimated £800m hole in its pension fund.The PFF monitors the health of 5,588 pension pots, with some of the biggest names on the FTSE 100 running schemes with major shortfalls.The biggest include £9.1billion at BT, as well as deficits of £6.9billion at Royal Dutch Shell, £6.7billion at BP and £6.6billion at both Tesco and BAE Systems.Sir Steve Webb, a former pensions minister under the recent coalition government, said Carillion would not be the last big company to fold leaving its pension scheme in jeopardy.“The question isn’t if there will be another Carillion – it’s when,” said Webb, who is now director of policy at pensions group Royal London.“With two-thirds of schemes in deficit it is inevitable there will be more insolvencies and more schemes ending up in the PPF.”The Carillion collapse affects about 27,500 members of its various pension schemes, the latest in a long line of funds to face an uncertain future. Savers with defunct retailer BHS, steelworkers with Tata, as well Toys R Us workers, are all either waiting to see just how much money they can expect on retirement or looking to move their pensions elsewhere. The PFF typically pays members 90% of what their nest eggs were worth in the event it has to intervene to safeguard a scheme. A report from consultants PwC last October estimated the total deficit of all the defined benefit (DB) pension funds in the UK stood at £410bn.
Jeremy Corbyn announces Labour will buy every homeless person in the country a house - Labour will buy every homeless person in the UK a house if the party is elected, Jeremy Corbyn has announced. The party leader said he would purchase 8,000 homes "immediately" and give them to people sleeping rough around the UK.He also highlighted plans to allow councils to take over properties that have been left "deliberately" empty in order to house people who are on waiting lists around the country. Rough sleeping in England has reached new highs, official figures out last week showed. There are now around 5,000 people living on the streets around the country, a 15 per cent rise on the same period in 2016. Labour also announced plans to hand over vacant Housing Association properties to homeless people, rather than to people on waiting lists. Speaking on the BBC's Andrew Marr show Mr Corbyn said: "(We would) immediately purchase 8,000 properties across the country to give immediate housing to those people that are currently homeless."At the same time we would require local authorities to build far more. "The problem is homeless people, rough sleepers, beg to get money for a night shelter, stay in the night shelter or a hostel. "The problem then is move on accommodation, the problem then is not having an address, without which can't get a job or claim benefits."
Russians in Britain told to reveal their riches - Oligarchs suspected of corruption are to be forced to explain their luxury lifestyles in Britain as part of a “full-spectrum” attack on organised crime.Officials are preparing to use new orders, which came into effect this week, enabling them to seize suspicious assets until those under investigation can properly account for their acquisitions. Dozens of targets have been identified, with two test cases being readied.Ben Wallace, the security minister, told The Times that he wanted the “full force of the government” to bear down on criminals and corrupt politicians using Britain as a playground and haven. “When we get to you we will come for you, for your assets and we will make the environment that you live in difficult,” he warned.The government estimates that about £90 billion of illegal cash is laundered in Britain every year. Mr Wallace said that he wanted to harness public awareness of corruption created by the McMafia TV drama on BBC One, which highlights Russian organised crime in Britain. “McMafia is one of those things where you realise that fact is ahead of fiction,” he said. “It’s a really good portrayal of sharp-suited wealthy individuals, but follow the money and it ends up with a young girl getting trafficked for sex. “Beneath the gloss there is real nastiness. So far it’s very close to the truth, the international nature of organised crime and the impunity with which some of these people operate and the brutality of it, is absolutely correct.” Asked about Russia’s involvement, Mr Wallace pointed to the so-called Laundromat case in which 21 ghost companies, many based in Britain, were used as part of a huge scam to wash dirty money from Russia through western banks. “What we know from the Laundromat exposé is that certainly there have been links to the [Russian] state. The government’s view is that we know what they are up to and we are not going to let it happen any more.”
UN urged to launch global effort to end offshore tax evasion - The United Nations has been urged by the Tax Justice Network to coordinate a global effort to end offshore tax evasion and corruption, amid warnings that the UK is continuing to insulate its overseas territories from financial transparency. Commenting on the launch of the TJN’s Financial Secrecy Index 2018, which ranks countries on the size and secretiveness of their offshore sectors, its chief executive, Alex Cobham, said big financial centres had proven unwilling to reform voluntarily. “The 2018 release confirms the long-term picture that the richest and most powerful countries have continued to pose the greatest global risks – with Switzerland and the US established as the key facilitators of illicit financial flows,” he said.“If we are to end tax evasion, corruption, fraud and money laundering, the world’s major financial centres need to clean up their act. And since they are not willing to do that voluntarily, the UN should create a global convention to end financial secrecy once and for all.” Switzerland, the US and the Cayman Islands are the biggest contributors to global financial secrecy according to the survey, which is published every two or three years. The UK does not feature in the top 10 secrecy jurisdictions. However, the TJN warned that the country was continuing to frustrate moves towards greater transparency by protecting its overseas territories – former colonies, some of which have since become prominent tax havens – from reform.
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