Fed President Warns Trade Wars May Delay Rate Hikes - While the Fed had clearly raised its economic outlook since the December FOMC meeting and into 2018 as a result of recent strong wage inflation prints, that may soon change, and not only because the global economic impulse is suddenly slowing fast as shown by the recent drop in the global economic surprise index... ... but mostly as a result of a potential economic slowdown resulting from Trump trade tariffs. That was the take home message from Atlanta Fed's (voting) president Raphael Bostic, who suggested that Trump's trade war could offset any positive boost from the Trump fiscal stimulus. Speaking to reporters in Florida, Bostic said that “some of the developments with the trade policy has introduced some uncertainty as to how the economy is going to perform, so I am really taking a wait-and-see attitude,’’ Asked whether he was deciding between two or three increases, or three or four, he said, “Everything is on the table." His dovish comments followed unexpectedly hawkish comments from none other than one of the Fed biggest heretofore dove, Lael Brainard: “We would take into account developments if they proved to be material to the outlook,” Brainard told a dinner audience in New York. “It’s early to tell what the broader implications could be, so I see it as an uncertainty, but not something that would materially change my outlook, today.” Bostic, who in December had favored raising rates just twice this year - making him one of the most dovish members of the rate-setting Federal Open Market Committee - shifted his projection to three moves. That upgrade was prompted by a $1.5 trillion tax-cut package signed by Trump in December and subsequent government spending agreed by lawmakers. However, he cautioned, a trade war might change the economic picture. The Atlanta Fed president did say the Fed would have to wait and see what the economic impact might be if tariffs are imposed. He said that protectionism is a negative for the US economy, that "trade wars are not easy and winnable", and that protectionist policies add uncertainties. He added, "There has not actually been anything done yet."
Rand Paul Adds 'Audit The Fed' Amendment To Senate Banking Bill - Senator Rand Paul (R-KY) announced on March 5 that he will introduce his “Audit the Fed” legislation, which would permit a full audit of the Federal Reserve System, as an amendment to the Senate Banking Bill. The Senate is expected to vote on the Banking Bill, S. 2155 - officially known as the Economic Growth, Regulatory Relief, and Consumer Protection Act— this week. “While we have made great strides in reviving our economy through curbing overzealous regulation and cutting taxes, lasting prosperity will escape us if we do not hold the enabler of big government and our astronomical national debt accountable. It’s time for the Senate to side with the American people by removing the shackles on congressional oversight and lifting the Fed’s veil of secrecy. It’s time for us to pass Audit the Fed,” Paul said in his press release. Passage of the Federal Reserve Transparency Act (S. 16), commonly referred to as Audit the Fed legislation, would require the nonpartisan, independent Government Accountability Office (GAO) to conduct a thorough audit of the Federal Reserve’s Board of Governors and reserve banks within one year of the bill’s passage and to report back to Congress within 90 days of completing the audit.
Fed's Beige Book: "Modest to moderate" expansion, "worker shortages across most sectors" -- Fed's Beige Book "This report was prepared at the Federal Reserve Bank of San Francisco based on information collected on or before February 26, 2018. " Economic activity expanded at a modest to moderate pace across the 12 Federal Reserve Districts in January and February. Consumer spending was mixed, as non-auto retail sales increased in just over half of the Districts while auto sales declined or were flat in every District. Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector. On balance, Districts reported modest growth in home sales and construction, with the latter constrained by shortages of labor and materials. Conditions in the nonresidential real estate market improved moderately since the previous report, with robust construction activity noted in three Districts. Commercial rents in and around New York City were up significantly, according to contacts in the area. Increases in production were broad based across manufacturing sectors, with all but one District noting at least modest growth in activity. Loan volumes were generally flat, with a handful of Districts noting a modest decrease in delinquency rates. Among reporting Districts, agricultural sector activity was mixed but flat overall. Contacts in natural resource sectors saw modestly improving industry conditions, except in the Minneapolis District, where energy and mining activity was robust. … On balance, employment grew at a moderate pace since the previous report. Across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services. Several Districts reported continued worker shortages across most sectors, with contacts often mentioning shortages in the construction, information technology, and manufacturing sectors. In many Districts, wage growth picked up to a moderate pace. Most Districts saw employers raise wages and expand benefit packages in response to tight labor market conditions. Contacts in a few Districts conveyed reports of modest increases in compensation following passage of the Tax Cuts and Jobs Act.
Overheating Arrives: Beige Book Finds Prices, Wages Rising In Most Districts - (Wage) inflation is here. That's the message from the just released, March, Beige Book, in which the Fed found that not only did "prices increase in all districts", but that "most districts also saw employers raise wages", a clear harbinger of an overheating economy. While overall economic activity expanded at a "modest to moderate" pace across the 12 Federal Reserve Districts in January and February, with districts reporting modest growth in home sales and construction with the latter constrained by labor and materials shortages, and the Super Bowl boosting hotel usage in Philadelphia ("a Philadelphia contact noted that hotels benefited from several large conventions, Eagles’ home playoff games, and the Super Bowl itself, which drew local fans for downtown hotel stays in anticipation of the evening celebration"), it was the commentary on employment, wages and prices that took center stage. Here, the Fed said that even as employment grew at a moderate pace, "across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services." The Beige Book further noted that "several Districts reported continued worker shortages across most sectors, with contacts often mentioning shortages in the construction, information technology, and manufacturing sectors." And the punchline: "Most Districts saw employers raise wages and expand benefit packages in response to tight labor market conditions" with contacts in a few Districts conveyed "reports of modest increases in compensation following passage of the Tax Cuts and Jobs Act." In other words, Trump tax cuts are already filtering through to the economy, to wit:
- "One large retailer planned to pass along half its savings from the corporate tax cut to selected workers in the form of higher wages, while a smaller retailer said it planned to raise salaries a bit to match the wage increases announced by some prominent retail chains as a result of the tax cuts."
- "Contacts speculated that savings resulting from the Tax Cuts and Jobs Act (TCJA) will, in part, support pay increases over the short to medium terms "
- "few contacts expect the tax cuts to lead to more robust hiring. "
And while wages increased in "most" districts, prices did so everywhere: "prices increased in all Districts, and most reports noted moderate inflation."
Q1 GDP Forecasts -- It is just early March, but here are few Q1 GDP forecast. From Merrill Lynch:1Q GDP tracking edged down a tenth to 1.8% qoq saar, while 4Q ticked up to 2.7% [March 6 estimate]. And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 3.5 percent on March 1, up from 2.6 percent on February 27.From the NY Fed Nowcasting Report. The New York Fed Staff Nowcast for 2018:Q1 stands at 3.0%. [March 2 estimate]
Stephanie Kelton explains how the government budget affects the economy and the mechanics of student debt forgiveness - - Alphachat podcast - In this episode, Matt Klein talks with Stephanie Kelton, a professor at SUNY-Stony Brook who was previously the chief economic adviser to Senator Bernie Sanders. Kelton has been one of America’s great evangelists of Modern Monetary Theory — the crazy idea that one person’s financial asset is another person’s financial liability. Put another way, the lines on this chart always add up to zero: We discussed the main implications of this insight for government policy, including but not limited to:
- The expected effects of the new tax policy
- The reason why governments issue bonds instead of just printing money
- Why the size of the budget deficit is meaningless without context
- The role of the central bank
- The difference between currency issuers and currency users — and what this means for Europe and US states
Breakthrough: North Korea Ready To Denuclearize "If Regime Safety Is Guaranteed" - Score another diplomatic victory for Trump, whose hard line negotiating tactic appears to have generated a dramatic - and favorable for market - outcome. Moments ago futures spiked, 10Y yields jumped and the USDJPY bounced about 106 on what the FT dubbed a "diplomatic breakthrough" that North and South Korea have agreed to hold direct talks between their leaders with North Korea signalling it is willing to abandon its nuclear program "if regime security can be guaranteed." The headlines come from South Korean National Security Office special envoy Chung Eui-yong, who is speaking to reporters in Seoul after returning from Pyongyang. Remember he and another envoy, National Intelligence Service chief Suh Hoon met North Korean leader Kim Jong Un in Pyongyang on Monday. Chung confirms that North Korea is indeed ready to stop the jawboning and negotiate:
- Kim Jong Un open to frank talks with U.S. for denuclearization: Chung
- North Korea to suspend provocations during talks: Chung
- Promises not to use any weapons against South Korea: Chung
Next step: a summit in April between the two neighbors where details will be ironed out: "North Korea, South Korea agree to hold summit in April", Chung says. Pyongyang vowed not to test any ballistic missiles or make further provocations during talks, according Chung clarified. The easing of tensions between the two Koreas and this clearly positive geopolitical development has triggered a broad based risk-on move. Fixed income is selling off sharply here, with Bunds flying. As the spot KRW market is closed, the NDF space is in focus. The 1m NDF has traded from 1076.0 to 1070.8 at time of print. USDJPY is spiking higher at 106.10 at print. This move may have legs especially as early NY begins to come in The question now is whether this unexpected diplomatic victory for Trump will further empower him to demand similar concessions on the trade side, and launch the "trade wars", even as the market is now fully convinced that the US president will backtrack.
Trump Sees Sign of Progress in Possible North Korea Talks With US - President Donald Trump signaled he’s open to talks with North Korea, even as his advisers expressed skepticism that Kim Jong Un is serious about suspending his nuclear weapons program and engaging in real negotiations.“They seem to be acting positively. I’d like to be optimistic,” Trump told reporters Tuesday, hours after envoys from South Korea said Kim told them he was ready to give up his nuclear weapons if the safety of his regime was guaranteed.But a top administration official, briefing reporters on condition of anonymity, said North Korea had earned skepticism in Washington through decades of failed peace deals and that Kim’s regime would need to do more than temporarily halt weapons tests before the U.S. would agree to talks. Many analysts shared those doubts.“The North Koreans are looking to buy time. They are looking for some relief just as the sanctions are beginning to bite and they are very worried about all the talk of a military strike,” said Sue Mi Terry, a former CIA analyst who’s a senior fellow at the Center for Strategic and International Studies in Washington. “I’m highly skeptical that all of a sudden the North Koreans are ready to give up their nuclear weapons and missiles.” The next step will be some tough questioning of South Korean officials who will travel to Washington later this week to brief the Trump administration on their talks with Kim in Pyongyang, the administration official said.
US Imposes More Sanctions On North Korea Despite Diplomatic "Breakthrough" - Barely 12 hours after a "breakthrough" report that North Korean leaders might be willing to shut down their nuclear program and surrender their existing nukes in exchange for assurances that the regime's safety would be guaranteed, the State Department announced that it would impose yet another round of economic sanctions on the North - its second batch of sanctions within the span of two weeks, per Reuters. State Department says it imposes additional sanctions on North Korea over assassination pic.twitter.com/mMiHuIJyk8 — Reuters Top News (@Reuters) March 7, 2018 The sanctions are being levied because the US has obtained solid evidence that North Korean leader Kim Jong Un ordered the assassination of his older half-brother, Kim Jong Nam, who was murdered in 2017 at an airport in Kuala Lampur when two young female assassins exposed him to a nerve agent, the US has determined. JUST IN: U.S. State Department says U.S. has determined that North Korean government used chemical warfare agent VX to assassinate half-brother of Kim Jong Un in Malaysia in 2017 pic.twitter.com/Mb5nOdyI6K — Reuters Top News (@Reuters) March 7, 2018 MORE: State Department says it imposes additional sanctions on North Korea over assassination pic.twitter.com/mMiHuIJyk8 — Reuters Top News (@Reuters) March 7, 2018. State Department spokesperson Healther Nauert made the announcement in a press release. "The United States determined under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act) that the Government of North Korea used the chemical warfare agent VX to assassinate Kim Jong Nam, in the Kuala Lumpur airport," Nauert said on Tuesday. These sanctions are in addition to the existing sanctions against targeting unlawful North Korean activities. This public display of contempt against universal norms of chemical weapons use further demonstrates the reckless nature of North Korea and underscores that we cannot tolerate a North Korean WMD program."
Lindsey Graham: Fighting A War With North Korea Would Be "Worth It" - Graham told CNN during a brief interview that the devastating collateral damage caused by a US military strike against North Korea would be “worth it." "All the damage that would come from a war would be worth it in terms of long-term stability and national security," the Republican senator from South Carolina told CNN. "I'm completely convinced that President Trump and his team reject the policy of containment… They've drawn a red line here and it is to never let North Korea build a nuclear-tipped missile to hit America." In another absurd claim, Graham claims that Americans shouldn't worry about the deadly consequences of a targeted strike in North Korea, because all of the violence and killing will be unfolding over there. And with that, Graham exposes the hypocrisy at the core of the aggressive foreign policy posturing that has dominated American politics since the days of Henry Kissinger: as long as there are minimal American casualties, the US shouldn't hesitate to intervene in foreign affairs even if (or perhaps especially) it means millions of casualties. "If there’s going to be a war to stop [Kim Jong-un], it will be over there. If thousands die, they’re going to die over there. They’re not going to die here," he added. "And [Trump] told me that to my face." "That may be provocative, but not really. When you’re president of the United States, where does your allegiance lie? To the people of the United States."
Trump Agrees To Meet With Kim Jong Un: "Great Progress Being Made” -- As we detailed earlier, while speaking to reporters at the White House, South Korean envoy Chung Eui-Yong said, and the White House confirmed, that Trump has accepted to meet Kim Jong Un, by some time in May, in what would be a historic first: no sitting American president has ever met a North Korean leader. His full remarks below:WATCH: Full remarks of South Korean security adviser Chung Eui-Yong: "Kim [Jong Un] pledged that North Korea will refrain from any further nuclear or missile tests." https://t.co/R1pNb0btCG pic.twitter.com/DbLdAosam3— Fox News (@FoxNews) March 9, 2018Chung Eui-yong made the announcement during a news conference outside the White House after meeting with Trump administration officials. Chung said the North Korean leader has expressed his "eagerness to meet with President Trump as soon as possible."SoKo security adviser Chung Eui-Yong: "[Kim Jong Un] expressed his eagerness to meet @realDonaldTrump as soon as possible." pic.twitter.com/6Hzactb9oH— Fox News (@FoxNews) March 9, 2018Chung had led a South Korean delegation earlier in the week on a historic trip to Pyongyang. During the trip, the envoys became the first South Korean officials to meet with Kim since he took power in 2011.Earlier this week, the South Korean envoys announced that Kim told them he is willing to begin negotiations with the United States on abandoning nuclear weapons and that he would suspend all nuclear and missile tests while engaged in talks. President Trump has tweeted his first remarks since accepting the invitation to meet with North Korean leader Kim. Trump explained the background: "Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. " And noted confidently that: "Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!" Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned! — Donald J. Trump (@realDonaldTrump) March 9, 2018 Oh to be a fly on the wall at that meeting!
Trump meeting with Kim Jong Un could signal major thaw in nuclear standoff - Politico — President Donald Trump has agreed to meet directly with the North Korean leader, Kim Jong Un, in what could be the biggest breakthrough in the tense nuclear saber-rattling that has defined the president’s stance since taking office. The invitation from the North Korean dictator was announced at the White House by South Korea’s national security adviser, who reported that North Korea also agreed that in the interim it would halt its missile tests and was prepared to negotiate ending its nuclear weapons program altogether. Kim “stressed his eagerness to meet President Trump as soon as possible,” Chung Eui-yong, the South Korean national security adviser, said on Thursday evening outside the West Wing of the White House. “President Trump appreciated the greeting and said he would meet Kim Jong Un by May to achieve permanent denuclearization.” “I explained to President Trump that his leadership and his maximum pressure policy, together with international solidarity, brought us to this juncture. I expressed President Moon Jae-in’s personal gratitude for President Trump’s leadership,” he added, referring to the South Korea leader. His comments, delivered in the driveway in the chilly night, came almost two hours after Trump himself ducked into the White House briefing room to alert reporters that news was coming. But he declined to share it himself, instead leaving the South Korean official to talk about his plans. The president reverted to his preferred form of communication shortly after, tweeting: “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”
History in the making: US president to meet North Korean leader | Asia Times: US President Donald Trump agreed on Thursday evening, Washington-time, to meet North Korean Leader Kim Jong-un by the end of May. The agreement – an historic one – was made following a briefing to Trump, and was itself followed by a speech delivered on the White House grounds by South Korean National Security Advisor Chung Eui-yong, who earlier this week met Kim in Pyongyang. During his briefing of Trump, Chung quoted the North’s leader as saying, “I will be able to produce a big outcome if I meet and talk to President Donald Trump,” Yonhap reports. Unusually, the South Koreans – who are playing the role of intermediary between Pyongyang and Washington – did the talking, with the normally effusive Trump remaining in the background. However, White House press secretary Sarah Huckabee Sanders confirmed that Trump would “accept the invitation to meet with” Kim, but that sanctions would remain in place. The exact timing has not yet been announced, but the meeting will take place by the end of May. Meanwhile, Kim has – according to the South Koreans – agreed to freeze all missile and nuclear tests. South Korean President Moon Jae-in, via his spokesperson, hailed the upcoming meeting as “a historic milestone.” Even allowing for the hyperbole common to diplomacy, the agreement to meet is, indeed, a landmark one. Moon may have personal reason to thank Kim, who, according to the Blue House, joked to South Korean delegates that he was halting missile tests so as not to disturb Moon. The latter has been forced by the tests to convene early morning national security meetings. Never before has a leader of North Korea, a nation established in 1948 following the division of the peninsula in 1945, met a sitting US president.
Trump rolls the dice on North Korea | TheHill: President TrumpDonald John TrumpAccuser says Trump should be afraid of the truth Woman behind pro-Trump Facebook page denies being influenced by Russians Shulkin says he has White House approval to root out 'subversion' at VA MORE is making a serious roll of the dice with his decision to meet face-to-face with North Korean leader Kim Jong Un. Trump would be the first U.S. president to ever meet with a leader of North Korea, and success in the negotiations — if the Korean peninsula was denuclearized — would be a tremendous, historic achievement. At the same time, there’s little reason to believe Kim has actually changed his mind about nuclear weapons when he’s on the verge of achieving his goal of a nuclear-tipped missile capable of striking the U.S. mainland. While GOP lawmakers said Kim’s offering of a meeting was proof that Trump’s policies are having some success, they also urged caution going forward. In Friday’s press briefing, White House press secretary Sarah Huckabee Sanders appeared to give the administration wiggle room to cancel the meeting, attaching conditions that were not announced Thursday night. “We’re not going to have this meeting take place until we see concrete actions that match the words and the rhetoric of North Korea,” Sanders said. “We’ve accepted the invitation to talk based on them following through with concrete actions on the promises that they’ve made.”
Not So Fast: White House Says North Korea Must Take "Concrete Actions" Before Trump-Kim Meeting - When Trump triumphantly accepted the invitation to meet with Kim Jong-Un last night, verbally delivered to the White House by the South Korean delegation, it almost seemed that peace on earth was about to break out after what would otherwise be one of the greatest diplomatic breakthroughs in recent US history. More importantly, the meeting between Trump and Kim, tentatively scheduled "before May", appeared to have no conditions attached to it.That changed on Friday afternoon, when White House press secretary Sarah Huckabee Sanders said that the U.S. will require North Korea to take “concrete and verifiable steps” before President Trump attends an announced sit down with Kim Jong Un.White House press secretary Sarah Sanders says President Trump won’t meet with Kim Jong Un “until we see concrete actions that match the words and the rhetoric of North Korea” https://t.co/qTID7SRySB pic.twitter.com/bJrQz4kvPQ— CNN (@CNN) March 9, 2018This is a notable development as the White House had not previously suggested said that there would be any "string attached" for the talks to take place in the next month.“This meeting won't take place without concrete actions that match the promises that have been made by North Korea,” Sanders said. However, as on Thursday, Sanders did not specify what promises must be kept or what steps North Korea must take for the planned meeting to go through.According to the South Korean delegation, Kim was prepared to suspend his ballistic missile tests in the hopes of opening a dialogue. Perhaps the "condition" is only for Kim to keep his word, something he has not been very good at in the past: Sanders said Friday that they expect North Korea’s actions and rhetoric to be aligned if the president is to sit down with Kim.When reporters pressed Sanders on whether it was possible that the meeting would fall through, she said that “a lot of things are possible,” and added that “I'm not going to walk through every hypothetical that could exist in the world. But I can tell you that the president has accepted that invitation on the basis that we have concrete and verifiable steps.”
Trump-Kim talks: US signals hardline stance as it scrambles to define position -- Donald Trump will take a hardline position at his planned summit with the North Korean leader Kim Jong-un, the White House said on Friday, as US officials scrambled to keep pace with the president after his sudden acceptance of Kim’s offer to talk. In briefings after the surprise announcement – which would be the first ever meeting of leaders of the two countries – US officials made no mention of possible concessions that Trump might offer, other than saying that severe sanctions would stay in place until North Korea took verifiable steps to dismantle its nuclear weapons programme. At the daily White House briefing, spokeswoman Sarah Sanders even cast doubt on Trump’s acceptance of the offer of a summit, suggesting it was dependent on preconditions. “Let’s be very clear. The United States has made zero concessions but North Korea has made some promises. This meeting won’t take place without concrete actions that match the promises that have been made by North Korea.” Sanders did not specify what actions the US required Pyongyang to take, and whether the demands amounted to more than the requirement of a pause in missile and nuclear testing, which Pyongyang appears to have already agreed to. The White House later appeared to minimise the impact of Sanders’ remarks, with one official telling the Wall Street Journal: “The invitation has been extended and accepted, and that stands.” Later, on Friday evening, Trump added to the confusion with a tweet about the meeting in which he added a qualifying phrase: “if completed”. The deal with North Korea is very much in the making and will be, if completed, a very good one for the World. Time and place to be determined.
For NYT, a Trillion Dollars’ Worth of A-Bombs Is ‘Little’ Response to Russia - For the New York Times, the US is always lagging behind the Russian menace. Now it’s in the realms of cyber and nuclear war that the Times sees dangerous gaps. In “A Russian Threat on Two Fronts Meets an American Strategic Void” (3/5/18), reporters David Sanger and William Broad passed along the worries of Washington—as expressed by a few military higher-ups, some guy from the arms industry mouthpiece known as the Center for Strategic and International Studies, and a disembodied “The United States”—that Trump didn’t have a coherent strategy for dealing with cyber and nuclear threats from Russia. The front-page subhead warned, “Russia has ramped up its arsenal, US has done little in response.”So what does a “little” response look like? Since taking office, the Trump administration and Congress—citing the Russian challenge as one of their major rationales—have increased the military budget by about $80 billion, or roughly 13 percent, the largest increase since the aftermath of 9/11, and 70 percent greater than the entire Russian military budget of $47 billion. (Note that in the late 1970s and early ’80s, the Soviet military budget was bigger in real terms than that of the United States—and yet the USSR still managed to lose the Cold War.)Additionally, Trump has reportedly asked for a “black budget” of over $80 billion for covert operations ($30 billion more than previous reports), and pledged more than $1.2 trillion to building up the United States’ nuclear arsenal over the next 30 years, $200 billion more than Obama asked Congress for when he announced the plan two years ago. And Trump has, again, asked to increase the military budget by even more—to $716 billion—for 2019. All this, of course, is omitted from Sanger and Broad’s piece, which largely paints the United States as bumbling around without any idea how to combat the always-one-step-ahead-of-us Russians. While the framing paints an image of the US doing nothing at all, the article’s text is a little less daft, focusing primarily on a “strategic void,” or what some “experts” believe is a lack of “strategy.” Although there’s no indication the US military has ceased to carry out strategic objectives laid out before Trump took office, one can grant this vague premise, but omitting the unprecedented amounts of money and resources Trump has spent on the military under the guise of combating Russia is a massive omission.
How Far Can The Americans Be Pushed? --Inspired by the Saker’s article regarding how far can the Russians be pushed, I ask, how far can the Americans be pushed, not specifically only in Syria, but in general?In his article, the Saker articulated in his regular rational and captivating style, the issue of Russian patience, or should we say frustration, with America’s actions and inactions in Syria. And, as I was reading the article, I began to think about looking at the situation from the other side of the mirror in a tongue-in-cheek manner; looking at it from the American perspective.I thought back to an article I had written on the very same theme some years ago, focusing and predicting on what a desperate America would do.The sad and ironic reality is that America does not walk the talk of competitiveness and level playing fields. America’s definition of a national threat is different from that of any other country in human history; except perhaps for ancient Rome.For this reason, America does not believe that Russia has been pushed at all, but quite the contrary. America believes that is America that has been pushed; by not only Russia, but by many other nations. As a matter of fact, I started writing this article and I wasn’t going to finish it and submit it until President Putin pushed America even further towards the state of panic in his 1st of March speech. American politicians operate on the pretext that America has a given right to be the greatest, wealthiest, most-developed, strongest unrivaled nation on earth. But Trump’s America, even Obama’s, Bush’s and Clinton’s is not exactly that global brain and talent pivot any longer. As a result, America has changed the rules of the game in order to stay on top. Having lost its competitive edge and not yet being able to admit it, America is still desperately trying to cling to this edge by means that contradict with its stature as the leader of the free world and the nation that it alleges to be. According to those new rules, now that they no longer can conceal or sugarcoat its true intentions, any nation that tries to develop itself is seen by America as a potential threat. And this applies to all aspects of development, because according to America, no other nation is allowed to be better or even close to where America is.
Jared Kushner’s Real-Estate Firm Sought Money Directly From Qatar Government Weeks Before Blockade - The real estate firm tied to the family of presidential son-in-law and top White House adviser Jared Kushner made a direct pitch to Qatar’s minister of finance in April 2017 in an attempt to secure investment in a critically distressed asset in the company’s portfolio, according to two sources. At the previously unreported meeting, Jared Kushner’s father Charles, who runs Kushner Companies, and Qatari Finance Minister Ali Sharif Al Emadi discussed financing for the Kushners’ signature 666 Fifth Avenue property in New York City. The 30-minute meeting, according to two sources in the financial industry who asked not to be named because of the sensitivity of the potential transaction, included aides to both parties, and was held at a suite at the St. Regis Hotel in New York. A follow-up meeting was held the next day in a glass-walled conference room at the Kushner property itself, though Al Emadi did not attend the second gathering in person. The failure to broker the deal would be followed only a month later by a Middle Eastern diplomatic row in which Jared Kushner provided critical support to Qatar’s neighbors. Led by Saudi Arabia and the United Arab Emirates, a group of Middle Eastern countries, with Kushner’s backing, led a diplomatic assault that culminated in a blockade of Qatar. Kushner, according to reports at the time, subsequently undermined efforts by Secretary of State Rex Tillerson to bring an end to the standoff. On Friday afternoon, NBC News reported that in late January and early February, Qatari government officials visiting the U.S. “considered turning over to Mueller what they believe is evidence of efforts by their country’s Persian Gulf neighbors in coordination with Kushner to hurt their country.” The Gulf crisis involving Qatar and its neighbors will likely be Kushner’s defining foreign policy legacy. The crisis followed a May visit to Riyadh, Saudi Arabia, by Kushner and President Donald Trump, who subsequently took credit for Saudi Arabia and its allies’ efforts against Qatar. The fallout has reshaped geopolitical alliances in the region, splitting the Gulf Cooperation Council and pushing Qatar, home to the Middle East’s largest U.S. military base, closer to Turkey and Iran.
Qatar Refused to Invest in Kushner’s Firm. Weeks Later, Jared Backed a Blockade of Qatar - Jared Kushner’s father met with Qatar’s minister of finance last April, to solicit an investment in the family’s distressed asset at 666 Fifth Avenue, according to a new report from the Intercept. The Qataris shot him down.Weeks later, Saudi Arabia and the United Arab Emirates organized a blockade of Qatar. The Gulf monarchies claimed that this act of aggression was a response to Donald Trump’s call for the Arab world to crack down on terrorists — after taking in the president’s majestic sermon in Riyadh, the Saudis simply couldn’t live with themselves if they didn’t take action to thwart Qatar’s covert financing of Islamist extremism.In reality, the Saudis’ primary aim was to punish Doha for asserting its independence from Riyadh by, among other things, engaging with Iran and abetting Al Jazeera’s journalism. This was obvious to anyone familiar with the Saudis’ own affinity for (shamelessly) exporting jihadism — which is to say, anyone with a rudimentary understanding of Middle East politics.And it was equally obvious that the United States had nothing to gain from a conflict between its Gulf allies. Qatar hosts one of America’s largest and most strategically important air bases in the Middle East. Any development that pushes Doha away from Riyadh pulls it toward Tehran. Thus, Secretary of State Rex Tillerson — and virtually every other arm of the U.S. government — scrambled to nip the blockade in the bud. But Jared Kushner was (reportedly) an exception. Donald Trump was more than happy to endorse the idea that his speech had moved mountains, and commended the Saudis for punishing Qatar — first on Twitter, and then during a press conference in the Rose Garden. According to contemporary reports, his son-in-law was one of the only White House advisers to approve of this stance.
Jared Kushner Failed to Disclose He Led a Foundation Funding Illegal Israeli Settlements Before UN Vote -- Jared Kushner failed to disclose his role as a co-director of the Charles and Seryl Kushner Foundation from 2006 to 2015, a time when the group funded an Israeli settlement considered to be illegal under international law, on financial records he filed with the Office of Government Ethics earlier this year.The latest development follows reports on Friday indicating the White House senior adviser attempted to sway a United Nations Security Council vote against an anti-settlement resolution passed just before Donald Trump took office, which condemned the structure of West Bank settlements. The failure to disclose his role in the foundation—at a time when he was being tasked with serving as the president’s Middle East peace envoy—follows a pattern of egregious omissions that would bar any other official from continuing to serve in the West Wing, experts and officials told Newsweek. The first son-in-law has repeatedly amended his financial records since his initial filing in March, along with three separate revisions to his security clearance application. Despite correcting his financial history on multiple occasions, he has yet to include his role as co-director to the family foundation. The omission was first discovered by a team of researchers at American Bridge, a progressive research and communications organization, and shared exclusively with Newsweek on Friday afternoon. The researchers suggested Kushner’s failure may have been more than an inadvertent mistake, but instead an attempt to avoid "potential conflicts with his job negotiating Middle East peace." Newsweek later independently confirmed Kushner's omission on his multiple financial disclosures.
Trump Slams Bush: Iraq Invasion "Single Worst Decision Ever Made" - President Trump slammed former President George W. Bush over the 2003 U.S. invasion of Iraq - referring to it as "the single worst decision ever made," and that it was comparable to "throwing a big fat brick into a hornet's nest." Speaking to a group of GOP donors at a Mar-a-Lago closed door lunch and fundraiser, Trump also mocked Bush's intellect: "Here we are, like the dummies of the world, because we had bad politicians running our country for a long time," reported CNN - which obtained leaked audio from the event. "That was Bush. Another real genius. That was Bush," Trump joked. "That turned out to be wonderful intelligence. Great intelligence agency there." In the past, Trump has been notoriously critical of the decision to invade Iraq, slamming Jeb Bush during the 2016 primaries over his brother's decision to invade.Jeb, why did your brother attack and destabalize the Middle East by attacking Iraq when there were no weapons of mass destruction? Bad info? — Donald J. Trump (@realDonaldTrump) October 18, 2015 We spent TWO TRILLION DOLLARS in Iraq and got NOTHING. Now we are going back and will again get NOTHING because our leaders are clueless!— Donald J. Trump (@realDonaldTrump) November 8, 2014 Former President Bush - despite rarely criticizing President Obama - only took a month into Trump's presidency to begin tossing barbs. Following Trump's controversial Executive Order banning travel from several countries associated with terrorism, Bush 43 said: "I don’t like the racism and I don’t like the name-calling and I don’t like the people feeling alienated. Nobody likes that." Last October, Bush indirectly slammed Trump at a policy seminar in New York - telling the audience “We have seen our discourse degraded by casual cruelty... We’ve seen nationalism distorted into nativism.” “Bullying and prejudice in our public life sets a national tone, provides permission for cruelty and bigotry, and compromises the moral education of children,” said Bush. “The only way to pass along civic values is to first live up to them.”
Netanyahu, Trump discuss war preparations against Iran --Israeli Prime Minister Benjamin Netanyahu’s five-day trip to the US has been dominated by a growing drumbeat for war against Iran, a regional struggle that would eclipse the immense carnage wrought by the past 15 years of uninterrupted US military intervention in the Middle East.Netanyahu’s meeting with US President Donald Trump Monday was followed Tuesday by his appearance before the annual conference of the American Israel Public Affairs Committee (AIPAC), the principal US Zionist lobby, in Washington. There, he proclaimed before a cheering audience that “Iran, Iran and Iran was the main topic of the meeting.”The Israeli prime minister spoke in apocalyptic terms of Iran’s growing influence in the Middle East, declaring “darkness is descending on our region” and pointing to a map in which countries that he alleged Iran was dominating were painted black.“Iran is building an aggressive empire: Iran, Iraq, Syria, Gaza, Yemen, more to come,” he continued. He went on to praise Trump for adopting a policy of provocation and aggression against Iran, declaring that “his administration will not accept Iran’s aggression in the region” and “will never accept a nuclear-armed Iran.” Netanyahu said that Trump “has also made it clear that if the fatal flaws of the nuclear deal are not fixed he will walk away from the deal and restore sanctions.”
Google admits collaboration with illegal US drone murder program - In another milestone in the growing integration between the military-intelligence complex and Silicon Valley, Google’s parent company Alphabet has confirmed that it has provided software to identify targets used in the illegal US government drone murder program. Since initiating its drone assassination program in 2009, the United States claims to have killed close to 3,000 “combatants” in drone strikes. Internal military documents show that for every one person targeted by a drone strike, nine bystanders are killed, meaning that the true toll of the US military’s airborne terrorism campaign in Yemen, Somalia, Afghanistan, Pakistan and Iraq potentially rises to the tens of thousands. According to the American Civil Liberties Union, “A program of targeted killing far from any battlefield, without charge or trial, violates the constitutional guarantee of due process. It also violates international law, under which lethal force may be used outside armed conflict zones only as a last resort.” Google’s complicity with the drone murder program implicates the company in the criminal activities of the US military, sparking outrage among employees after executives admitted the collaboration in an internal memo last week, according to a report by Gizmodo. Sensitive to both the potential legal ramifications of its actions and to the hostility to America’s criminal wars both inside and outside the company, Google stressed in a statement that its collaboration “is for non-offensive uses only,” saying “the technology flags images for human review.” But this absurd and unserious pretense, aimed to provide talking points to an uncritical, state-controlled media, is the equivalent of a Mafia getaway driver claiming he is not an accomplice to murder because he did not pull the trigger.
Hey Google! Who Should The US Government Kill Today? - Only months after it was disclosed that the Pentagon was using artificial intelligence (AI) to hunt for terrorists, officials have now acknowledged that Google has been collaborating with the Department of Defense to use AI in analyzing drone footage. The disclosure comes amid an uproar among Google employees who aren’t happy to be assisting in the development of military applications. While Google has had controversial contracts with the government before — most notably with the NSA — this is its “pilot” project with Project Maven, which is itself the Pentagon’s own flagship weaponized AI program. The purpose of Project Maven is to implement Big Data and machine learning into the U.S. military, which officials say is currently in a new AI arms race with China and Russia. According to information from an internal mailing list, Google will now join this arms race and assist the DoD with storing and analyzing the massive troves of data from aerial drones. When multiple anonymous Google employees expressed outrage over the disclosure, as Gizmodo first reported, a company spokesman issued the following statement:“We have long worked with government agencies to provide technology solutions. This specific project is a pilot with the Department of Defense, to provide open source TensorFlow APIs that can assist in object recognition on unclassified data,” the spokesperson said. “The technology flags images for human review, and is for non-offensive uses only. Military use of machine learning naturally raises valid concerns. We’re actively discussing this important topic internally and with others as we continue to develop policies and safeguards around the development and use of our machine learning technologies.” Google’s specific tasks have included gathering data from a fleet of 1,100 drones to help the Pentagon better identify terrorists. Google’s deep learning algorithms can help in object identification, differentiating people from vehicles in order to maximize the effects of military strikes against ISIS.
Tell Me More About How Google Isn’t Part Of The Government And Can Therefore Censor Whoever It Wants? - Caitlin Johnstone -- When you tell an establishment Democrat that Google’s hiding and removal of content is a dangerous form of censorship, they often magically transform into Ayn Rand right before your eyes. “It’s a private company and they can do what they like with their property,” they will tell you. “It’s insane to say that a private company regulating its own affairs is the same as government censorship!” This is absurd on its surface, because Google is not separate from the government in any meaningful way. It has been financially intertwined with US intelligence agencies since its very inception when it received research grants from the CIA and NSA for mass surveillance, pours massive amounts of money into federal lobbying and DC think tanks, has a cozy relationship with the NSA and multiple defense contracts. “Some of Google’s partnerships with the intelligence community are so close and cooperative, and have been going on for so long, that it’s not easy to discern where Google Inc ends and government spook operations begin,” wrote journalist Yasha Levine in a 2014 Pando Daily article. “The purchase of Keyhole was a major milestone for Google, marking the moment the company stopped being a purely consumer-facing Internet company and began integrating with the US government,” Levine wrote in a recent blog post about his book Surveillance Valley. “While Google’s public relations team did its best to keep the company wrapped in a false aura of geeky altruism, company executives pursued an aggressive strategy to become the Lockheed Martin of the Internet Age.” And now we learn from Gizmodo that Google has also been helping with AI for the Pentagon’s drone program.
‘Don’t react’: trade experts look past Trump noise at NAFTA talks (Reuters) - Donald Trump may be president of the United States but his words do not necessarily carry the weight of the U.S. government at the biggest trade shake-up he is pushing. Sometimes, it is better to block them out and carry on, participants say. Negotiations between the United States, Canada and Mexico to redraw the North American Free Trade Agreement (NAFTA) were clouded this week by Trump’s plan to slap 25 percent tariffs on steel imports and claims that trade wars are good. Participants at the talks have come to expect disruptions by Trump, ranging from his depictions of the United States as a victim of Canada and Mexico, to threats to dump the 24-year-old accord he has called a“disaster.” Several officials privately expressed frustration at his latest broadsides during the seventh round of NAFTA talks in Mexico, where Trump has regularly raised hackles by insisting on building a border wall he says Mexicans will pay for. But they also said that Canadian, Mexican and the technical staff of U.S. Trade Representative (USTR) Robert Lighthizer have remained focused on the task of overhauling the accord. “Our position on all this is: don’t react. Stick with the facts,” said a source close to the talks when asked how a man praising trade wars could be relied on to rework a trade deal. “Stick with the official positions of the government, and above all with our direct counterparts, USTR, the Commerce Department, and take serious decisions on that basis,” the source added, speaking on condition of anonymity. Technical discussions on one of the most contentious issues - U.S. demands for higher North American content in autos - made no progress after the U.S. official in charge of the issue unexpectedly returned to Washington for consultations. Trade experts studying the issue aim to meet next week, Mexico’s chief negotiator Kenneth Smith said on Saturday. Officials concluded a chapter on regulatory practices earlier this week, and may be able to finish a handful more before ministers from the United States, Mexico and Canada meet for talks in Mexico City on Monday. Smith said the trade teams held productive exchanges on energy, and officials at the round have held out the prospect of concluding the sections on telecoms, as well as one relating to food safety measures, due for discussion on Sunday.
Trump Says He’ll Only Cancel His Trade Tariffs If the U.S. Gets a New NAFTA Deal - President Donald Trump has indicated on Twitter that his recently announced tariffs on steel and aluminum “will only come off” if an agreement is reached at the North American Free Trade Agreement (NAFTA) talks. “We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs,” Trump tweeted on Monday. “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” he added. He also criticized fellow NAFTA members Canada and Mexico. We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must.. …treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying. — Donald J. Trump (@realDonaldTrump) March 5, 2018 The three countries will meet on Monday for the final round of negotiations, and the proposed duties are set to dominate talks, with both Mexico and Canada expected to press on whether they will be exempt from the tariffs. “I expect [the tariffs]… to be front and centre,” said Kevin Brady, Republican chairman of the U.S. House of Representatives Ways and Means Committee, according to CNBC. Trump announced that he would impose a 10% tariff on aluminum and a 25% tariff on steel during a Thursday White House meeting with the country’s biggest steel and aluminum manufacturers.
Trump’s tariffs -- Jared Bernstein - To an extent, I join with the conventional wisdom that Trump’s tariffs on steel and aluminum will do more harm than good, but if that’s where your analysis stops, you’re not going nearly far enough: At WaPo, with more coming tomorrow or Tues (with Dean Baker).Probably the most salient concern here is retaliation–ie, trade partners blocking our exports–though could be mitigating factors there as well. With 12% of GDP in exports, we’re less exposed to countervailing tariffs than other advanced economies. Also, to the extent that retaliation generates a GDP drag from larger trade deficits (think about that, Trump), the Fed could raise less quickly–or pause in their “normalization” campaign.Also, here’s an interesting wrinkle. As I note below, most of our trade partners have good reason to object to the administration’s rationale (national security risk generated by diminished capacity in sensitive industries). But since, unlike team Trump, they’re likely to be more rules oriented, they might decide to take their case to the WTO, which takes at least six months to deal with such cases.But while the Chinese dump steel below cost on global markets, most others (Canada, Brazil) do not do so, and we buy a lot more from them than we do from China. And there is no scenario I can think of wherein Canadian exports invokes “national security” risk, which was Trump’s rationale for this. So do not confuse my attempt to see some nuance here with support for Trump’s actions.
EU threatens retaliation to Trump’s trade war measures -- European leaders yesterday threatened trade retaliation after President Trump announced global tariffs of 25 percent on steel imports and 10 percent on imports of aluminium. Trump, however, responded with a series of tweets making clear that he does not intend to back down on a move that could provoke an escalating trade war. European Union (EU) trade commissioner Cecilia Malmström told the Financial Times that the EU would have little choice but to challenge US tariffs in the World Trade Organisation (WTO) and impose its own tariffs and other retaliatory measures. Warning of the danger of a trade war, she said: “We risk seeing a dangerous domino effect.” European Commission president Jean-Claude Juncker suggested in the German media that plans were being drawn up to tax American goods such as Harley-Davidson motorcycles, Kentucky bourbon and blue jeans if the planned tariffs on steel and aluminium were implemented. The choice of goods was targeted at the home states of key US Republican leaders. In a swipe directed against Trump and his administration, Juncker added: “None of this is reasonable, but reason is a sentiment that is very unevenly distributed in this world.” He said that European trade retaliation would conform with WTO rules. Trump’s announcement triggered international criticism and warnings, including from US allies that will be among the hardest hit if the tariffs go through next week. While the Trump administration’s rhetoric has been directed against China and Russia, Russia is only the fifth-largest source of US steel imports, and China the eleventh-largest.
Trump Threatens Europe: "We Will Tax Your Cars" - This is how trade wars escalate: Trump hasn't even officially announced the steel and aluminum import tariffs, expected to be formally unveiled this coming week, and the rhetoric is already one of World Trade War I doom and gloom. Hours after Trump tweeted on Friday morning that “trade wars are good, and easy to win,” European Commission President Jean-Claude Juncker said the bloc is prepared to respond quickly and forcefully by targeting imports of Harley-Davidson motorbikes, Levi Strauss & Co. jeans and bourbon whiskey from the U.S. According to some, the preliminary EU retaliation was targeted in a way that would maximize political pressure on American leaders: Harley-Davidson is based in House Speaker Paul Ryan’s home state of Wisconsin, while bourbon whiskey hails from the state of Senate Majority Leader Mitch McConnell. San Francisco-based Levi Strauss is headquartered in House Minority Leader’s Nancy Pelosi’s district. As Bloomberg noted, Juncker’s threat heightened the prospects of a global free-for-all, as the World Trade Organization said the potential of escalating tensions “is real” and the International Monetary Fund warned the restrictions would likely damage the U.S. and global economy. It also prompted speculation that in light of the widespread condemnation by US trading partners and allies, that Trump might step back and reconsider the sanctions. That however appears unlikely: first, in a tweet Friday morning, Trump doubled-down and warned of more trade actions ahead, casting them as reciprocal taxes, a term he has used for imposing levies on imports from countries that charge higher duties on U.S. goods than the U.S. currently charges. On Saturday, Trump's resolve appears only to be hardened. For one, Trump's newly reincarnated foreign trade advisor said that the tariffs will likely be signed early next week. On Friday, Navarro also made clear that there wouldn't be any exemptions, for either Canada or other US allies: “I don’t believe any country in the world is going to retaliate for the simple reason we are the most lucrative and biggest market in the world,” Navarro told Fox News Friday. “They know they’re cheating us. All we’re doing is standing up for ourselves.” One look at the record US trade deficit, with both the entire world, and with just Europe, and one could make the case that he is correct.
Theresa May tells Donald Trump not to launch trade war -- Theresa May has told Donald Trump of her “deep concern” at the president’s plan to introduce tariffs on steel and aluminium imports to the United States which have sparked fears of a trade war. It comes after the Prime Minister’s de facto deputy, David Lidington, rebuked Mr Trump for threatening a trade battle with the European Union. Following a phone call between Mrs May and the president on Sunday, a Downing Street spokeswoman said: “The Prime Minister raised our deep concern at the President’s forthcoming announcement on steel and aluminium tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests.” It marks the latest of the pair’s clashes, following disagreements over Mr Trump’s retweeting of anti-Muslim videos posted by the far-right group Britain First, and his recognition of Jerusalem as the capital of Israel. In a further escalation, Mr Trump has said the US “will simply apply a TAX” on cars made in Europe if the EU retaliates against the trade penalties he is seeking on imports of steel and aluminium. Mr Lidington told BBC One’s Sunday Politics programme: “I just think that the United States is not taking an advisable course in threatening a trade war. “Trade wars don’t do anybody any good.” Brussels is promising retaliation against American exports if Mr Trump follows through on his idea, which he is warning he will do next week.
Did Trump Start a Trade War Because He Was Having a Bad Day? - Taking the kind of action the president took this week in imposing tariffs on steel and aluminum imports is a perilous endeavor for multiple reasons. It may impose more economic damage on Americans than it prevents. It arguably violates world trading rules. It invites retaliation. It can be very destabilizing for markets and investors.And if you happen to be a Republican president, imposing tariffs can upset much of your party’s free-market opinion leaders, business constituencies, and campaign donors.While Trump’s action should not have surprised anyone who listened to him rant and rave on the campaign trail about Uncle Sucker getting kicked around by trading partners, it’s still unsettling how he made it. As Eric Levitz noted, it seems to have been an “impulsive action” that was made at a time when the elaborate advisory mechanisms set up to guide him on international economic issues were in chaos. The more we learn about it, the picture gets even worse. Trump had until April 11 to act on the Commerce Department’s recommendations on steel imports, and until April 19 to act on aluminum. He jumped the gun in a big way, trashing the usual procedures for explaining the action to the public, other countries, and various economic players. Why was that? According to NBC News, Trump was freaked out over other, entirely unrelated problems, and basically launched a trade war to make himself feel better. Seriously.On Wednesday evening, the president became “unglued,” in the words of one official familiar with the president’s state of mind.A trifecta of events had set him off in a way that two officials said they had not seen before: Hope Hicks’ testimony to lawmakers investigating Russia’s interference in the 2016 election, conduct by his embattled attorney general and the treatment of his son-in-law by his chief of staff. Trump, the two officials said, was angry and gunning for a fight, and he chose a trade war, spurred on by Commerce Secretary Wilbur Ross and Peter Navarro, the White House director for trade. This culminated in a seat-of-the-pants decision announced at a White House meeting that was advertised as a discussion:
Tariff Terrorist Trump, Meet Tariff-Cutting Congress - I will soon have (rather lots) more to say about the upcoming Trump tariffs on steel and aluminum. Since the US Trade Representative has not yet finalized the terms as to whether some countries or US domestic industries buying from abroad are exempt among other details, there is still some uncertainty about their ultimate form. That is, the full extent of the economic terror Trump will unleash on global markets is still up in the air. In the meantime, though, consider this: the American congress is considering legislation that will cut tariffs on a grab-bag of imported goods currently falling under the miscellaneous tariff bill. So, it's like a push-pull set of messages from the American executive and legislature that's got us foreigners rather confused. A handful of protectionist US lawmakers still want to keep it largely intact, though:Even as President Trump threatens to slap protective tariffs on steel and aluminum, lawmakers are moving forward with legislation to lower trade barriers on hundreds of other products, from chemicals to toasters, in a bid to lower costs for U.S. companies and consumers.Supporters of the so-called miscellaneous tariff bill, which unanimously passed the House of Representatives in January, say it would boost the economy by getting rid of tariffs designed to protect U.S. industries that no longer exist. The National Association of Manufacturers says U.S. companies pay hundreds of millions of dollars each year on unnecessary import fees.Critics say that miscellaneous tariff bills, which began decades ago as modest efforts to help U.S. manufacturers, have in recent years become sprawling packages of tariff reductions that undercut domestic producers without the means to defend their interests in Washington.Ohio Senator Sherrod Brown, a Democrat who worked to get several products removed from the current bill, said Congress should do a better job to ensure tariff reductions do not impede U.S. producers. “Miscellaneous Tariff Bills should help, not hurt American manufacturers,” Brown said in a statement to Reuters.
Paul Ryan Urges Trump To Kill Proposed Tariffs As Congress Warns "It May Respond" - Trump's trade tariffs may be derailed by his own party according to a Reuters report that House speaker Paul Ryan has joined the chorus against the Trump tariffs. In a statement emailed by his spokeswoman, Ashlee Strong, Ryan added the following: "We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains" According to Bloomberg's Michael Regan "this is either a strong signal that Trump may end up being talked out of tariffs, or a strong signal that Paul Ryan's about to get saddled with a new insult-comic nickname from Trump." Meanwhile Trump is also facing rising pressure from Congress, where as Bloomberg notes is trying to talk Trump out of tariffs. On Sunday, chairman of the US House of Representatives Ways and Means Committee, Kevin Brady, suggested that all fairly traded steel and aluminium, especially from Canada and Mexico, should be excluded from proposed tariffs.
Ryan Rejected: Trump Says "Not Backing Down" From Tariffs -- Moments ago, when reporting that Paul Ryan - and other senior members of Congress - had joined the Tariff Resistance, demanding that Trump kill the proposed steel and alu import tariffs, we quoted Bloomberg's Michael Regan who remarked that "this is either a strong signal that Trump may end up being talked out of tariffs, or a strong signal that Paul Ryan's about to get saddled with a new insult-comic nickname from Trump."As a reminder, Paul Ryan joined the chorus against the Trump tariffs on Monday, and in a statement Ryan said the following:"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains"According to Bloomberg's Michael Regan "this is either a strong signal that Trump may end up being talked out of tariffs, or a strong signal that Paul Ryan's about to get saddled with a new insult-comic nickname from Trump."At the same time, other Republican Congressional leaders said they haven’t ruled out "a potential action down the line" if President Trump follows through with imposing sanctions on imported steel and aluminum, a GOP official said.Well, it appears that Ryan is indeed about to have a new nickname, because according to flashing red headlines, Trump just said that he won't be changing his mind. Trump then doubled down, adding that "I don't think you're going to have a trade war" in response to the planned tariffs, which is somewhat at odds with everything else he said. Regarding Nafta and the tariffs, he told reporters, “If they aren’t going to make a fair trade deal, we’ll leave it this way.” He also threatens to tax car imports coming in 'like water', repeating his weekend tweet. So far, the stock market refuses to react clearly convinced that Trump is, once again, bluffing, while Trump's comment on China has triggered a small pop in the yuan.
WTO complaint possible if US imposes heavy tariffs on Hong Kong aluminium imports | South China Morning Post: A formal complaint at the World Trade Organisation would be considered if the US carried out heavy tariffs on aluminium imports from mainland China and Hong Kong, the city’s trade minister revealed on Monday. “Tariffs should be proportionate and reasonable, even when citing national security,” Secretary for Commerce and Economic Development Edward Yau Tang-wah said on a radio programme. “We reserve the right to lodge a formal complaint when necessary.” Yau warned that Hong Kong would suffer losses if the mainland and the US were entangled in trade disputes. US President Donald Trump last week said he would sign off this week on a plan to impose a 23.6 per cent tariff on aluminium products from Hong Kong and the mainland as well as Russia, Venezuela and Vietnam. Trump argued the US was losing “many billions of dollars on trade with virtually every country it does business with” and that his administration needed to protect American workers and industry.
No exemptions: Trump rules out steel and aluminium tariff concessions - US President Donald Trump has spoken to world leaders about his planned tariff hikes on steel and aluminum and is not considering any exemptions, Commerce Secretary Wilbur Ross said on Sunday. On Thursday, Trump said the United States would apply duties of 25 per cent on imported steel and 10 per cent on aluminum to protect domestic producers, drawing a fire storm of criticism from trading partners and triggering a slide in stock markets. Ross said Trump has had conversations with a number of world leaders since the announcement, which stunned US trading partners, alarmed American industry leaders and roiled stock markets. There was no indication Trump was considering lower tariffs or exemptions for any countries, Ross said. "The decision obviously is his, but as of the moment as far as I know he's talking about a fairly broad brush. I have not heard him describe particular exemptions just yet." Numerous ministers from around the world have been in touch with Trump and administration officials including Ross, hinting at an intensive behind-the-scenes effort to change the US President's mind, the commerce secretary said. Ross did not rule out that possibility. Peter Navarro, director of the White House National Trade Council, said exempting countries was a slippery slope. "There will be an exemption procedure for particular cases where we need to have exemptions, so that business can move forward. But at this point in time there will be no country exclusions," Navarro said, without elaborating. "If you exempt Canada, then you have to put big, big tariffs on everybody else," he said on CNN's State of the Union.
The "Nuclear Option" In Global Trade Wars: Dumping US Treasuries... But Will They? -- In response to Trump's shocking announcement of a global trade war (which may have been "born out of anger at other simmering issues and the result of a broken internal process"), the age-old question has once again returned front and center: will foreigners retaliate by selling US securities? First a quick recap: there was $6.3 trillion in US Treasuries held by foreign nations as of Dec. 2017, of which over $4 trillion was held by official accounts: central banks, reserve managers, sovereign wealth funds, and others. Also recall that much if not all of these official foreign Treasury holdings built up over the years as US trading partners converted dollars from persistent American trade surpluses into US debt. Which is why, as Reuters' Richard Leong writes, should China, Japan and other nations, which have recycled their trade dollars through their Treasuries holdings, suddenly decide to whittle them down, "markets could be in for a rough ride."Naturally, foreigners are well aware of the volatility-inducing leverage they have, and have previously threatened to sell US Treauries in response to adverse US policies: in April 2016, it was the Saudi Arabia who Threatened to liquidate its Treasury holdings if Congress probed the country's role in the Sept 11 attacks (Congress did, found the Saudis responsible, yet neither has Saudi Arabia "liquidated" its holdings, nor has the nation been found guilty of terrorism in any court of law, in any jurisdiction). Then in early January, Bloomberg reported that Chinese officials would recommend "slowing or halting", or evening selling, US Treasuries (China subsequently denied the report as "fake news").
EU Raises Stakes With Tariffs Targeting GOP Heartland - The European Union is preparing punitive tariffs on iconic U.S. brands produced in key Republican constituencies, raising political pressure on President Donald Trump to ditch his plan for taxing steel imports. Targeting 2.8 billion euros ($3.5 billion) of American goods, the EU aims to apply a 25 percent tit-for-tat levy on a range of consumer, agricultural and steel products imported from the U.S. if Trump follows through on his tariff threat, according to a list drawn up by the European Commission and obtained by Bloomberg News. The list of targeted U.S. goods -- including motorcycles, jeans and bourbon whiskey -- sends a political message to Washington about the potential domestic economic costs of making good on the president’s threat. Paul Ryan, Republican speaker of the House of Representatives, comes from the same state -- Wisconsin -- where motorbike maker Harley-Davidson Inc. is based. Earlier this week, Ryan said he was “extremely worried about the consequences of a trade war” and urged Trump to drop his tariff proposal. Bourbon whiskey hails from Senate Majority Leader Mitch McConnell’s home state of Kentucky. San Francisco-based jeans maker Levi Strauss is headquartered in House Minority Leader Nancy Pelosi’s district. The European retaliatory list targets imports from the U.S. of shirts, jeans, cosmetics, other consumer goods, motorbikes and pleasure boats worth around 1 billion euros; orange juice, bourbon whiskey, corn and other agricultural products totaling 951 million euros; and steel and other industrial products valued at 854 million euros. The Brussels-based commission, the EU’s executive arm, discussed the retaliatory measures with representatives of the bloc’s governments at a meeting on Monday evening. Europe may expand the group of targeted American goods should Trump also follow through on a related pledge to impose a 10 percent duty on foreign aluminum. The list obtained by Bloomberg on Tuesday relates only to steel countermeasures.
Boeing Is the Elephant in the Room in Trump’s Tariff War - On January 20, 2017, the date of Donald Trump’s inauguration as President of the United States, the giant aerospace company, Boeing, closed the trading day at $159.53. Yesterday, it clocked in at $352.75 by the closing bell. The Trump era has added 122 percent to the pockets of Boeing shareholders, giving it a market cap of $207.6 billion. Trump’s erratic reign had been good for Boeing – right up until Thursday, March 1, when Trump announced that he would be imposing 25 percent tariffs for foreign-made steel and 10 percent for aluminum. The stock market took a dive along with Boeing on the announcement. The problem isn’t that Boeing will see its aluminum costs for its planes rise dramatically. Morningstar analyst Chris Higgins notes the following in that regard: “We expect no material impact on Boeing’s costs from tariffs. First, steel exposure is minimal: steel (25% tariff under Trump’s plan) accounts for about 15% of weight on older aircraft and around 10% on newer models. According to Alix Partners, a consulting firm, aluminum accounts for 79% of the weight of the 737. However, aerostructures represent roughly 30% of aircraft costs, meaning that if 100% of the 10% tariff hits Boeing, we estimate the airframer will experience only a 2.5% cost increase. We’d note that customer contracts contain escalation clauses, which means Boeing might be able to pass through the increase. Newer aircraft, the 787 for example, use about 20% aluminum as a percentage of weight, making the impact more negligible.” Boeing’s potentially serious problems reside elsewhere. Boeing is America’s largest manufacturing exporter and derives 55 percent of its revenues from foreign countries. According to Boeing’s website, it has a backlog of half a trillion dollars in orders. Morningstar analyst Higgins estimates that while Boeing’s official figures show Chinese orders at just 304 aircraft, he believes that “over 70% of the 1,090 of unidentified orders on Boeing’s books will be delivered to Chinese customers (airlines and lessors),” giving China about 20 percent of Boeing’s total backlog.
GOP urges Trump to abandon tariffs - Republican lawmakers on Monday pressured President Trump to reverse course on his plan to impose steep tariffs on imports of steel and aluminum, arguing it threatens the U.S. economy and GOP majorities in Congress.Speaker Paul Ryan (R-Wis.) has lobbied Trump to reconsider the tariffs by sharing his concerns personally with the president “on multiple occasions,” according to his office.“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” Ryan spokeswoman AshLee Strong said in a statement. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”The House Ways and Means Committee also jumped into the fight, drafting a letter urging Trump to narrowly tailor the tariffs so that they only affect unfairly traded products. Members are in the process of collecting more signatures before sending the letter to the White House, according to a committee aide.“The president has not made a final decision yet,” said Ways and Means Chairman Kevin Brady (R-Texas), who spoke with Trump twice last week. “I am continuing to reach out to the White House and the trade team … I want to continue to stay at the table to help him tailor this.” The Senate Finance Committee sent a similar letter to the White House and a number of influential conservative outside groups, including Club for Growth and FreedomWorks, have ripped into the proposal in a frantic, last-minute push to convince Trump to either scale back or ditch the plan before it’s finalized.
Gary Cohn to Resign as Trump’s Top Economic Adviser - Gary D. Cohn, President Trump’s top economic adviser, said on Tuesday that he would resign, becoming the latest in a series of high-profile departures from the Trump administration.White House officials insisted that there was no single factor behind the departure of Mr. Cohn, who heads the National Economic Council. But his decision to leave came as he seemed poised to lose an internal struggle over Mr. Trump’s plan to impose large tariffs on steel and aluminum imports. Mr. Cohn had warned last week that he might resign if Mr. Trump followed through with the tariffs, which Mr. Cohn had lobbied against internally.“Gary has been my chief economic adviser and did a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again,” Mr. Trump said in a statement to The New York Times. “He is a rare talent, and I thank him for his dedicated service to the American people.”Mr. Cohn is expected to leave in the coming weeks. He will join a string of recent departures by senior White House officials, including Mr. Trump’s communications director and a powerful staff secretary.Yet the departure of Mr. Cohn, a free-trade-oriented Democrat who fended off a number of nationalist-minded policies during his year in the Trump administration, could have a ripple effect on the president’s economic decisions and on the financial industry. It leaves Mr. Trump surrounded primarily by advisers with strong protectionist views who advocate the types of aggressive trade measures, like tariffs, that Mr. Trump campaigned on but that Mr. Cohn fought inside the White House. Mr. Cohn was viewed by Republican lawmakers as the steady hand who could prevent Mr. Trump from engaging in activities that could trigger a trade war.
Cohn Resigns After Confrontation With Trump, His Replacement Will Be Chosen "Wisely" - As we detailed earlier, tThe great power shift we predicted one week ago, was just confirmed by the NYT which reported that Gary Cohn, former Goldman president and COO and President Trump’s top economic adviser, is resigning, "the latest in a series of high-profile departures from the Trump administration, White House officials said on Tuesday." President Trump has confirmed Cohn's departure: "Gary has been my chief economic advisor and did a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again. He is a rare talent, and I thank him for his dedicated service to the American people." Cohn also issued a statement: “It has been an honor to serve my country and enact pro-growth economic policies...I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future." According to the NYT, officials insisted "there was no single factor behind the departure of Mr. Cohn" but his decision to leave came after he seemed poised to lose an internal struggle amid a Wild West-style process over Mr. Trump’s plan to impose large tariffs on steel and aluminum imports.President Trump has announced he will make a decision soon on Gary Cohn's replacement: The two frontrunners, now confirmed by administration officials, are White House Trade Council Advisor Peter 'Death By China' Navarro (seemingly the out of nowhere architect of Trump's trade war plan) and Conservative commentator Larry 'mothers milk of stocks' Kudlow (who was on CNBC today defending Cohn and talking down Trump's trade war plan). Separately, Bloomberg reports that Trump confronted Cohn hours before the resignation, demanding his cooperation on tariffs in a meeting in the Oval Office Tuesday, and asking Cohn directly if he would support his decision to move forward with the plan. Cohn would not offer his support and just hours later, the White House announced Cohn’s resignation.
Tariffs ‘almost certain’ as Gary Cohn’s exit from Donald Trump’s White House hits markets -- Share and futures markets have dropped sharply as traders view Gary Cohn's resignation as Donald Trump's top economic adviser as making steel and aluminium tariffs "almost certain". Many traders had been holding out hope that free trade voices within the White House could talk President Trump down from his decision to impose a 25 per cent tax on steel imports and 10 per cent on aluminium.While Mr Trump's rhetoric on trade has generally singled out China, the proposed tariffs would actually hit some key US allies far harder, especially Canada, the EU, South Korea and Brazil. Already, many of these countries have threatened retaliatory action against key US exports if the new tariffs go ahead, sparking fears of a broader trade war that could cut short the recent global economic recovery. US media reports citing White House sources have indicated that Mr Cohn resigned because he lost the argument against protectionism. "Those voices within the administration arguing against the implementation of these potential future tariffs have become a casualty of this process," NAB's head of foreign exchange strategy Ray Attrill said."So it's almost certain, I think now, that we will see those tariffs signed into law in the coming few days."
How the Washington establishment is losing out to little-known Trump advisers on trade - Defense Secretary Jim Mattis and Secretary of State Rex Tillerson privately warned senior trade officials on Tuesday that President Trump’s proposed tariffs on steel and aluminum could endanger the U.S. national security relationship with allies, according to five people familiar with the meeting. The morning meeting came as Republican lawmakers grasped for a strategy to persuade Trump to change his mind, with House Speaker Paul D. Ryan (Wis.), who had loudly criticized the plan on Monday, telling members in a closed-door meeting not to bully Trump on the decision. He said it could backfire and make things even worse. And then on Tuesday evening, top White House economic adviser Gary Cohn, who had been furiously fighting the tariffs for months, announced his resignation. His exit will remove the most vocal critic of Trump’s new trade agenda from internal debates.The trio of events showed in stark fashion how establishment figures in Washington — national security leaders, top lawmakers, the former president of Goldman Sachs — had suddenly found themselves in a losing battle with a small posse of Trump advisers who have nurtured the president’s long-running skepticism of foreign trade. “We are urging caution,” Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday. The last-ditch efforts to get Trump to scale back, if not reverse, the tariffs came after a power struggle within the White House where Cohn, Mattis and others routinely tried to dissuade Trump from launching what many fear will be a trade war that could rattle the world’s largest economies. Yet the success of other officials, including White House aide Peter Navarro and Commerce Secretary Wilbur Ross, speaks to how Trump, in his second year in office, is fighting the constraints that have held him back from pursuing some of his most unorthodox positions.
EU’s anti-Trump hit list: Everything including the kitchen sink - Politico - The EU is set to hit a wide range of American products — ranging from yachts to peanut butter — with duties of 25 percent to retaliate against President Donald Trump’s tariffs on imports of steel and aluminum.The products targeted, as shown in a list obtained by POLITICO, are chosen so as not to harm EU industries, which do not need these imports. Some targets clearly gun for politically sensitive Republican-run states.The total value of the targets is €2.83 billion. They will be discussed on Wednesday by commissioners from the 28 member countries, and will be rolled out if Trump goes ahead with the restrictions he announced last week.In agriculture, the EU will go after kidney beans, bourbon whiskey, rice, cranberries, orange juice, peanut butter, tobacco and cheroots. The total value of the farm goods targeted, based on the EU’s 2017 imports, is €951 million, including €604 million worth of processed goods.In the industrial sector, the EU is going after a broad range of tubes, pipes and rolled steels, as well as appliances such as grills, sinks, ventilators and ladders. The list also includes iron and steel containers for compressed and liquefied gas. The total value of iron and steel goods targeted is €854 million.Motor boats are identified as a particularly high-value import. Other miscellaneous items on the list include lipstick, bed linen, motorcycles and trousers.
Trade Wars Set To Go Nuclear: US Considering Broad Curbs On Chinese Imports - First thing this morning, when the market was surging and inexplicably rejoicing in the certainty that Trump would back down on tariffs, a nagging feeling that this was all wrong prompted us to ask "What If Trump Does Not Back Down", and to follow it up with a troubling rumor from Strategas, namely that this is all about China, and would involve a massive amount of tariffs, to wit: Trump himself has also said that the trade wars have one major target: Beijing, with the rest of the world negotiable collateral damage. Just yesterday, the US trade rep made it clear that both Mexico and Canada would get an exemption from the tariffs once they agreed to a "fair" renegotiation of Nafta. And beyond the already announced aluminum and steel tariffs, there is another far more troubling aspect, or rather number, to Trump's protectionist push noted by Strategas. The number is $1 trillion. Here is Strategas: “President Trump is considering imposing tariffs on Chinese goods in response to China stealing US intellectual property. This is often referred to as Section 301 and President Trump specifically mentioned this action in both his Davos and State of the Union speeches. The rumor around DC is that the US will impose $1 trillion of tariffs, which would shock financial markets. We believe the $1 trillion number is too high. Since the US imports $450bn from China, across the board tariffs would need to be 200 percent. Even for Trump that is too much. But given the magnitude of what is being discussed, China would need to respond” If Strategas is correct, and if Trump's ultimate intention is to hit China with tariffs in the "hundreds of billions" (or more), it's on, and the resulting trade wars will promptly cripple all China-facing US corporations first, followed by the rest of the S&P. This afternoon the full confirmation that it was indeed, all about China, came moments after the Cohn news, when Bloomberg reported that the Trump administration is considering clamping down on Chinese investments in the U.S. by slapping tariffs on a broad range of its imports in response to alleged intellectual-property theft, according to people familiar with the matter. As Bloomberg adds, under the most severe scenario being considered, the U.S. could impose tariffs on a wide range of Chinese imports, from shoes to consumer electronics.
"We Must Act Soon" - Trump Asks China To Reduce Trade Deficit -- Having reached a record high trade deficit with China this morning, President Trump turned his attention from "global" tariffs to China. China trade deficit (in red) below... In his latest tweet, Trump explained that:"China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States. "Which judging from the chart above is a drop in the ocean. But then Trump turned a little more diplomatic:"Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!"China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States. Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!— Donald J. Trump (@realDonaldTrump) March 7, 2018 We look forward to China's response too...
Why Trump Is So Clumsy About Fighting ‘Free Trade’ - naked capitalism - Marshall Auerback --President Trump announced last week that he plans to impose 25 percent tariffs on imported steel and 10 percent on imported aluminum. It’s important to note that any policy pronouncement from this president is done within the paradigm of a real estate wheeler-dealer who sees deals of any kind as a zero-sum game. I win, and you lose; there is no such thing as a good trade deal that works as a win-win for both sides.Expressing the opposite view is Paul Krugman, who writes, “Trade isn’t a zero-sum game: it raises the productivity and wealth of the world economy.” And the corollary also applies as well: any action taken to disrupt the free flow of goods between countries is likely to provoke a counter-reaction, the result being a trade war in which every country loses out (there are already early indications of the latter, as seen in a tweeted headline from a UK paper, “Hit the Chevy with a Levy, Tax your Whiskey and Rye”). Given that Krugman won a Nobel Prize for his work on international trade, it is unsurprising that he gives a full-throated endorsement of free trade: […] The two “sacred tenets,” free trade and comparative advantage, are inextricably linked. After all, a “comparative advantage” begets the question, compared to what? We export goods to other nations when we can do that relatively better than they can and likewise import goods or services that we have a comparative disadvantage in producing. So tropical fruit is exported from, say, Mexico or Chile, rather than from Canada. And Australia’s abundance of natural resources explains why it has become a mining superpower. Of course, this classical model of trade and comparative advantage breaks down somewhat in an ultra-globalized world in which capital accounts have been largely liberalized (thereby allowing businesses to “arbitrage” wage rates/regulation by migrating to offshore manufacturing facilities with lower regulatory thresholds and cheap labor), and where technology is highly mobile and can be used to diminish natural advantages such as climate or natural resources. The bottom line is that it is a mistake for a country simply to follow an idealized playbook from an economics textbook on free trade/comparative advantage, and allow itself to be out-gamed via strategic trade policy/national development decisions taken elsewhere—particularly when the economy is not operating at full employment, which is key to optimizing the benefits of free trade. It’s all very well to argue that cheaper imported goods are benefits, but it is hard to consume those benefits when one is unemployed against a backdrop of rusting unused factories that have been shuttered, and where the jobs have been sent to Mexico. As misconceived as Trump’s actions might appear, then, one senses that the latter dynamic is the source of his angst when he talks about the U.S. getting “a bad deal” from countries like China (although frankly, this president seems to think that any country with whom the U.S. runs a trade deficit is ripping off America).
With Cohn gone, Peter Navarro is unleashed at White House - Peter Navarro suffered any number of humiliations in his first year in the White House, where the trade advisor was out of favor with President Donald Trump and his superiors for months. But nothing was more degrading than an order handed down by White House Chief of Staff John Kelly: Navarro had to copy his boss, Gary Cohn, on every single email he sent at the White House."The chief wanted him under control," a senior administration official told CNBC on Tuesday, referring to Kelly. But now the free-trading Cohn is stepping down as National Economic Council director, and Navarro's brand of protectionist nationalism is in the ascendency. Presumably, there will be no one else at the White House looking over Navarro's email now."Peter was quietly effective for nine months," said an administration official. "He helped his reputation by keeping a low profile and being a model prisoner during his period of captivity. And when his opportunity came, he took it and he won."Another administration official told CNBC that Cohn's resignation is "a huge victory for the nationalists." "Peter Navarro won the trade battle and now Gary's given up," that administration official said. "It literally reestablishes the intellectual framework and the personnel who were originally envisioned after Trump won the election. We can let Trump be Trump." Navarro and Larry Kudlow, a prominent conservative and CNBC contributor, will likely be candidates for Cohn's job.
Trump To Sign Import Tariffs Tomorrow: Report - With Cohn out, it became clear over the past 24 hours that Trump was not bluffing with the steel and aluminum trade tariffs, contrary to the market's rosy assumptions, and the only question was "when" will Trump officially sign the proclamation.We got a hint earlier today, when White House spokeswoman Sarah Sanders told reports that “we are still on pace for an announcement on that at the end of this week."Then moments ago, Axios reported, citing two senior admin officials, that Trump wants to sign the proclamation on steel and aluminum tariffs tomorrow, although it hedges that "still going thru legal process so nothing certain." As Axios adds, "Trump is impatient and he wants to act — or at least be seen as acting. He got fed up with staff, especially Gary Cohn and Rob Porter, not giving him his tariffs on steel and aluminum. And some of Trump’s nationalist-minded advisers are telling him these tariffs will help turn out voters in the upcoming special election in Pennsylvania's 18th congressional district."On the other hand, "these days — and in this White House — nothing is set in stone. Besides, the White House lawyers have been working overtime on these tariffs and sources tell me nothing is certain when it comes to timing." What to watch from tomorrow's proclamation, per Axios:
- Are any countries exempted? If not, this is a global 25% tariff on steel, and 10% on aluminum.
- What, if any, steel and aluminum products are exempted? Past proclamations have listed specific products for targeted tariffs, but they were on different grounds than this round.
- What does the post-tariff exclusion process look like? How do they handle the potential exemptions for specific products or countries after the fact?
Charles Koch Slams Trump And Tariffs: "Free Trade Is Essential To American Prosperity" - Charles Koch, one of America's most well-known industrialists (even if he's more widely recognized for his political activism) has published a scathing editorial in the Washington Post warning that President Trump's planned steel and aluminum tariffs would kill far more American jobs than they would create.While the trade barriers will no doubt benefit a few beleaguered industries - US steel producers, for one - overall, they will kill far more jobs than they create, Koch argued. Because of this, it's incumbent upon US business leaders to take their displeasure directly to the president. It is "no coincidence", said Koch - who, as a libertarian, opposes protectionism at the ideological level - that quality of life in the US has improved over the years as the average US tariff on imported goods has fallen - from nearly 20% in 1932 to less than 4% in 2016. Just as the United States benefits from the ideas and skills that opportunity-seeking immigrants bring with them, free trade has been essential to our society’s prosperity and to people improving their lives. The same has been true throughout history. Countries with the freest trade have tended to not only be the wealthiest but also the most tolerant. Conversely, the restriction of trade — whether through tariffs, quotas or other means — has hurt the economy and pitted people against each other. Tariffs increase prices, limit choices, reduce competition and inhibit innovation. Equally troubling, research shows that they fail to increase the number of jobs overall. Consider the devastation of cities such as Detroit, where trade barriers to aid the auto industry did nothing to halt its decline.
Trump Authorizes Tariffs, Defying Allies at Home and Abroad - — President Trump defied opposition from his own party and protests from overseas as he signed orders on Thursday imposing stiff and sweeping new tariffs on imported steel and aluminum. But he sought to soften the impact on the United States’ closest allies with a more flexible plan than originally envisioned. After a week of furious lobbying and a burst of last-minute internal debates and confusion, Mr. Trump agreed to exempt, for now, Canada and Mexico, and held out the possibility of later excluding allies like Australia. But foreign leaders warned of a trade war that could escalate to other industries and take aim at American goods. “The actions we are taking today are not a matter of choice; they are a matter of necessity for our security,” Mr. Trump said in a ceremony at the White House where he officially authorized the tariffs, which will go into effect in 15 days. Flanked by a handful of steel and aluminum workers, some wearing coveralls and holding hard hats, Mr. Trump presented the move as a way to rebuild vital industries decimated by foreign competition. “Our factories were left to rot and to rust all over the place; thriving communities turned into ghost towns,” he said. “That betrayal is now over.” The orders were Mr. Trump’s most expansive use of federal power to rewrite the rules of global trade since he took office and upended the prevailing consensus on free markets that has largely governed Washington under administrations of both parties for decades. A longtime critic of globalization, Mr. Trump argued that the United States had been ravaged by unfair trading partners. As a result of Mr. Trump’s action, levies on imports of steel will rise by 25 percent and aluminum by 10 percent. Business groups have warned that the effect could be felt across the global supply network as consumers face higher prices for automobiles, appliances and other goods. But Mr. Trump’s aides dismissed such predictions as “fake news” and said most Americans would hardly notice any impact. The United States issued the tariffs under a little-used provision of trade law, which allows the president to take broad action to defend American national security. The Commerce Department previously determined that imports of metals posed a threat to national security.
Corporate America Scrambles To Win Tariff Exemptions "So Projects Aren't Delayed Or Canceled" - Even though the scope of President Trump's planned steel and aluminum tariffs wasn't yet fully known when he stunned America (and global markets) a week ago by announcing at an impromptu meeting with steel executives that he'd be implementing a 25% tariff on steel and 10% tariff on aluminum, lawyers at every company that relies on imported steel or aluminum started scrambling to develop a plan for the worst-case scenario.And while the reality is a watered-down version of the "no exemptions" rhetoric that Trump boasted last week (at least for now, considering that Mexico and Canada, countries that produce a significant chunk of America's steel, are receiving a temporary dispensation as NAFTA talks are ongoing), hours after Trump signed his proclamation Thursday afternoon - announcing that the tariffs would take effect in 15 days - Bloomberg was ready with a story about America's importers pleading their cases to the Commerce Department, all hoping to receive exemptions of their own, for "national security" or other reasons.Companies that rely on steel and aluminum imports can ask the Commerce Department for a waiver if there’s a limited supply of the product in the US, or if, lacking the materials would put our national security at risk. But as Bloomberg points out, how these standards will be interpreted is anyone’s guess. Which is why aluminum can makers, pipeline builders and car companies are now making their cases about why they, too, should be exempt. "The can industry relies on imported metal to make up for shortfalls of domestic steel and aluminum production. US steel producers are unable to satisfy domestic demand for food, aerosol and other can production," the Can Manufacturers Institute said Thursday. The group will apply for exemptions for aluminum can sheets, aluminum ingots and steel tinplate - the material many food cans are made of.A lobbying group for automakers is planning to press the Trump administration to expand the number of countries that would be exempt from the tariffs (which, incidentally, would also render them effectively toothless, though Trump has said they could raise tariffs on other countries to make up for it)...The trade group that represents General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV hinted that automakers -- which purchase about 15 percent of the steel and almost 40 percent of aluminum consumed in the U.S. -- will press the Trump administration to water down the order by carving out exceptions for imports from some countries. And a group representing natural gas producers is arguing that some of the types of steel that are necessary to build the tanks and equipment to harvest and store LNG aren't available in the US...
Trump’s Travesty of Protectionism - Michael Hudson - Trump’s series of threats this week was a one-two punch. First, he threatened to impose national security tariffs on steel and aluminum, primarily against Canada and Mexico (along with Korea and Japan). Then, he suggested an alternative: He would exempt these countries IF they agree to certain U.S. demands.But these demands make so little economic sense that they should be viewed as an exercise in what academia used to call power politics. Or in Trump’s world, Us versus Them, a zero-sum game in which he has to show that America wins, they lose.It won’t work. Trump’s diplomatic ploy with Mexico is to say that he’ll be willing to exempt them from the steel and aluminum tariffs if they agree to (1) build the wall that he promised to make them build, and (2) give other special favors to the United States. He can then go to American voters and say, “See, we won; Mexico lost.”This is unlikely to elicit a Mexican surrender. Its president already has said that building a wall makes no sense, and cancelled the planned diplomatic visit to Washington last week. Giving in to Trump’s election promise to American voters (or more to the point, indulging in his own ego trip about the wall) would be political suicide. Trump would crow that he made Mexico bow to his bidding.Matters aren’t much better in Canada. While some Pennsylvania and Ohio steel companies probably will try to make Trump look good by hiring back a few hundred workers if and when the tariffs are announced, Canada and other suppliers employees would have to be laid off. Canadian resentment already has been building up for decades, ever since the auto agreement of the 1960s and ‘70s that favored U.S. suppliers. But the real economic problem comes from within the United States itself. If new steel workers are hired, they may be laid off in a few months. Most important is the bigger economy-wide picture: The Chamber of Commerce and other groups have calculated that the loss of jobs in steel- and aluminum-using industries will far outnumber the new hiring of steel and aluminum workers.
Trump’s Steel and Aluminum Tariffs: How WTO Retaliation Typically Works -- President Trump’s announced intention to impose import tariffs of 25% on steel and 10% on aluminium touched off a wave of retaliation threats and trade policy responses from trading partners, including the EU. This column examines the scope for retaliation against the Trump administration’s proposed tariffs under WTO dispute settlement. It estimates that if the sources of all US steel and aluminium imports were part of this dispute, trading partners would be permitted to retaliate by a collective amount of $14.2 billion per year.President Trump’s announced intention to impose import tariffs of 25% on steel and 10% on aluminium touched off a wave of retaliation threats and trade policy responses from trading partners, including the EU. Countries are reportedly already lining up their product lists of US exports over which to impose tariffs of their own. But what are we to make of these threats?President Trump had kept under wraps the steel and aluminium products being investigated under Section 232 of the 1962 trade law that he is relying on to curb imports. Only after the investigation’s reports were finally made public on 16 February did it become clear that the tariffs – which his administration claims are necessary to protect national security – will cover $46 billion dollars of imports (US Department of Commerce 2018a,b). However, only 6% of those imports derive from the country the administration has labelled as the main culprit in flooding the world with steel and aluminium – China (Bown 2018). Rules established by WTO dispute settlement permit a country to retaliate against an action such as the one Trump plans to take if there is a legal finding that the national security rationale is baseless. The compensation – or retaliation – limit has historically been set at the value of an exporting country’s lost trade. However, it could take years for retaliation under the process of formal WTO dispute settlement to unfold. As a result, countries may take other steps to circumvent that process, while at the same time claiming that they are relying on basic WTO rules to guide their retaliation response.
"We Will Not Sit Idly By" - Here's How China Might Retaliate Against US Tariffs -- As we highlighted last night, China has threatened to respond to President Trump's steel and aluminum tariffs with unspecified actions that Chinese officials said could "seriously hurt the international trade order."And as Axios warned in a piece published Friday, investors shouldn't interpret their lack of details as a sign of an empty threat: Rather, China actually has far more leverage with which to retaliate against the Trump tariffs than it did when George W Bush briefly imposed tariffs on imported steel in the early aughts. Back then, Bush rescinded the tariffs, it's widely believed, because the European Union threatened targeted sanctions that would hurt swing states like Michigan and Florida - states that Bush needed to carry during his 2004 campaign. Unsurprisingly, the EU is embracing a similar strategy this time around.But today, China's ability to retaliate now rivals that of the entire European Union - which means this could be the last time the US can "set the agenda" in terms of its relationship with its largest economic rival. Back in 2002, China produced less than 200 million tons of steel. As of 2016, China could churn out 1 billion tons, forcing Beijing to pare back production or risk a destabilizing glut. Given President Xi Jinping's decision to abolish term limits, effectively clearing the way for him to serve as dictator for life, the country has the wherewithal and the political will to strike back. Mark Wu, a professor of international trade law at Harvard, said the country needs to do something - if only to save face. As Axios sees it, there are two routes China can take: 1) it could retaliate by acting against US projects in China, denying US companies permits to operate in China, essentially blocking US companies from one of the world's most lucrative growth markets...2) it could engage in tit-for-tat retaliatory tariffs against specific US industries and products - much like the EU has threatened to do. However, not everybody is convinced that China will follow through with a response beyond mere rhetoric: Nathan Chow, a strategist at DBS Group, wrote in a March 9 report that he doesn't expect the US's steel and aluminum tariffs to spark a "trade war" with China. Steel and aluminum account for only 3% of China’s total exports (though this figure masks the rampant trans-shipping whereby Chinese steel is dumped into other countries to mask its origins) and 0.6% of its GDP. Chow also argued that Chinese steel exports to the US are much smaller than the country's top three steel export destinations: South Korea, Vietnam and the Philippines.
Australian government obtains “national security” exemption from Trump’s trade war measures - Alarmed by the prospects of a devastating global trade war, Australia’s government anxiously sought exemptions from US President Donald Trump’s punitive steel and aluminium tariffs on the grounds of “national security.” Prime Minister Malcolm Turnbull’s government put its case in terms of preparations for war, echoing the militarist rationale that Trump gave for proposing the tariffs. Last week, Trump told members of Congress: “If we ever have a conflict we don’t want to be buying steel [from] a country we are fighting.” Today Trump tweeted that he would exempt Australia on this basis: “Spoke to PM @TurnbullMalcolm of Australia. He is very committed to having a very fair and reciprocal military and trade relationship. Working very quickly on a security agreement so we don’t have to impose steel or aluminium tariffs on our ally, the great nation of Australia.” The Turnbull government argued that retaining steel production in Australia was vital for its $200 billion military spending program, which includes the construction of new submarines, frigates and patrol boats. It also emphasised the intensifying integration of Australia’s armed forces into those of the United States. Foreign Minister Julie Bishop told Sky News on Thursday: “We have made the point very clearly that no two countries could claim to be closer than Australia and the US in terms of our defence and security and intelligence sharing and the interoperability between our militaries.” A March 7 letter to Trump from the American Australian Business Council was even more explicit. “Australia is increasing the size of its defence budget by 4.7 percent every year until 2025,” it said. “This will see Australia’s defence spend reach 2.2 percent of GDP in 2023, above the level the United States is requesting of our allies.” “The majority of Australia’s military equipment is imported, providing substantial opportunities to US companies, and over the past decade, Australia has been the fourth largest importer of US military equipment, ahead of Japan, Israel or any European nation.”
Why a full-blown Trump trade war won’t happen - Donald Trump’s plan to impose big tariffs on foreign steel and aluminum has spawned lots of talk about a destabilizing global trade war that’s an echo of the Great Depression, but the White House move is better characterized, for now, as a mere skirmish.The real worry is the skirmish will metastasize into something far worse, especially in light of the president’s mercurial approach to policy. Trump has tweeted that “trade wars are good” and “easy to win,” warning of even harsher penalties if other countries respond in kind. “The threat of retaliation and counter-retaliation is very real,” said Edward Alden, a trade expert and senior fellow at the Council on Foreign Relations. The European Union has already drawn up a list of American-made products to target in its own shot over the bow.Smoldering disputes over steel and a handful of other goods, however, are far from the raging fire that is a global trade war. That’s why the world hasn’t seen one in a very long time. Trade disputes — as opposed to trade wars — are common and long predate Trump. The U.S., for example, only gets 2% of steel imports from China even though the Asian country produces about half of the world’s supply. How come? The Obama administration hit Chinese steel with heavy tariffs in 2016 that sharply reduced imports, and those remain in place. A full-blown trade war, on the other hand, hasn’t occurred in more than 80 years for a very simple reason: Countries understand the devastation that can result.
Trump Takes the Bait From Musk, Attacks China Auto Import Duties - President Donald Trump may not follow Elon Musk on Twitter, but the Tesla Inc. chief’s posts decrying China’s automotive trade practices managed to catch his attention. In announcing his order to implement tariffs on steel and aluminum Thursday, Trump read off tweets Musk sent hours earlier noting that China charges a 25 percent import duty on cars, ten times the 2.5 percent levy the U.S. puts on China-built vehicles.For example, an American car going to China pays 25% import duty, but a Chinese car coming to the US only pays 2.5%, a tenfold difference— Elon Musk (@elonmusk) March 8, 2018 “That’s from Elon, but everybody knows it,” Trump said. “They’ve known if for years, they never did anything about it. It’s got to change.” Musk’s lobbying-by-tweet hinted at his frustration over struggling to get a deal done with Shanghai’s government to assemble cars there. An agreement hasn’t been finalized because the two sides disagree on the ownership structure for a proposed factory, people with direct knowledge of the situation have told Bloomberg News. China’s central government is pushing for the plant to be a joint venture with local partners, while Tesla wants to own the factory completely, the people said. “Do you think the US & China should have equal & fair rules for cars?” Musk wrote to Trump. “I am against import duties in general, but the current rules make things very difficult,” he said in another post. “It’s like competing in an Olympic race wearing lead shoes.”
Ruling class conflicts in the US target inner circle of Trump White House The past week has seen an unprecedented escalation of the conflicts within the American ruling class, with the New York Times, the Washington Post, CNN, NBC and other leading corporate media outlets acting as the spearhead for a campaign to cripple the Trump White House. Trump’s inner circle—his son-in-law Jared Kushner, his daughter Ivanka, his close personal assistant and communications director Hope Hicks—have been the principal targets of leaked reports from the FBI and other intelligence agencies. These led Tuesday to the downgrading of Kushner’s security clearance, the resignation of Hicks Wednesday, and the revelation Thursday that the FBI’s counterintelligence unit had opened an investigation into Ivanka Trump’s overseas business activities. Press reports throughout the week have focused on Kushner, heir to a billion-dollar real estate fortune. The Post reported Tuesday that at least four countries, identified as Mexico, Israel, Qatar and China, had discussed using Kushner’s business activities as leverage with the Trump White House. The New York Times published Wednesday and Thursday an extraordinary, two-part, 3,000-word statement by its editorial board denouncing the White House role of Jared Kushner and Ivanka Trump, focused on the nepotism of the Trump White House. NBC News reported Thursday that the Mueller investigation into alleged Russian intervention in the 2016 presidential election had begun to scrutinize whether Kushner’s “business discussions with foreigners during the presidential transition” shaped White House policy. The network cited claims by witnesses that Mueller investigators had asked about Kushner’s business contacts with investors from Turkey and Qatar, among other countries, contacts which could have no direct relation to the question of the alleged Russian hacking or other efforts to assist Trump during the 2016 elections. Finally, the Washington Post carried a report on its web site Thursday night headlined, “‘Jared has faded’: Inside the 28 days of tumult that left Kushner badly diminished.” The article described an atmosphere of mutual suspicion driven particularly by the Mueller investigation.
More Than 30 Trump Aides Lose Top-Secret Clearance, Sources Say - More than 30 aides to President Donald Trump have been stripped of access to top secret intelligence, two people familiar with the move said. The officials have been notified that they will be downgraded to lower-level “secret” interim security clearances, said the two people. None of the officials has been asked to leave the administration and their portfolios on top secret matters will be distributed to other staff members, they said. Jared Kushner, Trump’s son-in-law and senior adviser, is among those officials whose security clearance has been downgraded as a result of the new policy on interim clearances set by White House Chief of Staff John Kelly, said another person familiar with the material. The change means that Kushner lost access to some files, including those containing intelligence on foreign leaders and diplomats that can be used to gain an advantage in negotiations, according to a second person, who is familiar with the clearance process. All of the officials whose clearances were downgraded held the top secret designation on an interim basis. Kelly set a new policy that took effect last week that permits interim clearances only at the secret level and not permitting temporary clearances at higher levels. The revelations come as the White House weathers intense criticism over its handling of sensitive intelligence after former Staff Secretary Rob Porter was permitted to keep his clearance status for months even though the FBI said it had provided the White House a report including allegations of domestic violence from his two ex-wives. Senate Judiciary Chairman Chuck Grassley this week called for answers from the White House and the FBI about reports that dozens of top officials still lacked a full security clearance and that some them, including Kushner, had access to the highly classified President’s Daily Brief prepared by intelligence agencies. The crackdown on clearances also come amid the drama of a special counsel investigation into Russian election meddling and potential ties to Trump election advisers. Trump communications director Hope Hicks, who had been romantically linked to Porter and who testified Tuesday to a House panel in the Russia probe, on Wednesday announced her plans to resign in a statement released by the White House.
Kelly Has No Idea What Jared And Ivanka Do All Day: Report - Chief of staff John Kelly has reportedly grown frustrated with White House advisers Jared Kushner and Ivanka Trump, and has been asking people what the couple does all day, according to a report by the Associated Press. “I am not a person who has sought the spotlight. First in my business and now in public service, I have worked on achieving goals, and have left it to others to work on media and public perception,” Kushner told congressional investigators last July. Kushner has come under fire of late, as Special Counsel Robert Mueller is reportedly probing his family's Real Estate dealings - including whether foreign nationals sought to manipulate him over his family's financial position. The Kushner Co. says it is financially sound, however skeptics point to the company scrambling to raise funds from investors whose country of origin may present a conflict of interest. The Intercept reported that Kushner supported a blockade against Qatar after his father, Charles Kushner, sought and failed to obtain financial support from the Qatari financial minister for the family's troublesome 666 Fifth Avenue property. “If it’s true it’s damning,” Sen. Chris Murphy (D-CT) a member of the Senate Foreign Relations Committee, told ABC on "This Week" Sunday. “If it’s true he’s got to go.” Kushner also lost his ability to access top-secret intelligence last week, as President Trump - who could have granted Jared a permanent clearance - left the decision to Chief of Staff John Kelly. The couple perceives Kelly’s crackdown on security clearances as a direct shot at them, according to White House aides and outside advisers. But one White House official disputed that account, suggesting that Kushner welcomed Kelly’s efforts to organize the West Wing, allowing him to more singularly focus on his portfolio. Kelly, in turn, has been angered by what he views as the couple’s freelancing. He blames them for changing Trump’s mind at the last minute and questions what exactly they do all day, according to one White House official and an outside ally. –AP
Sessions: "I Have Appointed A Person Outside Of Washington" To Investigate FISA Abuse -- Attorney General Jeff Sessions told Fox News Host Shannon Bream that he "will consider" naming a second special counsel to investigate the conduct of the FBI and Justice department during the 2016 election. On Tuesday, House Judiciary Chairman Bob Goodlatte (R-VA) and Rep. Trey Gowdy (R-SC) wrote a letter to Sessions demanding the appointment of a second Special Counsel. “Matters have arisen—both recently and otherwise—which necessitate the appointment of a Special Counsel. We do not make this observation and attendant request lightly,” wrote the Congressmen. “What changed for me was the knowledge that there are two dozen witnesses that Michael Horowitz, the [DOJ] Inspector General, would not have access to,” Gowdy said. “When I counted up 24 witnesses that he would not be able to access were he to investigate it, yeah only one conclusion, that’s special counsel.” -Fox News Instead of a second Special Counsel, Sessions says he's appointed "a person outside of Washington" to look into the allegations. “Well, I have great respect for Mr. Gowdy and Chairman Goodlatte, and we are going to consider seriously their recommendations,” Sessions told Bream in a Wednesday night interview. “I have appointed a person outside of Washington — many years at the Department of Justice — to look at all of the allegations that the House Judiciary Committee members sent to us and we are conducting that investigation.” Sessions also noted that he is "well aware that we have a responsibility to ensure the integrity of the FISA process." “We are not afraid to look at that,” the AG explained. “The inspector general, something that our inspector general is not very strong, but he has almost 500 employees, most of which are lawyers and prosecutors, and they are looking at the FISA process.... ...We must make sure it is done properly, and we are going to do that, and I will consider the request.”
Federal Judge Says Trump Within His Authority To End DACA - Moments ago, president Trump tweeted "Federal Judge in Maryland has just ruled that “President Trump has the right to end DACA.” President Obama had 8 years to fix this problem, and didn’t. I am waiting for the Dems, they are running for the hills!" What he was referring to is that on Monday, a Maryland federal judge gave the Trump administration a win over a lawsuit challenging the DOJ's ability to rescind the Obama-era Deferred Action for Childhood Arrivals (DACA) program. Judge Roger W. Titus ruled that Trump had the legal authority to rescind the executive order former President Obama announced in 2012. The order - designed to protect illegal immigrants who were brought to the United States as minors - was rescinded by Trump for a period of six months until Congress could find a more permanent solution. "This decision took control of a pell-mell situation and provided Congress — the branch of government charged with determining immigration policy — an opportunity to remedy it. Given the reasonable belief that DACA was unlawful, the decision to wind down DACA in an orderly manner was rational," wrote Judge Titus, adding "As disheartening or inappropriate as the president’s occasionally disparaging remarks may be, they are not relevant to the larger issues governing the DACA rescission. The DACA Rescission Memo is clear as to its purpose and reasoning, and its decision is rationally supported by the administrative record."
Sessions Reminds California: "There's No Secession, No Nullification” - Yesterday, we pointed out that Attorney General Jeff Sessions has finally acted to stop California from ignoring federal immigration authorities and laws, with the DOJ suing the state to nullify Assembly Bill 450, which stops private companies from voluntarily cooperating with federal immigration authorities.And shortly after the suit was filed, Sessions warned chided the state for disobeying federal laws, saying American law provides no room for secession or nullification, per the Hill"I understand that we have a wide variety of political opinions out there on immigration. But the law is in the books and its purposes are clear and just," Sessions said during a speech to the California Peace Officers’ Association in Sacramento on Wednesday."There is no nullification. There is no secession. Federal law is the supreme law of the land. I would invite any doubters to go to Gettysburg, to the tombstones of John C. Calhoun and Abraham Lincoln. This matter has been settled," he continued.The lawsuit filed by the DOJ aims to block three so-called sanctuary laws passed by the state's legislature this year. The laws being challenged prohibit private employers from voluntarily cooperating with federal immigration officials, while preventing state and local law enforcement officials from giving federal immigration officials information about the release date of removable immigrants in their custody; and create an inspection and review scheme that requires the California Attorney General to investigate the immigration enforcement efforts of federal agents.
Video of Border Patrol agents dragging mother away from children sparks outrage --A video of border Patrol agents dragging a woman into a van as her three traumatized daughters scream and cry for their mother has gone viral on social media. Last Saturday, 36-year-old Perla Morales Luna stepped out to pay her rent in National City, a suburb of San Diego, California. She was accompanied by her three daughters one of whom is believed to be a minor. Still close to her house, she was grabbed by two men plainclothes and one uniformed Border Patrol agent, and hustled off to a Customs and Border Patrol (CBP) van.Cell phone video footage shows the agents ripping Morales Luna from the hands of her children as they scream and wail, while in the background the officers can be heard demanding that she “Get in the car.” As the car is seen leaving, one of the daughters can heard asking where her mother was being taken.The video has been viewed over 10 million times after being shared on social media by Judith Castro-Gonzalez, a teacher for one of Morales Luna’s children. Explaining why she shared the video, Castro told NBC7 that she could not believe that a mother could be dragged away from her children in that manner, and was horrified at the injustice: “Honestly I couldn’t watch the whole thing…Just seeing a mom being approached by agents who are dressed in civilian clothing, with no badges to be seen, and just literally dragging the mom away into the border patrol truck.”
"We're Going To War" California Governor Blasts "Full Of Liars" Administration Over Immigrant Lawsuit - Having already raged at Attorney General Jeff Sessions last night, after last night's news of the Justice Department bringing suit against California over its Sanctuary State 'laws'...“At a time of unprecedented political turmoil, Jeff Sessions has come to California to further divide and polarize America. Jeff, these political stunts may be the norm in Washington, but they don’t work here. SAD!!!” A horrified California Governor Jerry Brown held a press conference today to signal as much virtue as possible...“This is really unprecedented for the chief law enforcement officer of the United States to come out to California and act more like Fox News than a law enforcement officer. This is a political stunt,” Brown said.“We know the Trump administration is full of liars. They’ve pled guilty already to the special counsel.”Then he raised the rhetoric to '11'... “This is basically going to war against the state of California, the engine of the American economy. It’s not wise, it’s not right, and it will not stand,” Brown said. As The Hill reports, Brown said Sessions’s speech was “unbecoming” of the nation’s chief law enforcement officer. He speculated that Sessions is trying to return to President Trump’s good graces, after a rocky first year in which Trump and Sessions saw a serious rift in their once-close relationship.“I assume, and this is pure speculation, that Jeff thinks that Donald will be happy with him,” Brown said. “Let’s face it, the Trump White House is under siege. [Special counsel Robert] Mueller is closing in. There are more indictments to come.”
Jeff Sessions’ misleading claim: California bans police cooperation with ICE - PolitiFact - Does California ban local law enforcement from transferring prisoners to and even communicating with federal immigration agents?U.S. Attorney General Jeff Sessions made that claim in a speech in Sacramento on March 7, 2018, one day after the Department of Justice announced it’s suing California over allegations the state’s immigration laws obstruct federal authorities.Here’s what Sessions told a group of local and state law-enforcement officials in downtown Sacramento:"California won’t let law enforcement officers like you and your people to transfer prisoners to ICE custody or even to communicate with ICE that you’re about to release them from your custody — people that ICE is looking for."California has enacted laws — SB 54, AB 103 and AB 450 — that limit cooperation with federal immigration agents, largely in response to the Trump administration’s aggressive stance on immigration enforcement.But do those state laws really prevent local police from transferring prisoners to and talking with U.S. Immigration and Customs Enforcement agents? We set out on a fact check.Experts on immigration told us Sessions’ statement includes some truth, but exaggerates the limits on local law enforcement.Police and sheriff’s officials are prohibited from cooperating with ICE agents in cases where undocumented immigrants are in jail for minor crimes — unless they are presented with a federal warrant or criminal removal order. "What the attorney general did is leave out important qualifying language," . "It’s not as if state and local law enforcement never have to cooperate with ICE."
US government cuts aid to Puerto Rico by half -- Puerto Rico's governor, Ricardo Rossello, announced Tuesday that the US Treasury Department has cut a $4.7 billion disaster relief loan available to the US territory by more than half, without explanation.Congress had approved the already meager loan for aid relief in October after Hurricane María ravaged the island in September last year. The storm, and the botched recovery effort that followed, has killed hundreds, if not thousands of people, and caused an estimated $94 billion in damage.Last month the Treasury Department and the Federal Emergency Management Agency (FEMA) ominously warned in a letter they would be temporarily withholding the aid loan because they did not believe the island’s government was facing a cash shortage. Federal officials said the money would be released through the Community Disaster Loan Program once the island’s central cash balance decreased to a certain level. Even before the storm, the island was already struggling with a major financial crisis to the tune of $74 billion in debt. With the economy in shambles after the hurricane, the suggestion that the island is flush with cash is absurd.The aid cut has put many essential services, especially the Puerto Rico Electric Power Authority (PREPA), the island’s public power utility, at risk of being interrupted. This means that millions of workers on the island may soon lose access to running water and electricity. This would be in addition to the approximately 30 percent of electric customers who have not had service since María made landfall over five months ago.
Keith Ellison takes over the Democrats’ universal health-care bill - WaPo - Rep. Keith Ellison, the deputy chairman of the Democratic National Committee, has replaced former congressman John Conyers Jr. as the sponsor of the Expanded & Improved Medicare For All Act. Early Wednesday afternoon, Ellison asked for and received unanimous consent to take over H.R. 676, the single-payer health bill that has become a focus of left-wing energy and is supported by most of the Democratic caucus. At the same time, Ellison (D-Minn.) is facing a new round of questions and attacks about his former support of Louis Farrakhan and the Nation of Islam — questions that dogged him in his first race for Congress and his near miss run for DNC chairman last year, even after he condemned Farrakhan. (Ellison flirted with the idea of running for attorney general in Minnesota this year but said Wednesday that he will seek reelection to the House.) In an interview, Ellison said that none of his colleagues raised concerns about the Farrakhan story, which has lit up in conservative media and on cable news, as he campaigned to take over H.R. 676. There was no obvious candidate to take up the bill after Conyers (D-Mich.) resigned in disgrace last year; what had been known as “the Conyers bill” had become problematically labeled. But Ellison’s fellow Democrats had no worries about his name replacing Conyers on the legislation.
Five Senators Want To Know Why The FBI Hasn’t Restored Missing Crime Data -- In December, FBI Director Christopher Wray promised in congressional testimony that data tables missing from the FBI’s yearly crime report would be added back in “a few weeks.” But as of March 2, the tables are still missing, and five U.S. senators have taken notice. On Thursday, Sens. Kamala Harris, Cory Booker, Mazie Hirono, Brian Schatz and Chris Van Hollen wrote a letter to Wray and Attorney General Jeff Sessions requesting information on why the data has not yet been restored. “This has now resulted in an unnecessary and unacceptable delay in making these data tables available — data that has been regularly provided in a timely manner within the annual report in prior years,” the letter stated. The missing data was first reported by FiveThirtyEight in October. Since Wray’s testimony in December, FiveThirtyEight has made repeated requests to the FBI for information on the release timeline. On Feb. 21, Stephen Fischer of the FBI’s Criminal Justice Information Services division told FiveThirtyEight in an email that the report was under review at FBI headquarters. He did not respond to a follow-up request for an update on the release timeline. As of publication, the FBI had not returned a request for comment. The annual Crime in the United States report, a collection of crime statistics gathered from over 18,000 law-enforcement agencies around the country, is considered the gold standard for tracking crime statistics in the United States. According to an analysis by FiveThirtyEight, the 2016 Crime in the United States report — the first released under President Trump’s administration — contained close to 70 percent fewer data tables than the 2015 version did. The removal could affect analysts’ understanding of crime trends in the country.
VIDEO: Rep. Tulsi Gabbard Introduces Securing America’s Elections Act to Ensure Integrity of 2018 Elections —Rep. Tulsi Gabbard (HI-02) today introduced legislation to protect the country’s election infrastructure from cyber-hackers by requiring the use of voter-verified paper ballots or a paper ballot backup in federal elections. It authorizes emergency funding to empower every state to use voter-verified paper ballots that produce an auditable paper trail, beginning with the 2018 elections. It also addresses the need to ensure safe and secure software is utilized in voting machines on Election Day.
Kellyanne Conway Hit With 'Hatch Act' Violations, "Appropriate Discipline" Recommended - Less than a week after Hope Hicks, one of the most prominent women serving in the senior ranks of the White House staff, announced that she's planning on leaving the West Wing, The Office Of Special Counsel has released a statement attacking Kellyanne Conway - not for anything related to the Russia probe, of course, but instead for the serious sin of uttering a partisan opinion on a cable news show. According to a statement released by the Office of the Special Counsel, On Nov. 20 and Dec. 6 2017, Conway appeared to try and influence a partisan election while serving in her "official capacity" as a "commissioned officer" of the West Wing. Subsequently, the special counsel's office decided there was grounds to accuse her of violating the Hatch Act, and are recommending that the president punish her. They made their recommendation in a report submitted to the president. "While the Hatch Act allows federal employees to express their views about candidates and political issues as private citizens, it restricts employees from using their official government positions for partisan political purposes, including by trying to influence partisan elections," the report says. "In passing this law, Congress intended to promote public confidence in the Executive branch by ensuring the federal government is working for all Americans without regard to their political views. Ms. Conway's statements during the Fox & Friends and New Day interviews impermissibly mixed official government business with political views about candidates in the Alabama special election for U.S. Senate." The White House has rejected the ethics allegations against Conway, saying "Kellyanne Conway did not advocate for or against the election of any particular candidate. She simply expressed the President’s obvious position that he have people in the House and Senate who support his agenda. In fact, Kellyanne’s statements actually show her intention and desire to comply with the Hatch Act - as she twice declined to respond to the host’s specific invitation to encourage Alabamans to vote for the Republican,"
CIA whistleblower loses in court, sparking warning of ‘chill’ for those seeing abuse -A federal judge Wednesday dismissed a complaint by a Cuban-American employee of the CIA, and his attorney said the decision may put a chill on other whistleblower charges from within the intelligence community.The employee, a Miami native who goes by the pseudonym James S. Pars, alleged that his career at the CIA had derailed after complaining of conditions at a remote foreign posting that he said were akin to a “college dorm,” and that the agency failed to conclude an inquiry into his charges after nearly three years.Pars’ attorney, Susan L. Kruger, said Wednesday’s ruling by a federal judge in Washington would have a ripple effect across multiple intelligence agencies.“What might happen here is that potential whistleblowers won’t want to speak up because their agencies will ignore any kind of whistleblower complaint that will come their way,” Kruger said. Federal Judge Trevor N. McFadden ruled that Pars’ lawsuit failed to establish that the CIA had a legal obligation to conduct an inquiry and that Pars could ask courts to compel action.
His Investigation Is BS": Former Trump Aide Refuses To Cooperate With Mueller Subpoena; Hints Trump, Carter May Have Colluded With Russia - As part of what Donald Trump has dubbed an ongoing "witch hunt", Special Counsel Robert Mueller has subpoenaed longtime Donald Trump associate and former aide Sam Nunberg. requesting he appear before a grand jury investigating Russian interference in the 2016 elections. Nunberg, however, told Bloomberg he has no intention of cooperating with Mueller's subpoena."I’m not going to cooperate with Mueller. It’s a fishing expedition," Nunberg told Bloomberg News. "They want me in there for a grand jury for testimony about Roger Stone. He didn’t do anything. What is he going to do? His investigation is BS. Trump did not collude with Putin. It’s a joke."Nunberg was on Trump’s payroll from mid-2011 to August 2015 when he was fired from Trump’s campaign shortly after it emerged that he had posted racially charged Facebook posts. In July 2016, Trump sued him for violating a confidentiality agreement, however the suit was dropped the following month. "They want me in there for grand jury on Friday. I’m not paying the money to go down there," Nunberg said. "What’s he going to do? He’s so tough - let’s see what they do. I’m not going to spend 40 hours going over emails. I have a life." Nunberg told Bloomberg he expects one line of questioning before the grand jury to be related to Stone, who Nunberg worked with closely over the years. In a somewhat surreal interview, Nunberg also spoke with NBC's Katy Tur on Monday afternoon, reiterating that he was not going to comply with the subpoena while stating his belief that his onetime boss may be guilty of collusion with the Russians.After admitting to host Katy Tur that he’d been interviewed by Mueller’s investigators, the host asked Nunberg if he believes the special counsel “has anything” on Trump.“I think they may,” the ex-aide responded. “I think he may have done something during the election. But I don’t know that for sure.”
After Day Of Bizarre, Possibly Drunken Interviews , Nunberg Says He'll "Probably" Cooperate - After a day of bizarre interviews - possibly while under the influence of one or more substances - Trump campaign associate Sam Nunberg says he will "probably end up cooperating" with special counsel Robert Mueller after previously stating he would not comply. “Mr. Mueller should understand I am not going in on Friday,” Nunberg told the Washington Post. Nunberg, who was fired from the Trump campaign in 2015 over offensive Facebook posts, was subpoenaed by Mueller to appear before a grand jury investigating Russian interference in the 2016 elections. "I’m not going to cooperate with Mueller. It’s a fishing expedition," Nunberg told Bloomberg News. "They want me in there for a grand jury for testimony about Roger Stone. He didn’t do anything. What is he going to do? His investigation is BS. Trump did not collude with Putin. It’s a joke."“Let him arrest me,” said Nunberg. * * *After an awkward appearance on CNN, host Erin Burnett wrapped up the interview by suggesting Nunberg had been drinking. “We talked earlier about what people in the White House were saying about you ― talking about whether you were drinking or on drugs or whatever had happened today,” said Burnett. “Talking to you, I have smelled alcohol on your breath.”Here's CNN's Erin Burnett telling former Trump aide Sam Nunberg that she can smell alcohol on his breath. He says he hasn't been drinking. pic.twitter.com/tryye9AiqA— Jim Dalrymple II (@Dalrymple) March 6, 2018 Nunberg claimed he had not had a drink and had only taken antidepressants earlier in the day - however the Daily Beast reported on Monday evening that Nunberg had been acting strangely in reaction to Mueller's subpoena, and that they were worried he had been "drinking again," and was about to enter into a tailspin.
Eric Holder Predicts Mueller Already Has Charges Prepared Against Trump - Former Attorney General Eric Holder believes special counsel Robert Mueller already has plans to charge President Donald Trump with obstructing justice.Mueller is holding back on charging Trump until he can make sure he has the president dead-to-rights, Holder, who served under former President Barack Obama, said Friday night on HBO’s “Real Time with Bill Maher.” He has made similar arguments in the past regarding Trump’s behavior.“I’ve known Bob Mueller for 20, 30 years; my guess is he’s just trying to make the case as good as he possibly can. So, I think that we have to be patient in that regard,” Holder said. He has long-suggested that Trump should be held criminally liable for ousting former FBI Director James Comey during the midst of an investigation into Russian meddling. Some of Trump’s supporters argue that the U.S. Constitution gives the president authority to fire the FBI director at any time and for any reason. “You cannot charge a president with obstruction of justice for exercising his constitutional power to fire Comey and his constitutional authority to tell the Justice Department who to investigate, who not to investigate,” Harvard Law professor Alan Dershowitz said last year. Trump has recently chided Attorney General Jeff Sessions for going out of his way to ensure the investigation into collusion lingered in the public. The president even suggested at one time that Holder defended Obama from accusations of wrong-doing. Holder pushed back against Trump’s characterization of his role as AG. “The difference between me and Jeff Sessions is that I had a president I didn’t have to protect,” he told Maher, adding that Sessions should consider stepping down to avoid taking any more barbs from his boss.
Robert Mueller Likely Has Donald Trump's Tax Returns -- It now appears likely special counsel Robert Mueller has crossed what President Donald Trump has said is a clear red line by gaining access to the president's tax returns as part of a broadening investigation looking for links between Trump's business interests, his presidential campaign and Russia. In fact, it seems almost certain the FBI–special counsel investigation has its hands on the president's tax returns. "Mueller would be engaged in malpractice if he didn't" already have access to the president's tax returns, a member of Congress on one of the congressional committees looking at Russia's interference in the 2016 presidential election told me.In fact, people familiar with the type of investigation that Mueller is now running signal the near-certainty that Mueller has access to the president's tax returns. The purpose would be to use the tax returns as a road map to investigate potential Russian financial influence within Trump Organization limited liability companies."I believe Mueller has already obtained tax returns in the Russia investigation," Renato Mariotti, a former federal prosecutor in the Securities and Commodities Fraud Section of the U.S. Attorney's Office in Chicago, said on Twitter on Aug. 10. He later wrote in The Hill he often used tax returns in his own federal investigations, and that it is almost a necessity in an investigation like Mueller's. It's also done without knowledge of the subjects of the investigation. "A federal prosecutor obtains tax returns by seeking an ex parte order from a federal judge. That means that the person who is being investigated doesn't know that the tax returns are being sought or if the judge issues the order," he said. "Basically, it's done in secret."
Trump Threatened To Fire White House Lawyer After He Refused To Deny Mueller-Probe Leak - We wondered why the pace of leaks from Special Counsel Bob Mueller's office started to slow late last summer - and then, suddenly, Mueller dropped the Manafort-Gates indictments, unsealed George Papadopoulos's plea agreement and announced the cooperation of Michael Flynn, all in a relatively narrow time period, with almost nothing appearing in the press ahead of time. It's notable that the pace of leaks started to slow after Mueller reportedly demoted Peter Strzok, the FBI agent who was first outed for trading anti-Trump text messages with his mistress, Lisa Page, and also helped steer the FBI's probe away from signs of Hillary Clinton's guilt.But now, the pace of leaks out of the special counsel's office is quickening once again: Tonight, for the first time in months, the Washington Post and New York Times published twin bombshells based on information clearly leaked by a member of Mueller's team. The NYT reports that President Trump considered firing White House Counsel Don McGahn III after he refused to release a statement denying reports that he had threatened to resign when Trump asked him about firing Mueller. Trump's conversation with McGahn, which occurred after McGahn had met with investigators from Mueller's team, was one of two conversations where Trump reportedly asked witnesses about what they said to the grand jury.Former White House Staff Secretary Rob Porter later told McGahn that Trump had considered firing him for his disloyalty.Trump also reportedly asked former chief of staff Reince Preibus whether Mueller's team was "nice" to him when Preibus sat for an interview with investigators...The report clearly suggests that Mueller is still casting about for evidence that the president has tried to obstruct justice - and, as part of this, is also exploring whether Trump tried to disrupt the Mueller probe.
Trump Lawyers Said To Seek Deal With Mueller: Report - With Trump's interview with Mueller looming, the President lawyers are reportedly seeking to negotiate a deal with special counsel Robert Mueller that uses an interview with Trump as negotiating leverage, and accelerate a conclusion to the Russia investigation.According to the WSJ, the president’s legal team plans on telling Mueller that Trump would agree to a sit-down interview based on multiple considerations, including that the special counsel commit to a date for concluding at least the Trump-related portion of the investigation. One idea is to suggest a deadline of 60 days from the date of the interview.Another consideration for Trump's lawyers is "reaching an agreement with Mueller on the scope of his questioning of the president, which they expect to focus largely on his decision to fire former national security adviser Mike Flynn and former FBI director James Comey." This also confirms that Trump's legal team is convinced that Mueller is now going after obstruction of justice and interference, and not Russian collusion as the primary angle of attack.Trump is pressing his lawyers to bring about an end to the probe.Mr. Trump has been eager to see the investigation wrap up as quickly as possible, describing it as a distraction that is hurting the country. His lawyers have repeatedly laid out public timelines by which they expected the investigation to end. Those deadlines have come and gone.Tweeting in January, Mr. Trump said of the investigation: “On and on it goes. Russia & the world is laughing at the stupidity they are witnessing.” Of course, it is feasible that Mueller does accelerate the probe's conclusion, only with a determination that is the opposite of what Trump would want to hear.
Adviser to Emirates With Ties to Trump Aides Is Cooperating With Special Counsel - An adviser to the United Arab Emirates with ties to current and former aides to President Trump is cooperating with the special counsel, Robert S. Mueller III, and gave testimony last week to a grand jury, according to two people familiar with the matter.Mr. Mueller appears to be examining the influence of foreign money on Mr. Trump’s political activities and has asked witnesses about the possibility that the adviser, George Nader, funneled money from the Emirates to the president’s political efforts. It is illegal for foreign entities to contribute to campaigns or for Americans to knowingly accept foreign money for political races.Mr. Nader, a Lebanese-American businessman who advises Crown Prince Mohammed bin Zayed Al-Nahyan, the effective ruler of the Emirates, also attended a January 2017 meeting in the Seychelles that Mr. Mueller’s investigators have examined. The meeting, convened by the crown prince, brought together a Russian investor close to President Vladimir V. Putin of Russia with Erik Prince, the founder of Blackwater and an informal adviser to Mr. Trump’s team during the presidential transition, according to three people familiar with the meeting. Mr. Nader’s cooperation in the special counsel’s investigation could prompt new legal risks for the Trump administration, and Mr. Nader’s presence at the Seychelles meeting appears to connect him to the primary focus of Mr. Mueller’s investigation: examining Russian interference during the 2016 presidential campaign.
Mueller "Requested Documents" About Trump's Long-time Lawyer Michael Cohen --Special Counsel Robert Mueller is reportedly requesting documents, asking witnesses about Michael Cohen, and otherwise "examining episodes" involving the longtime Trump lawyer who served as Trump's de facto fixer both during the campaign and during Cohen's time working at the Trump Organization.According to WaPo, Cohen played a role in two incidents that are of interest to the Mueller probe: The first area of focus for Mueller involves a deal that was nearly struck in late 2015 to build Trump Tower Moscow. As has already been reported, Cohen reportedly sent an email to Russian President Vladimir Putin inquiring about how to advance the stalled project. Cohen said he didn't remember receiving a response. The second focus for Mueller is a "Russia-friendly" peace proposal that passed to Cohen by a Ukrainian lawmaker one week after Trump took office. And as former Trump aide Sam Nunberg disclosed yesterday in a series of manic, freewheeling interviews with several cable news shows, Cohen is one of nine individuals whose communications with Nunberg are being requested by the special counsel. Notably, Cohen is the only individual on that list who never worked for the Trump campaign or for the Trump White House. Mueller is also looking into the construction of the Trump SoHo tower...
Porn Star Sues David Dennison a/k/a Donald Trump: "He Forgot To Sign" Hush Agreement - As one might have expected when the Wall Street Journal published its first report about President Donald Trump’s 18-month-long extramarital relationship with former adult film actress Stormy Daniels - aka Stephanie Clifford - the scandal has somehow become wrapped up in Special Counsel Robert Mueller’s sprawling investigation into collusion between Trump and the Russians (or obstruction of justice, or Trump’s business conflicts…). We learned as much earlier today when we learned that Special Counsel Robert Mueller is zeroing in on Trump lawyer Michael Cohen, the president’s longtime fixer who testified that he paid Daniels’ lawyer $130,000 out of his own pocket in exchange for her signing an NDA about her relationship with Trump, per NBC News. That news broke earlier this evening, and already, another twist in the ongoing saga of Stormy Daniels, the adult actress-turned-soccer mom who has scarcely left the headlines since making the initial round of media interviews (In Touch magazine even published a detailed 5,000-word interview with Daniels that it didn’t run back in 2011. Though she by all accounts kept her share of the $130,000 payout, Daniels is suing President Trump in Los Angeles, arguing that her NDA with the president isn’t valid - because he never bothered to sign it.
Trump Lawyer Obtained Restraining Order to Silence Stormy Daniels - President Trump’s lawyer secretly obtained a temporary restraining order last week to prevent a pornographic film star from speaking out about her alleged affair with Mr. Trump, according to legal documents and interviews.(Read the restraining order.)The order, issued by an arbitrator in California and reviewed by The New York Times, pertained to the actress Stephanie Clifford, who had been paid $130,000 shortly before the 2016 election in what she calls a “hush agreement.” In recent weeks, she had prepared to speak publicly about Mr. Trump, claiming his lawyer, Michael D. Cohen, had broken the agreement.The details of the order emerged on Wednesday after the White House’s spokeswoman, Sarah Huckabee Sanders, said that Mr. Trump’s lawyer had won an arbitration proceeding against Ms. Clifford, who goes by the name of Stormy Daniels. Ms. Sanders’s statement put the White House in the middle of a story that Mr. Trump and his lawyer had been trying to keep quiet for well over a year. The turn of events created the spectacle of a sitting president using legal maneuvers to avoid further scrutiny of salacious accusations of an affair and a payoff involving the porn star.
Does Stormy Daniels Have a Case Against Donald Trump? - “DONALD J. TRUMP a.k.a. DAVID DENNISON” is the first named defendant in a lawsuit filed on Tuesday, in California, in which Stephanie Clifford, who is also known as Stormy Daniels, seeks to have what the suit refers to as her “Hush Agreement” over an affair with Trump declared invalid. That agreement is between “Dennison,” or “DD”; “Peggy Peterson,” or “PP”; and “EC LLC,” all of which, it notes, are “pseudonyms whose true identity will be acknowledged in a Side Letter Agreement.” (Both documents are helpfully included as exhibits to the suit, although Dennison’s true name is blacked out.) The agreement is dated October 28, 2016, eleven days before the Presidential election. The problem, Clifford says, is that Trump, or Dennison, or DD, or whatever one wants to call him—let’s say the President of the United States—never delivered a copy of the agreement with his signature on it. And so she no longer has to hush. In January, the Wall Street Journal reported that Clifford had been paid a hundred and thirty thousand dollars for her silence—money that made its way to her via Michael Cohen, a longtime lawyer for the Trump Organization. Cohen has acknowledged paying the money but said that it was a “private transaction,” that neither Trump’s company nor his campaign “was a party to the transaction,” and that neither reimbursed him, directly or indirectly. Cohen did make it clear that his goal was to “protect Mr. Trump,” and suggested that he might have been protecting him from a false charge. This version of events already raised a number of questions. Why would Cohen, as a lawyer with a professional relationship with Trump, pay off someone all on his own, on a matter affecting Trump? Doing so may have violated New York legal ethics rules. But, under the Hush Agreement, Dennison, a.k.a. Trump, personally, is clearly intended to be a party to the deal. Cohen signed it on behalf of “EC LLC”—Essential Consultants, an entity he set up as the conduit for the payment—but there are also signature lines throughout for “Dennison” and his “a.k.a.,” and those are still blank.
Stormy Daniels, Donald Trump, and the Role of Arbitration in Ensuring Silence - Credit Slips - For readers who haven't been following along: Stephanie Clifford, aka Stormy Daniels, is an adult film star who allegedly had a sexual relationship with Donald Trump in the mid-2000s. She recently sued Trump and other defendants, seeking to invalidate a settlement agreement in which she was paid to keep silent about the details of the alleged relationship. Here is her complaint, which includes the settlement agreement as an exhibit. And here is some coverage of background details. The settlement agreement includes an arbitration clause, which should prompt some reflection about the use of arbitration to silence victims of sexual assault. On the other hand, people are often too quick to blame arbitration for unrelated problems, so I hope this (long-ish) post can offer a bit of clarity. The short version: Whoever drafted the agreement between Clifford and "David Dennison" gets an A for cynicism, but would have to beg for a C in my arbitration class. First, some factual background:
- The settlement agreement uses pseudonyms, Peggy Peterson and David Dennison. In exchange for a payment of $130,000, “Peterson” agrees among other things not to disclose confidential information about Dennison, their “alleged sexual conduct,” and other matters. She also agrees to arbitrate “any and all claims or controversies” arising between her and Dennison.
- Peterson (i.e., Clifford) signed the contract (through her lawyer), but Dennison did not. Instead, the contract was signed by Michael Cohen (a lawyer for Trump), on behalf of an entity named Essential Consultants, which allegedly was formed to hide the source of the hush money. There is a blank for Dennison’s signature, but it is empty.
- The settlement agreement requires all parties to keep the alleged relationship confidential. Formally, this has nothing to do with the arbitration agreement. Parties to an arbitration agreement do not have confidentiality obligations (unlike the arbitrator and any administering institution, which do). The arbitration hearing will be private; unlike a court hearing, members of the public cannot attend. But the parties can tell whatever they want to whomever they want, unless they have separately agreed to maintain confidentiality. Thus, Clifford's confidentiality obligations, if she has any, stem from the non-disclosure provisions of the agreement, not from the arbitration clause.
- In the event of a breach of the non-disclosure provisions, the agreement allows either party to obtain an injunction forbidding further disclosure without notice (!!) to the party alleged to have made the disclosure.
- It has been reported that Cohen recently obtained such an injunction from an arbitrator in a proceeding administered by ADRS. And in fact, here is a copy of what appears to be the arbitrator’s interim award. (I must say, this is not exactly a high water mark in the history of arbitration…)
Clifford’s complaint alleges that, because Donald Trump did not sign the agreement, she has no contract with him. She also alleges that any contract is unconscionable and/or void as against public policy. Some of these arguments target the confidentiality provisions. There are indeed potent arguments against enforcement of non-disclosure agreements in such cases. However, there is a problem with these arguments (from Clifford’s perspective). If Donald Trump is entitled to invoke the benefits of the arbitration clause, then the arguments must be resolved by the arbitrator (in a private hearing). Put differently, Clifford needs to do more than come up with legally sound arguments against enforcement of the contract and its non-disclosure provisions. If she wants to put pressure on Trump, she needs to come up with legally sound arguments that don’t have to be resolved in arbitration.
Is MSNBC Now the Most Dangerous Warmonger Network? - Truthdig - The evidence is damning. And the silence underscores the arrogance.More than seven weeks after a devastating report from the media watch group FAIR, top executives and prime-time anchors at MSNBC still refuse to discuss how the network’s obsession with Russia has thrown minimal journalistic standards out the window. FAIR’s study, “MSNBC Ignores Catastrophic U.S.-Backed War in Yemen,” documented a picture of extreme journalistic malfeasance at MSNBC:
- ● “An analysis by FAIR has found that the leading liberal cable network did not run a single segment devoted specifically to Yemen in the second half of 2017. And in these latter roughly six months of the year, MSNBC ran nearly 5,000 percent more segments that mentioned Russia than segments that mentioned Yemen.”
- ● “Moreover, in all of 2017, MSNBC only aired one broadcast on the U.S.-backed Saudi airstrikes that have killed thousands of Yemeni civilians. And it never mentioned the impoverished nation’s colossal cholera epidemic, which infected more than 1 million Yemenis in the largest outbreak in recorded history.”
- ● “All of this is despite the fact that the U.S. government has played a leading role in the 33-month war that has devastated Yemen, selling many billions of dollars of weapons to Saudi Arabia, refueling Saudi warplanes as they relentlessly bomb civilian areas and providing intelligence and military assistance to the Saudi air force.”
Meanwhile, MSNBC’s incessant “Russiagate” coverage has put the network at the media forefront of overheated hyperbole about the Kremlin. And continually piling up the dry tinder of hostility toward Russia boosts the odds of a cataclysmic blowup between the world’s two nuclear superpowers. In effect, the programming on MSNBC follows a thin blue party line, breathlessly conforming to Democratic leaders’ refrains about Russia as a mortal threat to American democracy and freedom across the globe. But hey—MSNBC’s ratings have climbed upward during its monochrome reporting, so why worry about whether coverage is neglecting dozens of other crucial stories? Or why worry if the anti-Russia drumbeat is worsening the risks of a global conflagration?
‘Progressive’ Journalists Jump the Shark on Russiagate - Jane Mayer of The New Yorker and Cenk Uygur of The Young Turks are the latest progressives to jump on the anti-Trump, pro-Russiagate bandwagon. They have made it crystal clear that, in Mayer’s words, they are not going to let Republicans, or anyone else, “take down the whole intelligence community,” by God.Odd? Nothing is too odd when it comes to spinning and dyeing the yarn of Russiagate; especially now that some strands are unraveling from the thin material of the “Steele dossier.”Before the 2016 election, British ex-spy Christopher Steele was contracted (through a couple of cutouts) by the Clinton campaign and Democratic National Committee to dig up dirt on candidate Donald Trump. They paid him $168,000. They should ask for their money back.Mayer and Uygur have now joined with other Trump-despisers and new “progressive” fans of the FBI and CIA – among them Amy Goodman and her go-to, lost-in-the-trees journalist, Marcy Wheeler of Emptywheel.net. All of them (well, maybe not Cenk) are staying up nights with needle and thread trying to sew a silk purse out of the sow’s-ear dossier of Steele allegations and then dye it red for danger.Monday brought a new low, with a truly extraordinary one-two punch by Mayer and Uygur. Mayer does her part in a New Yorker article, in which she – intentionally or not – cannot seem to see the forest for the trees. I could not help but think that Mayer wrote her piece some months ago and that she and her editors might have missed more recent documentary evidence that gives considerable support to that “dastardly” story line. But seriously, it should be possible to suspect Steele of misfeasance or malfeasance – or simply telling his contractors what he knows they want to hear – without being labeled a “Trump supporter.” I, for example, am no Trump supporter. I am, however, a former intelligence officer and I have long since concluded that what Steele served up is garbage.
The New Blacklist - Matt Taibbi -- One of the first rules of a shunning campaign is that it doesn't have to make sense. It just has to be what everyone's saying. Since most Americans went to high school, we tend to be instinctively familiar with the concept. The crazy inverse logic of the new national blacklist was on full display after special prosecutor Robert Mueller indicted 13 Russian "troll farm" operatives in February. In the wake of this foreign meddling charge, CNN reporter Drew Griffin banged on the door of an elderly female Trump supporter named Florine Goldfarb and accused her of being a Russia-collaborator. Goldfarb had attended a pro-Trump rally allegedly promoted on Facebook by Russian trolls. There were no Russians at the rally. The group didn't meet to discuss the subjugation of Abkhazia. They were plain, ordinary, Floridian Trump supporters – idiots, maybe, but not traitors. Not according to CNN. "That group was Russians," Griffin said accusingly. “I had nothing to do with Russians," the old lady said. "Maybe you didn't know it," Griffin countered, "but you did." Nearly two years into the #Russiagate scandal, accusing people of being in league with Putin has become an almost daily feature of news coverage. "Is it possible that we actually have a Russian agent running the House Intel Committee on the Republican side?" MSNBC anchor John Heilmann positednot long ago, referring to California congressman Devin Nunes. The main source of the questions about Nunes was Hamilton 68, a website purporting to track the work of Russian social media bots in real time. Their Hamilton 68 "dashboard," easily accessible online to civilians and journalists alike, supposedly tells us what the enemy wants us to think at any given moment. Citing a secret methodology, it claims to track 600 Twitter accounts for their "relationship to Russia-sponsored influence," and regularly spits out mysterious conclusions about Putin's preferences in the American political scene. More and more often now, the site's pronouncements turn into front-page headlines.
The CIA Democrats - This is the first part of a three-part article. An extraordinary number of former intelligence and military operatives from the CIA, Pentagon, National Security Council and State Department are seeking nomination as Democratic candidates for Congress in the 2018 midterm elections. The potential influx of military-intelligence personnel into the legislature has no precedent in US political history.If the Democrats capture a majority in the House of Representatives on November 6, as widely predicted, candidates drawn from the military-intelligence apparatus will comprise as many as half of the new Democratic members of Congress. They will hold the balance of power in the lower chamber of Congress. Both push and pull are at work here. Democratic Party leaders are actively recruiting candidates with a military or intelligence background for competitive seats where there is the best chance of ousting an incumbent Republican or filling a vacancy, frequently clearing the field for a favored “star” recruit.
The CIA Democrats - This it the second part of a three-part article. The first part was posted on March 7. There are 57 candidates for the Democratic nomination in 44 congressional districts who boast as their major credential their years of service in intelligence, in the wars in Iraq and Afghanistan, at the State Department, or some combination of all three. They make up the largest single occupational group running in the Democratic primaries that began March 6 in Texas and extend through mid-September, selecting the candidates who will appear on the general election ballot on November 6. Aside from their sheer number, and the fact that more than 40 percent, 24 of the 57, are women, there are other aspects worth considering. First: The number of candidates who openly proclaim their role in the CIA or military intelligence. In years past, such activities would be considered confidential, if not scandalous for a figure seeking public office. Not only would the candidates want to disguise their connections to the spy apparatus, the CIA itself would insist on it, particularly for those who worked in operations rather than analysis, since exposure, even long after leaving the agency, could be portrayed as compromising “sources and methods.”
How the Democrat’s Corrupt Congressional Pay-to-Play Machine Sabotages Progressives and the Popular Will - naked capitalism. Yves here. Readers who read the post below by progressive activist and Naked Capitalism reader Jeff Epstein may wonder why Democratic party members of Congress submit to having the Democratic Congressional Campaign Committee not only tell them how to spend substantial amounts of their time when in Washington but also aggressively monitor how much money they raise. The answer is not only does the DCCC provide resources (subscriptions, access to research, policy recommendations) to Congressmen who have hardly any staffers, but even more important, the DCCC controls committee assignments and leadership slots. Professor Tom Ferguson published an important paper on this topic; we recapped some key points from an article he wrote about it in a 2011 post: […] Less than two days after the Democratic Congressional Campaign Committee (DCCC) wrote a strong opposition research article about Laura Moser’s Congressional candidacy, the Texas progressive had raised $60,000.The DCCC’s unprecedented attack against one of its own comes only months after the organization, which calls itself the “official campaign arm of the Democrats in the House of Representatives,” sent all potential 2018 U.S. House candidates a “memorandum of understanding” (MoU). The memorandum requires candidates to refrain from attacking other Democrats during the primary election, calling it necessary in order to avoid “tactics that do harm to our chances of winning a General Election.” Although candidates are forbidden from criticizing one another, there are no such requirements for super PACs (or, at least in the case of Moser, the DCCC itself). So, while the candidates themselves talk about rainbows, unicorns, and lollipops, the super PACs, which are supposed to have no connection to the candidates, take care of the mud-slinging dirty work. Unsurprisingly, the DCCC, the Democratic Party, and the unlimited, dark-money super PACs most often back the same candidate. This requirement is therefore a clear disadvantage to most candidates without party backing, such as progressives and upstarts.
Disinformation spread online is so disorienting that it’s messing with the researchers who study it - This week I got to hear Kate Starbird, assistant professor at the University of Washington and director of its Emerging Capacities of Mass Participation (emCOMP) Laboratory, speak about her research into how online disinformation spreads during crisis events (like shootings and terrorist attacks) and what she’s learned about the networks spreading this information and the tactics that they use. A few of the intriguing bits from Starbird’s talk: She and her team have looked a lot at the language that conspiracy theorists use both in tweets and on sites like 21stCenturyWire.com. This is “question-mark language,” Starbird said. “‘I’m not gonna tell you what to think, I’m just gonna put the evidence out there and you can make up your mind yourself’ — this way of talking persists across different events” from Sandy Hook to the Boston Marathon bombing to the Orlando shooting. Starbird spent a lot of the time reading the sites that were spreading these conspiracy theory posts — the sites behind the links being tweeted out. (“I do not recommend this.) Stuff she looked at: Homepages, about pages, ownership, authors, common themes and stories. She developed coding schemes for theme, political view, and so on. Common themes: “aliens, anti-big pharma, chemtrails, anti-corporate media, geo-engineering, George Soros, anti-globalist, anti-GMO, Flat Earth, Illuminati, Koch Brothers, anti-media, 9-11 truth, New World Order Cabal, nutritional supplements, pedophile rings, Rothschilds, anti-vaccine, anti-Zionist.” (On the subject of GMOs, by the way, please read this tweet thread, which is not about conspiracy theories but is really interesting to keep in mind as you read about Starbird’s work.) “When you do this kind of thing, you should keep a rope around your ankle and have someone to pull you back up,” Starbird said. “This is a really disorienting part of the Internet.”
Dozens Of Nations That Interfered In 2016 Elections Annoyed Russia Got All Credit -- Complaining that U.S. investigations into foreign interference in the election have gotten almost everything wrong, officials from dozens of countries around the world expressed irritation Friday that all of the credit for meddling in the 2016 presidential race was going to Russia. Resentful operatives from Serbia, Uruguay, Swaziland, and 45 other nations said they were incredibly annoyed that Kremlin-backed computer hackers and dark-money financiers were receiving all the media attention, while their own far superior efforts to undermine the U.S. electoral process had so far received no recognition at all. “Do you have any idea how much more sophisticated our attacks on American democracy were than Russia’s?” Laotian president Bounnhang Vorachith said of his government’s efforts to spread misinformation about Democratic candidate Hillary Clinton on social media sites. “We spent millions building a sophisticated bot network that could craft false but believable stories portraying Trump in a good light." "And it worked! It’s unbelievably frustrating to pull off something like that and then have all the glory go to someone else.” According to sources, every time the American media credits Russian oligarchs with funding election-tampering efforts, numerous foreign agents across the globe throw up their arms and storm out of the room, infuriated because Costa Rican and Nepalese money launderers reportedly did far more to finance such initiatives. These agents have also been known to toss aside newspapers in anger, shouting that Mongolia’s work busing thousands of people with dead voters’ names to cast ballots for Clinton in New Hampshire was more deserving of attention than anything Russia had accomplished. “Russia had a bunch of scrubs sitting in some warehouse putting out piddly-shit Facebook posts while we were actually purging voter rolls in over a dozen states, and yet no one’s calling us an enemy of democracy?” said Gambian operative Ndura Sanneh, remarking that the ninth-largest country in the world impacting a U.S. election wasn’t nearly as impressive as the 146th most populous nation doing it.“It’s such bullshit. We fed that ‘build the wall’ line to the Trump campaign three years ago, and it’d be nice to get some goddamn acknowledgment for it.""But with the Russians grabbing all the headlines, how can we?” Throughout the international community, many leaders expressed similar sentiments. “In 2016, we managed to shake Americans’ faith in their political institutions to its core, and yet there’s still no one hysterically calling for sanctions against us,” German chancellor Angela Merkel told reporters.“It pisses me off that Russia got started at the last minute, copied everyone else’s ideas, and then got all the recognition for sticking America with President Trump.”“I guess this is what we get for actually being discreet about our interference, unlike the Russians, who were literally stupid enough to let one of their operatives meet with the Trump campaign inside Trump Tower,” she continued.“They’ll probably hog the spotlight after the 2020 election, too.”
Coming this fall: “nutrition labels” for news - The Baltimore Sun is the alma mater of some of history's most famous political journalists, and had its agenda-setting coverage featured on "The Wire." ... The Denver Guardian has published fictional stories and isn't a newspaper. ... National Review is provocative and consistently conservative. The big picture: Those thumbnail descriptions, provided first to Axios, are examples of the consumer-friendly online guides (with green, yellow and red ratings) coming from NewsGuard, co-founded by journalists and media entrepreneurs Steven Brill and Gordon Crovitz.
- NewsGuard is scheduled to launch in October, in time for the congressional midterms, with 7,500 Nutrition Labels for websites, covering what NewsGuard says is "98% of all news and information consumed and shared online in the U.S."
- The co-founders announced Monday that they have raised $6 million, and they plan to hire dozens of trained journalists as analysts. The lead investor, in a group of 18 investors, is the ad giant Publicis Groupe.
- What's planned, according to Brill, the founder of The American Lawyer, Court TV, and Brill’s Content magazine: “Our goal is to help solve this problem now by using human beings — trained, experienced journalists — who will operate under a transparent, accountable process to apply basic common sense to a growing scourge that clearly cannot be solved by algorithms.”
- Why it matters, from Crovitz, a former Wall Street Journal publisher: “In addition to alerting people to fake news, one of our key goals is to help consumers, including young people, know when to take news from certain sites with a grain of salt."
- What's next: The partners say NewsGuard will eventually expand to other countries.
Critics tap decades-old law to stall Trump bid to undo Obama regulations — President Donald Trump's aggressive push to reverse Obama-era policies is facing trouble in court.In recent weeks, federal judges have blocked the administration's attempts to end the Deferred Action for Childhood Arrivals program (DACA), postpone a rulegiving low-income families broader access to housing in wealthier neighborhoods, and delay an environmental regulation requiring oil and gas companies to reduce methane leaks.All of these Trump policy changes have hit the same stumbling block: Courts say the administration hasn't followed the proper steps in enacting them, citing a 1940s-era law that's become a key weapon in the legal battle over the president's agenda.Under that law, the Administrative Procedure Act, federal agencies are required to provide a reasoned justification for their policy decisions and offer the public an opportunity to weigh in when they are creating new regulations, making notable changes to existing rules, or scrapping them altogether. Trump's critics have seized upon these requirements as a mainstay of their lawsuits against his agenda, arguing not only that the policies are harmful, but also that the administration flouted the formal rule-making process in enacting them. That's created some significant setbacks and delays for Trump's agenda — and occasionally prompted the administration to reverse course altogether. The legal setbacks don't mean Trump's agenda is dead. Many of the biggest cases are still working their way through the courts. And some of the rulings have made it clear that the administration could still enact the policies it wants if it follows the proper steps for rule-making. But Trump's opponents have slowed down the president, prompting sympathetic judges to rule in their favor — much as President Barack Obama’s legal opponents did during his administration.
10 years after financial crisis, Senate prepares to roll back banking rules - WaPo --The Senate is preparing to scale back the sweeping banking regulations passed after the 2008 financial crisis, with more than a dozen Democrats ready to give Republicans the votes they need to weaken one of President Barack Obama’s largest legislative achievements. Congress’s appetite for pulling back bank regulations shows the renewed clout of the financial sector in Washington, not just in the GOP but also among Democrats. Eight years after nearly every Senate Democrat backed a sweeping set of new rules for financial firms large and small, the party is now split, with moderates, several of them facing tough midterm election contests, working with the opposing party. The core of the new bill exempts about two dozen financial companies with assets between $50 billion and $250 billion from the highest levels of scrutiny by the Federal Reserve, the nation’s central bank. Supporters argue that the legislation would bring much-needed relief to midsize and regional banks that were treated like their much larger counterparts under the 2010 legislation known as Dodd-Frank. Opponents say it would weaken the oversight needed to stave off the type of dangerous lending and investing that brought the U.S. economy to its knees. The Senate is slated to take an initial procedural vote this week to move the measure forward, and if it eventually becomes law, it would be the most substantial weakening of Dodd-Frank since it was passed. “On the 10th anniversary of an enormous financial crash, Congress should not be passing laws to roll back regulations on Wall Street banks,” Sen. Elizabeth Warren (D-Mass.) said in an interview. “The bill permits about 25 of the 40 largest banks in America to escape heightened scrutiny and to be regulated as if they were tiny little community banks that could have no impact on the economy.” Sen. Jon Tester (D-Mont.), a Banking Committee member and one of the new bill’s leading Democratic supporters, said banks in his largely rural state have been going out of business in part because of the regulations imposed by Dodd-Frank. “The Main Street banks, community banks and credit unions didn’t create the crisis in 2008, and they were getting heavily regulated,” Tester said, contending that “there’s not one thing in this bill that gives Wall Street a break.” Critics dispute those claims, echoing a Democratic Party schism over financial regulations that pits liberals such as Warren and top Banking Committee Democrat Sherrod Brown (D-Ohio) against moderate-leaning Democrats including Tester and Sens. Heidi Heitkamp (N.D.) and Joe Donnelly (Ind.).
As Senate nears big vote, Dodd-Frank shows its staying power - — The Senate is poised to pass the most substantial bank regulatory relief since the crisis, to many bankers' delight and progressive Democrats' alarm. But any disruption of the post-crisis regime is still eclipsed by how much the bill enshrines Dodd-Frank.The bill, which appears headed to a vote within days and is the culmination of negotiations between Senate Banking Committee Chairman Mike Crapo, R-Idaho, and moderate Democrats, would raise the asset threshold for “systemically important" financial institutions to $250 billion from $50 billion, and make other adjustments to stress test and mortgage data collection requirements, among others.“Republicans, who fought Dodd-Frank title by title from start to finish, now with control of the legislative and executive branches, only pursued a rationalization of Dodd-Frank over an architectural or structural redo,” said Jeffrey Stoltzfoos, a senior policy adviser at Venable. He added that Republicans are also pursuing structural changes to Dodd-Frank through regular order rather than a vehicle that could bypass the 60-vote filibuster. “This portends of a new order in ... financial services policy — one that is less partisan and more pragmatic and one where Dodd-Frank, for better or worse, is settled law,” he said.
Democrats Gutting Wall Street Reform? Follow the Money. -- Pam Martens - Today’s front page of the print edition of the New York Times has articles on the Oscars, the election in Italy, Ben Carson’s reign at HUD and the death of an elderly Briton who once broke the four-minute mile among numerous other less than urgent news pieces. What it does not have on its front page is any headline showing concern that the seminal piece of Wall Street reform legislation of the Obama era, which already has enough loopholes to set off champagne corks on K Street, may be dismantled this week by a vote in the Senate. The move would come in the midst of the 10th anniversary of the greatest Wall Street collapse and economic catastrophe since the Great Depression, both of which were underpinned by casino capitalism — Wall Street banks making obscenely leveraged bets for the house while holding Mom and Pop deposits. This is now the new normal at the New York Times with its editorial page editor declaring in December at a staff meeting that the paper is “pro-capitalism.” This is really code for “Wall Street is our home-town team and we’re not going to bite the hand that feeds us” – even if it means intentionally rewriting the facts on what actually caused the Wall Street crash. Instead of calling front page attention to the ongoing critical threat to the nation’s financial system and providing an in-depth analysis of how Wall Street has already whittled down the 2010 Dodd-Frank financial reform legislation by a thousand cuts, the Times buried its tepid article on page B1under the headline: “Big Banks May Weaken Dodd-Frank Oversight.” The situation with the anticipated vote this week in the Senate is so critical that Senator Elizabeth Warren has released a video about the threat on YouTube. (See video below.) Warren says in the video that the proposed legislation “takes about 25 of the 40 largest banks in this country and just moves them off the special watch list and treats them like they were tiny little community banks that just couldn’t do any harm to the economy.” Warren adds: “Those exact same 25 banks that are being taken off the watch list got about $50 billion in taxpayer bailout money during the last crash.” The 25 banks would be removed from the watch list through changes to Dodd-Frank Section 401. At present, any bank with over $50 billion in assets is subject to enhanced requirements like extra capital, liquidity, stress tests and monitoring of risk management protocols. The proposed legislation raises the asset threshold to a stunning $250 billion – a mega bank by any rational interpretation. Three of the banks that would be exempted under the legislation are U.S. bank holding companies of mega foreign banks: Deutsche Bank, UBS and Credit Suisse. All three have been serially fined for running afoul of U.S. banking laws. And Deutsche Bank stands out for its potential to amplify financial contagion in the U.S.
Fed’s Quarles details possible Volcker Rule changes — Federal Reserve Vice Chairman for Supervision Randal Quarles laid out fresh details on the scope and areas of change being considered for the proprietary trading ban known as the Volcker Rule. Quarles said the five agencies tasked with implementing the ban, which was enacted in the Dodd-Frank Act and originally proposed by former Fed Chairman Paul Volcker, are at work on potential administrative changes. He said the definitions of “proprietary trading” and “covered fund” should be made more consistent and clearer in order to give regulated entities a better understanding of what to expect and how not to run afoul of the Volcker Rule. “It should be clearer and more transparent what is subject to the Volcker rule’s implementing regulation and what is not,” Quarles said in a speech to the Institute of International Bankers. “The definition of key terms like 'proprietary trading' and 'covered fund' should be as simple and clear as possible. It should not be a guessing game or require hours of legal analysis of complex banking and securities regulations to determine if a particular entity is a covered fund.”Quarles went on to say that he wanted Volcker compliance to be “similar to compliance in other areas of our supervisory regime,” and that another area where regulators are weighing revisions is the applicability of the Volcker Rule to transactions by covered firms that either partially or entirely reside outside of the U.S. Last summer, the SEC and CFTC issued a guidance calling on their supervisors not to enforce the Volcker Rule on such funds. “In particular, there are certain foreign funds — funds that are organized outside the United States by foreign banks in foreign jurisdictions and offered solely to foreign investors — that are subject to the Volcker rule due to Bank Holding Company Act control principles,” Quarles said. “I expect we would continue this period of stay while we continue to consider these important issues.”The Volcker Rule’s exemption for market-making — as well as the five agencies’ definitions meant to determine what qualifies for that exemption — is another area that regulators are looking to revise. Under criteria known as RENT’D, the rule requires banks to hold no more of a product than that which is required to meet the near-term demands of customers. “We are considering different ways to use a clearer test for RENT’D,” Quarles said. “We want banks to be able to engage in market making and provide liquidity to financial markets with less fasting and prayer about their compliance with the Volcker rule.”
Prop Trading Is Back: Fed Considers "Significant Rewrite" Of Volcker Rule - Nearly 7 years after it was first implemented, the Volcker Rule - which sought to put an end to prop trading by FDIC-insured banks (i.e., those who are funded with deposits among other sources of capital) - is about to be phased out, and prop trading is about to become one of the most desired jobs on Wall Street again. As Reuters reports, the Fed's chief regulator said Monday the nation’s regulators are actively considering a significant rewrite of the "Volcker Rule."In a Washington speech before the Institute of International Bankers entitled "The Federal Reserve’s Regulatory Agenda for Foreign Banking Organizations: What Lies Ahead for Enhanced Prudential Standards and the Volcker Rule" , Fed Vice Chair for Supervision Randal Quarles, told bankers that regulators want to make“material changes” to streamline and simplify several aspects of the ban on certain bank trading, put in place after the 2007-2009 financial crisis.He added that certain foreign funds currently exempt from the rule’s requirements will likely remain exempt while changes are considered. Here are the key parts from his speech: Not to put too fine a point on it, but I believe the regulation implementing the Volcker rule is an example of a complex regulation that is not working well. The fundamental premise of the Volcker rule is simple: banks with access to the federal safety net--Federal Deposit Insurance Corporation insurance and the Federal Reserve discount window--should not engage in risky, speculative trading for their own account. Whatever one's view of this basic premise, it is the law of the land. Taking that premise as a given, we have to ask how to improve the framework of the implementing regulation to make it more workable and less burdensome in practice from both a compliance and supervisory perspective. I think we all can agree that the implementing regulation is exceedingly complex. As an initial matter, it should be clearer and more transparent what is subject to the Volcker rule's implementing regulation and what is not. The definition of key terms like "proprietary trading" and "covered fund" should be as simple and clear as possible. It should not be a guessing game or require hours of legal analysis of complex banking and securities regulations to determine if a particular entity is a covered fund. […] We would like Volcker rule compliance to be similar to compliance in other areas of our supervisory regime. As I noted earlier, we appreciate the broad extraterritorial impact of the rule in its current form on foreign banks' operations outside of the United States. Accordingly, we will be looking for ways to reduce the compliance burden of the Volcker rule for foreign banks with limited U.S. operations and small U.S. trading books.
Dear Congress: Reg relief bill is a giveaway for large banks -- The Senate is expected to take up banking legislation this week that would weaken oversight on some of the largest banks in the country put in place after the financial crisis. While the work that Banking Committee Chairman Sen. Mike Crapo, R-Idaho, has done to bring some Democratic senators on board is admirable — and is a far cry from the House Financial Choice Act — passing this bill would still be a significant mistake.To start with, the bill would weaken oversight of all firms, including the largest 13 firms, by undermining a key capital ratio through the exclusion of certain assets from consideration, and by handing large banks a litigation tool against stricter standards — a sort of creeping deregulation. The legislation goes on to automatically eliminate annual stress testing — analyzing how economic shocks would weaken the financial system — and tougher oversight of 25 of the 38 largest bank holding companies in the United States. It would also give regulators discretion to go even further to weaken oversight.That is both unnecessary and unwise.It is unnecessary to provide for the kind of tailored regulation that makes sense, because the Federal Reserve already has the authority to provide for a graduated system of regulation, with increasing stringency, depending on the risk that the firm poses to the financial stability of the United States.Graduated standards are already at work. Fed stress testing applies to the largest firms in the country, the 38 firms with assets of $50 billion and above. The largest, most complex financial institutions face the most stringent standards. The Fed, for example, imposes a supplementary leverage ratio, a countercyclical capital buffer and detailed liquidity coverage rules only on 13 firms with over $250 billion in assets. The very largest U.S. banks on a global basis, currently eight bank holding companies, are subject to even tougher standards, including capital surcharges, more stringent leverage ratios and long-term debt requirements. None of these enhanced measures apply at all to about 95 percent of banks, the category commonly described as community banks, those under $10 billion in assets — some 6,000 banks in communities all across the country.
Midsize banks urge passage of Senate reg relief bill — Thirteen midsize banks sent a letter to the Senate Banking Committee on Monday supporting a regulatory relief bill that is likely to be voted on later this week. “This bipartisan legislation is a common-sense approach that maintains regulatory authority but makes reasonable changes that allow traditional lenders to better meet the credit needs of the people and businesses in our rural and urban markets,” said the letter to Banking Committee Chairman Mike Crapo, R-Idaho, and Sen. Sherrod Brown, D-Ohio, the panel's ranking member. “Our banks do not threaten U.S. financial market stability, and we should not be subjected to the same regulatory regime as larger banks with more complex and interconnected business models,” the banks added. Drafting the letter were Ally Financial, American Express, Bank of the West, BBVA Compass, BMO Financial Corp., Citizens Bank, Comerica Bank, Fifth Third Bancorp, Huntington Bancshares, KeyCorp, M&T Bank Corp., Regions Bank and SunTrust Banks Inc.
Community banks like mine sorely need regulatory relief – Bank Think - You don’t need to be a community banker inside the beltway to know that partisanship and policymaking seem to go hand in hand in Washington these days. So, when an opportunity arises to enact meaningful reform — with the power to help my New Hampshire community bank and our customers — I can’t sit back and let the opportunity pass me by. Too much is at stake for my community and communities across the nation. When the Economic Growth, Regulatory Relief and Consumer Protection Act cleared the Senate Banking Committee in December with strong bipartisan support, I was thrilled. It was a clear signal that our years-long effort to push back against the unyielding barrage of regulations had not been in vain. And that a much-needed reprieve for Ledyard National Bank and thousands of other community banks — whose footprint and small business lending surpass their larger counterparts — was finally within reach. For far too long we’ve been sidetracked by the ever-increasing federal regulations that have raised compliance costs, reduced local credit availability and played an important role in the decline of de novo formation and consolidation within our industry, increasing systemic risk while reducing consumer choice. With the legislation set to be brought to the Senate floor this week, Congress will have the opportunity to support community banks and the communities they serve so that we can return to relationship-based lending and help bolster our nation’s economic resurgence. By reforming overly complex regulations on community bank mortgage lending, for example, my staff can focus on the needs of our borrowers rather than the mounds of regulatory paperwork meant to rein in Wall Street’s excesses.
Elizabeth Warren Slams Democrats for Helping Gut Financial Regulations -- naked capitalism - Yves here. Normally, it would seem to behoove Naked Capitalism to analyze the provisions of a proposed rollback of Dodd Frank which may come up for a Senate vote this week. But with the bill already having a dirty dozen Democratic co-sponsors, the die is already cast.So we’ll offer a few high-level observations instead: Banks have not been suffering in terms of profits, so exactly what is the problem that needs to be solved? And that’s before you get to the fact that banks enjoy such extensive subsidies that they should not be treated like private businesses but regulated like old-fashioned utilities. The idea that banks have a right to earn more that a modest level of profit to help fund expansion in line with overall economic growth is in fact detrimental to the economy.In fact, as we’ve also pointed out, policymakers and elected officials should be seeking to shrink the financial sector. In recent years, a raft of studies have found that for developed economies, bigger financial sectors are a drag on growth. That means a banking industry that creates global crises is negative value added from a societal standpoint. It is purely extractive.But our feckless Congresscritters are all too happy to throw pretty much everyone under the bus to curry favor with pet donors.Contrary to bank-promoted urban legend, there isn’t a shortage of liquidity. Even back in the stone ages of my youth, investors didn’t complain about a lack of liquidity in the bond markets. Moreover, there is evidence that too much liquidity is a bad thing, because it makes unproductive speculation too easy.Similarly, blaming Dodd Frank or other bank regulations on supposedly too little small business lending is another canard. First, unless the cost of money is their biggest expense, entrepreneurs don’t borrow because money is cheap. They borrow because they see an opportunity. And for businesses of all sizes, retained earnings is the most important source of expansion capital. Businessmen are mindful of the dangers of leverage.Second, as we’ve discussed regularly, the reason banks do so little in the way of small business lending is they started abandoning it in the late 1980s and early 1990s as they turned branches into retail stores. They went to using FICO-based scoring to originate various loans and sold most of them into securitizations. They stopped training credit officers who were able to analyze the risks of lending to idiosyncratic businesses, and to the extent that there will still old-school branch managers who had those skills, they cut or got rid of their ability to make discretionary loans and also gutted the higher level supervisory apparatus for small business loans.
Democrats' split intensifies as Senate Dodd-Frank bill moves forward — On the eve of a crucial Senate vote on regulatory relief, the split in the Democratic caucus over rolling back the Dodd-Frank Act has never been starker.Lawmakers on Tuesday voted 67 to 32 to begin debating the targeted relief bill that Senate Banking Committee Chairman Mike Crapo, R-Idaho, negotiated with moderate Democrats on the panel. The Senate could vote on the legislation before the end of the week. While the bill's bipartisan support appears to be sufficient for Senate passage, that did not stop Democrats from trading barbs with each other. The moderates supporting the bill continue to stress that the bill is balanced and preserves the Dodd-Frank regulatory framework, while more progressive Democrats argue that it is an industry giveaway. “This bill is all about helping the big banks,” Sen. Elizabeth Warren, D-Mass., said at a press conference Tuesday morning. “All I know is how the American people feel about bank deregulation, and telling a bank that it can be deregulated, and everyone who votes for this bill has to acknowledge this." But at a competing press conference, Sen. Heidi Heitkamp of North Dakota, one of the Democrats who helped steer the bill out of the Senate Banking Committee, said she won’t let the bill be “papered by misstatements.” “This is our moment to get this done,” said Heitkamp, who was joined by other Democrats supporting the legislation. Their statements came on the heels of a Congressional Budget Office report Monday that project a small uptick in the threat of a large bank failing as a result of the legislation. That "probability is small under current law and would be slightly greater under the legislation,” the report said. The report prompted a sharp reaction from Sen. Sherrod Brown, D-Ohio, the Banking Committee's ranking member and an opponent of the bill, who said in a statement that the CBO "confirmed what we know — this bank giveaway bill will cost taxpayers.” “Hardworking Americans shouldn’t have to pay for favors to Wall Street, foreign megabanks and their lobbyists,” Brown said.
Senate Democrats Caving, May Roll Back Dodd-Frank Regulations - After the recent indictments of Paul Manafort and Rick Gates which included charges for bank fraud, it should be obvious there are still problems with smaller banks making loans based on sketchy collateralization.It’s right there in the indictments. After reading about the recent relationship between bank fraudster Rick Gates, an identity monitoring company, and one of the biggest credit monitoring firms, it should be obvious there’s no daylight between bank fraud and other consumer financial products. It’s right there in publicly filed records and marketing statements.After reading about Donald Trump’s and Jared Kushner’s repeated real estate development failures, whether he borrowed the money from investment banks (Bear Stearns in 2006, in Trump’s case; Citigroup and Deutsche Bank recently, in Jared’s) or whether he licensed his brand while managing failing properties, it should be obvious the underlying threats setting 2008’s economic crash in motion didn’t end after Dodd-Frank regulatory reform was passed. Again, all of this is public record.Which is why it is absurd that Democratic Senators are caving in and rolling back Dodd-Frank regulatory reforms with S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.Do community banks need some relief from the additional expenses of compliance? Perhaps — but how does rolling back part of Dodd-Franks ensure that bank frauds like Rick Gates and Paul Manafort are stopped? Something isn’t working; the answer may be more, not less regulation.Do Too-Big-To-Fail banks need to ensure they can’t crash the economy by virtue of their size? Sure, but what has been done to prevent more piecemeal failures like those Trump’s circle exemplify?The capper? The CBO score on this bill sucks:– The bill would increase federal deficits by $671 million over the 2018-2027 period – And “would increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.”
Why Are Democrats Helping Trump Dismantle Dodd-Frank? - Mike Konzcal - This week, the Senate begins debate on the Economic Growth, Regulatory Relief and Consumer Protection Act, known as the Crapo bill for its primary sponsor, Mike Crapo, a Republican senator from Idaho. The bill would roll back or eliminate parts of the Dodd-Frank Act.The Crapo bill is unusual in today’s hyperpartisan environment: It has over 10 Democratic co-sponsors, many from swing or red states and up for re-election this year — like Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Claire McCaskill of Missouri — making its passage possible.Why would some Democrats provide support for a rollback of Dodd-Frank? Proponents argue that this bill provides much needed relief for community banks and credit unions, which, these proponents claim, face enormous difficulties. They also say that it doesn’t endanger financial reforms aimed against the largest and most dangerous players.But that view is mistaken: This bill goes far beyond the health of community banks and credit unions. It removes protections for 25 of the top 38 banks; weakens regulations on the biggest players and encourages them to manipulate regulations for their benefit; and saps consumer protections. What do Democrats get in return? Nothing substantive that they should want. They could demand better funding for regulators or an appointment to the Consumer Financial Protection Bureau — or a vote on gun control. The Crapo proposal would relax important regulations for major banks. Though often described as medium in size, these banks are still very large. Dodd-Frank introduces regulations for banks with assets of more than $50 billion, regulations that increase in strictness as the banks get larger and riskier. This ensures that they have enough cash to survive a crisis, quality equity to manage problems and a living-will plan for how they can fail without bringing down the economy. This regulation affects the 38 largest banks. By comparison, the more than 5,000 community banks in our country generally have $1 billion dollars in assets or less. The bill would move that line up to $250 billion. This would exempt 25 of the largest banks, which in total account for $3.5 trillion, or 16 percent of total banking assets.
As Cable News Obsesses Over a Porn Star, Senate Prepares to Put the Next Wall Street Crash in Motion - Pam Martens - The U.S. Senate is about to set in motion the next financial crash on Wall Street but you would never know it from watching cable news channels CNN or MSNBC last evening. Both news channels obsessed for endless hours over the Trump-Russia scandal and a hush money payoff to porn star Stormy Daniels, neglecting one of the most critical topics of the day: what was happening on the Senate floor this week. Some of the most informed Democratic voices in the U.S. Senate are making impassioned and heartbreaking appeals to their colleagues this week on the floor of the U.S. Senate to vote down Senate bill S.2155, which carries the Orwellian title: “The Economic Growth, Regulatory Relief and Consumer Protection Act.” The bill is a Republican/Wall Street lobbyist masquerade to ostensibly help small community banks but will effectively gut enhanced oversight of banks with up to $250 billion in assets – mega banks by any measure – that want to dodge oversight of their derivative counterparty exposure to the largest Wall Street banks like JPMorgan Chase and Citigroup. On Monday, the non-partisan Congressional Budget Office released an analysis showing that the legislation “would increase federal deficits by $671 million over the 2018-2027 period” while increasing the probability of a big bank failure. Some of the most gut-wrenching and poignant testimony came from Senator Sherrod Brown of Ohio. (Read his full prepared remarks below.) Brown emotionally went off script from his written remarks to explain how families in his zip code in Ohio, 44105, had to deliver the news to their children that they had to put the family dog in a shelter and that the kids would have to leave their school friends because their home was being foreclosed on. Brown added: “City officials in Cleveland began to hear reports that predatory home refinances were being pushed on borrowers, regardless of whether they could afford to repay the loans. “The City of Cleveland went to the Fed and asked it to use its authority to restrain subprime lending. “The Fed did nothing.”
Odds of changing reg relief bill are long, but many keep trying — More than 50 amendments had been filed by Wednesday afternoon to be considered as part of a Senate regulatory relief bill, but it was unclear which proposed changes if any have the approval of the legislation's key sponsors.Banking lobbyists were still scrambling Wednesday to gauge what might go into a broader "manager's amendment" — a package of what are typically technical changes seen as more likely to garner support — that will be offered by the bill’s lead author, Sen. Mike Crapo, R-Idaho, and agreed upon by the co-sponsors.Provisions that were unlikely to make it into the manager’s package were being filed as separate amendments to the larger piece of legislation. Sen. Elizabeth Warren, D-Mass., for instance, filed a long-shot amendment to reinstate the Glass-Steagall Act, the Depression-era law that separated commercial and investment banking. Other amendments are similarly broader than the targeted relief provisions in Crapo's bill that a critical mass of moderate Democrats have agreed to back. A proposal unlikely to have much traction is an amendment filed by Sen. Dean Heller, D-Nev., which would prevent hikes in Fannie Mae and Freddie Mac's guarantee fees from being used to offset the deficit.On the Republican side, lawmakers have floated proposals to go even further than the Crapo bill in unwinding the post-crisis regulatory regime. Sen. Mike Enzi, R-Wyo., introduced a bill that would limit the pay of employees working at the Consumer Financial Protection Bureau. But that amendment is unlikely to pass muster with Democrat co-sponsors.Because of the bipartisan nature of the Senate deal, the window is quite narrow for what could be added before the final bill is brought up on the Senate floor. Senate Majority Leader Mitch McConnell, R-Ky., could take steps to prevent any amendments from being offered, making the initial package brought to the floor likely what would pass the Senate.
Latest version of Senate Dodd-Frank relief bill to address key Dem criticism — The latest version of a bill to give regulatory relief to community banks and credit unions includes language designed to address a key criticism of the bill by ensuring that large foreign bank holding companies do not also see their supervision eased. Under a new version of the legislation released late Wednesday evening, the bill clarifies that large foreign banks such as Barclays, Credit Suisse and Deutsche Bank do not escape regulation as systemically important financial companies just because their U.S. units have less than $250 billion of assets. The change was made in response to criticism by progressive Democrats, such as Sen. Sherrod Brown of Ohio, that the bill as written would allow large foreign banks to benefit from a provision that raises the SIFI threshold to $250 billion of assets from $50 billion. Banks above that level face higher capital and liquidity requirements and tougher supervision by the Federal Reserve Board. "Many of us in this body are concerned about this deregulation bill … especially when it comes to foreign banks, those banks that are huge, but their assets in this country are under $250 billion,” Brown said last week.Senate Banking Committee Chairman Mike Crapo and a handful of moderate Democrats made the change as part of a so-called manager's amendment, a new version of the bill that makes several changes to the earlier version passed 16-7 by the banking panel in December. In an interview, Crapo said the bill was never intended to help foreign banks' intermediate bank holding companies in the U.S. The new language clarifies that is the case. “This confirms that the bill doesn’t do anything with foreign banks,” Crapo said. “This is an assurance that the bill doesn’t do what people are saying that it did.”Other changes to the bill are intended to help with capital formation, measures that had separately cleared the banking panel with the support of Brown, who opposes the underlying regulatory relief bill.
Midterm elections lurk in background of reg relief debate — The Senate regulatory relief bill has divided congressional Democrats, highlighting key differences in party messaging that could play out at the ballot box this November. Among the bill’s most outspoken co-sponsors are Sens. Jon Tester, D-Mont., Heidi Heitkamp, D-N.D., and Joe Donnelly, D-Ind. — moderates who are up for re-election in states that President Trump carried in 2016. All three lawmakers worked closely with Senate Banking Committee Chairman Mike Crapo, R-Idaho, in developing the legislation, which includes a host of Dodd-Frank Act reforms for community banks as well as several more hotly debated measures benefiting larger institutions. The bill’s passage could be crucial for helping moderate Democrats shore up support in their home states ahead of the 2018 elections. But the centrist lawmakers who have supported the bill also find themselves in a tough spot, as more progressive colleagues, including Sens. Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio, have blasted the package as being a giveaway to big banks. Fifteen Democrats and Angus King, I-Maine, who caucuses with the Democrats, voted to begin debate on the legislation this week, along with the Republican caucus. “There clearly are a lot of people on the left in the Democratic Party who are upset with the Senate vote. But for members thinking about 2018, this isn’t something that is going to matter all that much,” said Geoffrey Skelley, a political analyst at the University of Virginia’s Center for Politics. “If you are a Democrat who voted ‘yes’ on this, it may upset the base, but you are also trying to boost your more moderate credentials among other voters in your state.” Moderates have threatened to pull their support if any changes aren't cleared first by the bill’s Democratic co-sponsors. Supporters are hopeful Democrats won't back out.
Senate prepares to end week without vote on Dodd-Frank relief -- — The Senate will leave Washington this week without voting on a regulatory relief bill. Sen. Mike Crapo, R-Idaho, the lead author of a targeted bill to roll back certain Dodd-Frank Act provisions, introduced an amendment late Wednesday to clarify certain measures and add new sections to the bill. Crapo had hoped the Senate could vote on the bill before finishing business for the week, but with dozens of amendments to sort through, Democrats and Republicans were unable to come to an agreement on deciding which measures to allow for floor consideration.
The many flaws in the Senate’s rollback of Dodd-Frank: Attention must be paid. -Jared Bernstein -- A couple of days ago, I participated in the “On Point” radio show about this (sort of) bispartisan effort to significantly rollback the Dodd-Frank financial reform bill that passed back in 2010. I was a member of team Obama back then and thought this was an important and very necessary advance. Imperfect, sure, but an essential set of regulations and consumer protections to diminish the seemingly endless repetition of the economic shampoo cycle: bubble, bust, repeat.You can listen to my take on the show. I think this so-called fix to the bill goes way too far and exempts or partially exempts too many potentially risky institutions from the necessary oversight in Dodd-Frank. This mistake represents a) precisely the amnesia about reckless finance that repeatedly shows up years after the last crisis, b) an underestimate by the Senate Democrats signing on to the measure of the risk brought back into the system , and c) an almost completely unnecessary bit of work.By that last point, I mean this: what’s the motivation here? The financial sector, large and small, is doing great in terms of profitability (and that’s before all their goodies in the tax cuts), credit is freely flowing, and while there’s always speculation afoot in financial markets, there are no large and potentially destabilizing credit bubbles. So, of all the problems we face, why should Congress waste valuable time fixing something that’s clearly not broken?No question, as I stressed on the show, compliance with Dodd-Frank is far from costless, as any banking executive will readily tell you. And while the compliance burden is smaller for smaller banks, it’s still a pain for some institutions, like community banks and credit unions. So, I grant that there’s a rationale for reducing that burden. But, as you’d expect, given the linkages between Congress and the deep-pocketed banking lobby (and, trust me, I’m not just talking about the R’s), the Senate legislation goes much further than that. Moreover, once the bill gets out of the Senate, it may well have to be reconciled with a far more deregulatory House bill. Most notably, the Senate bill leaves the Consumer Financial Protection Bureau created by Dodd-Frank intact, whereas House conservatives have long been trying to crush the CFPB.
Meet the Democrats’ ‘Dirty Dozen’ Working to Gut Financial Reforms - As if to maximize the possibility of another major financial crisis, the Trump administration and the GOP have recently been busy undercutting the limited safeguards established a decade ago via Dodd-Frank. The latest example of this stealth attack on Wall Street reform is the Economic Growth, Regulatory Relief, and Consumer Protection Act, appropriately sponsored by Republican Senator Mike Crapo of Idaho, chairman of the Senate Banking Committee. Appropriate, because this is literally a “crapo” bill. It provides a few “technical tweaks” to Dodd-Frank in the same way in which protection payouts to organized crime provide businesses with “insurance” against property damage. In reality, it is an act of regulatory vandalism, which highlights everything that is corrupt about our political system. We have grown to expect no less from the GOP, whose sole raison d’etre these days seems to be filling the trough from which America’s fat cats can perpetually gorge themselves. What is truly disturbing, however, is that the Republican effort is being given bipartisan cover by more than a dozen Democratic senators: Doug Jones (Ala.), Joe Donnelly (Ind.), Heidi Heitkamp (N.D.), Jon Tester (Mont.), Mark Warner and Tim Kaine (both from Va.), Claire McCaskill (Mo.), Joe Manchin (W.Va.), Gary Peters (Mich.), Michael Bennet (Colo.), Chris Coons (Del.), and Tom Carper of Delaware. To this esteemed group, we should also add Senator Angus King (ME), an Independent who regularly caucuses with the Democrats. So, in reality, it’s a filibuster-proof “Baker’s Dirty Dozen.” Digging into the details, perhaps this is what Senator Mitch McConnell had in mind when he predicted more bipartisanship in Congress this year. In co-sponsoring this bill, the 13 senators are providing cover for the GOP when the inevitable fallout comes, dissipating the Democrats’ political capital with the electorate in the process. Yes, we get it: some of these senator incumbents are in red states that voted heavily for Donald Trump in the last election. And the latest polls suggest many are vulnerable in this year’s elections. But the last time we checked, there didn’t seem to be an overwhelming wave of populist protest demanding regulatory relief for banks. All 50 states—red and blue—suffered from the last financial crisis, and it’s hard to believe voters in Montana, West Virginia, North Dakota, Indiana or Missouri would be more likely to support Senators Tester, Manchin, Heitkamp, Donnelly or McCaskill because they backed a bank deregulation bill.
U.S. Libor exposures larger than thought at $200 trillion: ARRC (Reuters) - A committee of large banks tasked with helping U.S. derivatives markets move away from reliance on the London interbank offered rate (Libor) said on Monday that the benchmark rate underpins more derivatives and loans than previously thought, adding to the need to reduce its influence. The Alternative Reference Rates Committee (ARRC) said that around $200 trillion in U.S. dollar-based derivatives and loans are based on Libor, with derivatives accounting for around 95 percent of the exposures. That is 25 percent higher than previous estimates. “The vast scale and broad scope of this activity underscores the necessity of promoting robust alternatives to Libor,” the ARRC said in a report. Regulators including Federal Reserve Chairman Jerome Powell are seeking to reduce markets’ reliance on Libor due to the decline in loans backing the rate. If the rate stops being published “that has all the potential of being a pretty significant financial stability problem,” Powell said last Tuesday. Reforms to banking and money market fund regulations, along with allegations of Libor manipulation before and during the 2007-2009 financial crisis, has resulted in fewer interbank short-term loans and reduced funds’ demand for bank debt, so Libor rates are sometimes estimated rather than based on actual transactions. The ARRC in June voted to adopt an interest rate benchmark from the U.S. Treasuries-backed repurchase agreement market (repo) as an alternative to the use of Libor in exchange and privately traded derivatives. The New York Federal Reserve said last week it will begin publishing the new reference rate on April 3, and the CME Group (CME.O) said it will launch futures based on the repo rate on May 7. To help markets move away from Libor, the ARRC said it will also seek the creation of a forward-looking term rate that is based on derivatives backed by the repo benchmark.
Wells Fargo was tipped off to government probe by OCC, watchdog says -- The top examiner of Wells Fargo at the Office of the Comptroller of the Currency improperly revealed to the San Francisco bank the existence of a government investigation, a watchdog agency’s inquiry has found. Sometime before mid-April 2017, the OCC’s examiner-in-charge at Wells allegedly disclosed a probe by the Treasury Department’s inspector general. The specific issues under investigation and allegedly disclosed to Wells Fargo remain confidential. As a general matter, OCC employees are not allowed to discuss a pending inspector general investigation with the subject of the probe unless they receive approval to do so. The improper disclosure, which has not been previously reported, was described in a recent report by the Treasury inspector general’s office. The report’s findings provide new fodder for critics of the OCC, whose budget depends on assessments it levies on the banks it regulates, including Wells Fargo.
Stock Bulls in Trump Country Are Freaking Out Their Brokers -- As 2017’s roaring bull market gives way to a markedly choppier 2018, the buzz among Wall Street stock touts is that the best of the Trump Trade has passed. Sure, more gains could be wrung out, and probably will be, but nothing like the 30 percent burst over the past 16 months.Don’t try to tell that to the true believers in San Angelo, Texas. Or Covington, Louisiana. Or Sioux Falls, South Dakota. They’re sure this rally has just begun, and they’re sure they know why.“I hear it every day,” said Jimmy Freeman, a financial adviser at Edward Jones in San Angelo, a city of some 100,000 that’s just east of the booming Permian Basin shale oil fields. “The market’s going up because of Trump. They all think it’s Trump.”Across middle America, in the towns big and small that voted overwhelmingly for Donald Trump, his most ardent, and financially comfortable, backers are opening stock-market accounts or beefing up existing ones, according to interviews with more than a dozen advisers and brokers. They were spurred on by a stream of presidential tweets crowing about, and taking credit for, the gains throughout 2017 and they remain undaunted now as the rally sputters and the tweeting dissipates.“It has really made a difference in attitudes,” said Jimmy Waggoner, an investment adviser with VisionPoint Advisory Group in Sioux Falls. So much so that in Covington, Rob Smith, an adviser at Edward Jones there, said he tries to tap down on the enthusiasm. “I dissuade people from thinking any specific politician or even event will have that much of a long-term positive or negative effect on markets.” They’re not inclined to listen. To those who study market psychology, it’s no stretch that passionate belief in a president would translate into throwing money on the table. Particularly this president, with whom his admirers have a strong bond. “There’s a feeling of identity with Trump,” said Nobel laureate Robert Shiller, an economics professor at Yale University. “The man they identify with is in power and that’s exhilarating.”
Treasury report to weigh in on fintech regulation — A top Treasury Department official on Monday said the administration's forthcoming report on regulating nonbanks will tackle questions around financial technology companies and whether they need to be regulated more like banks. Craig Phillips, counselor to Treasury Secretary Steven Mnuchin, said at a conference sponsored by the Institute of International Bankers, said Treasury is working on the final of a series of reports recommending changes to financial regulation. The last report will address nonbank financial institutions in general, and fintech firms in particular. “We’re currently working on our final report which will cover nonbank financials, and this is an area that will really deal with the evolution of fintech and innovation in financial services, which we expect out in the next couple of months,” he said. Phillips said that the report will consider regulatory shortcomings concerning two broad categories of nonbank financial institutions. The first are traditional nonbank institutions, such as small-dollar lenders, specialty financial institutions, and mortgage originators and servicers. The second are fintech firms centered around marketplace lending, payments and settlement activities for securities.The report will consider “regulatory asymmetries” between fintech firms and regulated institutions, and will be guided by a desire to maintain the innovation of the new fintech firms without creating an uneven playing field between federally regulated and unregulated institutions, Phillips said. Part of that consideration will include the role of state financial regulators as well, and potentially the role of a fintech charter, which was put forth by the Office of the Comptroller of the Currency. But Phillips noted that many nonbank fintech firms have entered into partnerships with banks, so those boundaries between regulated and unregulated institutions are not always so clearly defined.
Wall Street veteran Caitlin Long is turning Wyoming into a haven for crypto - Just as Switzerland has its Crypto Valley, a center of blockchain innovation, so Wyoming might become an epicenter of the new token economy if Caitlin Long has her way. Long, a 22-year veteran of Wall Street who recently stepped down as president and chairman of blockchain startup Symbiont, is a key figure in an effort to introduce a clutch of bills to make the state, currently one of the least friendly for digital-asset businesses, into an ideal environment for them.A former managing director at Morgan Stanley, Long has experience in the legislative arena. Last year, she spearheaded the Delaware Blockchain Initiative, a successful effort to amend Delaware law to allow corporations registered in the state to issues shares of stock on a blockchain. Long and her partners have now introduced five bills in Wyoming, the latest to make sure that cryptocurrency holdings remain exempt from state property taxes. One bill would exempt cryptocurrencies from state money-transmission laws, while the other would exempt so-called "utility tokens," blockchain assets that aren't designed to be either currencies or investments, from both securities and money-transmission laws. The governor of Wyoming, she says, is likely to sign them into law this month.
Initial coin offerings likely need to heed bank secrecy rules -- Issuers and investors in initial coin offerings for digital coins appear to have something else to worry about besides the increased scrutiny of regulators. All startups that accept digital or fiat currencies in exchange for their newly issued tokens are money transmitters, which must be in compliance with bank secrecy and know-your-customer guidelines, according to a newly released letter from the Department of the Treasury. In a letter to Sen. Ron Wyden, D-Ore., dated Feb. 13 but only released Tuesday, a Treasury official said that companies and organizations must comply with laws devised to combat money laundering and the financing of terrorism. To comply, companies have to investigate customers and report suspect transactions to authorities. This interpretation of the Bank Secrecy Act could mean trouble for startups planning ICOs as well as those that have already sold coins, as Treasury's Financial Crimes Enforcement Network could potentially enforce this requirement retroactively, said Peter Van Valkenburgh, director of research at the industry advocacy Coin Center in Washington. While some ICOs have already registered with FinCEN in anticipation of the requirement, many haven't. Violating the requirement could be a felony, punishable with up to five years of jail time. Many states whose regulations of digital currencies are still works in progress could follow Treasury's lead and require ICOs to get money-transmitter licenses, Van Valkenburgh said in a phone interview. "In general it will continue to chill that activity in relation with U.S. purchasers," he said. Startups and individuals issuing coins raised about $4 billion in funds last year alone, according to CoinSchedule. Many of these startups are based overseas, and may not wish to comply with the requirement, while many others are run by a couple of people and may not have the ability to comply.
Bitcoin is based on the blockchain pipe dream - Roubini and Byrne - Predictions that bitcoin and other cryptocurrencies will fail typically elicit a broader defence of the underlying blockchain technology. Yes, the argument goes, more than half of “initial coin offerings” to date have already failed, and most of the 1,500-plus cryptocurrencies also will fail, but blockchain will nonetheless revolutionise finance and human interactions generally. In reality, blockchain is one of the most overhyped technologies ever. For starters, blockchains are less efficient than existing databases. When someone says they are running something on a blockchain, what they usually mean is that they are running one instance of a software application that is replicated across many other devices. Bitcoin is the first, and the biggest, “cryptocurrency” – a decentralised tradeable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person. The required storage space and computational power is substantially greater, and the latency higher, than in the case of a centralised application. Blockchains that incorporate “proof-of-stake” or “zero-knowledge” technologies require that all transactions be verified cryptographically, which slows them down. Blockchains that use “proof-of-work”, as many popular cryptocurrencies do, raise yet another problem: they require a huge amount of raw energy to secure them. This explains why bitcoin “mining” operations in Iceland are on track to consume more energy this year than all Icelandic households combined. Blockchains can make sense in cases where the speed/verifiability trade-off is actually worth it, but this is rarely how the technology is marketed. Blockchain investment propositions routinely make wild promises to overthrow entire industries, such as cloud computing, without acknowledging the technology’s obvious limitations.
The SEC wants to regulate bitcoin, and bitcoin doesn’t like it at all - After months of rumors that US financial regulators might come for cryptocurrencies, the Security and Exchange Commission (SEC) has issued dozens of subpoenas (paywall) and information requests to companies involved in crypto markets. In a statement today (March 7), the SEC argued that digital assets, like coins and tokens offered and sold in initial coin offerings (ICOs), fall within the definition of a “security” under US security laws. That could mean platforms that trade digital currencies would have to register with the SEC. The SEC is the federal agency responsible for protecting investors and keeping order in markets. All of the national securities exchanges, like the New York Stock Exchange, Chicago Stock Exchange, or Cboe Exchange, are registered with the SEC. The SEC is worried investors in bitcoin and other cryptocurrencies think they’re getting the protections and benefits of a registered exchange, when they’re not. “Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange,” said the SEC in a statement on its website. “There is no reason to believe that such information [on digital currency platforms] has the same integrity as that provided by national securities exchanges.” News of the probes and the SEC statement chilled markets. After today’s announcement, bitcoin prices fell 9%.
SEC Subpoenas 80 Cryptocurrency Firms, Including TechCrunch Fund - The U.S. Securities and Exchange Commission (SEC) has subpoenaed 80 cryptocurrency companies, including the $100 million cryptofund of TechCrunch founder Michael Arrington, according to CNBC. Arrington told CNBC Thursday that he has received a subpoena, as has every cryptofund he has spoken to. Arrington said he has no problem with the subpoena. He said the government has to figure out its rules for the market to follow. It remains undetermined whether securities laws apply to digital coins. While the SEC has said digital coins are subject to regulations, it has not indicated how digital coin developers can comply with the regulations. As a result, cryptocurrency firms have had to rely on lawyers to distinguish their companies from cryptocurrency scams. In some cases, cryptocurrency companies have chosen to ban U.S. investors from participating in their offerings on account of the legal uncertainties. The SEC has sought more information about cryptocurrencies in the last year as the market has drawn billions of dollars. This past Wednesday, The Wall Street Journal reported the SEC has issued scores of subpoenas regarding new digital coins. Jason Gottlieb, a partner and head of the cryptocurrency litigation team at Morrison Cohen, said SEC offices in New York, Boston and San Francisco has issued subpoenas. Another source confirmed these locations. Gottlieb, who is representing PlexCorps, a company facing SEC fraud charges, said the overall SEC investigation will continue throughout the year. A source claimed about 80 firms have been subpoenaed thus far. The SEC did not respond to a CNBC request for comment. SEC investigations, along with regulatory uncertainty, have driven some cryptocurrency activities offshore, Arrington said. He said it is a shame that the U.S. has “frozen itself.” From an investor’s point of view, Arrington said he has become more interested in projects from China and nearby Asian countries, characterizing them as “uniformly high quality.”
How would regulators react to Amazon-JPM checking partnership? - The negotiations between Amazon and big banks like JPMorgan Chase and Capital One to offer a checking-account-like product pose significant questions for regulators about the e-commerce giant pushing further into the banking space. Amazon is hardly new to the financial world. It already offers a payments system through third-party websites, called Amazon Pay, and it has a cobranded credit card with JPMorgan. Additionally, a partnership like the one it is reportedly contemplating is not a novel approach. But the potential scale of Amazon and JPMorgan joining forces would embed Amazon deeper into the banking system and raises questions in terms of how Amazon will be overseen by federal financial regulators. “If Amazon got in trouble, what happens to the deposits? I think this poses yet another challenge to the insured depository system," said Cam Fine, president of the Independent Community Bankers of America. Bloomberg News Following is a rundown of early questions, the answers to which are likely to depend on how the partnership is structured, if it happens at all. The biggest difference in determining how an Amazon partnership is regulated will depend on whether the company or the bank owns the customer data and therefore, the customer. That has an impact on which regulations apply. If the bank “owns the customer,” then “the rules governing banks protect the consumer,” said Karen Shaw Petrou, managing partner of Washington-based financial services consultant, Federal Financial Analytics. “If the bank doesn’t own the customer, then the rules — not just the consumer protection rules but the safety and soundness rules — are both different.” Very few details have been released about the negotiations, which were first reported by The Wall Street Journal, but many observers said if Amazon owns the consumer data, it would give the tech giant far greater access into consumer financial behaviors, beyond their shopping behaviors. Banks have greater access into the debts and assets of a consumer, for example. Amazon “knows what sweaters I like and what I feed my dog but they don’t know how rich or how poor I am,” Petrou said. “They don’t know what I own and with that data [from Chase], matching it with publicly available data, they would be far more powerful than they already are.”
Five takeaways from Amazon’s flirtation with checking – Here we go again!If the news Monday that Amazon might be teaming up with a large bank on a major endeavor felt familiar, you were correct. Several weeks ago, Amazon and JPMorgan Chase sent a flutter through the health care, banking and payments worlds when they announced that they were two of the key players in a joint venture that would somehow ( the details were a little vague) seek to drain the expense of out employer health plans and improve patient care. Then came the report Monday that Amazon had put out requests for proposal to banks to power an Amazon-branded checking account that would be aimed at young consumers and the unbanked. The details were even vaguer this time, and Amazon reportedly could select JPMorgan, Capital One Financial, another bank or perhaps several of them.But for banks this Amazon effort was much more a direct threat than the health one — or was it? One read on the situation was that it meant Amazon had decided not to become a bank, as many banking industry officials had long feared, and instead had decided to partner with banks.Still, the more folks mulled the implications in the hours that followed, some fundamental matters became clear. Big banks could be the biggest winners and losers here, because research suggests their customers are the most apt to bank with an Amazon; so whichever big bank or banks get selected could have a leg up on their larger rivals. And there are all kinds of questions about how the banks would make money, and whether Amazon or the bank(s) would be in charge. Here are five takeaways on those issues and more that clarify the stakes and provide guideposts for understanding what happens next.
Wall Street Journal Hyping Amazon Banking: “Ridiculous, Ridiculous, Ridiculous” - Yves Smith - It’s become an unfortunate staple of the times that tech companies regularly get reporters to act as stenographers, even when the companies have too obviously fuzzy ideas about mature industries with high barriers to entry like banking. In the same vein, when the tech company with a hairball scheme is a big name like Amazon or Apple, readers who ought to know better seem to turn off their critical thinking apparatus entirely. That means that rather than yours truly doing a high level shellacking, I have to call in the heavy artillery, in the form of our payments system expert Clive, to go scorched earth. Even then, it seems to take an undue amount of repetition to get across the idea that just because the protagonist has a lot of dough and clever developers does not mean that it can get where it thinks it wants to go without spending vastly more time and money that it would ever be worth. Today’s object lesson is a breathless and suitably vague story in the Wall Street Journal, Next Up for Amazon: Checking Accounts, about Amazon wanting to get into the banking biz. Rest assured, even the headline is wrong unless you accept an awfully liberal definition what Amazon getting into checking accounts would amount to. From the Journal: Amazon.com Inc. is in talks with big banks including JPMorgan Chase & Co. about building a checking-account-like product the online retailer could offer its customers… After several paragraphs about what a gee whiz company Amazon is, we get to this: In banking, however, Amazon appears to be arriving more as a partner than a disrupter. It is too early to say exactly what the product will look like, including whether it would give customers the ability to write checks, directly pay bills, or access to a nationwide ATM network. So there’s no product concept here, just a nebulous belief on Amazon’s behalf that because it gets an absolutely ginormous volume of customer orders and has the interface to payments processors, surely it can leverage that somehow into taking a bigger chunk out of banks. Mind you, it does so to a degree already by offering what is called a co-branded credit card, which runs over a bank’s payment platform (in this case, Chase’s). Now let us turn the microphone over to our Clive:
Wells Fargo Is The Go-To Bank For Gunmakers And The NRA - AS dozens of corporations have bowed to corporate pressure and severed their relationship with the NRA, Bloomberg reports Wednesday that none other than Wells Fargo is the biggest financial institution lending money to the country's two largest gun manufacturers.Not only that, but Wells Fargo also has a long relationship with the National Rifle Association, inherited from banks that Wells took over. The San Francisco-based Wells Fargo created a $28 million line of credit for the NRA and operates the primary accounts for the pro-Second Amendment group, financial documents show. On Valentine's Day, a disturbed teenager left 17 dead when he shot up his former high school in Parkland, Fla. Meanwhile, retailers such as Dick’s Sporting Goods Inc. have implemented stricter gun rules, like increasing the age necessary to buy one, and some companies, like Delta Air Lines Inc., have cut ties with the NRA’s member-benefits program. And Wells, of course, isn't the only bank involved in extending long-term financing to gun manufacturers. Bowing to media pressure, Bank of American has said it would review its relationships with gun makers.Other banks are active as bookrunners for gunmakers, sometimes jointly. Morgan Stanley helped arrange $350 million in debt and TD Securities $332.5 million, according to data compiled by Bloomberg. Bank of America Corp. and JPMorgan Chase & Co. and two other banks each arranged $273.6 million. That’s counting loans and bonds to gun and ammunition manufacturers American Outdoor Brands Corp. and Vista Outdoor Inc. since the day of the Sandy Hook bloodshed. Another gunmaker, Sturm Ruger & Co., currently has no public debt. Remington Outdoor Inc. has debt outstanding, but it was issued before December 2012.TD Securities said the bank condemns violence in any form and shares the public’s outrage over the Florida school shooting. “We strongly support bipartisan efforts aimed at preventing these types of tragedies from happening again.” The bank declined to comment further, citing policy against speaking about customer relationships.In total, the NRA paid $9.9 million in banking fees in 2015 and 2016, according to annual reports filed with the Internal Revenue Service. And since Wells is the biggest lender to several troubled gun manufacturers, the bank will likely be awarded their operations as part of the bankruptcy.
Despite activist pressure on gun makers and sellers, Wall Street has a hard time dumping the gun industry - After the mass shooting and killing of schoolchildren in Newtown, Connecticut, in late 2012, activists made an appeal to Wall Street money managers: sell your stock holdings of gun makers and gun sellers.It was a similar argument activists had made to exert pressure on tobacco and big oil companies. But while their message got a sympathetic ear from several high profile pensions and consumer advocacy groups, in practice it hasn't been so easy for the finance world to dump the gun industry.Indeed, two of the world's biggest money managers, BlackRock and Vanguard, are among the top shareholders of three of the biggest publicly traded gun manufacturers as well as some of the biggest gun retailers.BlackRock, with $6 trillion under management, is the top shareholder of American Outdoor Brands, the renamed Smith & Wesson, with 10.5 percent of shares. It holds 16 percent of Sturm Ruger & Co., 11.9 percent of Vista Outdoor and 9 percent of Orbital ATK.BlackRock and Vanguard are also the top two holders of big gun sellers, including Dick's Sporting Goods, with about 7 percent each, and top three along with State Street Global Advisors among Walmart holders. They have something else in common: BlackRock and Vanguard are among the biggest managers of exchange traded and index funds, which buy all the stocks in a given index in an effort to reproduce its performance. American Outdoor, Sturm Ruger and Vista are in the Russell 2000, while Walmart is on both the S&P 500 and the Dow Jones industrial average.
Kabbage vows to curb lending to gun sellers - Kabbage, an online lender to small businesses, has taken a strong stand on gun control. The Atlanta company said Monday that it will not fund “any businesses that we identify as a seller of firearms or ammunition to individuals under 21 or that sell or manufacture any form of assault-style weapon.” It said it will enforce the policy on existing as well as potential customers “as soon as possible.” “As parents and leaders of Kabbage we simply cannot imagine the grief of families who too often have been stricken by gun violence like the tragedy in Parkland, Florida,” read a statement signed by CEO Rob Frohwein, President Kathryn Petralia and COO Bob Sharpe. “The technology community must work to prevent these horrifying and heartbreaking events from robbing our children of their futures.” In addition to the ban on gun sellers, Kabbage executives also said they would support the Parkland survivors’ March 14 walkout; the company’s offices will close for a time, and employees will be invited to walk out, to demonstrate solidarity with the students and staff staging the walkout to protest gun violence and honor the victims of the deadly shooting at the school in mid-February.The Kabbage leaders further said they will donate $100,000 to a charity chosen by the students of Marjory Stoneman Douglas High School and match up to $250,000 in donations made by employees, customers, friends and family. Frohwein, Petralia and Sharpe said they would start by personally donating $10,000 each.“We call on the broader FinTech, technology and business community to join us in protecting our children from unnecessary harm and championing their voice for change,” the three said in the statement.
Who Gets Rich on America’s Guns? -- The shooting rampage earlier this month at Marjory Stoneman Douglas High School put renewed focus on the firearms manufacturing industry—which, along with ammunitions production, accounts for an estimated $17 billion in revenue. Thousands of students—with those from Parkland, Florida leading the way—have staged walk-outs across the nation to protest the firearms industry, the NRA, and industry’s bought-off politicians. It’s starting to feel like it could be some sort of turning point. As the Parkland students and others think through questions of strategy, tactics,and targets, it’s worth reflecting on who holds power in—and who profits from—the firearms industry. Who are the billionaires and multi-millionaires that are profiting most off of gun sales in the US? Who are the executives and investors? Who holds power over the decisions that are made within the industry? Some of these individuals come from the firearms manufacturing and retail industry itself—for example, top executives in the companies that produce and sell the guns. Others come from Wall Street—the hedge fund billionaires and big money managers that invest in the gun companies. Still others come from the big banks that finance the gun companies. While a lot of focus has been on the NRA, these other corporations and individuals hold a lot of power over the firearms industry. If banks, investors, and retailers felt strongly that the decisions of gun companies were hurting their owns brands, they could exert a lot of leverage—the threat of pulling their credit arrangements and investment stakes, or limiting or ending gun sales—to force change. Understanding the powerful figures behind the gun industry helps provide a potential path for challenging it. We put together a list to help readers make sense of the different players who are profiting from firearms sales in the US.
What Gary Cohn's departure from Trump administration means for banks - — Banks are losing a pillar of stability within the Trump administration with the departure of Gary Cohn as director of the White House’s National Economic Council.While many others within the president's inner circle have quit or been forced out in recent weeks, few directly impacted financial services policy. Cohn is different. The former Goldman Sachs banker helped usher in a tax cut bill, recruited industry friendly regulators and pushed back against protectionist trade policies financial institutions oppose. He also championed a regulatory relief bill for banks that the Senate is in the process of passing.More than that, however, was that banks saw him as a top ally within the Trump administration, one who could deliver results while the president lurched from crisis to crisis. “There has been a mantra ‘In Gary We Trust' on Wall Street and part of that is that because they felt he represented a pro-market view inside the White House," said Ed Mills, a policy analyst at Raymond James. "To the extent he is departing, there would be concern that his view is no longer able to win internally."The impact of Cohn’s departure may also depend on how quickly and who is picked as Cohn's replacement. “This could be a problem for nominations, especially if someone else is named in a reasonably quick matter and clears out the NEC,” said Brandon Barford, a partner at Beacon Policy Advisors. “Then this will have a huge impact on nominations.”
OCC’s Otting will be recused from oversight of five banks, agency says — Comptroller of the Currency Joseph Otting will not be involved in certain regulatory matters related to five banks with which he has ties.Otting will be recused from certain matters involving two banks where he previously held leadership roles, CIT and U.S. Bank, according to an internal staff letter that the Office of the Comptroller of the Currency released to reporters Wednesday. The other three banks are Central Bank in Lexington, Ky., UBS Bank USA and MUFG Union Bank.The letter said Otting will bow out of "particular matters involving specific parties in which he knows one of the ... entities is a party." Otting specifically cannot get involved in the pension units of U.S. Bank due to his investment as a former employee, as well as at MUFG Union Bank, where Otting worked in the eighties and nineties and where his wife has a pension. The recusal for those two banks only pertains to pension-related matters."Examples of particular matters involving specific parties include examinations, enforcement actions, contracts, and litigation," the letter, written by Ethics Counsel Jennifer Dickey, said. "Though uncommon, specific party matters may also include policies, regulations, or legislation narrowly focused on one or a few institutions."Otting was an executive at U.S. Bank, where he worked during the early 2000s. He later served as CEO of OneWest Bank in California, which was merged into CIT in 2015.
Yielding to political pressure is slippery slope for banks -- Three recent issues in the news — energy infrastructure, marijuana and guns — illustrate the challenge the banking industry is facing as political pressure on all sides forces new considerations of risk and due diligence as part of any business or investment decision. First, on energy and the environment, environmental activists are pressuring banks to divest from pipeline and other energy infrastructure projects. This type of demand is a relatively new tactic to undermine not just companies producing oil and gas, but those firms that are transporting it as well. European and U.S. banks are facing unmitigated reputational risk, and even physical intimidation, due to their business decision to finance and support this important economic sector. Activist pressure has also led cities to remove funds from certain banks and even consider creating city-run banks as an alternative to those that are expected to deliver financial performance for investors, suggesting that this pressure will not soon relent. Second, when it comes to navigating the regulatory no-man’s land between state laws that legalize marijuana and federal laws that criminalize it, banks are subject to the whims of federal administrations that determine policies affecting whether they can serve their customers. Companies operating or investing in this sector find themselves unable to find a bank to serve their needs. In addition, small community banks in states where marijuana is legal are finding themselves turned down for access to national banking networks, further exacerbating an already ambiguous position that will not become clearer until there is a policy solution.Lastly, in light of the tragic school shooting in Parkland, Fla., banks are being discussed as an answer to the contentious gun control debate. Where legislators have been unable to pass laws that some hope might prevent troubled students from getting weapons, a New York Times columnist has suggested the financial industry can change its "terms of service to say that it won’t do business with retailers that sell assault weapons, high-capacity magazines and bump stocks," thereby circumventing traditional routes of policymaking entirely. It is a sign of the times that chief executives in the industry are contemplating these ideas, but those that do so need to recognize that every action has a reaction, and activist demands on business may only increase until their objectives are completely achieved.
Crapo, Hensarling lead court brief supporting Mulvaney as CFPB head -- — Over 100 Republican lawmakers filed a legal brief Friday backing Mick Mulvaney in the lawsuit challenging his appointment as acting head of the Consumer Financial Protection Bureau. The 38 senators and 75 House members — led by Senate Banking Committee Chairman Mike Crapo, R-Idaho, and House Financial Services Committee Chairman Jeb Hensarling, R-Texas — said President Trump had legal standing to appoint Mulvaney despite deputy CFPB Director Leandra English's claim that she was the rightful acting director. A federal judge denied English's claim that she automatically became head of the agency after the departure of former CFPB Director Richard Cordray. The case is now being heard at the U.S. Court of Appeals for the D.C. Circuit. "The problem with the CFPB isn’t who’s running it, the problem is the CFPB and its creator, the Dodd-Frank Act,” said House Financial Services Committee Chairman Jeb Hensarling, R-Texas. English argues that the Dodd-Frank Act elevates the deputy director to head the agency, but the Trump administration has cited the Federal Vacancies Act as providing the authority to install Mulvaney as the acting director."It is English’s argument — which would dispense with the requirements of the Federal Vacancies Reform Act — that threatens Congress’s prerogatives by upsetting the Constitution’s finely calibrated balance between the President’s appointment power and Congress’s role in that process,” Republican lawmakers said in their amicus brief. In their brief, they noted that the CFPB’s own general counsel came to the conclusion that Trump could pick Mulvaney to lead the bureau.“Further, from the first day of his tenure, Acting Director Mulvaney has enjoyed the recognition of CFPB staff, consistent with the direction of the CFPB’s General Counsel that ‘all Bureau personnel act consistently with the understanding that Director Mulvaney is the Acting Director of the CFPB,’” the brief said.
CFPB asks industry to weigh in on rulemaking process -- The Consumer Financial Protection Bureau issued a request for information Wednesday about certain "discretionary aspects" of the bureau’s rulemaking processes that are not already required by law.The CFPB said it is looking for input about both the "positive and negative aspects of the bureau's processes" for writing rules, including its outreach and information-gathering efforts, consultations with tribal governments and convening of advisory panels to weigh the impact of rules on small businesses. In its request, the CFPB said it is not seeking input on "the content of any particular proposed or final rule." Rather, the agency wants data on "the impacts and costs of participation in rule-makings." The agency also wants information on how rule changes might affect consumers or otherwise show some "public benefit."The request is part of a broad public review of the agency by acting CFPB Director Mick Mulvaney, who issued the first "call for evidence" in January to examine nearly every aspect of the bureau's operations.The request for comment on the CFPB's rulemaking functions is the seventh of a dozen requests that Mulvaney has issued so far. The initial phase was a request for input about civil investigative demands, or CIDs, which are issued to companies during enforcement investigations. The process has allowed companies that were targets in investigations by former CFPB Director Richard Cordray to speak their minds about the process. It remains to be seen what can be changed in the CFPB's rulemaking processes given that many elements are required by law. The Dodd-Frank Act authorizes the CFPB to prescribe rules to carry out and administer 19 different federal consumer protection statutes.
Mulvaney’s idea for curbing CFPB’s clout: Hand it to other agencies - In Washington, federal agencies — no matter which political party controls the government — rarely give up their power. But if acting Consumer Financial Protection Bureau Director Mick Mulvaney has his way, his agency would effectively become a backup regulator, ceding authority over virtually every firm for which it has jurisdiction to other state and federal authorities. In the past week, Mulvaney has made two speeches to different audiences in which he discussed his plans. On Feb. 28, he told a collection of state attorneys general that he expects them, not the CFPB, to take the lead on enforcement of violations of consumer protection laws against financial firms. A day later, he said the Office of the Comptroller of the Currency and the Federal Reserve should take the lead on supervisory matters when it comes to banks under their purview. Taken together, it's clear Mulvaney envisions an agency that takes a back seat to other authorities, rarely stepping out in front. "He's saying the CFPB is not going to be leading the charge, but that the states and prudential regulators will be in the vanguard, and the CFPB will not be the leader it was," said Kathleen Ryan, a partner at Akerman and a former deputy assistant director for the CFPB's Office of Regulations. Since 2004, there has been a power shift toward states and now state attorneys general have become far more visible defenders of consumers' rights. That is expected to continue further with the CFPB's new Republican leadership.Joe Jacquot, a partner and business attorney at Foley & Lardner and a former chief deputy attorney general of Florida, says Mulvaney's strategy is a breath of fresh air. "It could be seen as refreshing, that here's someone that is not consolidating power," said Jacquot. "He believes in the structure of federalism and that state AGs have a better sense of what's happening on the ground." Mulvaney's views are closely aligned with the Trump administration's emerging regulatory strategy, described by Deputy U.S. Attorney General Rod Rosenstein last week, as one of "self-reporting and cooperation" by regulated companies.
The Supreme Court Case That Could Give Tech Giants More Power - NYT - Big tech platforms — Amazon, Facebook, Google — control a large and growing share of our commerce and communications, and the scope and degree of their dominance poses real hazards. A bipartisan consensus has formed around this idea. Senator Elizabeth Warren has charged tech giants with using their heft to “snuff out competition,” and even Senator Ted Cruz — usually a foe of government regulation — recently warned of their “unprecedented” size and power. While the potential tools for redressing the harms vary, a growing chorus is calling for the use of antitrust law. But the decision in a case currently before the Supreme Court could block off that path, by effectively shielding big tech platforms from serious antitrust scrutiny. On Monday the Court heard Ohio v. American Express, a case centering on a technical but critical question about how to analyze harmful conduct by firms that serve multiple groups of users. Though the case concerns the credit card industry, it could have sweeping ramifications for the way in which antitrust law gets applied generally, especially with regards to the tech giants. The case was first brought by the Justice Department against American Express, Visa, and Mastercard for imposing anticompetitive restrictions on merchants. The credit card industry is a classic case of oligopoly. Despite involving millions of merchants and hundreds of millions of cardholders, the credit card business is controlled by four firms. Merchants who need payment networks lack any real bargaining power and have been stuck paying high rates to the oligopoly — steeper costs that ultimately get passed on to consumers.
RBS tally for RMBS settlements reaches $6 billion - Royal Bank of Scotland Group has agreed to pay $500 million to the state of New York to settle a probe into its marketing and sale of toxic residential mortgage-backed securities before the financial crisis, moving the government-owned lender another step closer to resolving a series of costly U.S. investigations. The deal between RBS and New York Attorney General Eric Schneiderman boosts the bank’s RMBS settlement costs to $6 billion in less than a year. In July 2017, the Edinburgh-based lender agreed to pay $5.5 billion to the U.S. Federal Housing Finance Agency to resolve a parallel investigation.A separate probe by the Justice Department is still pending. RBS will pay New York $100 million in cash and $400 million for residents who were hurt by the housing crash, Schneiderman said Tuesday. The deal boost’s New York’s RMBS recoveries from a half dozen banks to $3.7 billion, Schneiderman said.JPMorgan Chase and Bank of America previously paid $1 billion and $800 million respectively to settle New York’s investigations. Citigroup, Morgan Stanley and Goldman Sachs also settled. A message left with RBS’s press office after regular business hours in the U.K. wasn’t immediately returned.RBS still has exposure on the RMBS issue. Federal prosecutors in Boston have investigated the bank and explored the possibility of bringing charges against individual employees. People familiar with the investigation told Bloomberg last year that a settlement was close, but that turnover among senior officials at the Justice Department could slow the process. Under the New York deal, RBS admitted to selling investors RMBS that were backed by mortgage loans that didn’t "materially comply with underwriting guidelines," the attorney general said.
Commercial mortgage delinquencies lower as economy improves -- Commercial and multifamily fourth-quarter mortgage delinquency rates improved for most investor types compared to one year prior as the U.S. economy continued its recovery. Across the board, delinquency rates in each group were well below their respective peaks in 2011 or 2012. The MBA aggregates delinquency rates for five investor groups that hold more than 80% of the commercial and multifamily debt outstanding. However, because the sources for the data measure delinquencies differently, the information is not comparable across the groups. The largest year-over-year improvement in delinquencies was for loans included in commercial mortgage-backed securities, at 4.08% with payments which were 30 days or more late, including those loans in real estate owned status. This was 45 basis points lower than the 4.53% delinquency rate in the fourth quarter of 2016. Fannie Mae was the only investor type that had an increase in loans that were 60 days or more delinquent compared to the fourth quarter of 2016, a rise of 6 basis points to 0.11%. This is the highest fourth-quarter delinquency rate since 2012. There was a 1-basis-point year-over-year drop at Freddie Mac, to 0.03%.For commercial and multifamily loans held by banks and thrifts, the 90-day delinquency rate was at 0.51%, down 9 basis points from the previous year.Life insurers reported that 0.03% of their commercial and multifamily mortgage investments were 60 days delinquent, down 1 basis point from the fourth quarter of 2016.
Competition may force CMBS issuers to pursue higher LTV loans - Growing competition may prompt commercial mortgage-backed securities issuers to accept higher loan-to-value ratios in their deals. "Many market participants believe that increased conduit leverage is required for the CMBS market to effectively compete for future commercial real estate loans and maintain CMBS conduit issuance at sustainable levels," Fitch Ratings analysts wrote in a report.Although commercial mortgage leverage has been falling, the shift could put pressure on mortgage performance. If underwriting loosens in the commercial mortgage-backed securities market and leverage rises, expected losses from loans could rise, according to Fitch's models. A CMBS deal with multiple borrowers and an adjusted 108% loan-to-value ratio has a 4.7% expected loss rate. In comparison, 125% LTV equivalent has an 8.6% expected loss rate, according to the report by Fitch analysts Ryan Frank, Robert Vrchota, Christine Hartnett and Huxley Somerville.But the increase may not be that substantial. A more moderate increase with a less dramatic effect on expected losses also is possible, according to the report.If LTVs rise, it will mark a change in direction for the market. LTVs have fallen slightly in recent years due to influences such as risk retention requirements. In addition to potentially higher LTVs, higher interest rates could put pressure on the commercial mortgage performance this year. However, "interest rates on most commercial property types could increase to 5% (4.5% for multifamily and 6% for hotel) before modeled losses are affected," according to Fitch.Overall, CMBS delinquencies have declined in recent months, but the decreases have been driven largely by more loosely written legacy product that has been running off.
Regulators need to step up their game to stop tech-based discrimination - Slowly but surely, algorithms are taking over our lives.From the news we see on Facebook and Twitter, to where we buy our groceries, to the movies we watch on Netflix, technology-driven processes are gaining sway over the decisions we make each day. Algorithms are also taking over our financial lives, and in the process, are helping to increase inequality and undermine the fabric of our society.In the context of financial services, in theory, automated decision-making makes it easier and more efficient for financial institutions to offer products and services tailored to a variety of prospects and customers. Lenders can use algorithms to decide whether we can buy a home in a neighborhood with good schools, obtain a credit card that affords us greater flexibility in managing our finances or open a bank account instead of paying onerous check-cashing fees. This sort of innovation is not inherently bad, but it can have bad consequences. For one thing, it can be used to circumvent fair lending laws, which prohibit discrimination based on race, color, national origin, sex, age and other characteristics. In fact, it’s already happening. Online lenders and traditional lenders are using technology, statistics and data science to create underwriting models that do not incorporate these factors but produce the same results as if they did. Imagine a bank agreed not to include skin color in its lending decisions — “We would never…!” — but included hundreds of factors in its algorithms, like what magazines one subscribes to, what brands someone frequently buys, what websites he or she visits and what music someone listens to. Those factors might very well predict a lender’s likelihood of repaying a loan — but they might also have the effect of excluding, for example, African-Americans. Imagine the computer spits out an algorithm based on Facebook “likes”: Make loans to people who listen to country, but not to people who listen to hip hop. Because a computer selected and weighted those factors, banks claim no one’s to blame — and because the algorithm does not expressly use “black,” the model doesn’t violate the law. Unfortunately, the only ones being fooled by this model are the regulators. They lack the tools and personnel necessary to keep up.
HUD Secretary Ben Carson praises housing measures in tax bill - — Housing and Urban Development Secretary Ben Carson on Monday praised measures in the recent tax reform legislation that help foster affordable housing. At a meeting of the National Council of State Housing Finance Agencies, Carson said low-income tax credits and private activity bonds, preserved in the bill Congress passed in December, are key to the development of affordable housing. But Carson also a touted the bill's creation of "Opportunity Zones" to stimulate investment in low-income census tracts. Those zones allow investors to sell an "investment with an unrealized capital gain and invest the proceeds" in designated Opportunity Zones selected by state governors, Carson said. "More than $2 trillion in capital gains could be unlocked for investment in these zones, and affordable housing stands to be major recipients of this private capital," Carson said.
FHA lenders warming up to reverse mortgages for new home purchases - Given housing inventory shortages that have created fierce competition for homes, new-construction purchase lending has been hot almost everywhere except the reverse mortgage market. While more than half of recent traditional home loans tracked by the Mortgage Bankers Association are purchase originations, less than 10% of the Home Equity Conversion Mortgages processed by ReverseVision's origination system get used by borrowers to buy a house.But now that the Federal Housing Administration and a bank that specializes in new-home and construction financing have come up with ways to address a timing concern that has held back the use of HECMs to purchase new construction, things could change.The HECM for Purchase, which allows seniors to take out a reverse mortgage on the property they are buying to pay for it, hasn't been as widely used as it could be in the new construction market because the loans require a certificate of occupancy or equivalent. The requirement made it difficult for the borrower to get the funds in time to pay for the new home and the complication is off-putting to real estate agents."Most Realtors really didn't use the HECM for Purchase because of the confusion as to whether it's going to close on time," said Rick Davis, a senior vice president at Fidelity Bank in West Des Moines, Iowa. But an FHA bulletin last fall gave lenders who typically wouldn't even start applications until they had the certificate of occupancy a little more leeway. The clarification suggests borrowers can start the application before the certificate of occupancy is issued, before or after counseling. However, the loan can still not be submitted to the FHA for endorsement until the certificate of occupancy or equivalent is available. "Prior to the change, builders would need to carry the interest on a newly constructed home for an extra 30 days or more for buyers using a HECM for Purchase loan,"
Mortgage brokers are making a comeback, but big banks are staying clear - A decade ago, the wholesale origination channel was in full meltdown, a nuclear waste pile that few lenders wanted to be associated with.Today, the four large bank mortgage lenders still keep their distance. None of them have a direct wholesale lending channel, though as correspondent aggregators, they will buy brokered loans sold to them by other wholesalers.But for small and midsize lenders — depositories and independent mortgage bankers alike — wholesale lending has again become an attractive option to expand residential real estate lending. The shift comes at a time of soaring costs and an originations market expected to decline for the second straight year. This increased flow of capital to the wholesale channel has sparked a renaissance for mortgage brokers. Employment in the sector peaked at 148,200 workers in April 2006, before falling to a post-crisis trough of 55,200 in June 2011. Since then, brokers have been on the rebound, growing to 94,000 in December 2017, according to the Bureau of Labor Statistics.The mortgage broker business never fully went away after the crisis. But high compliance costs, combined with fewer outlets to fund loans and securitize them, changed the economics of the business. It became difficult, if not impossible, for many of the smaller broker shops to remain in business. But now, the industry is taking a fresh look at mortgage brokers as it searches for ways to lower its own origination costs and increase market share.
Black Knight Mortgage Monitor: Recent Increase in Rates Cuts Potential Refinance Population by 40% Black Knight released their Mortgage Monitor report for January today. According to Black Knight, 4.31% of mortgages were delinquent in January, up from 4.25% in January 2017. The increase was primarily due to the hurricanes. Black Knight also reported that 0.66% of mortgages were in the foreclosure process, down from 0.94% a year ago. This gives a total of 4.97% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Homes in Lowest Price Tiers Continue to See Greatest Appreciation, Tightest Affordability The spike in 30-year fixed mortgage interest rates also had the effect of cutting the population of borrowers with interest rate incentive to refinance by nearly 40 percent in 40 days. Approximately 1.4 million borrowers lost the interest rate incentive to refinance in just the first six weeks of 2018. This leaves 2.65 million potential candidates who could still both benefit from and likely qualify for a refinance at today’s rates, the smallest that population has been since late 2008, prior to the initial decline in rates during the recession. This represents another challenge to a consistently shrinking refinance market. Refinance lending declined significantly in 2017, with the total number of originations down 29 percent, and total volume down by $355 billion, a 34 percent year-over-year decline. This graph from Black Knight shows the Black Knight's estimate of the number of refinance candidates.
Mortgage credit availability down as an investor changes programs - Loan program revisions made by one large conventional mortgage investor led to a decrease in total residential home finance credit availability in February. February's Mortgage Credit Availability Index was 180.7, compared with 182.9 in January and 177.8 for February 2017, according to the Mortgage Bankers Association. January's value was the third-highest since the MCAI was introduced in June 2013, although using historical data for the calculations, the index was much higher during the mortgage boom period of the mid-2000s. "A change in program offerings from a single large investor in the conventional space was responsible for much of the net decline," Lynn Fisher, the MBA's vice president of research and economics, said in a press release. "The decline in February returned the jumbo component index to levels just above year-end levels, and the conforming component index to levels just above last October. The government component index continued along the same modest downward trajectory that it has been on for nearly a year." The conventional MCAI was down by 2.5% from January and is further broken down into two components: the conforming MCAI, which was down 2.1% from the previous month; and the jumbo MCAI, which was down by 2.8%. There was a much smaller decline in government program offerings, as that MCAI component was down just 0.2%.The month-to-month decline in February continued a pattern since September where investors made more products available for the month but pulled back the following month.
Amazon Sets Off To Become America's Biggest Mortgage Lender - First it monopolized the online retail space; then it made a dramatic appearance in the bricks and mortar grocer sector with its acquisition of Whole Foods, and lately it has been preparing to take on both the pharmaceutical & healthcare sector, and even banking. And it's only just starting, because as Housing Wire notes, Amazon is now looking to get into the mortgage lending business, and not just get into it but - in standard Bezos operating procedure - dominate it thoroughly while crushing, humiliating and bankrupting all competition. The company for which barriers to entry simply do not exist, was first reportedly planning on starting with offering checking programs first, then move into the debt product space after. And now, Housing Wire confirms that Amazon is currently looking to hire someone to lead their newly-formed mortgage lending division.Here, a humorous aside from the report author, who refuses to provide the identity of the mortgage lender firm that Amazon has targeted:Due to non-disclosure agreements, we probably shouldn’t reveal their identities. After all, with Amazon planning a move into mortgage lending, it’s best we work with them and not against them. Am I right?... but gives the following hint:We can say that if you look at the top 10 HMDA lenders and pick out the nonbanks, that’s where Amazon is recruiting their talent.... and adds that "one person we spoke to turned down the job, but couldn’t say why."We are confident, however, that the next person Jeff Bezos speaks about the role of starting up Amazon's mortgage lending division, will be delighted to accept. The timing of Amazon's entrance into the highly competitive sector is hardly coincidental: last month we reported that America's formerly largest mortgage lender, Wells Fargo, just lost its title to Quicken: Quicken revealed that it originated $25 billion in home loans during the quarter, compared with Wells Fargo's $23 billion in home mortgages. Wells is the country's leading bank in home mortgages; Bank of America and JP Morgan Chase & Co. reported $13 billion and $11 billion that quarter, respectively. In other words, as of this moment, an "online" service is the most popular provider of mortgage loans in the US. It is this niche that Bezos has realized provides a major opportunity for Amazon, and he is not shy of making it clear that in just a few years, your mortgage lender will be none other than Jeff Bezos as Amazon continues on its unstoppable crusade of intergalatic domination.
Mortgage interest rates push higher on market volatility -- Mortgage rates increased for the ninth consecutive week, moving in reaction to bond and stock market volatility. The 30-year fixed-rate mortgage averaged 4.46% for the week ending March 8, according to Freddie Mac. This was up from last week when it averaged 4.43%. A year ago at this time, the 30-year FRM averaged 4.21%."The 10-year Treasury yield has been bouncing around in a narrow 15-basis-point range for the last month. While the yield on the 10-year Treasury is currently below the high of 2.95% reached two weeks ago, mortgage rates are up for the ninth consecutive week. The U.S. weekly average 30-year fixed mortgage rate rose 3 basis points in this week's survey, its highest level since January 2014," Len Kiefer, Freddie Mac's deputy chief economist, said in a press release.
CoreLogic: House Prices up 6.6% Year-over-year in January -- The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic Reports Home Prices Rose More Than 6 Percent Year Over Year for the Sixth Consecutive Month in January CoreLogic® ... today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for January 2018, which shows home prices rose both year over year and month over month. Home prices nationally increased year over year by 6.6 percent from January 2017 to January 2018, and on a month-over-month basis home prices increased by 0.5 percent in January 2018 compared with December 2017,* according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to increase by 4.8 percent on a year-over-year basis from January 2018 to January 2019, with a 12-month increase of more than 7 percent projected for California, Florida, Nevada and Oregon. The CoreLogic HPI Forecast is a projection of home prices that is calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Homes with a purchase price less than 75 percent of the local area median had price growth of 9.0 percent during the year ending January 2018. Homes that sold for more than 125 percent of median appreciated 5.3 percent over the same 12-month period. Thus, first-time buyers are facing acute affordability challenges in some high-cost areas.” CR Note: The YoY increase has been in the 5% to 7% range for the last couple of years. This is towards the top end of that range. The year-over-year comparison has been positive for almost six consecutive years since turning positive year-over-year in February 2012.
30 Year Mortgage Rates at 4.5% to 4.625% From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Strong, But End The Day HigherMortgage rates ended higher today, after financial markets reacted to developments in last week's tariff-related news. Last Thursday, stock prices and interest rates fell in response to the tariff announcement because investors figured it ran the risk of doing more economic harm than good. In general, economic weakness/risks/fear tends to push rates lower. Today, congressional leaders made statements that effectively opposed the tariffs as written. In fact, one Republican source said not to rule out "potential action" in the near future if Trump continues with the Tariff plan. Much like the initial news hurt stocks and helped rates last week, the potential reversal or mitigation of that news did the opposite today. Stocks prices and bond yields rose in concert. In general, when bond yields rise enough during the day, mortgage lenders will adjust their rate sheets for the worse (a so-called "negative reprice). Most lenders repriced today, taking rates to higher levels in the early afternoon. [30YR FIXED - 4.5-4.625%] Here is a table from Mortgage News Daily: Home Loan Rates View More Refinance Rates
MBA: Mortgage Applications Increase Slightly in Latest Weekly Survey --From the MBA: Mortgage Applications Slightly Increase in Latest MBA Weekly Survey: Mortgage applications increased 0.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 2, 2018. The previous week’s results included an adjustment for the Washington’s Birthday (Presidents’ Day) holiday.... The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index increased 13 percent compared with the previous week and was 1 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since January 2014, 4.65 percent, from 4.64 percent, with points decreasing to 0.58 from 0.63 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990.
Spring Home Sales Could Be the Weakest in Years -- The economy is booming, take-home pay is rising and millennials are getting married and having children. Despite all those homebuying catalysts, real-estate agents said this could be one of the weakest spring selling seasons in recent years. The culprits: rising mortgage rates, a new tax law that reduces the incentives for homeownership and a growing weariness among first-time buyers being priced out of the market—all of which are expected to damp demand for homes this year. The next few months are a critical test of the housing market, as buyers look to get into contract before summer vacations and the new school year. About 40% of the year’s sales take place from March through June, according to the National Association of Realtors. With sales volumes expected to be lackluster this year, the relentless price increases of the past few years could lose some steam. That could present opportunities for hardy buyers willing to brave rising interest rates, but make it slightly more difficult for sellers in some pricey markets. “It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers,” said Daren Blomquist, a senior vice president at the housing-research firm Attom Data Solutions. Lawrence Yun, chief economist at the National Association of Realtors, said he expects sales to be flat this spring from a year earlier. About 2.06 million homes were sold between March and June 2017, up from about 2 million in the same period a year earlier, according to the National Association of Realtors. Mr. Yun has predicted sales will remain flat for all of 2018 due to inventory shortages and eroding affordability, as both prices and mortgage rates rise.
Update: Framing Lumber Prices Up Sharply Year-over-year, At Record Prices Here is another monthly update on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs - and now prices are above the bubble highs. This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through February 2018 (via NAHB), and 2) CME framing futures. Right now Random Lengths prices are up 25% from a year ago, and CME futures are up about 45% year-over-year.
There is a seasonal pattern for lumber prices. Prices frequently peak around May, and bottom around October or November - although there is quite a bit of seasonal variability.
Rising costs - both material and labor - will be headwinds for the building industry this year.
Why Trump steel tariff won't hurt housing -- The Trump administration's new tariffs on imported steel and aluminum may raise prices on a variety of consumer and commercial products, but will only put minimal strain on the housing industry.The 25% tariff on steel and the 10% tariff on aluminum are more likely to be a concern for commercial and multifamily construction than the single-family sector, said Tim Rood, managing director at Situs and chairman of consulting firm The Collingwood Group."I think for single-family, imported steel and aluminum are going to contribute a small percentage to the home's cost, but when you talk about multifamily and commercial construction, it's substantially higher," said Rood. But while the American Iron and Steel Institute estimates 43% of steel imports go to the construction industry, very little of it is used in residential construction. Steel frames accounted for less than 0.5% of new single-family houses and about 4% of multifamily buildings, according to Census Bureau estimates.
Leading Index for Commercial Real Estate Increases Slightly in February -- Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Tepid Rise for Dodge Momentum Index in February The Dodge Momentum Index increased 0.5% in February to 146.9 (2000=100) from the revised January reading of 146.2. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The move higher in February was the result of an 8.2% increase in the institutional component, while the commercial component contracted 4.8%. The commercial component has declined for two consecutive months, and while this should not lead to an outright decline in construction activity, it is an additional sign that commercial building construction growth could ease in 2018 in response to rising vacancy rates for offices and warehouses. On the other hand, institutional building construction continues to feed off the massive number of state and local bonds issued for schools and other institutional buildings over the past few election cycles. This graph shows the Dodge Momentum Index since 2002. The index was at 146.9 in February, up from 146.2 in January.
After Record Debt-Fuelled Splurge, US Credit Card Usage Post Sharp Slowdown - After a massive surge in consumer credit in the last three months of 2017, when October thru December saw a massive increase in revolving and non-revolving credit, amounting to a total $73 billion, the Fed reported that 2018 started off with a whimper, with a modest $701 million increase in credit card debt, coupled with a $13.2 billion increase in non-revolving, or auto and student loan, credit in the first month of the year. Revolving credit was the clear outlier, with the monthly increase of $0.7BN far below December's $6.1BN and last January's $934 million, and the smallest increase since February 2015 (excluding the December 2015 series revision). Still, the increase pushed the latest revolving credit total to $1.0298 trillion, a new all time high. Meanwhile, non-revolving credit, which with the exception of one definition change month, has not gone down since 2011, also hit a new all time high of $2.825 trillion, following the latest monthly increase of $13.2 billion, fractionally higher than last month's downward revised $13.1 billion. What about its components? Well, with everything else going for record highs, we doubt it will be a surprise to anyone that both student debt and auto loans hit a new all time high in the quarter ending December 2017, with $1.491 trillion for the former, and $1.12 trillion for the latter (the next monthly update will take place in two months, when the Q1 data is released). The sharp slowdown in consumer credit growth may be the latest red flag for the US economy, which as a reminder ended 2017 with a record surge in credit-funded spending; and now that credit card companies demand payment, US consumers - whose personal saving rate is already near record lows - appear to have retrenched, and have substantially slowed down their credit card usage, which for an economy in which 70% of GDP is consumer spending suggests more negative surprises for Q1 GDP.
"Avoiding The Mistakes Of Our Parents" - Only A Third Of Millennials Have A Credit Card - Nearly a decade has passed since Lehman Brothers collapsed, ushering in the most acute phase of the financial crisis - yet, despite all the time that has passed many millennials remain deeply distrustful of banks and borrowed money, according to a study published by Bankrate.The study found that, while a majority of older Americans own credit cards, only 33% of adults between the ages of 18 and 29 say they have one. That is, even as the economy and job prospects have improved, millions of Americans continue to shun credit - something that is probably related to the massive pile of student loan debt, the bulk of it borne by millennials, who are defaulting in ever-greater numbers. While that figure might seem surprisingly large, it's actually down from two years ago, when Bankrate discovered that two-thirds of young adults said they had no "major" credit cards, defined as cards issued by either American Express, Visa, MasterCard or Discover. In interviews with several "real-life" millennials, Bankrate said they hadn't even considered getting a credit card. Others said they shunned credit cards because of previous financial problems."I’ve never owned nor have ever wanted to own a credit card,” says Kristian Rivera, 25, a digital marketing specialist in New York City.“It wasn’t really a decision that I made, but growing up I was warned of the risks of having a credit card and advised to put off getting one as long as possible.” "We don’t want to make the same mistakes our parents made in the past," Rivera says. "We want to do things smarter and safer." For millions of Americans, the agglomeration of debt that most people have accumulated by early adulthood is forcing them to put off marrying or starting a family. And roughly one-third of adult millennials are still living in their parents' basements.
Thousands More Stores Are Now On The 2018 Retail Apocalypse Death List - Every year, it seems like more and more retail outlets are going out of business, resulting in the loss of jobs and local supplies. Last year, hundreds of stores closed, and this year, even more shops are scheduled to shut their doors for good. This year, in an effort to save their businesses, the following retailers will close hundreds of their stores, according to Fox Business.
- Abercrombie & Fitch: 60 more stores are charted to close
- Aerosoles: Only 4 of their 88 stores are definitely remaining open
- American Apparel: They’ve filed for bankruptcy and all their stores have closed (or will soon)
- BCBG: 118 stores have closed
- Bebe: Bebe is history and all 168 stores have closed
- Bon-Ton: They’ve filed for Chapter 11 and will be closing 48 stores.
- The Children’s Place: They plan to close hundreds of stores by 2020 and are going digital.
- CVS: They closed 70 stores but thousands still remain viable.
- Foot Locker: They’re closing 110 underperforming stores shortly.
- Guess: 60 stores will bite the dust this year.
- Gymboree: A whopping 350 stores will close their doors for good this year
- HHGregg: All 220 stores will be closed this year after the company filed for bankruptcy.
- J. Crew: They’ll be closing 50 stores instead of the original 20 they had announced.
- J.C. Penney: They’ve closed 138 stores and plan to turn all the remaining ones into toy stores.
- The Limited: All 250 retail locations have been closed and they’ve gone digital in an effort to remain in business.
- Macy’s: 7 more stores will soon close and more than 5000 employees will be laid off.
- Michael Kors: They’ll close 125 stores this year.
- Payless: They’ll be closing a whopping 800 stores this year after recently filing for bankruptcy.
- Radio Shack: More than 1000 stores have been shut down this year, leaving them with only 70 stores nationwide.
- Rue 21: They’ll be closing 400 stores this year.
- Sears/Kmart: They’ve closed over 300 locations.
- ToysRUs: They’ve filed for bankruptcy but at this point, have not announced store closures, and have in fact, stated their stores will remain open.
- Wet Seal: This place is history – all 171 stores will soon be closed.
And these are just the people who have announced store closures so far. In an environment hostile to brick and mortar businesses, more are sure to come. Tens of thousands of jobs will be lost.
US Wholesale Inventories Climb 0.8%, But Wholesales Sales Slump 1.1% - Wholesale inventories in the U.S. increased by slightly more than expected in the month of January, a report from the Commerce Department revealed on Friday. The Commerce Department said wholesale inventories climbed by 0.8 percent in January after rising by an upwardly revised 0.7 percent in December. Economists had expected inventories to rise by 0.7 percent compared to the 0.4 percent increase originally reported for the previous month. The bigger than expected increase in wholesale inventories was partly due to a continued jump in inventories of non-durable goods, which soared by 1.8 percent in January after surging up by 1.1 percent in December. Sharp increases in inventories of drugs, petroleum and farm products more than offset notable decreases in inventories of chemicals and paper. The report said inventories of durable goods edged up by 0.2 percent in January after rising by 0.4 percent in the previous month. Increases in inventories of furniture, hardware, and automotive goods were partly offset by a steep drop in inventories of computer equipment. Meanwhile, the Commerce Department said wholesale sales slumped by 1.1 percent in January after climbing by 0.8 percent in December. Sales of durable goods tumbled by 1.4 percent in January after rising by 0.6 percent in December, reflecting sharp decreases in sales of miscellaneous goods, machinery, furniture, and electrical goods. The report said sales of non-durable goods also fell by 0.8 percent in January following a 1.0 percent jump in the previous month. The pullback reflected steep drops in sales of alcohol, farm products, apparel, and chemicals. With inventories climbing and sales falling, the inventories/sales ratio for merchant wholesalers rose to 1.26 in January from 1.23 in December.
AAR: Rail Carloads Declined YoY, Best February Ever for Intermodal -- From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. Total U.S. rail carloads were down 0.3% (2,753 carloads) in February 2018 from February 2017. In what unfortunately seems to have become a pattern, the decline in overall carloads in February was due mainly to declines for coal (down 1.7%, or 5,801 carloads), grain (down 5.3%, or 4,712 carloads), and motor vehicles and parts (down 4.5%, or 3,283 carloads). ... February was another great month for intermodal: weekly average volume was 276,000 containers and trailers, the second highest weekly average for any month in history (behind only October 2017) and easily the highest ever for February.This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA). Light blue is 2018. Rail carloads have been weak over the last decade due to the decline in coal shipments. Total U.S. rail carloads were down 0.3%, or 2,753 carloads, in February 2018 from February 2017. It’s a decline, but it’s a big improvement from January’s 3.4% decline. Total carloads averaged 257,035 per week in February 2018; since 1988, when our U.S. data begin, only 2016 had a lower weekly average in February. For the first two months of 2018, total carloads were down 2.0%, or 45,184 carloads, to 2.245 million, the lowest January-February total since 1988 other than 2016. The second graph is for intermodal traffic (using intermodal or shipping containers): In terms of average weekly volume, February 2018 was the second best month in history for U.S. railroads. Total originations in February 2018 were 1,104,001, up 6.9%, or 70,970 containers and trailers, over February 2017. Weekly average intermodal originations in February 2018 were 276,000. Only October 2017 (279,853 units) was higher. Since February is not typically one of the highest volume months of the year for intermodal, it’s reasonable to expect new intermodal records to be set in the months ahead, especially this coming fall.
Trade Deficit at $56.6 Billion in January --From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $56.6 billion in January, up $2.7 billion from $53.9 billion in December, revised. ... January exports were $200.9 billion, $2.7 billion less than December exports. January imports were $257.5 billion, down less than $0.1 billion from December imports.Both exports and imports decreased in January.Exports are 21% above the pre-recession peak and up 5% compared to January 2017; imports are 11% above the pre-recession peak, and up 7% compared to January 2017.In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $54.76 in January, up from $52.10 in December, and up from $43.94 in January 2016. The petroleum deficit increased in January, and this is the main reason the overall trade deficit increased in January. The trade deficit with China increased to $36.0 billion in January, from $31.3 billion in January 2016.
January Trade Deficit at $56.60B, Up 5.0% MoM --The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $56.6 billion in January, up $2.7 billion from $53.9 billion in December, revised.Exports and imports of goods and services were revised for July through December 2017 to incorporate more comprehensive and updated quarterly and monthly data. In addition to these revisions, seasonally adjusted data for all months in 2017 were revised so that the totals of the seasonally adjusted months equal the annual totals. Today's headline number of -56.60B was worse than the Investing.com forecast of -52.60B. Revisions were made going back to July 2017. This series tends to be extremely volatile, so we include a six-month moving average.
US Factory Orders Tumble In January - Following Durable Goods plunge in January (final data showing worsening non-defense orders), US Factory Orders tumbled 1.4% (as expected) - the first drop in six months. Core Factory Orders disappointed and growth slowed to its weakest since June... Under the hood of orders, some sectors stood out with notable collapses...
- Transportation equipment -10.0%
- Nondefense aircraft: -28.4%
- Defense aircraft: -45.6%
- Mining, oil field machinery: -8.9%
Of course this should not be a surprise as global macro data has serially disappointed this year.
US Steel To Reopen Idle Plant Thanks To Trump Tariffs - Two blast furnaces will be fired back up at the Granite City Works integrated steelmaking plant in Illinois - a process which could take up to four months, and will add approximately 1.4 million tons of steel annually to the U.S. market - generating up to $85 million in pretax income in 2018 for the company. The restarted furnace will require inventories of iron ore, metallurgical coking coal and other ingredients to operate. The site also has another idle blast furnace which could be restarted later. The facility had been idle since December 2015 over what Burritt called unfair trade practices. "If you don't have customers here to sell to and you can't make money, you have to shut them down." Steel producers have been hurt in recent years by increasing competition from foreign competitors, particularly China, that have ramped up production at lower prices.Prices have been rising again in the U.S. in part because of the Trump administration’s discussions over whether to widen tariffs that have been applied piecemeal in recent years. Spot-market sheet-steel prices have risen more about 37% since October to about $810 a ton, according steel-industry price surveys. –WSJ “Our Granite City Works facility and employees, as well as the surrounding community, have suffered too long from the unending waves of unfairly traded steel products that have flooded U.S. markets,” said Burritt. President Trump announced the tariffs on steel and aluminum last Thursday - a move widely credited with the "last straw" in White House economic advisor and former #2 at Goldman Sachs, Gary Cohn. Commerce Secretary Wilbur Ross appeared on CNBC Wednesday with Burritt, where he said the White House is not trying to "blow up the world" with tariffs - indicating that President Trump was open to exempting U.S. trading partners Mexico and Canada under a reworked NAFTA deal. "It's really important that we get this right, and now it's finally happening." "You've got to be able to make stuff in the United States. If you take away our ability to make things, you don't really have a society."
Fuel For The Protectionist Fire: US Trade Deficit Surges, Ex-Petroleum At All Time High -- Coming at a time of heightened trade tensions and fears of an imminent trade war, for once every trader was looking at this morning's international trade report to see if it will pour more fuel on the trade war fire. It did, because according to the BEA, in January the US trade deficit surged 5% to $56.6 BN from $53.9BN in December, worse than the $55.0BN expected, and the biggest deficit going back to 2008. In January, imports were little changed in Jan. at $257.51b from $257.51b in Dec, while exports fell 1.3% in Jan. to $200.91b from $203.61b in December.The report came just hours after Trump once again slammed the US trade deficit, tweeting that "From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!" Looking at the breakdown:
- Exports of goods and services decreased $2.7 billion, or 1.3 percent, in January to $200.9 billion. Exports of goods decreased $3.0 billion and exports of services increased $0.3 billion. The decrease in exports of goods mostly reflected decreases in capital goods ($2.6 billion), in industrial supplies and materials ($1.3 billion), and in other goods ($1.0 billion). An increase in consumer goods ($1.2 billion) partly offset the decreases.
- The largest increase in exports of services was in charges for the use of intellectual property ($0.1 billion). The only decrease was in maintenance and repair services ($0.1 billion)
- Imports of goods and services decreased less than $0.1 billion, or less than 0.1 percent, in January to $257.5 billion. Imports of goods decreased $0.2 billion and imports of services increased $0.2 billion. The decrease in imports of goods mostly reflected decreases in capital goods ($1.3 billion) and in consumer goods ($0.9 billion). An increase in industrial supplies and materials ($2.0 billion) partly offset the decreases.
- The largest increase in imports of services was in other business services ($0.2 billion), which includes research and development services; professional and management services; and technical, trade-related, and other services. The largest decrease was in travel (for all purposes including education) ($0.2 billion
Jan. crude oil imports increased to $13.19b from $11.15b last month, representing 74.8% of total petroleum imports, Commerce Dept. said. What was more troubling than the growing headline number deficit, however, is that the "core" US trade balance remained at all time high, or $49.52BN.
U.S. manufacturing, business spending on equipment slowing - (Reuters) - New orders for U.S.-made goods recorded their biggest decline in six months in January and business spending on equipment appeared to be slowing after strong growth in 2017. Factory goods orders fell 1.4 percent amid a broad decrease in demand, the Commerce Department said on Tuesday. That was the largest drop since July 2017 and followed five straight monthly increases. Factory orders rose 1.8 percent in December. January’s drop in orders was broadly in line with economists’ expectations. Orders surged 8.4 percent on a year-on-year basis. Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, fell 0.3 percent in January instead of declining 0.2 percent as reported last month. Orders for these so-called core capital goods decreased 0.5 percent in December. That was the first back-to-back drop since May 2016. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, slipped 0.1 percent in January instead of edging up 0.1 percent as reported last month. Core capital goods shipments increased 0.7 percent in December. Business spending on equipment is cooling after growing by a robust 4.8 percent in 2017. But it is likely to remain supported as companies are expected to use some of their windfall from a $1.5 trillion tax cut package to buy machinery and other equipment as they seek to boost sluggish productivity. In January, orders for transportation equipment dropped 10.0 percent, weighed down by a 28.4 percent plunge in the volatile orders for civilian aircraft. Orders for machinery dropped 0.4 percent, the biggest decline since October 2016, after rising 0.6 percent in December. Orders for mining, oil field and gas field machinery tumbled 8.9 percent after increasing 5.0 percent in the prior month. Orders for motor vehicles fell 0.5 percent, reversing a 0.4 percent gain in December. Pointing to a slowdown in manufacturing, unfilled orders at factories fell 0.3 percent in January. That was the biggest drop in six months and followed four consecutive monthly increases. Manufacturing inventories increased 0.3 percent. They have risen in 14 of the last 15 months. Shipments of factory goods increased 0.6 percent in January after advancing 0.7 percent in December. The inventories-to-shipments ratio was unchanged at 1.35.
ISM Non-Manufacturing Index decreased to 59.5% in February -- The February ISM Non-manufacturing index was at 59.5%, down from 59.9% in January. The employment index decreased in February to 55.0%, from 61.6%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: February 2018 Non-Manufacturing ISM Report On Business® "The NMI® registered 59.5 percent, which is 0.4 percentage point lower than the January reading of 59.9 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index increased to 62.8 percent, 3 percentage points higher than the January reading of 59.8 percent, reflecting growth for the 103rd consecutive month, at a faster rate in February. The New Orders Index registered 64.8 percent, 2.1 percentage points higher than the reading of 62.7 percent in January. The Employment Index decreased 6.6 percentage points in February to 55 percent from the January reading of 61.6 percent. The Prices Index decreased by 0.9 percentage point from the January reading of 61.9 percent to 61 percent, indicating that prices increased in February for the 24th consecutive month. According to the NMI®, 16 non-manufacturing industries reported growth. The non-manufacturing sector reflected the second consecutive month of strong growth in February. The decrease in the Employment Index possibly prevented an even stronger reading for the NMI® composite index. The majority of respondents’ continue to be positive about business conditions and the economy."
Markit Services PMI: Growth Accelerates in February - The February US Services Purchasing Managers' Index conducted by Markit came in at 55.9 percent, up 2.6 from the final January estimate of 53.3. The Investing.com consensus was for 55.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: Business activity across the U.S. service sector expanded sharply in February, according to the latest PMI data. The upturn in output accelerated to the fastest since August 2017. In addition, greater client demand led to a steep rise in new business, which rose at the strongest pace in almost three years. Capacity pressures intensified as a result of the upswing in demand, with backlogs of work accumulating to the greatest extent since March 2015. Meanwhile, rates of both input and output price inflation accelerated, with the former reaching the fastest since June 2015. [Press Release] Here is a snapshot of the series since mid-2012.
ISM Services Dips But PMI Confirms Soaring Cost Inflation – On the heels of US Manufacturing's stagflationary signals (albeit mixed ISM/PMI headline prints), the US Services sector was also mixed (ISM dipped as PMI spiked) but the latter confirmed signs of significant price inflation (largest monthly rise in aggregate prices since September 2014)In the case of the Services economy, Markit's PMI jumped to its highest level since Nov 2015 but ISM dipped from record highs in January (but was slightly better than expected)...ISM Breakdown
- Business activity rose to 62.8 vs 59.8 prior month
- New orders rose to 64.8 vs 62.7
- Employment fell to 55.0 vs 61.6
- Supplier deliveries unchanged at 55.5 vs 55.5
- Inventory change rose to 53.5 vs 49.0
- Prices paid fell to 61.0 vs 61.9
- Backlog of orders rose to 56.0 vs 51
- New export orders rose to 59.5 vs 58.0
- Imports fell to 50.0 vs 54.0
While ISM shows a modest drop in prices paid, Markit suggests that on the prices front, cost burdens faced by service providers continued to rise in February. The rate of input price inflation accelerated to the fastest since June 2015. Where higher input costs were reported, panellists commonly linked this to higher fuel and raw material prices. Meanwhile, amid larger cost burdens and greater client demand, average charges also rose further as firms protected margins. Moreover, the pace of inflation quickened to the sharpest for five months.
Weekly Initial Unemployment Claims increase to 231,000 -- The DOL reported: In the week ending March 3, the advance figure for seasonally adjusted initial claims was 231,000, an increase of 21,000 from the previous week's unrevised level of 210,000. The 4-week moving average was 222,500, an increase of 2,000 from the previous week's unrevised average of 220,500.Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.
ADP: Private Employment increased 235,000 in February --From ADP: Private sector employment increased by 235,000 jobs from January to February according to the February ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.“The labor market continues to experience uninterrupted growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “We see persistent gains across most industries with leisure and hospitality and retail leading the way as consumer spending kicked up. At this pace of job growth employers will soon become hard-pressed to find qualified workers.” Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is red hot and threatens to overheat. With government spending increases and tax cuts, growth is set to accelerate.” This was above the consensus forecast for 203,000 private sector jobs added in the ADP report.
First Look at February: ADP Says 235K 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 February estimate of 235K new nonfarm private employment jobs, a decrease over February's revised 244K.The 235K estimate came in above the Investing.com consensus of 195K for the ADP number.The Investing.com forecast for the forthcoming BLS report is for 191K nonfarm private new jobs and the unemployment rate to decrease to 4.0%. Their forecast for the February full nonfarm new jobs is (the PAYEMS number) is 200K.Here is an excerpt from today's ADP report press release:“The labor market continues to experience uninterrupted growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “We see persistent gains across most industries with leisure and hospitality and retail leading the way as consumer spending kicked up. At this pace of job growth employers will soon become hard-pressed to find qualified workers.”Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is red hot and threatens to overheat. With government spending increases and tax cuts, growth is set to accelerate.” Here is a visualization of the two series over the previous twelve months.
A Closer Look at Yesterday's ADP Employment Report - In yesterday's ADP employment report we got the February estimate of 235K new nonfarm private employment jobs from ADP, a decrease over January's revised 244K. 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 decreasing in early 2015, with a recent uptick in 2017 into 2018. 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. Another view of the relative trends of the five select industries is an overlay of the year-over-year comparison.
February Employment Report: 313,000 Jobs Added, 4.1% Unemployment Rate - From the BLS: Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining. .. The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported. .. In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 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 313 thousand in February (private payrolls increased 287 thousand). Payrolls for December and January were revised up by a combined 54 thousand.This graph shows the year-over-year change in total non-farm employment since 1968. In February the year-over-year change was 2.281 million jobs. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate was increased in February to 63.0%. 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 increased to 60.4% (black line). The fourth graph shows the unemployment rate. The unemployment rate was unchanged in February at 4.1%. This was well above the consensus expectations of 205,000 jobs, and the previous two months combined were revised up 54,000.
US Private-Sector Employment Surged In February - Hiring at US companies accelerated in February, rising 287,000, the biggest monthly advance in nearly two years, according to the Labor Department. The faster increase translates into the strongest year-over-year rise since last August. The upbeat data gives the Federal Reserve another excuse to raise interest rates at the March 20-21 monetary policy meeting. Today’s results also provide fresh support for arguing that the deceleration in growth in the labor market has bottomed out and is now rebounding. Private-sector payrolls increased 1.8% in the year through last month, marking the strongest annual pace in six months. Using the last several months as a guide, it appears that a new uptrend in annual growth may be underway. The year-over-year change, although firmer compared with recent history, is still a middling rate compared with numbers published over the past year. But the stronger annual pace, which has picked up in recent months, may be a sign that the labor market’s growth rate is reaccelerating after several years of downshifting.Meantime, today’s report clears the path for another rate hike at the FOMC meeting scheduled for later this month. In fact, given the latest numbers it would be surprising if the central bank doesn’t tighten monetary policy.The question is whether President Trump’s embrace of protectionist measures this week will spark a global trade war? If so, will that create new headwinds for the US economy – headwinds that aren’t yet reflected in today’s data? It’s too soon to know, largely because it’s unclear how other nations will respond to the President’s embrace of trade policies. For now, the US labor market continues to expand at a healthy pace. But there’s a new risk factor to consider as foreign governments evaluate how or if to respond to trade tariffs.
February Employment Tops All Estimates - (5 graphs) The February payroll employment numbers crushed all preliminary forecasts (in the 200k ballpark) by increasing 313,000. In addition, January employment was revised up 39,000 from the first estimate and December revised up 15,000 from the second estimate. The increase in private payrolls was 287,000 with government employment rising 26,000. Employment in the goods sector increased 100,000. The only significant decline came in the service producing information sector, declining 12,000 and has seen three consecutive months of declining employment. As in the past most of the employment growth was in the service sector continuing a shift in the structure of the economy that has been on-going for many years. Manufacturing remains relatively flat, well below levels of a decade ago. The more volatile mining and construction sector both improved. Average weekly hours ticked up from 34.4. to 34.5 and average hourly earnings barely changed, rising from $26.71 to $26.75. The increase in average hours implies that workers paychecks increased in the quarter. Average hourly earnings are up 2.6% year over year and the CPI up 2.1% from a year ago (January to January in the case of the CPI). The household survey release reveals a 806,000 increase in the labor force, 785,000 of that from employment and 22,000 more unemployed, leading to almost no change in the 4.1% unemployment rate. Those not in the labor force declined by 653,000. The employment population ratio increased to 60.4%, moving up from historic lows. The strong job growth most likely reflects business optimism because of the tax cuts and regulation role backs. In additional, we have entered a period in which most of the worlds developed economies are growing in sync. The new Fed Chairman Jerome Powell has signaled the he is open to increasing interest rates several time this year. The very strong labor market gives him cover for that view but the modest rise in hourly earnings is a factor that will have to be considered as well.
Jobs report: There’s still room to run in this job market! -- Jared Bernstein -- Payrolls rose 313,000 last month, well above expectations, and the unemployment rate held at 4.1 percent, as wage growth moderated a bit from last month’s pace (up 2.6 percent, yr/yr). Though these monthly data are notoriously jumpy, the out-sized job gains were accompanied by a nice pop in labor force participation rate–up 0.3 percent to 63 percent–suggesting that the hot labor market may be pulling new workers in from the sidelines. If so–if this turns out to be more of a trend than a blip–this has important, positive implications for the increased “supply-side” of the economy, implying more room-to-run than many economists believe to be the case. This was the first over 300K month since July 2016, and the jump in labor force participation comes after the rate was stuck at 62.7 percent since last September. However, both of these values jump around and so our monthly smoother provides a look at the underlying trend in job growth by taking 3, 6, and 12 month averages of the monthly changes.This month, the smoother tells a surprising story. Typically, as economies close in on full employment, we expect the rate of job gains to slow, as the labor market nears its capacity. But the smoother shows the opposite pattern, that of a (slightly) accelerating trend. For example, over the past three months, the average monthly job gains come to 242,000, but over the last 12 months, they amount to a lower 190,000. We should be careful not to over-interpret even these smoothed numbers, but the punchline is that it’s hard to make a case that employment growth is DEcelerating, as would be the case if the economy’s water glass, if you will, were full to the brim. This question of how much room-to-run exists out there is leading, as it should, to close scrutiny of wage growth for signs that job market pressures are pushing up paychecks. The figures below show yearly hourly wage growth (along with a smoother trend) of both all private sector workers and the lower paid 80 percent who are blue-collar or non-managers. The wage pop that spooked markets last month (Jan17/Jan18) was revised down slightly, from allegedly scary 2.9 percent to 2.8 percent. As noted, this month’s wage pace slowed a bit to 2.6 percent. Again, the smooth trend (6-mos average, in this case) in wage growth deserves a close look, and it shows remarkably little acceleration given the persistent tightness of the job market. I’ll discuss why that may be occurring in a moment, but in fact, there’s a bit more there than meets the eye. Taking annualized growth rates of quarterly averages reveals more wage acceleration: 2.9 percent over the past three months compared to 2.5 percent last spring. This suggests perhaps a bit more pressure than the annual growth numbers reveal, which is, of course, what we’d expect at this point. That said, there’s just no story right now, at least in the actual data (as opposed to expectations), of an overly tight job market leading to inflationary wage gains. The figure below shows some of the key indicators from the Fed’s dashboard, including unemployment, the Fed’s guess at the “natural rate” (the lowest unemployment rate consistent with stable inflation), actual inflation (PCE core, the Fed’s preferred gauge), and the Fed’s inflation target of 2 percent.
February jobs report: a blowout! Except (sigh) for wages - HEADLINES:
- +313,000 jobs added
- U3 unemployment rate unchanged at 4.1%
- U6 underemployment rate unchanged at 8.2%
- Not in Labor Force, but Want a Job Now: declined -40,000 from 5.171 million to 5.131 million
- Part time for economic reasons: rose 171,000 from 4.989 million to 5.160 million
- Employment/population ratio ages 25-54: rose 0.3% from 79.0% to 79.3%
- Average Weekly Earnings for Production and Nonsupervisory Personnel: rose $.06 from $22.34 to $22.40, up +2.1% YoY.
- Manufacturing jobs rose by 31,000 for an average of 18,700/month in the past year 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 300 for an average of -17/month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
- the average manufacturing workweek rose 0.2 hours from 40.8 hours to 41.0 hours (reversing last month's decline). This is one of the 10 components of the LEI.
- construction jobs increased by 61,000. YoY construction jobs are up +254,000.
- temporary jobs increased by 26,500.
- the number of people unemployed for 5 weeks or less increased by 228,000 from 2,280,000 to 2,508,000. The post-recession low was set over two years ago at 2,095,000.
- Overtime rose from 3.5 to 3.6 hours.
- Professional and business employment (generally higher- paying jobs) increased by 50,000 and is up +495,000 YoY.
- the index of aggregate hours worked in the economy rose by 0.9%.
- the index of aggregate payrolls rose by 0.6% .
This was a a blowout positive report as to nearly all metrics. All important categories of employment rose strongly, as well as aggregate hours and aggregate payrolls, the employment to population ratio and the labor force participation rate. Among prime age workers, the e/p ratio is now only -0.9% under its 2006 high, although it is still about 2% under its all time high from 1999. Even the "soft" data of the unemployment and underemployment rates is largely explained by the surge in labor force participation -- i.e., more people entering the jobs market to find work. Negatives remain the persistently high number of people who are not even in the labor force but say they want a job now, and the increase in involuntary part-time employment.
"Goldilocks": February Payrolls Smash Expectations, Soar By 313K But Hourly Earnings Miss -- There was good and bad news in the just released payrolls report: on one hand, February payrolls soared by a whopping 313K, smashing expectations of 205K, and well above last month's upward revised 239K (from 200K). This was the biggest monthly increase since October 2015. The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported. The unemployment rate failed to drop to 4.0% as expected, remaining unchanged at 4.1%. Here Goldman was right: the black unemployment rate dropped sharply, back to 6.9%, but even with that drop it was not enough to push the overall unemployment rate higher. The reason for the flat unemployment rate is that the participation rate jumped notably, rising from 62.7% to 63.0%, the highest since September. Now for the not so good news, which confirm that the February wage spike was to be short-lived, as hourly wages rose only 2.6% last month, below the 2.8% expected, with the February outlier of 2.9% also revised lower to 2.8%. This was in large part due to the increase in the workweek to 34.5 from 34.4 last month, which was a major reason for the spike in average hourly earnings in February. The lack of notable wage growth even with the whopping payrolls addition confirms that a lot of slack still remains in the jobs market, or a return to the "Goldilocks" narrative, which as Bloomberg commentator Paul Dobson puts it, "Big beat on payrolls plus miss on average hourly earnings is great news for stocks (cheap labor) and may leave bonds/the dollar little changed." Citi confirms: "This favors the ‘goldilocks’ economy scenario – where the economy is not so hot it’s causing high inflation, but not so cold it’s causing recession concerns. It's "just right." More details from the report: Total nonfarm payroll employment rose by 313,000 in February. Job gains occurred in construction, retail trade, professional and business services, manufacturing, financial activities, and mining…
Jobs Friday! 313K Jobs Added [Higher Than Expected], Labor Force Participation Increases, Wage Growth Declines (Jobless Rate Holds at 4.1%) - The Bureau of Labor Statistics has released their report for February. In a nutshell, 313k jobs were added, Labor Force Participation increased to 63%, but YoY average hourly earnings fell to 2.6%. Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today.Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining. In February, the unemployment rate was 4.1 percent for the fifth consecutive month,and the number of unemployed persons was essentially unchanged at 6.7 million. (See table A-1.)Among the major worker groups, the unemployment rate for Blacks declined to 6.9percent in February, while the jobless rates for adult men (3.7 percent), adultwomen (3.8 percent), teenagers (14.4 percent), Whites (3.7 percent), Asians (2.9percent), and Hispanics (4.9 percent) showed little change. (See tables A-1, A-2, and A-3.) The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.4 million in February and accounted for 20.7 percent of the unemployed. Over the year, the number of long-term unemployed was down by 369,000. (See table A-12.) The civilian labor force rose by 806,000 in February. The labor force participation rate increased by 0.3 percentage point over the month to 63.0 percent but changed little over the year. (See table A-1.) In February, total employment, as measured by the household survey, rose by 785,000. The employment-population ratio increased by 0.3 percentage point to 60.4 percent in February, following 4 months of little change. (See table A-1.) The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in February.
Where The Jobs Were In February: Who's Hiring And Who Isn't - While February was expected to match the January payrolls number at best, the February payrolls print was a blockbuster, blowing expectations out of the water with 313K jobs added, over 785K according to the Household Survey, and a record 1 million full and part-time jobs. So which sectors were responsible for the surge in February employment? The key highlights: virtually every industry with the exception of information, added jobs in February, with a particular focus on construction workers, which added a whopping 61K jobs in February...
- Construction: +61K
- Durable Goods: +32K
- Retail: +50K (Big Building Materials and Department Store non-firing)
- Professional Services: +50K (solid temp workers of +27K)
- Government: +26K (Schools +27K)
- Healthcare: +9K
- Mining: +9K
- Financial Activities: +28K
Commenting on the data, SouthBay research noted the following:
- Construction: Much higher than expected. Homebuilders are hiring and the bottlenecks I saw did not show up in BLS data
- Manufacturing: Higher than expected. My data shows demand is strong but more moderate
- Financial: Higher than expected. More lending and sales agents
What was also quite notable was the sharp, +50,300 jump in retail jobs, which according to the BLS, have wiped out the doldrums from the recent bricks and mortar collapse, and are back to record high. Southbay's summary: "Broad strength. Notable strength in the supply chain (manufacturing, transportation) and consumer (home construction, Lending, Retail, Leisure & Hospitality)" Finally, as Bloomberg shows, 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 February Employment Report -- The headline jobs number at 313,000 for February was well above consensus expectations of 205 thousand, and the previously two months were revised up a combined 54 thousand. Overall this was a very strong employment report. There was probably a boost from weather in February. According to Chicago Fed economist Francois Gourio: "February was significantly warmer than usual - positive weather effect in today's NFP of about 80k according to our state model". Even if weather boosted the NFP report by 80,000 jobs, this was still a strong report. If weather was a factor, we might see some payback in the March report. In February, the year-over-year employment change was 2.281 million jobs. This has been generally trending down, but is still solid year-over-year growth. Wage growth was disappointing in February, and hourly wages for both December and January were revised down. From the BLS: "In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent." The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.6% YoY in February. Wage growth had been trending up, although growth has been moving sideways recently. The number of persons working part time for economic reasons has been generally trending down, however the number increased in February. 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 was unchanged at 8.2% in February. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.397 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.421 million in January. This is the lowest level since April 2008. This is trending down, but remains a little elevated. The headline jobs number was strong, and the unemployment rate unchanged at a low level, overall a very strong report.
United is cutting bonuses and asking employees to enter a lottery for $100,000 -- Employees of United Airlines used to get quarterly bonuses if they hit certain performance targets. Now, they’ll all be entered into a lottery, out of which one—and only one—lucky person will win $100,000. United president Scott Kirby broke the news in a memo on March 2, calling the change “an exciting new rewards program.” He noted that, in addition to the $100,000 award, quarterly prizes would also include luxury vacations, smaller cash awards, and Mercedes-Benz C-Class sedans. Instead of getting individual bonuses each quarter, workers who achieve their performance goals will be all entered into the drawing, from which winners will be chosen at random. The change is not sitting well with employees themselves. Some of them told Chicago Business Journal that Kirby’s memo “quickly ignited a firestorm” among rank-and-file workers, and Bloomberg reports that union members say they’d rather have a shot at bonuses that are much smaller and surer than entry into a chance lottery. “No team-oriented reward should be dictated by lottery,” Craig Symons, the president of United’s flight dispatchers union, said to Bloomberg. Spokespeople for the airline counter that the new program builds “excitement and a sense of accomplishment.” United—which happens to be the lowest-ranking airline in America by customer satisfaction—is gambling with its swap-out of bonuses for a prize drawing: It is assuming that the new program will still motivate its 86,000 employees to want to hit their on-time operational metrics, which ultimately translate to the airline’s output and performance. Studies are divided on whether employee bonuses really work—but there apparently isn’t management research on the efficacy or psychological effect of a lottery.
Income Inequality in the U.S. Is Even Worse Than You’ve Been Led to Believe -- The more the ultra-rich prosper, the less they're burdened with taxes, the greater the benefits for society as a whole. If you're familiar with Republican economic theory of the past 40 years, you've probably heard this line of reasoning. In fact, just the opposite is true. Take it from the world's third richest man, Warren Buffett, who recently noted that between 1982 and 2017, "the wealth of the 400 [richest people in America] increased 29-fold—from $93 billion to $2.7 trillion—while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.” The reality is the United States is now home to some of the worst income inequality in the developed world, and thanks to the recent passage of the Tax Cuts and Jobs Act, this wealth gap will grow exponentially wider. Lowering the corporate tax rate from 35 to 21 percent, the GOP’s massive overhaul of U.S. tax law exemplifies trickle-down economics at its worst. Trump supporters insist that corporations will generously share their gains with employees, but according to economist Robert Reich, “almost all the extra money is going into stock buybacks” rather than wage increases. Because the richest 10 percent now own 84 percent of stock shares in the U.S., he emphasizes, this will do little to nothing to improve the prospects of most Americans. According to the firm Birinyi Associates, a record $170.8 billion worth of buybacks and counting have been announced since the president signed these tax cuts into law. Reich has denounced the legislation for creating greater inequality in a country that is already radically unequal.
Father, daughter found dead in freezing home after seeking help with a broken furnace in Nile, MI -- Temperatures were freezing, and 81-year-old Albert Bivins and his 55-year-old daughter Patricia Bivins had a broken furnace. So the pair visited the Ferry Street Resource Center in Niles, Michigan, to see if someone could fix it for them, according to the South Bend Tribune. The paper reported that temperatures were fluctuating between the high teens and below zero during the period the Bivins visited the non-profit social service agency. But it wouldn’t be an easy fix, WNDU reported. They had to get three repair estimates and fill out papers for a program within the Michigan Department of Health and Human Services before someone from that program could fix it.That program can help those who meet certain qualifications with funding a furnace repair, according to the Tribune. Greg Nasstrom, director of the center, told the Tribune that the father-daughter duo “did not come back in here with any paperwork or any bids.” Police conducted a welfare check at the behest of worried neighbors, and the Bivins were found dead in their home on Jan. 3, a week after meeting with Nasstrom, WSBT reported. According to ABC57, police looked inside the house before entering and saw Albert laying on the couch. Police say he didn’t appear to be breathing, so officers broke a window to enter. The temperature in the house was far below 32 degrees when their bodies were discovered, according to WNDU, and six of the seven days after the Bivins visited the agency had temperatures dip below zero. Timmothy Bivins told ABC57 his father Albert had dementia and his sister Patricia had special needs. Now Bivins wrote on a GoFundMe page that he is hoping “to give them a wonderful going away Funeral.”
Judge rules Seattle homeless man’s truck is a home - Steven Long returned from his job cleaning up CenturyLink Field after a Seattle Sounders’ game when he discovered that home was gone. He had been living in his 2000 GMC pickup, parked on a side street, but the city of Seattle towed it because Long had violated a city rule that requires vehicles be moved every 72 hours.That impound set up an unusual court ruling Friday that advocates for homeless people and the city both say could have broad implications on the crisis of homelessness. King County Superior Court Judge Catherine Shaffer ruled that the city’s impoundment of Long’s truck violated the state’s homestead act — a frontier-era law that protects properties from forced sale — because he was using it as a home. Long’s vehicle was slated to be sold had he not entered into a monthly payment plan with the city. Shaffer also ruled the fees the city required Long, 58, to pay to retrieve the truck were too high, violating constitutional protections against excessive fines.“We believe this case has a lot of implications for other people using their vehicles as homes,” said Ali Bilow, one of Long’s attorneys with Columbia Legal Services. “I think Seattle municipal judges should follow this ruling and take a hard look when homeless individuals, who are living in their vehicles, are charged these really excessive fees.”
US Border Patrol uses pretext of “human trafficking” to separate immigrant children from parents -- US Border Patrol agents have given themselves the power to determine whether the relationships—particularly between parents and children—claimed by undocumented immigrants are in fact legitimate, according to a recent report in the Wall Street Journal.The usurping of such power by the federal agency has far-reaching consequences, including the unconscionable separation of children who have already suffered the severe trauma of leaving their homes and making a dangerous crossing, from their families. While the legal system does not yet permit the wholesale jailing of families that seek asylum, the Department of Homeland Security (DHS) has begun, in the name of preventing sex trafficking of minors, the process of questioning the legitimacy of familial relationships to justify the punishing practice of separating children from their parents, so that the latter can be jailed. The separated children are then generally sent to extended family, often in the US. In February, the American Civil Liberties Union (ACLU) filed suit against the DHS for its forcible separation of a 39-year old Congolese woman from her 7-year old daughter. The woman, who is named as “Ms. L” in the lawsuit, travelled with her young daughter from the Democratic Republic of Congo, through Mexico, and surrendered herself to immigration agents at the San Ysidro Port of Entry near San Diego. She told the agents that she and her daughter were fleeing the violence in their home country and were seeking asylum. The woman was detained in the Otay Mesa Detention Center, California by Immigration and Customs Enforcement (ICE). Four days later, her daughter was taken more than 2,000 miles away to a youth shelter in Chicago run by the US Office of Refugee Resettlement.The ACLU statement on its filing explains that Ms. L was separated from her child without any explanation or justification: “When the officers separated them, Ms. L. could hear her daughter in the next room screaming that she did not want to be taken away from her mother. No one explained why her daughter was being taken away, where she was being taken, or when she would see her child again.”
Impoverished California parents arrested, charged with raising children in substandard conditions - Two homeless parents, Daniel Panico, 73, and Mona Kirk, 51, of San Bernardino County, California, were arrested Thursday on suspicion of willful cruelty to their three minor children. The two parents had been living with their children in a trailer and makeshift shelter outside of Joshua Tree National Park.The shelter was discovered by a patrolling San Bernardino County Sherriff’s deputy. It was described as a 4-foot-tall makeshift shelter, approximately 200 square feet in area. According to reports, the roof of the shelter, which was comprised of salvaged tin and a “kiddie pool,” was lined with twigs and mattress padding, apparently for insulation in the winter.The family reportedly owned the land plot and used a trailer for shelter as well. Several pet cats were also owned by the couple. The plot had no electricity or running water, while holes around the property were reportedly filled with refuse and human feces. The shelter contained canned food, a camping stove and various children’s toys, bikes and storybooks. The case is receiving widespread media attention, particularly as it comes on the heels of revelations of parental abuse in the city of Perris, which is about an hour’s drive southwest of Joshua Tree. More importantly, however, the Joshua Tree case reveals that Panico and Kirk are being punished not because of any willful acts of harm against their children, but because of their extreme poverty. Community members who know the parents attest that they appeared to be engaged and responsible in spite of the conditions faced by the family. They reportedly brought their children to community events, including scouting, on a regular basis. According to neighbor Linda Klear, recently interviewed by the Los Angeles Times, the family was often seen together at the local library and Hi-Desert Nature museum. According to Klear, the children “were very much loved.” The eldest boy, she said, was a voracious reader and always had his head in a book.
The Florida legislature's push to arm teachers, explained - The Republican-held, typically pro-gun Florida legislature is weighing some gun control measures after the school shooting in Parkland, Florida, that left 17 dead. But the bill also includes a program that gun control advocates hate: arming teachers in the state’s schools. The proposed legislation would also raise the minimum age to purchase a firearm to 21 and impose a minimum three-day waiting period for gun purchases — alongside an opt-in “school marshal” program that would train and arm teachers in Florida schools. The state House and Senate are considering similar bills that include incremental gun reforms alongside a contentious program that would coordinate with law enforcement to train teachers to carry guns. The House version of the bill would direct $67 million to a “school marshal” program to train and arm teachers. School boards or superintendents would decide whether to participate and sponsor teachers to undergo training with the local sheriff’s department. According to Politico: A school staffer who enters the program, among other things, must get a mental health screening, and receive training for things like firearms safety, classes in firearm precision and discretionary shooting, and active-shooter training. Teachers would undergo 132 hours of training, pass background checks and drug tests, and officially become sworn officers with the local sheriff’s office — essentially teachers and cops in one. The bill aims to put 10 armed teachers in every school — coming out to about 37,000 more guns statewide, according to the Tampa Bay Times. Teachers who become trained marshals would get a $500 stipend. Republican Rep. José Oliva, who sponsored the legislation, said it’s up to school boards or superintendents whether teachers would have to purchase their own firearms or whether the district would buy them.
Florida state Senate votes against arming most classroom teachers - (Reuters) - Florida’s Republican-controlled Senate approved sweeping reforms to the state’s gun law on Monday that raise the minimum purchase age and add a three-day waiting period in response to the deadliest high school shooting in U.S. history last month. Senators approved the legislation after an amendment removed a provision to arm most teachers. That was designed in part to increase support from many parents, law enforcement officials and lawmakers in both parties - including Republican Governor Rick Scott - who objected to the idea. The exclusion was adopted by voice vote as part of a package of legislation the Senate passed a short time later, 20-18, to raise the minimum legal age for buying all guns in Florida to 21 and impose a three-day waiting period for any gun purchase. The bill now moves to Florida’s Republican-controlled House of Representatives.
The Florida student spearheading the gun debate in the US now has more followers than the NRA - Two weeks ago, Emma González was a typical high school student. But then a gunman entered her school on Valentine's Day and killed 17 people.Just two days later, she spoke out in an 11-minute-speech at an anti-gun rally in Fort Lauderdale and rose to become one of America’s most visible gun violence prevention activists. She’s 18-years-old.And as of today, Emma has more followers on Twitter than the National Rifle Association of America (NRA). The Marjory Stoneman Douglas High School student now has 691,000 followers on the social media platform, while the NRA has 562,000. She is spearheading the gun debate in America along with several of her other classmates.The NRA, which represents gun owners in the US, accused “failures” on the police and the high school where the shooting took place. It hit out at the #BoycottNRA trend accusing it of wrongly punishing it's five million or so members for the attack.Companies - like airlines United and Delta, car hire firm Hertz and First National Bank - have pulled out of promotional contracts with the NRA. The organisation is widely condemned for its lobbying of gun rights in the United States. It spends about $3 million a year on influencing gun policy, according to a BBC report.
‘All-In or Nothing’: How West Virginia’s Teacher Strike Was Months in the Making - Home from a long day teaching English last month at Mingo Central High School, Robin Ellis told her husband the latest talk among the teachers. They were tired of low pay and costly health benefits — and they were mulling a “rolling strike,” in which teachers in a few counties would walk out each day.“You don’t want to do that,” Donnie Ellis, her husband, said. As a veteran of strip mines and the intense labor conflicts that often came with them, he knew what made some strikes succeed and others crumble.“It’s got to be all-in or nothing,” he said. It has definitely been all-in in West Virginia. For seven days now, teachers have refused to work in all 55 counties, shutting down every school in the state. Every school day since last Thursday, thousands of red- and black-clad teachers, bus drivers and cooks have descended on Charleston to fill the halls of the State Capitol, chanting and singing defiantly in one of the few statewide teachers’ strikes in American history. On Saturday evening, teachers’ frustration flared again as the Senate passed a bill granting a 4 percent raise, rather than the 5 percent raise that had been part of the deal to get the teachers back to work. In a statement shortly after the vote, the three unions representing school employees in West Virginia announced that all public schools would be closed on Monday and would “remain closed until the Senate honors the agreement that was made.” The 5 percent raise was initially announced by Gov. James C. Justice, a Republican, and union leaders said that would be enough to get teachers back to class. But rank-and-file educators have since said they will not return until the full pay raise is guaranteed by legislation. For a brief and extraordinarily confusing period late Saturday, it almost seemed as if the strike would come to an end because of a mix-up in the Senate, which initially — and accidentally — passed the bill with the 5 percent raise. Procedural wrangling followed for the next hour before the Senate voted to pass the 4 percent raise. The bill then went back to the House, which voted not to concur with the Senate’s version. The two versions will now go to a committee tasked to work out a compromise. In a statement issued Saturday night, Mr. Justice reiterated his support for the 5 percent raise and urged a quick end to the standoff.
Notes on the West Virginia Teachers Strike of 2018 -- naked capitalism by Lambert Strether - Obviously, the West Virginia teachers strike is a big story, and potentially an enormous one, especially if it turns out to be the more successful cousin of the the Wisconsin State Capitol occupations of 2011 which followed Tahrir Square and preceded Occupy proper. (As we’ll see below, “teachers strike” is a bit of a misnomer, and that’s important, but I think we’re stuck with the phrase.) So I ought to present a general theory, or at least a hot take, but on working through the sources as best I could, I realized how little I knew of realities on the ground[1], so my ambitions for this post will be more modest. First, I’ll review the state of play; then, I’ll reinforce the demands — one of the nice things about a strike is that there is an answer to the question “What are their demands?” — that the teachers are making, as opposed to the demands that careless journalists say they are making; and then I’ll present a grab bag of interesting characteristics worth noting, partly about West Virginia, partly about this strike. I’ll conclude with some remarks on the role of the Democrat Party in creating the conditions that led to the strike.
The West Virginia Teachers’ Strike Takes Aim at Coal and Gas - Republican Governor Jim Justice and the unions’ state leads had come up with a compromise bill, HB 4145, that raised teacher pay by 5 percent. But it did not create a permanent fix for the Public Employee Insurance Agency, which is meant to provide all public employees with affordable health insurance but has effectively been cutting funding every year. As I previously reported, some teachers distrusted the deal when it was first announced on Wednesday. A letter that day from Justice to state employees announcing the formation of a PEIA task force did not mollify many of them. On Wednesday night, the bill passed the state House. On Thursday, Senate Republicans voted against taking it up. Shortly afterwards, news of further teacher walkouts began rolling across social media. At 6:02 pm, it was official: There would be no public school in West Virginia on Friday, which means schools across the state will have been closed for a full week. And now, teachers are demanding that lawmakers take a hard look at fixing PEIA, possibly using a modest tax hike on the coal and gas industries. The continuation of the strike raises two possible courses of action for the state: It could try to issue injunctions to force teachers back into classrooms, or it could hire replacement workers, better known as scabs. But Anne Lofaso, a professor of law at West Virginia University and the parent of a child in public school, told me that she thinks the first option would backfire and that the second option is unlikely to occur. There are 727 teacher vacancies in the state, meaning government officials have no adequate supply of replacement labor.
How Tax Cuts Led To West Virginia's Massive Teacher Strike -- Striking teachers and other public employees in West Virginia have shut down schools across the state for more than a week, flooding the capitol in Charleston each day to rebuke their lawmakers. The workers are demanding significant raises to their stagnant pay and a clear plan to curb rising premiums in the state employee health care program. If only someone could have foreseen such a state of affairs.“They’re saying we can’t afford it,” Ted Boettner, director of the West Virginia Center on Budget and Policy, said of legislators. “Well, we can’t afford it because we’ve done these large tax cuts.”A decade ago, West Virginia began gradually winding down certain business taxes that could have helped pay for the across-the-board raises that teachers haven’t seen in four years. They also could have helped fill the funding shortfall in the Public Employee Insurance Agency, or PEIA, which many workers list as their top concern.Instead, lawmakers are staring down budget gaps as they try to resolve a historic strike that has shuttered schools in all 55 counties and galvanized austerity-weary residents. Many lawmakers have doubted the governor’s numbers and questioned whether the money is there for the raises. Then-Gov. Joe Manchin had urged legislators to pursue the tax cuts in 2006, arguing that West Virginia needed to slash taxes on corporations in order to be competitive with other states. Over the following years, the state wound down its corporate net income tax rate from 9 to 6.5 percent, and phased out its business franchise tax. It also slashed its tax on groceries from six to three percent, and later did away with it entirely under Manchin’s successor, Democrat Earl Ray Tomblin. Over the same span, the state also created a family tax credit, increased its homestead exemption and got rid of an alternative minimum tax and corporate charter tax, according to the West Virginia Center on Budget and Policy. All told, those cuts diminished state revenue by more than $425 million each year, the center estimates.
West Virginia telecommunications workers begin strike as teachers’ walkout enters second week --Frontier Communications workers in West Virginia and part of Virginia went on strike early Sunday morning as the walkout by 33,000 West Virginia teachers and public school employees entered a new and decisive stage. The announcement of the strike by 1,400 Frontier workers came shortly after the Republican-controlled state Senate carried out a calculated provocation against the striking teachers, voting Saturday night to reduce the pay offer to teachers and school employees from 5 percent to 4 percent.The Frontier workers, who are members of the Communications Workers of America (CWA), have been working without a contract since August 5 of last year. They face mounting job cuts and other attacks on their working conditions. Since Frontier acquired Verizon’s land lines in West Virginia in 2010, the company has cut over 500 jobs in the state.The school strike, the first statewide teachers’ strike in West Virginia since 1990, has continued and gained strength as a result of a rebellion by rank-and-file teachers against the unions. Union leaders called for a return to work last Tuesday on the basis of a sellout agreement with Governor Jim Justice, a billionaire coal operator, which failed to address their demands for decent wages and lower health care costs. Teacher pay in West Virginia ranks 48th among the nation’s 50 states.Teachers met across the state and decided to reject the unions’ deal and defy their instructions to return to work on Thursday. Since then, as teachers, students and other workers continued to rally at the state Capitol, the union leaders and state Democratic politicians have been plotting to end the strike on the basis of a rotten “compromise” that does nothing to address rising health costs and near-poverty wages for educators, school employees and other state workers.
West Virginia teachers’ strike: Why it’s happening and why it’s historic - Public school teachers and state employees in West Virginia have been on strike for the past week. The workers have been advocating for better pay and healthcare. On Wednesday, the state’s House of Representatives reached a deal that would give the teachers a 5% raise and other state workers a 3% bump. Despite union leadership approving the proposed plan, workers have gone against their own labor organization and continue to strike. Here’s why:
- The state’s healthcare program is the big problem: Healthcare premiums for state employees have skyrocketed, and the state government has refused to tackle the problem. Speaking with the New York Times, a high school educator named Katie Endicott said the state was raising her costs by hundreds of dollars, while not adequately increasing salaries. Though the government has offered short-term solutions–namely, freezing insurance rates and the proposed salary increase–that doesn’t solve the problem in the future.
- The teachers feel the state legislature is simply not listening to them: Though the proposed 5% salary increase seemed like a start, the teachers realized that healthcare remained a looming and ever-growing problem. Until the government figured out a long-term solution to deal with rising healthcare costs, the teachers feel the strike remains necessary.
- Legislative demands: For days, the West Virginia government has been discussing bills and amendments to give them adequate pay and compensation. The teachers are demanding that these bills be passed, and they want a task force to attack the healthcare issue.
- Ultimately, this is a historic moment: Not only is it West Virginia’s longest teachers’ strike in two decades, it’s also an example of workers—by virtue of defying their own labor union—exerting greater control over their futures. The strike could also provide a blueprint for workers in other states and industries.
Thousands converge on state capitol to show support for West Virginia teachers strike - Striking West Virginia teachers, school bus drivers, custodians and other public-school employees from across the state, along with workers and young people supporting their struggle, converged on the state capitol in Charleston Monday, on the eighth day of the continuing statewide strike by 33,000 school employees.The mobilization came after the Republican-controlled state Senate on Saturday night reduced to four percent the meager offer of a five percent raise backed by the governor and lower House of Delegates. If the two bodies do not agree on a bill by Tuesday—although the deadline could be extended—an earlier law specifying a 2 percent raise in July, and then 1 percent over the next two years, would be imposed.Striking workers and their supporters filled the capitol building to capacity, with more than 7,000 protesting inside and hundreds, if not thousands, more outside. The mood was exhilarant. Strikers carried homemade signs with their demands for decent wages and affordable health care, and there was a palpable sense that this struggle was historic and was sparking a far broader movement of working-class opposition. Commenting on the recently started strike of 1,400 Frontier Communications workers in West Virginia, and the calls for a walkout by Oklahoma teachers to demand a $10,000 raise, Lorene, a school bus driver from Wayne County, in the southwest corner of the state, said, “It’s time for people to take a stand for what’s right. These days of the rich living high on the hog are over. We’ve opened the door, and I hope it turns into a humongous gate.”
Unions mull legal action after wrong bill passed; schools remain closed Monday — A state education union leader said Sunday that union leaders are “exploring all avenues” — which could include legal action — after the state Senate mistakenly passed the wrong public employee pay raise bill Saturday. Dale Lee, president of the West Virginia Education Association, said during a forum at Ripley High School Sunday that while he “can’t go into it, [union leaders] are exploring all avenues that [they] have in this.” The Senate Finance Committee took up a pay raise bill that had been previously passed by the House. During the committee meeting Saturday evening, members reduced the pay increase for teachers, school service workers and State Police troopers from 5 percent to 4 percent. Later that evening, the Senate mistakenly passed the House version of the bill with the 5 percent raise, as opposed to the 4 percent version sent to the Senate from committee. House members wouldn’t agree to that change, and both sides appointed three members to a conference committee, which will try to hash out the differences on the bill. “There’s a lot of angst here in this community,” Haney said. “We’re taking to teachers, the community, business leaders and whoever else to explain what’s happened, what’s going on in the process and where we are.”
West Virginia teachers unions ram through sell-out deal to end strike -On Tuesday afternoon, billionaire West Virginia Governor Jim Justice signed into law a bipartisan agreement announced earlier in the day by legislators to end the nine-day strike by teachers and other public school employees across the state.The agreement, which the unions endorsed and are claiming as a victory, is a betrayal of the courageous struggle by 33,000 school workers.It does nothing to address workers’ primary demand: guaranteed funding for the state-run Public Employee Insurance Agency (PEIA). Instead, it provides a temporary freeze on rising health-care costs and sets up yet another task force to address the chronic underfunding of the PEIA. The task force will resolve nothing, since both political parties are beholden to the powerful energy and corporate interests in the state and refuse to impose any significant tax on them to fund health care.Justice and the state legislators have boasted that the five percent pay raise, which also covers all state workers, will not be financed through any increase in taxes. Instead, it will be funded through budget cuts, including to the health insurance program Medicaid, upon which many school employees, their students and thousands of workers depend.School employees have waged their fight for the right to health care—not for it to be taken from the poor. Teachers, who are already the 48th lowest paid of all states in the country, have made clear that a five percent raise will be more than eaten up due to future health-care cost increases. An article published yesterday in the Charleston Gazette-Mail reports that the raises will be funded by $82 million in cuts to the 2018-2019 state budget, including $23 million allocated to repairing dilapidated state buildings, $7 million assigned to provide tuition for students at state community and technical colleges, and millions from Medicaid. Senate Finance Chairman Craig Blair said the Republican-controlled Senate had only agreed to the pay rise in exchange for “very deep” cuts, adding: “There’s going to be some pain.”
West Virginia teachers’ triumph offers fresh hope for US workers’ rights - On Tuesday, Governor Jim Justice passed a law granting all public employees – not just teachers – a 5% across-the-board raise. This raise will probably halt talk among public employee unions about striking, as the legislation initially proposed had public employees slated for smaller raises than the teachers. But the money for the raises will come from cuts to other areas of the budget – including potential reductions to Medicaid – rather than taxes on fracking companies, as the union and its allies preferred. Governor Justice, however, vowed to veto any bills that would fund charter schools, strip teachers of their seniority, or reduce or remove the deduction of union dues from their paychecks – even if those dues are applied to political work. The deal will also freeze all out-of-pocket healthcare costs under the WV Public Employees Insurance Agency (PEIA). A taskforce composed of some union representatives will then convene to present a long-term solution to fixing PEIA. Many teachers were disappointed that a long-term fix to PEIA was not paid for by increased taxes on the natural gas industry, which has come to dominate the local economy. With the taskforce expected to present its report in October, the union hopes to shine a spotlight right before the November election upon state legislators blocking long-term reforms to the state’s health insurance plan. “This isn’t the end of the battle, because teachers are still not paid well enough and they still don’t have enough resources,” said the American Federation of Teachers president, Randi Weingarten. “But in West Virginia, lawmakers were put on notice that they needed to act in the best interests of kids and workers, not for special interests. And if they didn’t learn that lesson through this strike, workers will make sure they learn it in November.”
Oklahoma teachers planning a statewide strike - KTUL - Oklahoma teachers are fed up with state lawmakers. A public school teacher in Stillwater created the Facebook group "Oklahoma Teacher Walkout - The Time is Now!" two days ago, and it has already gained more than 20,000 members.Today, teachers gathered in Moore to discuss the possible statewide strike."Frustration levels are high, so a strike is not a touchy word anymore," said Molly Jaynes, a teacher in Oklahoma City."'Strike' is a big word, but I think it's necessary for Oklahoma," said Chloe Prochaska, a teacher in Mustang."We are to the point where we have no other option," said Heather Reed, a teacher in Oklahoma City.Fed up with a legislature seemingly mired in quicksand, teachers from Oklahoma City, Mustang and Tulsa, just to name a few, are laying the groundwork for a statewide strike."I don't think we have a choice. How long can we keep sicking out?" said Tulsa teacher Larry Cagle."I think we have surpassed the point of conversations, and I don't think that there's anything the legislators have provided us recently to give us any sort of hope that they're going to take actual actions this time," said Jaynes.As for when it might take place? "If we do it the first week of April, that would be during standardized state testing, which would be a great time to say, 'Hey, we're going on strike, and we're not going to give these tests,'" said Prochaska.
Oklahoma teachers demand strike action, funding for education --Teachers in Oklahoma are angry. They are threatening to follow West Virginia educators in statewide strike action against an intransigent legislature entirely beholden to the energy industries and big businesses. “Teachers from Oklahoma stand with West Virginia,” an Oklahoma teacher and supporter of the Facebook group Oklahoma Teachers United (OTU) told the WSWS. “On Friday of next week [March 9] Oklahoma teachers will go to the national media and announce a strike date. Hang strong West Virginia! We need your courage as we approach the microphone.”Oklahoma teachers have been paid on the same salary scale for the last 10 years. Like West Virginia, their last statewide strike was in 1990. The Oklahoma Education Association (OEA) union has steadfastly opposed strike action, citing its illegality. In response to the years of both legislative and union indifference, teachers have now organized independently through social media to demand action.Another Facebook group, “Oklahoma Teacher Walkout – The Time is Now!” has ballooned to more than 40,000 members within a week. A meeting of several dozen teachers from seven districts around the state was held Friday in Oklahoma City. The groups have discussed a possible walkout April 2, during the period of standardized testing, or “not returning” after spring break. They have publicized a list of 30 school districts in which the state superintendents have agreed to “suspend school to support teachers.” Other educators have made their views known, with one posting, “It needs to be more than just a one-day deal.” Students have continued to show their support for teachers. Bartlesville High School students walked out Friday, February 23 carrying signs “We Love Our Teachers” to protest the education funding cuts. Students at Oneta Ridge Middle School walked out last Wednesday to support educators.
Nearly 30,000 Los Angeles School District support staff to vote for strike authorization -- Nearly 30,000 school workers are set to vote on strike authorization this month in the Los Angeles Unified School District, the nation’s second largest.Service Employees International Union (SEIU) Local 99 announced the vote last week after the school district proposed a paltry 2 percent raise for the 2017-2018 academic year with an option to reopen salary negotiations should the district’s financial health improve.LA Unified’s chief negotiator, Najeeb Khoury, said the district’s latest offer was “solid” and that it was the best it could do given rising pension costs and declining enrollment due to the proliferation of private charter schools. The fact that charter schools are a significant contributor to the district’s deficit indicates the financial elites’ motivation for funding and advocating for charter schools in the first place. That is, the schools were meant to serve as a mechanism not to improve children’s educational outcomes, but to attack public education and promote privatization schemes. The promotion of charter schools was a major component of the education policy of the Obama administration, backed by the teachers’ unions.“We encourage SEIU Local 99 to continue working with us at the table to find solutions that take into account our economic reality,” Khoury said. “We trust that SEIU Local 99 will follow the law and will not declare a strike before going through all the statutory mandated procedures, including mediation and fact-finding.” In other words, the district is expecting underpaid and overworked school employees to accept all the time-honored tricks, including government-appointed mediators whose role it is to side against the workers.
As teacher struggles spread, unions redouble effort to suppress class struggle - Protests and demands for strike action by teachers and other school employees are spreading throughout the United States in the aftermath of the nine-day walkout by 33,000 West Virginia educators and public school workers.Teacher struggles are erupting in Oklahoma, Arizona, Kentucky and other states, along with Jersey City, New Jersey. Later this month, 30,000 school service employees will vote for strike authorization in the Los Angeles Unified School District, the nation’s second largest school system, serving 734,641 students.The state affiliates of the National Education Association (NEA) and American Federation of Teachers (AFT) betrayed and shut down the strike of West Virginia teachers after cutting a deal with billionaire Governor Jim Justice on Tuesday. The bill passed by the state legislature and signed by Justice does nothing to address strikers’ main demand: to fully fund the state’s public employee medical insurance program and end impossibly high out-of-pocket expenses. To add insult to injury, the meager five percent raise for teachers will be funded through deep cuts in social programs.The West Virginia strike exposed the unbridgeable gulf between the teachers and the unions. The struggle began as a series of one-day strikes organized independently of the unions in the southern coal counties, which spread to all 55 counties. The unions called a two-day statewide walkout on February 22–23 and then were forced to extend it before suddenly announcing an agreement with Justice and ordering teachers back to work on March 1. But rank-and-file teachers rebelled and voted to defy union leaders and continue the strike. This came as a shock to the governor and state legislators, with Republican state senate leader Mitch Carmichael calling the movement “more like an uprising.” The unions shut down the strike just as it was gaining momentum and inspiring other sections of workers to walk out, including 1,400 Frontier Communications workers in West Virginia and Virginia.
College, wages, inequality, and the implied policy agenda -- Jared Bernstein - I stumbled on a number of facts today that put me in mind of the old, venerable debate among labor economists about the extent to which educational wage premiums driven by employers’ increased demands for skills is driving overall wage inequality. It sounds obscure, but it actually has very potent policy implications. Let me try to quickly break it down.
- –The gap between high, middle, and low wages has grown a great deal since the late 1970s. No secret there. In real terms, this has meant long periods of wage stagnation for middle- and low-wage workers.
- –At the same time, the earnings of those with college educations have grown a lot relative to those with terminal high-school degrees. Economists interpret this as increasing returns to “skill,” or more wonkily, evidence that technological advances, like computerization in the workplace, are increasing complementary to the skills college-educated workers bring to the job.
- –The policy conclusion is “get more education!”
- –But while I solidly subscribe to that admonition, there’s a ton more going on under the surface. For example, anything that drives down the pay of the non-college educated, who still account for about 2/3 of the workforce, also drives up the college wage premium. So, you must try to parse out declining union power, falling minimum wages, weak macroeconomies (the absence of full employment), and more, from the skill-demand part of the story. And this, of course, has major implications for the policies we pursue to close the gap and reverse the wage stagnation for the majority of the workforce.
- –Moreover, and this part is particularly notable, the college wage premium, while as high as ever, hasn’t grown much over almost two decades. The figure below was in the WSJ this AM, in an interesting piece about how, given the rising costs of college relative to incomes, some kids and their parents are taking a closer look at alternatives like technical/vocational programs. The figure makes two important points: the premium is as high as ever (wage signal: go to college!), and it hasn’t risen since 2000.
3,000 contract teachers and graduate assistants strike York University --Three thousand contract faculty and teaching and research assistants at Toronto’s York University walked off the job Monday, after decisively voting down management’s “final” contract offer late last week.The main issue in dispute is job security, under conditions where a majority of courses at York are being taught by teachers working on short-term contracts lasting only a few months.Management has offered pitiful annual wage increases of 2.1, 2.2 and 2.3 percent respectively for each year of a three-year contract. Given the current rate of inflation, these “increases” would at best result in stagnant earnings.Moreover, the pay offer for contract faculty, teaching assistants, research assistants and graduate assistants would leave them earning low and in many cases poverty-level wages. Many education workers live below the provincial poverty line. A contract faculty member can expect to earn little more than $25,000, for teaching the same number of courses as a tenured professor earning anywhere from $80,000 to $150,000. Full-time contract faculty, who often have to hold down jobs at different institutions to make ends meet, earn little more than a full-time employee at Walmart. It is common for contract faculty to learn only weeks or even days in advance whether they will have a teaching post in the coming semester.
Striking Illinois grad students speak out against attacks on higher education - According to a Chicago Tribune report, the Graduate Employees Organization (GEO) has reached an agreement with the university administration and is working quickly to end the strike of 2,700 graduate student workers at the University of Illinois at Urbana-Champaign (UIUC), with members voting on the agreement Thursday and Friday. If reports are accurate, the GEO has given in to the university’s main demand: to be able to reduce or eliminate tuition waivers for future students in exchange for paltry raises that will be entirely eaten up by inflation by the end of the contract. This rotten sellout, of a piece with other contracts and agreements worked out by the American Federation of Teachers (AFT), with which the GEO is affiliated, is a betrayal of the principled fight by graduate student workers for full access to public higher education. The contract, which is reportedly for five years, includes a meager pay raise of 4.5 percent in the first year and 2 percent in each of the second and third years. The university will also pay 87 percent of insurance fees instead of 80 percent, and will now cover 25 percent of health insurance for up to one dependent. In other words, this agreement ensures that graduate student workers will still make poverty wages, and will still be liable to pay enormous health care costs out of their own pocket, particularly if they have families.
College Adds 'Ne', 'Ve', & 'Ey' As Gender-Neutral Pronouns - The Kennesaw State University LBGT Resource Center recently produced a new pamphlet that adds “ne,” “ve,” “ey,” “ze,” and “xe” to the list of gender neutral pronouns. The “Gender Neutral Pronouns” pamphlet, a copy of which was obtained by Campus Reform, tells students that “some people don’t feel like traditional gender pronouns fit their gender identities,” and thus lists alternatives that students can use instead. These pronouns are accompanied by a conjugation chart listing how they might be used as a subject, object, possessive, possessive pronoun, and reflexive. For example, to refer to a student who identifies as “ne,” one could say “Ne laughed” or “That is nirs.” To refer to a student who identifies as “ve,” the pamphlet explains that one would say “Vis eyes gleam” or “I called ver.”The pamphlet - which lists seven different types of gender neutral pronouns - encourages students to ask their friends, classmates, and coworkers how they identify before making any assumptions. The guide does warn, however, that students “may change their pronouns without changing their name, appearance, or gender identity,” and suggests that preferred pronouns be re-confirmed regularly during “check-ins at meetings or in class.” “It can be tough to remember pronouns at first,” the guide notes. “Correct pronoun use is an easy step toward showing respect for people of every gender.”
Yale’s David Swensen Gets Into Spat With Student Paper Over Endowment -- David Swensen, head of Yale’s $27 billion endowment, rarely speaks publicly about the fund’s enviable track record and investments.Now he’s found himself in an ugly spat with the student newspaper over coverage of the endowment and subsequent publication of an email exchange in which Swensen called the editor-in-chief a “coward” and asked if she understood “simple English.”The dispute flared up over his op-ed column in the Yale Daily News, which he asked the staff to publish without editing. His March 1 piece took exception to the paper’s reporting in February of a teach-in event led by student activists that criticized the endowment’s investments.He said the student reporter didn’t contact Yale’s investment office for the February article. The newspaper on March 3 issued a correction over the news story. Editors of the newspaper eliminated what they called an erroneous sentence in Swensen’s piece that said he wasn’t contacted by a reporter, which he deemed as editing. On March 4, the paper published an editor’s note along with email exchanges between Swensen and student editors. Swensen said the editors failed to mention that his opinion piece was edited against his wishes. He criticized the decision as “disgusting” and “inexcusable.” He also wrote that he’s “furious” and asked, “Don’t you understand simple English? - The piece was to be run without editing - I wrote that in all capital letters - What is the matter with you?”
Nota bene: Holding Yale accountable - Felix Salmon - The Yale Daily News caused a minor Twitter storm on Sunday when it published correspondence from David Swensen, the legendary head of the Yale endowment. Swensen does not come off well in the emails, and the editors of the paper are quite right to be “disheartened” that he would take such a tone with them. (“I am furious - Don't you understand simple English? What is the matter with you?”) Swensen is an extremely rich and successful man, who clearly doesn’t relish facing questions from impertinent students who fail to approach him with the requisite level of obsequiousness and awe. He doesn't feel accountable to the student body, even though on some level he works for them. Instead, he reads the student paper, and seethes, and bides his time, waiting for the perfect opportunity to strike with maximum superciliousness. Swensen found that moment earlier this month, when the paper published a dispatch from a teach-in criticizing the endowment. The event featured a number of speakers, making many different points. Some wanted to ensure that the endowment doesn’t hurt the environment, for instance; others asked whether it can help make reparations for slavery. One of the points made in the piece, which was buried halfway down the article, was about the Yale endowment’s connections to the private prison industry. That particular criticism turned out to be based on a misunderstanding, and Swensen saw his opportunity: after years of refusing to speak to the Daily News, he sent them a blistering op-ed complaining that the newspaper “frequently fails to meet fundamental journalistic standards.” He added that an editor should have noticed the errors and prevented them from being printed. Ironically, Swensen’s own letter contained an error — he incorrectly said that the reporter did not contact the investment office before filing her story. Fortuitously enough, Swensen’s error was intercepted by an editor, but instead of thanking the News for its editors’ keen eyes, Swensen went ballistic, complaining that, well, his error had been corrected.
Pearsons, Who Pledged $100 Million to UChicago, Want Their Money Back - In the fall of 2015, University of Chicago president Robert Zimmer made a surprise announcement to a packed audience at a formal event in Mandel Hall. Flanked by sleek graphics and illuminated by camera flashes, Zimmer said that the University had received a $100 million gift—then the second-largest donation in its history. The widely-covered donation was made by Thomas L. and Timothy R. Pearson on behalf of their family. The brothers, neither of whom had ties to the University, donated the money to establish the first research institute of its kind at the Harris School of Public Policy. The Pearson Institute, as it was called, would aspire to recruit world-class scholars who would produce groundbreaking research used to design and implement policies that would reduce conflict around the globe. It was an extraordinary accomplishment for then-Harris Dean Daniel Diermeier, one that would be cited when he was appointed provost six months later. On February 20, however, the much-hyped Institute’s status and future were publicly put into doubt as the Pearson Family Foundation sued the University of Chicago for $22.9 million—the total value of the installments of the gift it had given to the University thus far—in the United States District Court for the Northern District of Oklahoma, making it one of the largest lawsuits of its kind in recent memory. In the suit, the Pearsons declared that they had lost all confidence that the University would be “an appropriate or capable steward of the Pearson Family legacy” as it had allegedly failed to fulfill several key contractual obligations that were agreed upon when the gift was made. These included the University’s hiring of an institute director who allegedly recruited underqualified faculty due to favoritism, its insistence on participating in a Catholic conference that celebrated heterosexual marriage instead of hosting a required academic forum, and Diermeier’s purported unwillingness to act as a steward of the Pearsons’ grant. They also allege that the University persistently engaged in deceptive and bad-faith behavior in the relationship.
Banks Want a Bigger Piece of Your Student Loan - Private lenders are pushing to break up the government’s near-monopoly in the $100 billion-a-year student-loan market. The banking industry’s main lobbying group, the Consumer Bankers Association, is pressing for the government to institute caps on how much individual graduate students and parents of undergraduates can borrow from the government to cover tuition. That could lead more families to turn to private lenders to cover portions of their bills, meaning lower interest rates for households with good credit histories and constrained funding for households with blemished records. A group of investors also is lobbying for legislation to provide a clearer legal framework for “income-share agreements,” under which private investors provide money upfront to cover tuition in exchange for a portion of a student’s income after school. Firmer rules would help spur more agreements, the group said.At stake is potentially billions of dollars in new business for private lenders, a group dominated by SLM Corp. , better known as Sallie Mae, Wells Fargo & Co., and Discover Financial Services. The U.S. Education Department makes about 90% of student loans annually, a market that totaled $107 billion in new originations in the most recent academic year, according to the College Board. Student debt has more than doubled over the past decade, driven by a boom in college enrollment during the recession and rising tuition. Roughly a fifth of all student debt outstanding—excluding debt held by borrowers still in school—sits in accounts that are at least 90 days delinquent, according to the New York Federal Reserve. Private lenders pushed for legislative changes in previous years to no avail, but now they are receiving a more welcome reception from congressional Republicans and the Trump administration.House Republicans, looking to revamp higher-education policies for the first time in a decade, have included the industry’s proposals in a wide-ranging bill unveiled in November, which they hope to pass this year.
40% of student loans could default over 20 years - America's student loan debt may be approaching a critical point with respect to repayment. According to Student Loan Hero, the total student loan debt has reached $1.48 trillion spread across 44.2 million Americans, and the latest release from the U.S. Department of Education in September of 2017 shows that default rates are climbing. According to the Education Department, the three-year cohort default rate for 2014 rose to 11.5% for federal student loans, up from 11.3% from the previous year. For any given fiscal year, the term "cohort" refers to all borrowers that entered the repayment period of their student loan within the same time period, and the cohort default rate is the percentage of those borrowers who defaulted on their loans over a given period of time. In this case, the cohort is composed of all students entering repayment between Oct 1, 2013 and September 30, 2014. Since this data reflects a standard three-year default rate, anyone in this cohort who defaulted on student loans before the end of September of 2016 is included in the list. Essentially, the Education Department release says that 2014 graduates are defaulting within their first three years of graduation at a higher rate than the graduates of 2013 did but what happens in five, ten, or even twenty years after graduation? What do the default rates look like over longer periods of time? Logically, one would expect most borrowers to default in the earlier stages of the loan as they struggle to find jobs and manage their new responsibilities. In later years, as borrowers become more established, the cumulative default rate should begin to level off. Scott-Clayton's analysis shows otherwise. The cumulative cohort default rate continued to rise steadily over time for both cohorts studied, with the 1996 cohort at a twenty-year default rate of just over 25%. The 2004 cohort has already surpassed that mark, with a default rate above 27%. By assuming the same constant rate of growth in defaults a reasonable assumption given the 1996 cohort results 2004 graduates could reach a cumulative twenty-year default rate of 40%.
Killing a Parasite, Part 2 — How to Implement Student Debt Cancellation - This is the second part in a short series, “Killing a Parasite — Canceling Student Debt.” In Part 1, we made the case that the institutionalized and growing student debt crisis is not fed by predatory activity on creditors, but by parasitic activity. Predators kill, eat, and move on. Parasites disable, then live off the energy system of the disabled host for as long as they can keep the host alive. An especially pernicious form of “loan parasite” includes institutions preying financially on students, who incur their debt without current income to pay it, yet need a college degree to effectively compete in the post-graduation job market. […] Part 1 of this series argued the benefits of a “debt jubilee” on all student loans in the U.S. The paper cited above also argues those benefits (see the Executive Summary). The mechanics of this cancellation, ways it can be implemented, are as follows. Note in the second bulleted paragraph how private loan debt would be handled (emphasis mine):
- • The current portfolio of student loans held by the ED would be cancelled or, equivalently, borrowers would simply be allowed to stop making payments and any principal due on a given date would be cancelled at that time (that is, the loan would effectively be cancelled in stages as payments come due). As of the second quarter of 2016, the ED’s outstanding loans totaled $986.19 billion.
- • The federal government would either purchase and then cancel, or, equivalently, take over the payments on student debt currently held by the private sector. As with the ED’s loans, if the government purchases the privately held loans it can choose to cancel them immediately or as borrowers’ payments come due. The government-guaranteed loans are $266.69 billion, while nonguaranteed privately issued loans are $101.58 billion, both as of the second quarter of 2016. Having the government assume these payments or purchase and cancel the loans is preferable to cancellation by private investors. The latter would require the private sector to write down nearly $370 billion in both assets and equity, which could be highly destabilizing (or worse) for the affected sectors.
"This Is Madness": New Jersey Raises Expected Pension Fund Return To 7.5% - Last weekend, in our latest report on the unsustainable US public pension system, we quoted Steve Westly, the former California controller and Calpers board member who made a stunning admission about the largest public pension fund in the US, i.e. California Public Employees Retirement System (oddly, his tweet has since been deleted):"The pension crisis is inching closer by the day. @CalPERS just voted to increase the amount cities must pay to the agency. Cities point to possible insolvency if payments keep rising but CalPERS is near insolvency itself. It may be reform or bailout soon." The "admission" will not come as a surprise to readers who have followed our series on US public pensions (more recently here, here, here, here, and here) and who are aware that one of the key reasons behind the systematic underfunding of US public pension funds has been the chronic optimism that they can continue to generate outsized investment returns.Recall that it was only in December 2016 that Calpers voted to lower its earnings projection to 7.0% – it had been 7.5% – hoping to avoid another disaster were the economy to turn sour. Prior to 2016, the last time Calpers lowered its investment expectation was in 2012 when the rate dropped from 7.75% to 7.5%So while the Sacramento-based CalPERS may be on the verge of insolvency, it is at least taking baby steps to admit it has a problem and to address the "new normal" reality of far lower projected returns (as a reminder, just last month the San Fran Fed concluded that "that the current price-to-earnings ratio predicts approximately zero growth in real equity prices over the next 10 years"). Meanwhile, to the shock and dismay of muni and pension analysts everywhere, Calpers' peer over in Trenton stunned many last week when it decided to go the other direction: on Thursday New Jersey’s acting state treasurer Elizabeth Maher Muolo said that she will increase the expected rate of return for the state’s struggling public pension system which manages over $76 billion in assets, from 7% to 7.5%, "then lower it again over time" in hopes that the recent market surge persists indefinitely into the future and quietly wipes away some of the state's massive underfunding.
Trump Administration Stops Idaho’s Bid to Skirt Obamacare Rules -- The Trump administration on Thursday rejected a plan by Idaho insurance regulators to sell health plans that don’t carry some of the consumer protections required by the Affordable Care Act. In January, Idaho regulators said they would let insurers in the state sell health plans that don’t cover pre-existing conditions and that do allow them to charge sick people higher premiums. Obamacare bars such policies, and the head of the agency that oversees the health law said she would reluctantly enforce the letter of the law. “If a state fails to substantially enforce the law,” Washington must do so, Seema Verma, administrator of the Centers for Medicare and Medicaid Services, wrote in a letter to Idaho’s Republican governor. “This is certainly not our preference; we believe that Idaho has options within the law” to make room for the kinds of insurance policies it proposed. Idaho’s proposal has put the Trump administration in a position it has found itself in before: charged with upholding a law it wants to get rid of, and that it has taken active steps to dismantle. Verma left open the possibility that plans like the state was proposing could be sold in a different form. If they were offered as short-term policies instead of annual coverage, they might be allowable, she said. The administration has pushed short-term plans as a way to offer consumers less expensive, less comprehensive options. In her letter to Idaho authorities, Verma said that “with certain modifications, these state-based plans could be legally offered” as short-term plans. The White House has suggested to Congress that people should be able to renew short-term plans without being subject to medical underwriting, the process by which insurers can exclude or charge more for pre-existing conditions. Senator Ron Wyden, an Oregon Democrat who has opposed efforts to repeal or roll back the law, criticized the administration’s stance. “While they claim to be upholding the law, they are explicitly inviting Idaho and other states to sell short-term, junk insurance -- the exact opposite of the protections put in place by the Affordable Care Act,” Wyden said in a statement.
‘Our Healthcare Crisis Won’t Be Solved Until We Get Private Insurance Out’ - When you hear that Jeff Bezos, Warren Buffett and Jamie Dimon have a plan to “fix” healthcare, questions, shall we say, naturally arise about how transformative it’s likely to be, this plan of super-wealthy corporate executives that they insist would be “free from profit-making incentives and constraints.”But if the plan comes from a group represented as liberal, and its spokespeople talk about “universal coverage” and “healthcare as a right,” and the New York Times declares it “a better single-payer plan,” well, what are you to think? Here to help us see what’s going on in a new healthcare proposal that you will be hearing about is Margaret Flowers. Margaret Flowers is co-director of Popular Resistance and coordinator of the national Health Over Profit for Everyone campaign. She joins us now by phone. Welcome back to CounterSpin, Margaret Flowers.
Healthcare Triage: Why Does the U.S. Spend So Much on Healthcare? High, High Prices. – Dr Aaron Carroll – video - American healthcare spending is still WAY higher than pretty much all other industrialized countries. But not that long ago, things were different. The US didn’t spend nearly as much in this realm. What changed? Demographics? More sickness? Nah. Spoiler alert, prices have risen much, much faster than the rate of inflation. We’ve got a few suggestions for getting it under control. This video was adapted from a column Austin and I wrote for the Upshot. Links to further reading can be found there.
So Bad the DoJ Woke Up: Saline Bag Makers Look to Have Endangered Patients Via Illegal “Tying” and Price Gouging Yves Smith - Lambert has remarked occasionally that one of the side effects of the Puerto Rico hurricane is that the US is in the midst of a saline bag shortage, an important hospital staple. The official story was that a plant that was knocked out was close to a monopoly supplier, forcing hospitals into cumbersome and costly work-arounds, like injecting saline solutions. It turns out, by happenstance, that he’d become the unwitting transmitter of partial information that is unduly flattering to big medical manufacturers who have been under scrutiny by the New York and California attorneys general and now the Department of Justice for possible criminal anti-trust abuses. As this Financial Times story explains, even though anti-trust law in the US is weak and not often enforced, the conduct at issue is a bulls-eye for Things Not To Do: “tying” or forcing customers to buy other products to get the ones they want and misusing monopoly/oligopoly power. A saline bag that once cost $1.77 is now $4.04, while the price has increased to only roughly $2 in the UK. But the even bigger deal is that Baxter apparently used the scarcity as an excuse to withhold supplies unless hospitals agreed to buy certain (higher than they’d otherwise order) amounts of alternate saline delivery mechanisms. The Financial Times story quotes at length from reports from the Cleveland Clinic, as well as a large, unnamed “New York hospital group”. The accounts are damning:At the peak of the crisis, the [Cleveland Clinic] hospital had the equivalent of eight full-time pharmacy employees battling the shortage. Technicians worked through the night to mix saline by hand, while nurses injected the solution of salt in water into patients using syringes — a task normally done by the metal stands and plastic bags used for intravenous drips.“Sometimes we’ve had over 20 nurses at a time doing that,” says Scott Knoer, chief pharmacy officer….Hospitals alleged that sales representatives from the company [Baxter] pressured them into buying higher margin products used to deliver saline and other intravenous solutions, such as pumps, tubes and catheters…As the shortage became more serious in the winter of 2014, a sales representative from Baxter arranged a meeting with one of its major customers…. According to a person who attended that meeting, the sales rep suggested Baxter would be unable to guarantee the hospital’s existing supply of saline unless it signed a new five-year contract that required it to also buy other “consumables” used to deliver the solutions, like intravenous tubes and taps… The hospital agreed to sign the contract, but the decision caused anger among some employees. They feared that forcing nurses to switch to unfamiliar products for solely commercial reasons would jeopardise safety and leave the group vulnerable to legal action…
Martin Shkreli Sentenced to Seven Years in Prison - Martin Shkreli, the pharmaceutical industry’s enfant terrible, was sentenced Friday to seven years in prison, putting an end to a saga that captivated and sometimes enraged Washington, Wall Street and the tabloids. The brash 34-year-old — who gained notoriety for jacking up the price of a life-saving anti-infection drug — was convicted in August of lying to investors in his hedge funds and manipulating shares in Retrophin Inc., a biotech company he founded. Prosecutors sought a sentence of at least 15 years for the securities fraud. Shkreli, who once proclaimed “you can’t quell the Shkrel,” asked for as little as a year. “This case is not about Mr. Shkreli’s self-cultivated public persona,” U.S. District Judge Kiyo Matsumoto in Brooklyn, New York, said Friday before handing down the sentence. His actions were “extremely serious,” she said, recounting how he boasted once of threatening an investor and his family. A remorseful Shkreli told the court he was embarrassed and ashamed, saying he got innocent people mixed up in his conduct. “This is my fault,” he said. Addressing his investors, he choked back tears to say, “I am terribly sorry I lost your trust. You deserved far better.” “There is no conspiracy to take down Martin Shkreli,” he said. “I took down Martin Shkreli, with my shameful and disgraceful actions.” Shkreli’s downfall marks an ignominious end to what was once a promising career at the intersection of finance and pharma. The child of working-class immigrants from Albania and Croatia, Shkreli landed his first job as a 17-year-old college intern for Jim Cramer, the hedge fund manager and host of CNBC’s “Mad Money.” He was soon recommending that investors short biotech shares, becoming so good at it that he found himself under the scrutiny of the Securities and Exchange Commission at 19.
Centers that do surgery outside the hospital are becoming more popular and taking on riskier cases — and it’s having a deadly side effect -- Such centers started nearly 50 years ago as low-cost alternatives for minor surgeries. They now outnumber hospitals as federal regulators have signed off on an ever-widening array of outpatient procedures in an effort to cut federal health care costs. Thousands of times each year, these centers call 911 as patients experience complications ranging from minor to fatal. Yet no one knows how many people die as a result, because no national authority tracks the tragic outcomes. An investigation by Kaiser Health News and the USA TODAY Network has discovered that more than 260 patients have died since 2013 after in-and-out procedures at surgery centers across the country. Dozens — some as young as 2 — have perished after routine operations, such as colonoscopies and tonsillectomies. Reporters examined autopsy records, legal filings and more than 12,000 state and Medicare inspection records, and interviewed dozens of doctors, health policy experts and patients throughout the industry, in the most extensive examination of these records to date. The investigation revealed:
- Surgery centers have steadily expanded their business by taking on increasingly risky surgeries. At least 14 patients have died after complex spinal surgeries like those that federal regulators at Medicare recently approved for surgery centers. Even as the risks of doing such surgeries off a hospital campus can be great, so is the reward. Doctors who own a share of the center can earn their own fee and a cut of the facility's fee, a meaningful sum for operations that can cost $100,000 or more.
- To protect patients, Medicare requires surgery centers to line up a local hospital to take their patients when emergencies arise. In rural areas, centers can be 15 or more miles away. Even when the hospital is close, 20 to 30 minutes can pass between a 911 call and arrival at an ER.
- Some surgery centers are accused of overlooking high-risk health problems and treat patients who experts say should be operated on only in hospitals, if at all. At least 25 people with underlying medical conditions have left surgery centers and died within minutes or days. They include an Ohio woman with out-of-control blood pressure, a 49-year-old West Virginia man awaiting a heart transplant and several children with sleep apnea.
- Some surgery centers risk patient lives by skimping on training or lifesaving equipment. Others have sent patients home before they were fully recovered. On their drives home, shocked family members in Arkansas, Oklahoma and Georgia discovered their loved ones were not asleep but on the verge of death. Surgery centers have been criticized in cases where staff didn't have the tools to open a difficult airway or skills to save a patient from bleeding to death.
How Cuba Became a Biopharma Juggernaut -- We hear little about the Cuban biopharmaceutical industry, but it merits attention. The sophisticated system, which the small island nation developed despite limited resources and access to international markets, holds about 1,200 international patents and sells medicine and equipment to more than 50 countries. The industry is entirely publicly funded and managed, and is a key component of one of the most efficient public health care systems in the world. Its goal is to develop drugs of strategic importance to the health care of all people. High-tech industrial development isn’t the first thing that comes to mind for many when thinking of Cuba. The island nation more commonly invokes visions of a stunning place frozen in time: Crumbling colonial buildings sit alongside beautiful beaches, while 1950s American cars line city streets awash in the sun’s afternoon glow. But there’s something missing in this outsiders’ view of the country, as it can’t account for the enormous successes of Cuba’s biopharmaceutical[1] industry and health care systems. In light of ongoing debates in the U.S. and other nations about the role of government in ensuring people have the health care coverage they need, Cuba’s experience could prove instructive. Local production covers more than 60% of finished pharmaceutical products used in the country, and the industry’s trade balance has remained consistently positive for most of the period 1995-2015. Cuba’s biopharma sector has been able to finance many programs carried out within the nation’s public health system, and it is the main reason behind the affordability of the medical products supplied by the system. In terms of the biotechnology sector specifically, while Cuba’s government does not publish extensive statistics on the matter, industry officials report that the Cuban biotech sector managed to maintain positive, if modest, cash flows at a time when overall cash flows of the industry worldwide had been mostly negative for decades.[2]
Australia May Become First Country to Eliminate Cervical Cancer -- The International Papillomavirus Society has announced that Australia could become the first country to eliminate cervical cancer entirely. According to a new study, Australia's efforts to distribute a human papillomavirus (HPV) vaccinefor free in schools have been a resounding success. The sexually transmitted infection causes 99.9 percent of cases of cervical cancer. In 2007, the Australian federal government began offering the vaccine to girls aged 12-13, and in 2013 it was made available to boys, too. Girls and boys outside of that age bracket but under nineteen are also entitled to two free doses of the vaccine.Between 2005 and 2015, the percentage of Australian women aged between 18 and 24 who had HPV dropped from 22.7 percent to just 1.1 percent. Immunization rates have increased further since 2015, contributing to what's being described as a "herd protection" effect. Coupled with a more advanced screening test that was introduced by the Australian government in December 2017, there are hopes that no new cases of cervical cancer will be reported within ten or twenty years. In the US, the HPV vaccine is not free. It can cost as much as $450 for the full regimen, according to the Association of Reproductive Health Professionals, although financial assistance is often available. The situation is much worse in the developing world, where papillomavirus incidence rate remains high. "Two-thirds of the world's population of women don't get access to what Australian women do," said Joe Tooma, the chief executive of the Australian Cervical Cancer Foundation. "Unless we do something, it will still be one of the major cancer killers in developing countries."
US emergency departments report significant increase in opioid overdoses among all age groups, including infants - Two recent reports—from the American Academy of Pediatrics (AAP) and the Centers for Disease Control (CDC)—reveal that hospital emergency departments in the United States continue to see increases in opioid overdoses. Moreover, the population most at risk of opioid poisoning appears to be children under the age of six years old. The AAP study begins with a dire summary, noting: “The number of deaths in the United States that are attributable to opioid medications has doubled since 2000.” Prescription drug poisoning has become the primary cause of injury-related deaths in the US, and prescription drug poisoning continues, despite prevention strategies, to be a “major cause of morbidity among children.” Published this month, the AAP report highlights worrisome trends in the continuing opioid epidemic, especially amongst the youngest. Between 2004 and 2015, there were 3,647 opioid-related hospitalizations of children; of this number, 42.9 percent required treatment in Pediatric Intensive Care Units (PICUs). Hospitalizations requiring PICU care for opioid poisoning doubled, with 37 percent of these cases requiring mechanical ventilator support. The AAP highlights the extensive impact of the opioid crisis, explaining, “[Emergency department] visits for prescription-opioid overdose, abuse, and misuse now rival those of illicit drugs, including heroin and cocaine.” While this fact has been supported by numerous studies over the past decade, the AAP report brings to light a disturbing and previously underreported facet of the burgeoning opioid crisis: among children under the age of six, “opioids now account for the majority of drug poisonings.” During the study period, the mortality rate for children visiting the hospital for opioid poisoning was 1.6 percent. While deaths decreased from 2.8 percent in 2004 to 1.3 percent in 2015, the incidence of pediatric opioid exposure increased, with significant intervention required by PICUs. The AAP notes that, among those ages 1 to 19 years, the incidence of prescription opioid poisonings nearly doubled between 1997 and 2012, with the greatest increase occurring among children between the ages of one and four.
Opioid crisis: overdoses increased by a third across US in 14 months, says CDC -- Opioid overdoses increased by roughly 30% across the US in just 14 months between 2016 and 2017, according to a new report by the US Centers for Disease Control and Prevention (CDC). The CDC called the data a “wake up call to the fast-moving opioid overdose epidemic”. It recorded 142,000 overdoses in US hospital emergency departments between July 2016 and September 2017. Although not all overdoses in the study were fatal, they are part of the grim toll opioids have taken. In the US in 2016, illicit and prescription drug overdoses killed 64,000 people. “Our results through September 2017 show opioid overdoses are increasing across all regions, most states for most men and women and most age groups,” said Dr Anne Schuchat, acting director of the CDC. “We’re currently seeing the highest overdose death rates ever recorded in the United States.” Schuchat later added: “The infrastructure to fully tackle this problem is fragile.” The CDC’s Vital Signs study looked at two data sets. The first, the Enhanced State Opioid Overdose Surveillance (ESOOS) program, is a snapshot of emergency department data from 16 states. Eight of those states included saw “substantial” overdose increases of at least 25%. Two states reported overdoses more than doubled – including in Wisconsin with 109% and Delaware with 105% increases. Another dramatic increase occurred in Pennsylvania, where overdoses went up 81%. Overdoses also increased in “cities and towns of all types”, the report said. Overdoses are often associated with rural America but metropolitan areas with 1 million or more people saw the steepest increase, at 54%. While the CDC did not look at the source of opioids, Schuchat said illicit fentanyl-laced heroin is “a very major problem right now”.
How the VA Fueled the National Opioid Crisis and Is Killing Thousands of Veterans - Keller was a U.S. Navy vet wracked with constant pain, and because his right arm had been crippled by a stroke, he had to use his left hand to scrawl a note of apology to his buddy: “Marty, Sorry I broke into your house and took your gun to end the pain! FU VA!!! Can’t take it anymore.” He then drove to his nearby Veterans Affairs outpatient clinic in Wytheville, Virginia, and put the barrel of his friend’s 9 mm pistol to his head and shot himself. Grieving friends told The Roanoke Times that Keller couldn’t handle how the VA was weaning him off painkillers. His doctors had told him cutting back would extend his life, but Marty Austin, whose gun Keller stole that night, told the paper, “He did not want a longer life if he was going to be miserable and couldn’t do anything because of the pain.” Suicides like Keller’s and the widespread despair behind them are yet another tragic element of a national opioid crisis blamed for most of the 64,000 fatal drug overdoses a year. Opioids, mostly illegally obtained counterfeit pills and heroin, now account for 63 percent of all drug deaths in the U.S., with fatalities climbing at an astounding rate of nearly 20 percent a year. In fact, the estimated number of drug deaths in 2016 topped the total number of soldiers killed in the Iraq and Vietnam wars. There’s a grim irony in that statistic, because the Department of Veterans Affairs has played a little-discussed role in fueling the opioid epidemic that is killing civilians and veterans alike. In 2011, veterans were twice as likely to die from accidental opioid overdoses as non-veterans. One reason, as an exhaustive Newsweek investigation—based on this reporter's book, Mental Health, Inc.—found, is that for over a decade, the VA recklessly overprescribed opiates and psychiatric medications. Since mid-2012, though, it has swung dangerously in the other direction, ordering a drastic cutback of opioids for chronic pain patients, but it is bungling that program and again putting veterans at risk. (It has also left untouched one of the riskiest classes of medications, antipsychotics—prescribed overwhelmingly for uses that aren’t approved by the Food and Drug Administration (FDA), such as with post-traumatic stress disorder.)
Children need microbes — not antibiotics — to develop immunity, scientists say - Allowing children to play with dirt actually helps them build their immune systems and reduce their chances of developing chronic conditions, such as asthma. New science shows that blasting away tiny organisms called microbes with our hand sanitizers, antibacterial soaps and liberal doses of antibiotics is having a profoundly negative impact on our kids’ immune systems, says microbiologist Marie-Claire Arrieta, co-author of a new book called Let Them Eat Dirt: Saving Our Children from an Oversanitized World. The assistant professor at the University of Calgary, along with her co-author, esteemed microbiologist Brett Finlay, make the case that we’re raising our kids in a cleaner, more hyper-hygienic environment than ever before. They say that overdoing it the way we are is contributing to a host of chronic conditions ranging from allergies to obesity. I chatted with Arrieta recently to find out more. (interview transcript)
Yes, bacon really is killing us - For a few weeks in October 2015, half the people I knew were talking about the news that eating bacon was now a proven cause of cancer. As one journalist wrote in Wired, “Perhaps no two words together are more likely to set the internet aflame than BACON and CANCER.” The BBC website announced, matter-of-factly, that “Processed meats do cause cancer”, while the Sun went with “Banger out of Order” and “Killer in the Kitchen”. The source of the story was an announcement from the World Health Organization that “processed meats” were now classified as a group 1 carcinogen, meaning scientists were certain that there was “sufficient” evidence that they caused cancer, particularly colon cancer. The warning applied not just to British bacon but to Italian salami, Spanish chorizo, German bratwurst and myriad other foods.Health scares are ten-a-penny, but this one was very hard to ignore. The WHO announcement came on advice from 22 cancer experts from 10 countries, who reviewed more than 400 studies on processed meat covering epidemiological data from hundreds of thousands of people. It was now possible to say that “eat less processed meat”, much like “eat more vegetables”, had become one of the very few absolutely incontrovertible pieces of evidence-based diet advice – not simply another high-profile nutrition fad. As every news report highlighted, processed meat was now in a group of 120 proven carcinogens, alongside alcohol, asbestos and tobacco – leading to a great many headlines blaring that bacon was as deadly as smoking. The WHO advised that consuming 50g of processed meat a day – equivalent to just a couple of rashers of bacon or one hotdog – would raise the risk of getting bowel cancer by 18% over a lifetime. (Eating larger amounts raises your risk more.) Learning that your own risk of cancer has increased from something like 5% to something like 6% may not be frightening enough to put you off bacon sandwiches for ever. But learning that consumption of processed meat causes an additional 34,000 worldwide cancer deaths a year is much more chilling. According to Cancer Research UK, if no one ate processed or red meat in Britain, there would be 8,800 fewer cases of cancer. (That is four times the number of people killed annually on Britain’s roads.)
China Reports Outbreak Of Highly Contagious Bird Flu - A dangerous strain of bird flu that has been circulating in 2013 could be on the verge of snowballing into a global pandemic. The Paris-based Organization for Animal Health said Wednesday that a farm in Shaanxi province has reported an outbreak of a highly dangerous pathogen, while a separate farm in Guangxi province has reported an outbreak of H5N6, another dangerous strain of bird flu.The H5N6 virus killed 23,950 ducks out of a flock of 30,462 ducks, according to the Chinese Ministry of Agriculture. The remaining birds were all slaughtered..In Shaanxi, the H7N9 virus killed 810 layers out of a flock of 1,000 birds.Last year, the number of bird flu cases in China spiked as the annual outbreak was much worse than normal. It also saw the virus split into two distinct strains that are so different, they no longer respond to the same vaccines, according a Reuters report from late last year. H7N9 is becoming increasingly pathogenic, meaning it possesses the capacity to kill infected birds. According to the South China Morning Post, Yoshihiro Kawaoka of the University of Wisconsin and a colleagues tested a version of the new H7N9 strain taken from a person who died from their infection last spring. They found that the virus replicated efficiently in mice, ferrets and non-human primates, and that it caused even more severe disease in mice and ferrets than a low pathogenic version of the same virus that does not cause illness in birds.But perhaps the most disturbing aspect of the virus is its ability to spread easily from cage to cage. When placed in cages adjacent to healthy ferrets, the virus will spread easily from infected animals and health animals, suggesting the virus can be transmitted by respiratory droplets such as those produced by coughing and sneezing. Since 2013, the H7N9 bird flu virus has sickened at least 1,562 people in China and killed at least 612. Some 40 percent of people hospitalized with the virus die.
Lassa fever: The killer disease with no vaccine - BBC News: Since the beginning of the year, Nigeria has been gripped by an outbreak of a deadly disease. Lassa fever is one of a number of illnesses which can cause dangerous epidemics, but for which no vaccine currently exists. Lassa fever is not a new disease, but the current outbreak is unprecedented, spreading faster and further than ever before. Health workers are overstretched, and a number have themselves become infected and died. The potentially fatal disease is a so-called "viral haemorrhagic fever", which can affect many organs, and damage the body's blood vessels. But it is difficult to treat. Most people who catch Lassa will have only mild symptoms such as fever, headache and general weakness. They may have none at all. However, in severe cases, it can mimic another deadly haemorrhagic fever, Ebola, causing bleeding through the nose, mouth and other parts of the body. Lassa fever normally has a fatality rate of about one per cent. But in the Nigerian outbreak it is thought to be more than 20% among confirmed and probable cases, according to the country's Centre for Disease Control. '
There is a terrifying outbreak of Lassa fever in Nigeria right now - Nigerian health authorities are calling the current outbreak of Lassa fever “unprecedented.” Lassa fever is a hemorrhagic virus. It starts out looking like the flu a couple of weeks after someone is exposed to the virus, and in about 20% of cases can damage blood vessels and organs to the point where they bleed internally, or externally through the eyes, nose, and gums. It’s endemic to parts of western Africa, and every year there are anywhere between (pdf) 100,000 to 300,000 cases of reported in countries including Nigeria, Sierra Leone, Liberia, and Guinea. So far, the Nigerian Center for Disease Control has reported over 353 lab-confirmed cases (out of over 1,100 suspected instances) of the virus within 18 states clustered near the coast and center of the country. Last year, there were 143 confirmed cases, up from 101 the year before. Yet it’s not just the number of cases that are making this year so bad—it’s the lethality of the strain. Normally, Lassa is only fatal in an average of 1% of cases, and 15% for those people who have to go to the hospital—a far cry from other hemorrhagic viruses like Ebola, which kills about 70% of those infected. But according to a report (pdf) from Mar. 4, this time the disease is killing 23.8% of those infected. There have been 110 deaths since the beginning of the year.
Absolute hell: the toxic outpost where Mumbai’s poorest are ‘sent to die’ - Away from the hustle and bustle of Mumbai, a sense of intense gloom pervades Mahul. The former fishing village to the east of India’s great metropolis is now home to 30,000 people who were “rehabilitated” after their slum homes were demolished to make way for infrastructure projects. They live in 72 seven-storey buildings jammed together in the shadow of oil refineries, power stations and fertiliser plants. The air is pungent with the strong smell of chemicals. Sewage overflows into narrow streets. With the nearest government hospital seven miles away, masked patients stand in obedient lines outside homeopathy clinics, coughing. Mahul is “critically” polluted, according to India’s central pollution control board. A survey by the city’s KEM hospital found that 67.1% of the neighbourhood’s residents complained of breathlessness more than three times a month, 86.6% complained of eye irritations and 84.5% had experienced feeling a choking sensation. “There are no schools, hospitals, medical shops or means of livelihood here,” says Anita Dhole, a 40-year-old who was relocated to Mahul after her home was demolished when authorities cleared a secure zone around the city’s colonial-era Tansa water pipeline 12 months ago. “But there are smoke-belching chimneys – and a crematorium. It’s the government’s way of telling us that they’ve sent us here to die.” Rishi Agarwal, a Mumbai-based urban planner, believes that the city’s development is crushing its poorest citizens. “It’s part of the larger gentrification, which is rapidly progressing in Mumbai,” he says. “In the past two decades, the government’s intention has been to push the most underprivileged citizens to the outskirts in order to create housing near the centre for more affluent residents. “The displaced have been dumped in rehabilitation centres. These places are devoid of basic amenities like ventilation, waste management and transport links. Mahul, particularly, is absolute hell.”
Why the world needs to get ready for more people dying -- For decades, lifespans have grown ever longer, delaying the inevitable fact of death. But the coming years will see a sharp rise in the number of people dying, presenting a challenge about how we care for those at the end of life.We started the 20th Century without penicillin, but now genomic medicine raises the possibility of increasingly sophisticated treatments tailored to an individual's genetics.In little more than a century, medical and scientific breakthroughs like these have seen life expectancy increase dramatically - by about 30 years, to 79 for men and 83 for women in England, for example.Death had been an unpredictable event: most people died suddenly, often from infectious diseases. Now, infectious diseases that were once fatal are curable, improved survival rates mean many people live for years with cancer, while dementia has become the most common cause of death in England and Wales. We are living longer and dying slower, but how well prepared are we for the challenges that come with that?A central challenge is presented by the fact that we are going to have to prepare for many more deaths.As lifespans increased - and individuals delayed dying - the number of deaths decreased.But everyone has to die and we are now at a tipping point. In England, for example, there are currently around half a million deaths each year. This will increase by about 20% in total over the next 20 years, until an extra 100,000 people are dying each year. Worldwide, the pattern is similar. The World Health Organization estimates that the number of deaths worldwide will rise from 56 million in 2015, to 70 million in 2030. This rise will mainly be caused by an increase in non-communicable diseases such as heart disease and cancer. This is illustrative of a second challenge: most people will suffer from multiple medical problems in their final years. They will experience a gradual physical - and often cognitive - decline before they die.
What if billionaires could live forever? - Several billionaires, most of them Californians, have been funding firms involved in developing life-extension technologies. What if they succeed? What if billionaires alive today live indefinitely and get ever richer? February saw the announcement in Silicon Valley by X Prize founder, serial entrepreneur, and all-round gee-whiz future-technology promoter Peter Diamandis that he had cofounded a new company called Celularity.He did so together with Dr. Bob Hariri, a renowned biomedical entrepreneur known for innovations in harvesting placental stem cells. Hariri had previously founded Celgene Cellular Therapeutics.Here's the new company's aim, as expressed on its website: "Celularity seeks to make 100 years old the new 60, and to provide people with maximal aesthetics, mobility, and cognition as they age."According to Diamandis, Celularity "is being born above the line of supercredibility, with $250 million (€203 million) in funding from Celgene, United Therapeutics Corporation, Sorrento Therapeutics, Human Longevity, and a group of venture capitalists." So it's clear the company has serious funding. Does it have a serious scientific basis? It seems likely that the answer is yes. It's well understood that stem cells have great promise for regenerative medicine — and Celularity's focus is on using stem cells to regenerate tissues and organs for aging bodies. "Studies have shown as we age the population of stem cells resident in our organs and tissues declines exponentially, diminishing our body's ability to heal and repair itself.... By replenishing our reservoir of stem cells, nature's repair kit, on an ongoing basis, we can augment our longevity," Celularity's website says.Some of the more recognizable names who have been putting money into such efforts: Larry Ellison (founder of Oracle), Larry Page and Sergey Brin (founders of Google), Jeff Bezos (founder of Amazon), and Peter Thiel, cofounder of PayPal and Palantir Technologies.
Judge to Decide if Monsanto Roundup Cancer Lawsuits Move Forward at Crucial Hearing - A federal judge in San Francisco will hear from expert witnesses on the science and safety of glyphosate at critical hearing starting Monday that will determine if plaintiffs around the country can move forward with their legal action against Monsanto over cancer claims . More than 365 pending lawsuits against the agribusiness giant have been centralized in multidistrict litigation under U.S. District Judge Vince Chhabria. The plaintiffs claim they or their loved ones developed non-Hodgkin Lymphoma (NHL) due to exposure to glyphosate, the active ingredient in Monsanto's Roundup weedkiller. The judge will not decide whether or not glyphosate causes cancer. Rather, Chhabria will determine if the experts providing scientific opinions regarding causation will be permitted to testify at trial, explained Baum, Hedlund, Aristei & Goldman, one of the law firms leading the litigation. The firm wrote: "If Judge Chhabria determines that the experts used valid methodologies, then the cases would proceed to trial and the experts would provide evidence and testimony regarding whether Roundup generally causes NHL and additionally whether that propensity for inducing NHL caused a particular Roundup user's NHL. The jury would then decide whether the evidence more likely than not shows Roundup caused the individual's NHL." Simply—"It's game over for the plaintiffs if they can't get over this hurdle," as David Levine, University of California, Hastings law professor told the Associated Press : Glyphosate, the star ingredient in Monsanto's Roundup, is the world's most popular herbicide and is applied on everything from home gardens to crops that are genetically engineered to resist it. The herbicide was declared a "probable human carcinogen" in 2015 by the International Agency for Research on Cancer (IARC).
Analysis: 60 Million Acres of Monarch Habitat to Be Doused With Toxic Weed Killer — Within the next two years, more than 60 million acres of monarch habitat will be sprayed with a pesticide that’s extremely harmful to milkweed, the only food for monarch caterpillars, according to a new analysis by the Center for Biological Diversity.Monarch populations have already fallen by 80 percent in the past two decades due to escalating pesticide use and other human activities. Now the Center’s report A Menace to Monarchs shows that the butterfly faces a dangerous new threat from accelerating use of the notoriously drift-prone and highly toxic weed killer dicamba across an area larger than the state of Minnesota.“America’s monarchs are already in serious trouble, and this will push them into absolute crisis,” said Nathan Donley, a senior scientist at the Center. “It’s appalling that the EPA approved this spraying without bothering to consider the permanent damage it will do to these butterflies and their migration routes.”Today’s report found that by 2019, use of dicamba will increase by nearly 100-fold on cotton and soybean fields within the monarch’s migratory habitat across the heart of the United States. Other key findings include:
- Accelerating harm: In addition to 61 million acres of monarch habitat being directly sprayed with dicamba, an additional 9 million acres could be harmed by drift of the pesticide.
- Deadly timing: The timing and geographical distribution of dicamba use coincides precisely with the presence of monarch eggs and larva on milkweed.
- Double trouble: Dicamba degrades monarch habitat both by harming flowering of plants that provide nectar for adults as they travel south for the winter and by harming milkweed that provides an essential resource for reproduction.
- Greater menace to milkweed: Research has shown that just 1 percent of the minimum dicamba application rate is sufficient to reduce the size of milkweed by 50 percent, indicating it may have a greater impact on milkweed growth than the already widely used pesticide glyphosate.
Monarch Butterfly Migration Could Collapse, Scientists Warn - The yearly count of monarch butterflies overwintering in Mexico, released Monday, shows a decrease from last year's count and confirms the iconic orange and black butterfly is still very much at risk. The count of 2.48 hectares of occupied winter habitat is down from 2.91 hectares last winter.Overall, monarchs have declined by more than 80 percent over the past two decades. "Another year, another reminder: Our government must do what the law and science demands, and protect monarchs under the Endangered Species Act, before it's too late," said George Kimbrell, legal director at the Center for Food Safety. "The remaining question is whether the Trump administration wants to do Monsanto's bidding or protect monarchs for future generations." "We could lose the monarch butterfly if we don't take immediate action to rein-in pesticide use and curb globalclimate change ," said Tierra Curry, a senior scientist at the Center for Biological Diversity and co-author of the 2014 petition to protect monarchs under the ESA. Roughly 99 percent of all North American monarchs migrate each winter to oyamel fir forests on 12 mountaintops in central Mexico. Scientists estimate the population size by measuring the area of trees turned orange by the clustering butterflies. That population has been dangerously low since 2008. In the mid-1990s the population was estimated at nearly one billion butterflies, but this year's population is down to approximately 93 million butterflies. This year's drop is attributed in part to unseasonal weather last year including late spring freezes that killed milkweed and caterpillars, and an unseasonably warm fall that kept late-season monarchs from migrating.
The Oligopolization of Food Supply Hits a Snag - Don Quijones - German drug and agrichemicals giant Bayer has suffered a setback in its efforts to acquire the world’s biggest seed company, Monsanto. Bayer had reckoned on winning regulatory approval for its $63.5 billion takeover bid at the beginning of this year, but this week the company cautioned that it could take longer than expected to receive final clearance from EU regulators.The corporate marriage between Bayer and Monsanto has already received the blessing of more than half the 30 antitrust authorities that need to sign off on the acquisition, including those in the US and Brazil. If given the go-ahead by the European Commission, this mega-merger would create the world’s largest supplier of seeds and farm chemicals.Bayer’s interest in Monsanto is reflective of a trend that began decades ago but picked up speed in 2015: the increasing concentration of power and control over the global food chain. US giants Dow and DuPont were the first to tie the knot. Their merger, completed in 2017, resulted in a combined seed-and-pesticide unit that, in terms of annual sales, is roughly the size of its biggest current rival, Monsanto.In the last two years, Chinese chemical giant ChemChina has bought up Swiss pesticide-and-seed player Syngenta; and fertilizer giants Agrium and Potash Corp of Saskatchewan have merged into a new mega-player called Nutrien.This gathering process of oligopolization is happening at virtually all levels of the global food industry, including on the buy side — companies that purchase farmers’ crops and process them into livestock feed, food ingredients, and biofuel, as well as serve as the intermediary in grain export markets. But it’s the concentration of power and ownership in the global seed industry that should be the biggest cause of concern, since seeds are the primary link of the global food chain. In 2016, just six American and European companies – Monsanto, Dupont, Syngenta, Dow, Bayer, and BASF – controlled 100% of the genetically modified seeds planted around the world. Those six are now five. If Bayer’s bid for Monsanto is successful, they will become four.
Glyphosate and the General Poison Paradigm: Destroy the Soil; Destroy Antibiotics; Drive Climate Chaos - “Field studies cited in the report show the half-life of glyphosate in soil ranges between a few days to several months, or even a year, depending on soil composition. The authors say the research demonstrates that soil sorption and degradation of glyphosate vary significantly depending on the soil’s physical, chemical, and biological properties.” Who would’ve thought the effects of pesticides and GMOs depend on environmental factors! Certainly not our flat-earther scientific reductionists and biological determinists.
- 1. As an antibiotic and general animal poison glyphosate wrecks critical soil ecosystems, from bacteria to earthworms and beyond. Therefore it takes its place as part of the corporate campaign to destroy all soil, whose continued existence depends upon these soil ecosystems. All actions of industrial agriculture directly destroy the soil. Therefore this is a primary goal of all participants and supporters of this mode of agriculture.
- 2. Along with antibiotic abuse in CAFOs and genetic engineering, glyphosate and other pesticides are part of the general corporate campaign to wipe out antibiotics as an effective medical treatment. Glyphosate does this two ways: (1) As an abused antibiotic itself, it drives microbial resistance among botulins, salmonella, and other pathogenic bacteria. This effect is related to how glyphosate decimates our essential gut bacteria while selectively sparing those pathogens. (2) The main source of antibiotic agents is the same soil bacteria which are being decimated by glyphosate. By destroying soil ecosystems, the glyphosate campaign works to destroy the very basis of antibiotic research and development. All actions of industrial agriculture work to eradicate antibiotic medical technology. Therefore this is a primary goal of all participants and supporters of this mode of agriculture.
- 3. Soil ecosystems are essential for the cycling of carbon in forms other than the atmospheric release of carbon dioxide. Proximately, soil organisms draw CO2 down from the air and build soil organic matter in the form of humus. They help maintain healthy, prolific plant growth with maximum incorporation of carbon in the plant biomass. This comprises the proximate carbon sink. Over the longer run, soil organisms greatly enhance the process of carbon being incorporated into water solution (in the form of calcium bicarbonate), carried to the ocean, and from there incorporated into the microscopic shells and skeletons of oceanic algae whose shells then rain down to the ocean floor where they solidify as limestone. This is the ultimate carbon sink, from which the carbon doesn’t volcanically return to the air for many millions of years.
By decimating soil ecosystems, glyphosate and other pesticides stanch both the proximate and long run processes of carbon sinking. They maximize the atmospheric release of CO2.
Commercial pesticides: Not as safe as they seem -- New regulations are needed to protect people and the environment from toxic pesticide ingredients that are not currently subject to safety assessments. This is the conclusion of the first comprehensive review of gaps in risk assessments for "adjuvants" - ingredients added to pesticide formulations to enhance the function or application of the active ingredient. Ignoring the potential dangers of other ingredients in commonly used commercial pesticides leads to inaccuracies in the safety profile of the pesticide solution, as well as confusion in scientific literature on pesticide effects, finds the review published in Frontiers in Public Health. "Exposure to environmental levels of some of these adjuvant mixtures can affect non-target organisms -- and even can cause chronic human disease," says Dr Robin Mesnage from King's College London, who co-wrote the review with Dr Michael Antoniou. "Despite this, adjuvants are not currently subject to an acceptable daily intake and are not included in the health risk assessment of dietary exposures to pesticide residues. "Pesticides are a mixture of chemicals made up of an active ingredient - the substance that kills or repels a pest - along with a mixture of other ingredients that help with the application or function of the active ingredient. These other ingredients are known as adjuvants, and include dyes, anti-foaming agents and surfactants. Regulatory tests for pesticide safety are currently only done on the active ingredient, which assumes the other ingredients have no effects. This means the full toxicity of a pesticide formulation -- including those used in both agriculture and domestic gardens -- is not shown. "Currently, the health risk assessment of pesticides in the European Union and in the United States focuses almost exclusively on the active ingredient," explains Dr Mesnage. "Despite the known toxicity of adjuvants, they are regulated differently from active principles, with their toxic effects being generally ignored."
The bee(tle)s are dying at an alarming rate - Beetles that depend on dead or decaying wood, often with weighty frames and photogenic jaws—called saproxylic beetles—are fascinating insects, and often kids’ favorites (think stag beetles). According to a new report, they are also some of the most threatened, with nearly one-fifth of Europe’s saproxylic beetles at risk of extinction due to major declines in old trees. The International Union for the Conservation of Nature (IUCN) warns that their widespread decline could have serious repercussions for other species and the ecosystems the beetles inhabit. The conservation group determined a number of causes for the decline in the veteran trees that the beetles rely on for at least part of their lifecycle, ranging from logging and wood harvesting to urbanization and tourism to increasing wildfires. According to the report, “old and hollow trees have become increasingly scarce around the world, including in Europe, due to land management practices.” This is a major problem for saproxylic beetles, as they wait for old trees to start to disintegrate before colonizing them and laying eggs.“Saproxylic beetles are part of biodiversity, part of the ecosystem, part of what keeps the natural world functioning.”Dr. Keith Alexander, a leading UK expert on the beetles who served as the main advisor for the study, told Earther that measures requiring a minimum amount of deadwood in landscapes should be implemented to ensure the beetles’ survival. “Veteran trees should be preserved in forests, pastureland, orchards, and urban areas,” he said. Alexander said he was surprised to find nearly one fifth of the species threatened, and that “things are worse than expected. People really do need to start to take nature conservation more seriously, or it will be too late sooner than you think.”
Lead in Grape Juice: FDA's Proposed Limit Won't Protect Children - On March 12, the Food and Drug Administration (FDA) will be leading the U.S. delegation in the Netherlands proposing that the Codex Alimentarius Commission adopt a maximum lead limit of 40 parts per billion (ppb) in grape juice. The current limit, set by Codex in the 1980s, is 50 ppb. While it's a small step in the right direction, FDA's proposal falls woefully short of adequately protecting children from lead. For context, the 40 ppb proposed Codex limit would be 2.6 times greater than the 15 ppb lead action level established for drinking water by the U.S. Environmental Protection Agency ( EPA ) in 1991 and 8 times FDA's limit of 5 ppb for bottled water. In addition, a child drinking a single 8-ounce serving of juice with a lead concentration of 40 ppb will be exposed to 160 percent of FDA's maximum daily intake level of 6 micrograms of lead per day . This level, set in 1993, should be much lower because it does not reflect scientific discoveries of the past 25 years showing harm to children at lower levels . The proposed limit is disturbing given the scientific consensus recognizing that NO safe level of lead in blood has been identified and analysis from EPA showing that food is currently the source of half of the lead exposure for the average 1 to 6 year old child. It is also troubling given that food manufacturers often rely on Codex standards and may use them to reassure the public and their customers that the food is "safe." The working group appeared to look no further than the recent levels of lead in the international grape juice market and selected 40 ppb because 97 to 98 percent of sampled products currently comply. The working group considered 30 ppb but decided that it was too restrictive, as only 94 to 96 percent of grape juice would be compliant. Eighty-five percent of the samples would comply with 20 ppb, the most "protective" level considered. Again, the human health effects of these decisions were not considered.
New Study Details How Climate Change Will Affect California Agriculture -- It's hard to understate California's agricultural significance: On just 1.2 percent of U.S. farmland, California produces more than a third of the country's vegetables and about two-thirds of its fruits and nuts. A new study from researchers at the University of California's Davis and Merced campuses takes a broad look at how climate change will affect the country's most important agricultural state, and the results are alarming. To put it in the words of the scientists themselves: “The detailed review presented in this paper provides sufficient evidence that the climate in California has changed significantly…and justifies the urgency and importance of enhancing the adaptive capacity of agriculture and reducing vulnerability to climate change.” The detailed review they’re talking about is a comprehensive analysis of various climate-related trends over the past century or so—precipitation, temperature, droughts, extreme weather conditions, and the amount of snowpack in the Sierra Nevada mountains (which provides much of California’s agricultural water)—to develop forward projections for the state’s very complex agricultural landscape. The results are as varied as the state’s agricultural landscape. Among the warning signs found in California are increased maximum and decreased minimum temperatures, unpredictable precipitation, reduced snowpack, and a greater frequency of climate emergencies (like droughts and floods). By tracking those factors in specific areas, the researchers are able to make certain predictions. For example: Fruits like apricots, peaches, nectarines, and plums have specific cold-weather requirements (at least as they’re grown now). Currently, about 20-45 percent of the Central Valley is able to support those crops; by the end of the century, only 10 percent of that same area will be suitable as daytime heatwaves increase and nighttime temperatures rise. For crops requiring even more cold weather, like apples, cherries, and pears? “Virtually no areas will remain suitable by 2041-2060,” reads the study. Those aren’t major crops for the Central Valley today, but in the mid-1990s, California produced 8.5 percent of the nation’s apples. In a few decades? Zero percent.
A slow-motion catastrophe threatens 350-year-old farms - On the lower eastern shore of Maryland, the stately Almodington plantation overlooks the Manokin River as it drains into the Chesapeake Bay. First surveyed in 1663, the expansive farm sits a few miles from Princess Anne, a town named for the daughter of King George II. For 350 years, this region’s rich, sandy soils and warm, moist climate have been ideal for growing fruits and vegetables. Tomato production supported 300 canneries in the area at its peak in the early 1900s. Today, however, Somerset County is the country’s sixth-largest poultry producer. The county’s roughly 60 row-crop farmers now grow corn and soybeans for chicken feed. While the farms have adapted to meet shifting demand, it is the unseen changes happening underfoot that may have a long-lasting impact. In the fields beyond the picturesque manor, six-foot-tall salt-tolerant weeds thrive. Nearby, a decaying corn cob lies in bare, bleached soil pocked with patches of blue-green algae. Last year’s dismal corn yield was this field’s last: The leasing farmer abandoned a 30-acre parcel. It’s amazing corn plants grew at all. “The soil salt content is six to seven parts per thousand. Corn, typically, won’t grow once salt is more than 0.8 parts per thousand,” says Keryn Gedan, a wetland ecologist. Sea-level rise near the Chesapeake Bay, the largest estuary in the United States, is twice as high as the global average. It’s not solely the result of atmospheric warming, melting ice, and expanding waters. The ground is also subsiding. This is happening for a variety of reasons, most notably aquifer withdrawals and the continued settling of land that had been pushed up by ice sheets to the north during the last Ice Age. “We are sinking and the water is rising,” says Michael Scott, a geographer at Salisbury University in Maryland. The result of this slow-motion catastrophe is that saltwater is threatening America’s first colonial farms.
EPA plan seeks cuts in pollution that causes Lake Erie algae (AP) — The U.S. Environmental Protection Agency called for stepped-up efforts Wednesday to reduce nutrient pollution that contributes to algae blooms in Lake Erie but recommended no new federal regulations to accomplish the task.A plan released by EPA's Chicago-based Region 5 office sets targets for reducing phosphorus that feeds giant algae masses that in the past decade have caused fish kills and beach closures on the shallowest of the Great Lakes, harming tourism and threatening drinking water. A 2014 bloom settled over the drinking water intake pipe for Toledo, Ohio, contaminating the municipal supply for more than 400,000 people.But the strategy relies largely on existing state and local programs and voluntary actions by the region's farms to prevent phosphorus-laden fertilizers, manure and sewage from flowing into waterways, particularly in a dissolved form that creates toxins. It acknowledges some tougher rules might be needed but leaves those decisions to the states."EPA is working with federal and state partners to ensure local communities and economies continue to benefit from this vital resource," regional administrator Cathy Stepp said, describing the plan as "a significant step in fulfilling our commitment to protecting the health of Lake Erie."The blueprint seeks a 40 percent reduction in the amount of phosphorus entering the lake by 2025, a goal endorsed previously by Ohio, Michigan, Indiana and the Canadian province of Ontario. That would require a reduction of about 7.3 million pounds annually from U.S. sources, the EPA plan said.It said a critically important need is reducing runoff of phosphorus during spring storms through better sewage treatment, stormwater management and farm practices. For agricultural lands — the biggest source of dissolved phosphorus in Lake Erie's algae-choked western basin — the plan outlined measures that can keep fertilizers from running off, including reducing nutrient applications on frozen or snow-covered ground, saturated soils and before significant rainfall.
Trump might release more sewage. Warming could make it worse -- President Trump wants to loosen the rules for monitoring pollution discharges from sewers and industrial facilities as part of his infrastructure push. That could affect areas seeing more rain because of climate change, experts say. When the Clean Water Act was enacted in 1972, regulators limited phosphorus pollution into Lake Erie to 11,000 metric tons. Before then, about 29,000 metric tons had entered the lake every year, mostly from sewage treatment plants.Then the hog farmers came. Agriculture began dotting the Maumee River watershed in Indiana, Ohio and Michigan. Phosphorus from those facilities followed. It poured into Lake Erie, giving rise to blooms of algae as excess nutrients reduced oxygen and, in turn, aquatic biodiversity. Fishermen dependent on walleye and other fish suffered.Five of Lake Erie's worst algal blooms have occurred since 2011. To compensate, regulators will have to clamp down on pollution — the next phosphorus limit will be less than 7,000 metric tons, said Jeff Reutter, former director of the Ohio Sea Grant program at Ohio State University. Climate change is adding to the problem, as increasingly intense rainfall events are flushing more runoff into the lake. A study published last July in Science said climate change could boost nitrogen runoff associated with fertilizers nationwide 20 percent by 2100. Experts say Trump's plan to extend pollution discharge permits to 15 years, up from five, with the possibility for automatic renewals will worsen these problems. "It's hard for me to imagine that the receiving body for the ... discharge is not going to be changed by a significant increase in the amount of precipitation it gets. And it's not just the amount, it's the intensity," Reutter said. "When we look at the intensity of storms that produce more than 2 inches of rain in a 24-hour period, those are the ones that really cause the problems. You have a lot of problems, a lot of runoff. You've got a lot more of those storms."
While Mexico Plays Politics With Water, Some Cities Flood and Others Go Dry - When Cape Town acknowledged in February that it would run out of water within months , South Africa suddenly became the global poster child for bad water management. Newspapers revealed that the federal government had been slow to respond to the city's three-year drought because the mayor belongs to an opposition party. Scarcity turns water into a powerful political bargaining chip. From Delhi to Nairobi , its oversight is fraught with inequality, corruption and conflict. Mexico, too, has seen its water fall prey to cronyism in too many cities. I interviewed 180 engineers, politicians, business leaders and residents in eight Mexican cities for my book on politics and water . I was startled to discover that Mexican officials frequently treat water distribution and treatment not as public services but as political favors. Nezahualcóyotl is a city in Mexico State near the nation's sprawling capital. Just after lunch one Friday afternoon in 2008, Pablo, an engineer, was showing me around town when news of an unexpected thunderstorm began lighting up his team's cell phones and pagers. The engineers shouted back and forth, looking increasingly frantic. Having just begun my book research, I did not yet understand why an everyday event like a thunderstorm would elicit such panic. Pablo explained that Nezahualcóyotl's aged electric grid often failed during big storms and that the city lacked backup generators. If a power outage shut down the local sanitation treatment plant, raw sewage would flood the streets. These "aguas negras" carry nasty bacteria, viruses and parasitic organisms and can cause cholera, dysentery, hepatitis and severe gastroenteritis. If raw sewage also contains industrial wastewater —which is common in rapidly industrializing countries like Mexico—it may also expose residents to chemicals and heavy metals that can lead to everything from lead poisoning to cancer . This is what Pablo and his colleagues hoped to prevent. While we avoided a flood that day, I later saw news articles reporting that sewage overflows were relatively common there . In fact, Nezahualcóyotl residents have been dealing with this multisystem failure for 30 years, complaining of gastrointestinal illness and skin lesions all the while. So why hasn't this public health emergency been fixed? The answer is a primer on the tricky politics of urban water delivery in Mexico .
Global deforestation hotspot': 3m hectares of Australian forest to be lost in 15 years -- Australia is in the midst of a full-blown land-clearing crisis. Projections suggest that in the two decades to 2030, 3m hectares of untouched forest will have been bulldozed in eastern Australia. The crisis is driven primarily by a booming livestock industry but is ushered in by governments that fail to introduce restrictions and refuse to apply existing restrictions. And more than just trees are at stake. Australia has a rich biodiversity, with nearly 8% of all Earth’s plant and animal species finding a home on the continent. About 85% of the country’s plants, 84% of its mammals and 45% of its birds are found nowhere else. But land clearing is putting that at risk. About three-quarters of Australia’s 1,640 plants and animals listed by the government as threatened have habitat loss listed as one of their main threats. Much of the land clearing in Queensland – which accounts for the majority in Australia – drives pollution into rivers that drain on to the Great Barrier Reef, adding to the pressures on it. “It has gotten so bad that WWF International put it on the list of global deforestation fronts, the only one in the developed world on that list,” says Martin Taylor, the protected areas and conservation science manager at WWF Australia. In Queensland, where there is both the most clearing and the best data on clearing, trees are being bulldozed at a phenomenal rate. About 395,000 hectares of native vegetation were cleared there in 2015-16, 33% more compared with the previous year. And despite the re-elected Labor government promising changes to rein it in, notifications of planned land clearing in Queensland have jumped a further 30%, suggesting woodlands could be bulldozed even faster in coming years. Mapped over Sydney 395,000 hectares covers an area stretching from the central coast in the north, to Campbeltown in the south, and the Blue Mountains in the west. That equates to more than 1,500 football fields worth of native woodland and scrub being cleared each and every day in Queensland.
Zambia taps climate fund to battle worsening drought - Zambian farmers facing more extreme weather are set to get better early warning and weather information to help them cope, as part of a new grant from the Green Climate Fund. In a funding round announced this week, the international climate fund approved $32 million toward a broader effort by the United Nations Development Programme (UNDP), the U.N. Food and Agriculture Organization (FAO) and the World Food Programme to help shore up food security and keep farmers from slipping into poverty. The U.N. agencies had already raised $125 million toward the effort, which aims to help fight poverty among about 940,000 farmers hit by extreme weather in Zambia, according to Janet Rogan, a UNDP representative in the country. The effort aims to help farmers plan for climate risks, make their farming more resilient and diversified and give them better access to markets, said Simon Pollock, a spokesman for the Green Climate Fund (GCF), in an email interview. “In addition, this intervention is specifically designed to create economic opportunities for women,” Pollock told the Thomson Reuters Foundation. The project targets 16 particularly climate-vulnerable provinces in the country, where worsening droughts and flooding have been a problem. Zambia, like many of its southern African neighbors, is struggling with strengthening climate impacts in the face of already widespread poverty. According to the 2016 UNDP Human Development Report, about 60 percent of the country’s people live below the poverty line, more than 40 percent of those in extreme poverty. The report says 70 percent of Zambians rely on agriculture for a living, and agriculture, forestry and fishing contribute 24 percent of the country’s Gross Domestic Product.
Trump Will Now Consider Elephant Trophy Imports on 'Case-By-Case Basis' -- The Trump administration will now consider all permits for importing the remains of elephants hunted in Zimbabwe and Zambia on a "case-by-case basis," The Hill reported.The action is a reversal from President Trump's previous statements that his administration would keep the Obama-era ban on imports of the animals .Fish and Wildlife Service (FWS), overseen by Interior Department Secretary Ryan Zinke , issued amemorandum dated March 1 saying it will withdraw its Endangered Species Act (ESA) findings for trophies of elephants from the two African nations "effective immediately.""The findings are no longer effective for making individual permit determinations for imports of sport-hunted African elephant trophies," the memo states.FWS will now "grant or deny permits to import a sport-hunted trophy on a case-by-case basis."The memo also withdrew ESA-related findings for trophies of bontebok, elephants and lions hunted from several African countries. The ESA-findings "are no longer effective for making individual permit determinations for imports of those sport-hunted ESA-listed species." FWS added that it is continuing to monitor the status and management of these species in their range countries. "At this time, when the Service processes these permit applications, the Service intends to do so on an individual basis, including making ESA enhancement determinations, and CITES non-detriment determinations when required, for each application."
Plan to Kill Colorado Mountain Lions, Black Bears Prompts Lawsuit Against U.S. Fish & Wildlife -- Three conservation and animal-protection organizations sued the U.S. Fish and Wildlife Service Thursday for funding a Colorado Parks and Wildlife plan to kill hundreds of mountain lions and dozens of black bears without analyzing the risks to the state's environment. The multi-year plan to kill black bears and mountain lions in the Piceance Basin and Upper Arkansas River areas of Colorado is intended to artificially boost the mule deer population where habitat has been degraded by oil and gas drilling. The killing plans were approved despite overwhelming public opposition, and over the objection of leading scientific voices in Colorado. The lawsuit was filed in the U.S. District Court of Colorado by the Center for Biological Diversity , The Humane Society of the United States and WildEarth Guardians . The lawsuit faults the Fish and Wildlife Service for failing to adequately analyze the impacts of these lethal predator-control experiments under the National Environmental Policy Act. "It's appalling that the Fish and Wildlife Service bankrolled this killing without bothering to truly examine the environmental risks," said Andrea Santarsiere, a senior attorney at the Center for Biological Diversity. "Reckless oil and gas drilling has destroyed mule deer habitat, and outdated predator-control techniques can't fix that. Slaughtering bears and mountain lions will only further damage these ecosystems." The Piceance Basin Plan will last three years. Colorado Parks and Wildlife will use specialized contractors, including the U.S. Department of Agriculture's Wildlife Services program, to kill mountain lions and black bears using inhumane traps, snares and hounds. The killing will be focused on and around the Roan Plateau, considered one of the most biologically diverse areas in Colorado. Up to 75 black bears and 45 cougars will be killed for a cost of approximately $645,000—75 percent of which will be paid for with federal taxpayer dollars.
Exotic animals disappear from Florida wildlife sanctuary after fake ad - The advertisement on Craigslist was specific: “Free exotic animals. We’re a sanctuary going out of business. Go around back and help yourself.” Early on Sunday morning, somebody did just that, driving a truck up to the rear gate of the We Care Wildlife Sanctuary in Miami and loading up seven ring-tailed lemurs, five marmosets, four monkeys, seven birds and 13 tortoises. The internet posting, however, was a fake. Now the sanctuary owners want their animals back, fearing they could die in days without the specialist care they need. “We’ve been violated,” a sanctuary volunteer, Cindy Robert, said of the disappearance of the valuable animals, which is being treated by the Miami-Dade police department as a theft. “I don’t think these animals are going to be taken care of. The stress alone could give some of them heart attacks.” Detectives are looking into the theory that the entire episode was carefully planned, targeting those animals that would bring in the best return from dealers or collectors who trade in exotic species. “They took the dollar animals. They knew exactly what they wanted,” said Robert, adding that the combined value of the lost animals would run to “thousands” of dollars. “They’d have had to chase the animals around and net them, and put them in cages, and that puts them under even more stress. We have a tortoise that’s on antibiotics for a cold and needs needs injections every three days. “There’s an umbrella cockatoo with food regression because the original owners weren’t taught how to wean her, and if you don’t feed her properly and soak her food she won’t eat – she’ll starve to death in a few days. We’re just heartbroken.”
Dramatic declines in snowpack in the western US - Mountain snowpack stores a significant quantity of water in the western US, accumulating during the wet season and melting during the dry summers and supplying much of the water used for irrigated agriculture, and municipal and industrial uses. Updating our earlier work published in 2005, we find that with 14 additional years of data, over 90% of snow monitoring sites with long records across the western US now show declines, of which 33% are significant (vs. 5% expected by chance) and 2% are significant and positive (vs. 5% expected by chance). Declining trends are observed across all months, states, and climates, but are largest in spring, in the Pacific states, and in locations with mild winter climate. We corroborate and extend these observations using a gridded hydrology model, which also allows a robust estimate of total western snowpack and its decline. We find a large increase in the fraction of locations that posted decreasing trends, and averaged across the western US, the decline in average April 1 snow water equivalent since mid-century is roughly 15–30% or 25–50 km3, comparable in volume to the West’s largest man-made reservoir, Lake Mead.
Seven Feet Of Snow In Northern California Puts Screeching Halt To State’s Drought: A massive snowstorm Friday in Northern California could bring the state’s lengthy drought to end while leaving two feet of snow in the mountains near Los Angeles. The Sierra Nevada Mountains has seen two feet of snow and winds gusting over 100 miles per hour. Forecasters are expecting seven feet of snow in some areas of the mountain range. Meanwhile, more than 22,000 Montecito residents evacuated their homes as rain continued to pound the area — California’s weather comes as a nor’easter clobbers parts of the East Coast.“The worst of the storm has passed, and we are cautiously optimistic that due to a significant amount of pre-storm preparation we have come through this with minimal impact,” Rob Lewin, director of the Santa Barbara County Office of Emergency Management, said in a statement. Maximum wave heights in the Western Atlantic over 70-feet from powerful Nor’easter. (https://t.co/XcmEbEJxko) pic.twitter.com/8WmGWotuAT — Ryan Maue | weather.us (@RyanMaue) March 2, 2018 Things have not been that much better on the East Coast. A so-called bomb-cyclone condition is shaping up on the other side of the country that could be even more intense than one from earlier this year. Predictions are it could cause record flooding and intense damage and be the most intense nor’easter in 20 years, according to the National Weather Service.“Many have asked how this event will compare to January 4,” the NWS in Boston said in a statement. “Our thinking is there will likely be more structural damage in this event given the larger waves and occurring over multiple tide cycles. Many neighborhoods will likely become isolated, some for extended periods of time.”
7 Dead After "Monster Nor'easter" Pummels East Coast, Leaving Floods, Outages -- At least seven people were dead after a "monster nor'easter" - officially called Winter Storm Riley - slammed the northeastern United States on Saturday, leaving a trail of flooded streets, power outages and brutal winds. A 6-year-old boy died in Virginia after a tree fell on his family’s home, officials said. Others include an 11-year-old boy hit by a falling tree in New York state, a 57-year-old man in Upper Merion, Pennsylvania, hit by a tree while in his car and a 77-year-old woman struck by a branch outside her home in Baltimore. The storm strengthened rapidly Friday, undergoing what's known as bombogenesis or "bombing out," when a low-pressure system drops 24 millibars in 24 hours. It was the second "bomb cyclone," to hit the region after a similar storm hit the northeast back in early January. According to Reuters, almost 2.4 million homes and businesses had no power in the Northeast and Midwest early on Saturday. Some utility companies warned customers that power might not be restored until later in the day or Sunday. In Boston and nearby coastal communities, storm surges and high tides sent seawater in the streets, the second floods there this year. Wind gusts of more than 90 miles per hour downed trees and power lines a day earlier. The highest wind gust was 93 mph in Barnstable, Massachuetts, while an 83 mph gust was measured in both East Falmouth, Massachusetts, and Little Compton, Rhode Island. Hurricane-force wind gusts will continue through coastal Massachusetts and Rhode Island Friday night.Virginia Governor Ralph Northam and Maryland Governor Larry Hogan declared a states of emergency. “Please use common sense, heed all warnings, and stay inside and off the roads if possible,” Hogan said in a statement. Heavy snow fell across much of the interior northeast Friday afternoon, including in Syracuse and Albany, New York; New Jersey and eastern Pennsylvania. According to AccuWeather, the storm dumped as much as 18 inches (46 cm) of snow on parts of New York state and Pennsylvania. In Pennsylvania, a school bus was toppled over by high winds. Amtrak temporarily suspended service along the Northeast corridor until Saturday due to what it termed were "hazardous conditions for our customers and crews." Over 4,000 flights were canceled in the United States Friday, according to FlightAware. Nearly half of all scheduled flights at New York City's LaGuardia Airport have been canceled today, the airport said.
Second storm forecast for East Coast already struggling with power outages - Almost a third of a million people were still without power on Monday afternoon after a ferocious Nor'easter hammered the East Coast — and many residents were bracing for round two with a second storm forecast to roll into the region late Tuesday. At 11 p.m. ET, the number of customers without electricity in Massachusetts, New Jersey, New York, Pennsylvania, Maryland and Virginia had fallen below 300,000, according to each state's respective power companies.At least nine people died, including an 11-year-old and a 6-year-old. The lack of heat forced some people from their homes, while others were forced out by flooding. "We've been suffering, because we have no light, no nothing. We have dogs and it's just been miserable," "Most of my food I have to throw away, and I have two refrigerators." . Shelters have opened and school has been canceled in some regions with no power. But as some East Coast states cleared the debris from Friday's storm and worked to restore power, 33 million people from eastern Pennsylvania to Maine were yet again under a winter storm watch, according to The Weather Channel and the National Weather Service.The second Nor'easter is expected Tuesday evening, starting with heavy, wet snow and gusting winds and moving up the coast. The system is expected to continue into Wednesday and Thursday with heavy snow forecast for New England. The storm was still lingering over the Great Plains on Monday afternoon, causing whiteout conditions in South Dakota, where 140 miles of Interstate 90 from Murdo to Mitchell were closed in both directions, the state Transportation Department said.
Beast From the East Drives Sea Life Die-Off -- March certainly came in like a lion in the UK and Ireland, as " the Beast from the East " brought freezing temperatures, up to 20 inches of snowfall and travel disruptions to the British Isles. But what was disruptive for the region's human inhabitants was deadly for its marine life . Hundreds of thousands of lobsters, starfish, crabs and other creatures washed up dead or dying on beaches on the UK's eastern coast, Buzzfeed News reported Monday."There are places where you are ankle-deep, or calf-deep, in animals ," Yorkshire Wildlife Trust worker Bex Lyman said.The Yorkshire Wildlife Trust worked with local fisherman to separate live lobsters from the dead, with the aim of returning them to the ocean when the weather warms.It's worth saving them so that they can be put back into the sea and continue to breed," Lyman told The Guardian .Rodney Forster, a marine biologist at the University of Hull, told Buzzfeed he'd counted 24 types of fish so far.Forster explained the cold is likely to blame. Ocean temperatures dropped from 5 to 2 degrees Celsius in less than a week. "For a lot of creatures, that really pushes them to their lower limits, especially the warm-water species ... we've seen washed up," he told Buzzfeed. Waves caused by the storm, as well as high tides, also contributed.
Global warming is already fueling 'high-tide' floods — and it's only going to get worse - Snow may get the most headlines from nor'easters, but it's the relentless onslaught of waves and water along the coast that can cause the most destruction. Thanks partly to global warming, it doesn't even take a storm to inundate the coast with ruinous floodwaters. “Nuisance" or "sunny day" high-tide flooding is becoming more commonplace across the USA, and a federal report released this week warns that such flooding will worsen in the decades to come.By the end of the century, such flooding could be a weekly, or even daily, event in some vulnerable locations of the country, such as Miami, Charleston, S.C., and Norfolk, Va. "The risk of coastal flooding has been steadily increasing and will continue to in the coming decades," said oceanographer William Sweet, the report's lead author. At many locations, "today’s storm flood will become tomorrow’s high tide sometime this century," he said.The report prepared by the National Oceanic and Atmospheric Administration found that rising seas are the cause: "Due to rising relative sea level, more and more cities are becoming increasingly exposed and ever more vulnerable to high-tide flooding, which is rapidly increasing in frequency, depth and extent along many U.S. coastlines," the report said. "It can reach into our communities and leave us stranded in our cars, stuck at home, sloshing through water, unable to get to school and work ... (It's) not a catastrophic flood, but it can disrupt our ability to go about our normal lives," Sea level has risen nearly 8 inches worldwide since 1880, but unlike water in a bathtub, it hasn't risen evenly. In the past 100 years, it has climbed about a foot or more in some U.S. cities because of ocean currents and land naturally settling — 11 inches in New York and Boston, 12 in Charleston, S.C., 16 in Atlantic City, 18 in Norfolk, Va., and 25 in Galveston, Texas, according to NOAA.
New Report Predicts Rising Tides, More Flooding - Some of the worst flooding during this weekend's East Coast storm happened during high tides.Shoreline tides are getting progressively higher. A soon-to-be-published report obtained by NPR predicts a future where flooding will be a weekly event in some coastal parts of the country."The numbers are staggering," says oceanographer William Sweet, at the National Oceanic and Atmospheric Administration. "Today's storm will be tomorrow's high tide," he says, referring to how high coastal water rises. "A storm [such as we experienced] along the East Coast of the United States this weekend, that will be a high tide at some point in the future, whether that's two or three decades or eight decades, we'll see, but it's coming."This new report sets out to give communities a clear guide to prepare for coastal flooding. "We find that minor flooding starts on average about a foot and half above high tide," says Sweet, "Moderate flooding starts about two and a half feet above high tide, and major flooding starts about four feet."That's what people can expect now; it gives them a margin of safety, and for the most part communities have been built to handle that. But here's the thing: As high tides get higher, that is inexorably reducing the margin of safety. In fact even without a storm, high tides already are flooding cities like Miami and Norfolk, Va. And now NOAA's latest calculations portray a future where this kind of "sunny day" flooding will become a lot more frequent.
San Francisco Sinks as Waters Rise -- According to a study released March 7, half of San Francisco International Airport's runways could sink underwater by 2100, The New York Times reported. The study, published in Science Advances by Manoochehr Shirzaei of Arizona State University and Roland Bürgmann of the University of California, Berkeley, reveals that sea level rise poses more of a threat to the Bay Area than previously thought. The reason? A phenomenon known as subsidence, or land sinking. Shirzaei and Bürgmann found that previous flood-risk maps based on sea-level-rise projections were too conservative because they did not take local land subsidence (LLS) into account. This is a big problem for San Francisco, since parts of its coast lie on top of compacting landfills and mud deposits that are subsiding by a rate of 10 millimeters per year. "The maps estimating 100-year inundation hazards solely based on the projection of sea level rise from various emission scenarios underestimate the area at risk of flooding by 3.7 to 90.9%," they wrote in their abstract. The report contains revised flood-risk maps that account for the combined impact of LLS and sea level rise (SLR) based on different emissions scenarios. In addition to the San Francisco airport, Shirzaei and Bürgmann's work revealed that Foster City, Union City and Treasure Island are particularly at risk. Treasure Island has recently been the target of development, and as many as 8,000 homes are set to be built there, California Magazine reported .
North Atlantic right whales may face extinction after no new births recorded - The dwindling North Atlantic right whale population is on track to finish its breeding season without any new births, prompting experts to warn again that without human intervention, the species will face extinction. Scientists observing the whale community off the US east coast have not recorded a single mother-calf pair this winter. Last year saw a record number of deaths in the population. Threats to the whales include entanglement in lobster fishing ropes and an increasing struggle to find food in abnormally warm waters. The combination of rising mortality and declining fertility is now seen as potentially catastrophic. There are estimated to be as few as 430 North Atlantic right whales left in the world, including just 100 potential mothers. “At the rate we are killing them off, this 100 females will be gone in 20 years,” said Mark Baumgartner, a marine ecologist at the Woods Hole Oceanographic Institution in Massachusetts. Without action, he warned, North Atlantic right whales will be functionally extinct by 2040. Most whale populations had been reduced to such low levels that it will take decades for many of them to recover. Additional problems of entanglement, pollution, climate change and ship strikes are also curtailing their recovery. A 10-year-old female was found dead off the Virginia coast in January, entangled in fishing gear, in the first recorded death of 2018. That followed a record 18 premature deaths in 2017, Baumgartner said. . Federal research suggests 82% of premature deaths are caused by entanglement in fishing line. The prime culprit is the New England lobster industry. Crab fishing in Canadian waters is another cause of such deaths.
Taiwan Announces Ban on All Plastic Bags, Straws, and Utensils - Ordering take-out, picking up groceries, buying a soft drink — these are all activities that will change over the next decade in Taiwan when the island nation imposes a blanket ban on single-use plastic bags, straws, and cups, according to the Hong Kong Free Press.It will be one of the farthest-reaching bans on plastic in the world, and it demonstrates the momentum of the anti-plastic movement as the scale of environmental harm caused by the substance is fully realized."We aim to implement a blanket ban by 2030 to significantly reduce plastic waste that pollutes the ocean and also gets into the food chain to affect human health," said Lai Ying-yaun, a Taiwanese Environmental Protection Agency official, in a statement. Taiwan’s ban will be phased in over time and builds on existing regulations like an expanded recycling program and extra charges for plastic bags, according to the science website Phys. The first part of the regulation includes banning chain restaurants from giving straws to customers in 2019, and then an overall ban on straws in dining outlets by 2020. Retail stores will be charged for providing free plastic bags, disposable food containers, and utensils in 2020 and additional fees will be added in 2025. These measures will culminate in a flat-out ban on single-use bags, utensils, straws, and containers by 2030, Hong Kong Free Press reports. Taiwan’s announcement is in response to the scale of plastic pollution. Globally, around 380 million metric tons of plastic are being created annually. Meanwhile, an estimated 8 million metric tons of plastic enter the oceans each year, which is like emptying a garbage truck of plastic into an ocean every minute. The announcement is also part of a larger movement against plastic in the world as governments realize that the convenience of plastic is not worth the harm it causes.
640,000 Metric Tons of Ghost Gear Enters Oceans Each Year - Governments around the world are waking up to the scourge of plastics on our oceans and its creatures by banning items such as shopping bags and drinking straws . But an often-overlooked form of plastic waste is also a major threat to our seas: "ghost" gear . A report released Thursday from World Animal Protection highlights that every year 640,000 metric tons of fishing nets are lost or discarded in our oceans each year, trapping and killing countless marine mammals, including endangered whales, seals and turtles. Shallow coral reef habitats also suffer further degradation from the gear, which can take up to 600 years to decompose. "Worryingly, the level of ghost gear has increased in recent years and it is likely to grow further as fishing efforts intensify all over the world," said Deputy Prime Minister Didier Reynders of Belgium, a partner of World Animal Protection's Global Ghost Gear Initiative that's aiming for ghost-gear-free seas. Unfortunately, World Animal Protection's report, Ghosts beneath the waves , finds that most of the seafood industry's biggest companies are not doing enough to address deadly fishing gear. The report ranked 15 seafood giants and their approaches to fishing equipment on a 1 to 5 scale, but found that none of the companies ranked in the top two categories of "setting best practice" or have responsible handling of their fishing gear as "integral to business strategy." The results also showed that 80 percent of the assessed companies do not have a clear position on ghost fishing gear nor do they even publicly acknowledge the issue.
Previously unknown ‘supercolony’ of Adélie penguins discovered in Antarctica -- For the past 40 years, the total number of Adélie Penguins, one of the most common on the Antarctic Peninsula, has been steadily declining—or so biologists have thought. A new study led by researchers from the Woods Hole Oceanographic Institution (WHOI), however, is providing new insights on of this species of penguin. In a paper released on March 2nd in the journal Scientific Reports, the scientists announced the discovery of a previously unknown "supercolony" of more than 1,500,000 Adélie Penguins in the Danger Islands, a chain of remote, rocky islands off of the Antarctic Peninsula's northern tip. "Until recently, the Danger Islands weren't known to be an important penguin habitat," says co-PI Heather Lynch, Associate Professor of Ecology & Evolution at Stony Brook University. These supercolonies have gone undetected for decades, she notes, partly because of the remoteness of the islands themselves, and partly the treacherous waters that surround them. Even in the austral summer, the nearby ocean is filled with thick sea ice, making it extremely difficult to access.Yet in 2014, Lynch and colleague Mathew Schwaller from NASA discovered telltale guano stains in existing NASA satellite imagery of the islands, hinting at a mysteriously large number of penguins. To find out for sure, Lynch teamed with Stephanie Jenouvrier, a seabird ecologist at WHOI, Mike Polito at LSU and Tom Hart at Oxford University to arrange an expedition to the islands with the goal of counting the birds firsthand.When the group arrived in December 2015, they found hundreds of thousands of birds nesting in the rocky soil, and immediately started to tally up their numbers by hand. The team also used a modified commercial quadcopter drone to take images of the entire island from above.
'Crazy, Crazy Stuff': Arctic Winter Warmest on Record -- The Arctic just experienced its warmest winter on record, scientists say. In the dead of winter, temperatures at the North Pole approached the melting point, the National Snow and Ice Data Center (NSIDC) in Boulder, Colorado found. "It's just crazy, crazy stuff," NSIDC director Mark Serreze told the Associated Press . "These heat waves—I've never seen anything like this." Several areas in the Arctic have reported record-high heat. As the AP reported, Cape Morris Jesup, in the northernmost point of Greenland, saw temperatures normally seen in May. Not only that, 15 different Arctic weather stations clocked temperatures 10 degrees above normal . Data from climatologist Brian Brettschneider of the International Arctic Research Center at the University of Alaska Fairbanks show that the Arctic Circle in Barrow, Alaska, was 18 degrees Fahrenheit warmer than normal in February, and the entire winter, which spans from December to February, averaged 14 degrees above normal. NASA remarked that temperatures have soared in the Arctic for the fourth winter in a row: "The heat, accompanied by moist air, is entering the Arctic not only through the sector of the North Atlantic Ocean that lies between Greenland and Europe, as it has done in previous years, but is also coming from the North Pacific through the Bering Strait." "We have seen winter warming events before, but they're becoming more frequent and more intense," noted Alek Petty, a sea ice researcher at NASA's Goddard Space Flight Center in Greenbelt, Maryland. The region also experienced record-low sea ice for this time of year, with open water areas expanding rapidly in the Bering Sea off Alaska's west coast. Climate scientist Zack Labe, who frequently shares striking graphs of the region's anomalies, illustrated the Bering Sea's disappearing ice pack.
Arctic spring is starting 16 days earlier than a decade ago, study shows -- The Arctic spring is arriving 16 days earlier than it did a decade ago, according to a new study which shows climate change is shifting the season earlier more dramatically the further north you go.The research, published on Friday in the journal Scientific Reports, comes amid growing concern about the warming of Greenland, Siberia, Alaska and other far northern regions, which have recently experienced unusually prolonged and frequent midwinter temperature spikes. The authors from the University of California, Davis, based the study on temperature records and 743 previous phenological studies looking at timings of bird migrations, flowers blooming and amphibians calling. The results showed a curve, with spring events occurring earlier further north of the equator. “Spring is arriving earlier, and the Arctic is experiencing greater advances of spring than lower latitudes,” said lead author Eric Post, a fellow of the John Muir Institute and polar ecologist at UC Davis. Over the past 10 years, this means the end of winter will come about a day earlier in Los Angeles, but two weeks earlier in the Arctic. The authors say the northward increase in the rate of springtime advance is roughly three times greater than indicated by previous studies. This underlines how pronounced climate change is in the Arctic, where temperatures are rising twice as fast as the global average and ice fields are rapidly shrinking. The warming trend has been unusually apparent in recent weeks. Although the sun has not reached the high Arctic since October, temperatures has been above freezing for 61 hours – more than three times the previous record – at Greenland’s northernmost weather monitoring station. “Think of waves on the beach. Some are high, some are low. That’s the weather. But in the background the tide is coming in. That’s climate change. Even though the waves haven’t changed their properties, they come closer and closer to your feet,”
PIOMAS March 2018 -- Another month has passed and so here is the updated Arctic sea ice volume graph as calculated by the Pan-Arctic Ice Ocean Modeling and Assimilation System (PIOMAS) at the Polar Science Center:During February Arctic sea ice volume increased by 2075 km3, according to the PIOMAS model, which is well below the 2007-2017 average of 2437 km3. Only 2014 and 2016 managed to score lower, at 1930 and 2047 km3 respectively. This means that 2018 has consolidated its second place in the ranking, creeping somewhat closer to 2017. Especially the gap with 2013 has widened spectacularly from 166 to 1261 km3. Closest follower is now 2011 at 817 km3. Here's how the differences with previous years have evolved from last month: Wipneus' version of the PIOMAS graph clearly shows how the 2018 trend line strongly deviates from all the other trend lines during February: The trend line on the PIOMAS sea ice volume anomaly graph has gone down some more and is now hugging the linear trend line (how romantic!): As for PIJAMAS average thickness, crudely calculated by dividing PIOMAS numbers with JAXA sea ice extent numbers, the 2018 trend line has crept in second position here as well: Not quite there yet on the thickness graph from the Polar Science Centre. Now that we've discussed the monthly numbers, it's time for some interesting stuff, and it has to do with CryoSat-2 observations…
Global CO2 emissions forecast to 2100 -- In his recent post Euan Mearns projected global energy requirements out to 2100. In this brief post I apply Euan's methodology to carbon dioxide emissions, which are closely correlated with energy consumption. The projections show CO2 emissions peaking around 2075 under the UN low population growth scenario but continuing to increase through 2100 under the UN's medium and high population growth scenarios. The alleged "dangerous interference" threshold of 1 trillion tons of cumulative carbon emissions (3.67 trillion tons of CO2) targeted by the Paris Climate Agreement is exceeded between 2050 and 2055 under all three scenarios. Figure 1 plots global CO2 emissions and total primary energy consumption between 1965 and 2016. The data are from the BP 2016 Statistical Review. Note that the CO2 data cover only emissions from fossil fuel combustion. Other greenhouse gases such as methane and Nox are not included: The near-exact match between CO2 emissions and energy consumption (R2 = 0.998) is obvious. What is not obvious is any detectable impact from the world’s efforts to cut CO2 emissions, which began at Kyoto over 20 years ago in 1997. (The combination of flattening emissions and moderate economic growth after 2013 has been claimed as evidence that energy and emissions are finally becoming decoupled, but global CO2 emissions in 2017 have risen again – by about 2% over 2016 according to Carbon Brief.) Figure 2 plots global per-capita CO2 emissions since 1965, calculated from the BP emissions data and the UN’s global population estimates:
20,000 Scientists Have Now Signed 'Warning to Humanity' -- A chilling research paper warning about the fate of humanity has received 4,500 additional signatures and endorsements from scientists since it was first released last year.The paper —"World Scientists' Warning to Humanity: A Second Notice"—was published in November 2017 in the journal Bioscience and quickly received the largest-ever formal support by scientists for a journal article with roughly 15,000 signatories from 184 countries.Today, the article has collected 20,000 expert endorsements and/or co-signatories, and more are encouraged to add their names.The "Warning" became one of the most widely discussed research papers in the world. It currently ranks 6thout of 9 million papers on the Altmetric scale, which tracks attention to research. It has also inspired pleas from political leaders from Israel to Canada ."Our scientists' warning to humanity has clearly struck a chord with both the global scientific community and the public," said lead author ecology professor William Ripple at Oregon State University in a statement.The 2017 paper is actually an update to the original version published 25 years ago by the Union of Concerned Scientists . It was signed by 1,700 scientists then, including the majority of living Nobel laureates in the sciences.The first notice started with this statement: "Human beings and the natural world are on a collision course." It described trends such as the growing hole in the ozone layer, pollution and depletion of freshwater sources,overfishing , deforestation , plummeting wildlife populations, as well as unsustainable rises in greenhouse gas emissions , global temperatures and human population levels. Unfortunately, the authors of the updated paper said that humanity failed to progress on most of the measures and ominously warned, "time is running out."
Climate Change and Environmental Frames: The Consensus-Action Disconnect -- American attitudes toward the environment generally – and climate change specifically – could long be described as ambivalent. The Trump Administration seized on this ambivalence and spent the past year furiously censoring climate change scientists and scrubbing the EPA website of any references to dangerous words such as “greenhouse gases” and “science.” While survey research shows more and more Americans recognize climate change is caused by human activities and believe the effects have already begun, only 45% say they worry “a great deal” about it. Despite such shifts in public attitude, it’s hard to make a case that Americans are actually growing more concerned; when President Trump announced on June 1, 2017, that the US would withdraw from the Paris Climate Agreement, his approval numbers in the following weeks didn’t take a hit. Some might chalk this resilience up to a diehard core of Trump supporters, who were pleased with the announcement, propping up his approval ratings. But research from Yale’s Program on Climate Change Communication shows that almost 70% of registered voters want the US to stay in the agreement (including majorities of Democrats, Republicans and Independents), while only 13% don’t.While American views of climate change are continuing to shift toward concern, and an overwhelming majority of the country wants to stay in the Paris Climate Agreement, President Trump has not faced political consequences for his blatant attacks on science and the environment.So how can the semblance of consensus be translated into action? New research suggests that framing of environmental issues might be part of the answer.
67 Environmental Rules on the Way Out Under Trump - Since taking office last year, President Trump has made eliminating federal regulations a priority. His administration — with help from Republicans in Congress — has often targeted environmental rules it sees as overly burdensome to the fossil fuel industry, including major Obama-era policies aimed at fighting climate change. To date, the Trump administration has sought to reverse more than 60 environmental rules, according to a New York Times analysis, based on research from Harvard Law School’s Environmental Regulation Rollback Tracker, Columbia Law School’s Climate Tracker and other sources.33 rules have been overturned: 24 rollbacks are in progress: 10 rollbacks are in limbo: The chart above reflects numbers above reflect three types of policy changes: rules that have been officially reversed; announcements and changes still in progress, pending reviews and other rulemaking procedures; and regulations whose status is unclear because of delays or court actions. (Several rules were undone but later reinstated after legal challenges.)The process of rolling back the regulations has not been smooth, in part because the administration has tried to bypass the formal rulemaking process in some cases. On more than one occasion, the administration has tried to roll back a rule by announcing its intent but skipping steps such as notifying the public and asking for comment. This has led to a new kind of legal challenge, according to Joseph Goffman, executive director of Harvard’s environmental law program. Courts are now being asked to intervene to get agencies to follow the process.
Trump White House quietly issues report vindicating Obama regulations -President Donald Trump’s administration has been on a deregulatory bender, particularly when it comes to environmental regulations. As of January, the New York Times counted 67 environmental rules on the chopping block under Trump. His administration is more ham-handed and flagrant about it, but the antipathy it expresses toward federal regulation falls firmly within the GOP mainstream. Republicans have been complaining about “burdensome” and “job-killing” regulations for so long that their opposition to any particular health, safety, or environmental regulation is now just taken for granted. For instance, why would the Environmental Protection Agency close a program investigating the effects of toxins on children’s health? Is there some evidence that the money is wasted or poorly spent? Why would the EPA allow more unregulated disposal of toxic coal ash? Don’t people in coal regions deserve clean air and water? Is there any reason to think coal ash is currently well-regulated? These questions barely come up anymore. Republicans oppose regulations because they are regulations; it’s become reflexive, both for the party and for the media the covers them. As it happens, though, we know something about the costs and benefits of federal regulations. In fact, Trump’s own administration, specifically the (nonpartisan, at least for now) White House Office of Management and Budget (OMB), just released its annual report on that very subject. (Hat tip to E&E.) The report was released late on a Friday, with Congress out of session and multiple Trump scandals dominating the headlines. A cynical observer might conclude that the administration wanted the report to go unnoticed. Why might that be? Well, in a nutshell, it shows that the GOP is wrong about regulations as a general matter and wrong about Obama’s regulations specifically. Those regulations had benefits far in excess of their costs, and they had no discernible effect on jobs or economic growth.
House votes to delay EPA air pollution rules for brickmakers, wood heaters | TheHill: The House voted Wednesday to delay air pollution rules that the Obama administration had written for brickmakers and residential wood-burning heaters. Lawmakers voted 234-180, mainly along party lines, to pass the Blocking Regulatory Interference from Closing Kilns (BRICK) Act. The legislation, sponsored by Rep. Bill Johnson (R-Ohio), would push off compliance with the 2015 Environmental Protection Agency (EPA) rule for brick and tile kilns until ongoing litigation from the industry is resolved. House leaders also attached provisions to push off emissions standards for residential wood-fired heaters by three years to 2023.It’s the latest in a long string of actions by congressional Republicans and the Trump administration to repeal, weaken or delay the Obama administration’s aggressive environmental agenda.The GOP said the delays are justified. Brick kilns should not have to comply with a rule that might be overturned in court, while wood heater makers and users need more time to meet stringent new rules, Republicans argued.
Trump taps chemical company lawyer to lead EPA Superfund office | TheHill: President Trump is nominating a senior attorney at Dow Chemical Co. to lead the Environmental Protection Agency’s (EPA) office responsible for highly contaminated Superfund sites. Peter Wright would lead the EPA’s Office of Land and Emergency Management if confirmed by the Senate, the White House announced Friday. The office’s responsibilities include the Superfund program, the brownfield program for redeveloping sites, emergency response operations, landfill regulation and underground storage tanks.“Peter is exceptionally qualified to lead the Office of Land and Emergency Management,” EPA Administrator Scott Pruitt said in a statement. “He has the expertise and experience necessary to implement our ambitious goals for cleaning up the nation’s contaminated lands quickly and thoroughly.” Pruitt has made the Superfund program a priority for his time at the EPA. The agency currently has more than 1,300 sites on its priority list, and Pruitt has accused the Obama administration of not doing enough to clean them up. If confirmed, Wright would potentially be overseeing sites that Dow is responsible for cleaning up. The EPA has identified contaminated sites in California, Michigan and elsewhere as places that Dow is potentially responsible for. Ethics guidelines may require Wright to recuse himself from matters relating to Dow, which merged last year with DuPont Co.
Ryan Zinke Blames Wind Turbines for Contributing to Global Warming - At the CERAWeek energy industry conference in Houston this week, Interior Secretary Ryan Zinke said he's "pro- energy across the board" but made it clear that he's in favor of oil and gas over other types of domestic energy production.According to Bloomberg , Zinke praised the Trump administration's push for fossil fuels, from expandingoffshore oil drilling to slashing regulations . He also advocated for a partnership with oil and gas companies."Interior should not be in the business of being an adversary. We should be in the business of being a partner," the former Montana Congressman said in front of representatives from energy companies and oil-producing countries. Zinke admitted that "certainly oil and gas and coal have a consequence on carbon," but he then slammedwind turbines for their carbon footprint and for killing birds—a notorious charge from his windmill-hating bossin the White House."We probably chop us as many as 750,000 birds a year with wind, and the carbon footprint on wind is significant," Zinke said.Zinke's remark is peculiar for two reasons. First, as TIME pointed out:"Spread out over the life cycle of a typical turbine, scientists estimate that the typical wind plant generates between .02 and .04 pounds of carbon dioxide equivalent per kilowatt-hour of electricity produced. Even at the high end, that's less than 3 percent of the emissions from coal-generated electricity and less than 7 percent of the emissions from natural gas-generated electricity."Secondly, yes, birds are killed by turbines, but "Zinke is exaggerating the figure beyond virtually all published estimates," Axios noted, adding "turbines are a drop in the bucket when it comes to the human-related causes of bird deaths."
Perry calls shift away from fossil fuels "immoral" - Energy Secretary Rick Perry said Wednesday global efforts to shift away from fossil fuels were "immoral," threatening economic developments in poorer nations."Look those people in the eyes that are starving and tell them you can't have electricity," he said. "Because as a society we decided fossil fuels were bad. I think that is immoral."The comments followed a sprawling speech at the CERAWeek by IHS Markit energy conference in which Perry declared the United States has entered an age of a new "energy realism," in which the country would increasingly supply the world with oil and gas, coal, wind and other forms of energy. "America is now on the cusp of energy independence but the president wants to see this go further. He wants to share America's energy bounty with the world," Perry said. "We're going to be exporting multiple fuels. and we will export the same technologies that made us a clean abundant energy producer." Since taking office last year, Perry has promoted an "all of the above" energy strategy towards lowering energy costs and growing the U.S. economy - a script he largely stuck to Wednesday. But behind the scenes, his department has shown a predilection for aiding the coal sector.
Climate change lawsuit against Trump administration can go to trial - A federal appeals court has ruled in favour of 21 teenagers suing the US government for its energy and climate change policies. The case, Juliana v. United States, will now be able to go to trial as President Donald Trump’s administration is expected to try and get the Supreme Court to throw out the case. The lawsuit alleges that decades of US energy policy takes away the children’s Constitutional right to “life, liberty, and the pursuit of happiness”. The complaint claimed that US energy policy over the last 50 years in promoting the use of fossil fuels and becoming one of the world’s largest polluters has put these young people’s lives in jeopardy now and spoiled the environment for future generations. But, the new federal appeals court ruling defeated the current US Department of Justice’s request that the case be thrown out on the basis that it is based on “utterly unprecedented legal theories”. The Trump administration also argued that “it’s unreasonable to delve into “unbounded” research into the executive branch dating back to the Lyndon Johnson presidency,” as Bloomberg News reported. Mr Trump himself has repeatedly called climate change a "hoax" perpetrated by the Chinese. The case, supported by Our Children’s Trust legal organisation in Eugene, Oregon, was first fought by former President Barack Obama’s administration in 2016. Julia Olson, the attorney representing the group of teenagers, told The Independent that though Mr Obama “acknowledged climate science and that we are in a dangerous situation, but his actions did not match his speeches”. She said that the administration “promoted and supported fossil fuels as much as George W. Bush before him. His signature “climate policy”, the Clean Power Plan (CPP) would have replaced coal with natural gas and basically flatlined US emissions through 2040 according to the US Department of Energy’s projections, leading to climate catastrophe”.
Citizens Sue to Hold UK Government Accountable for Climate Goals - A group of 11 plaintiffs filed a lawsuit in the UK’s High Court in December. They claim the government’s 2050 carbon target is unlawful based on the latest science and runs counter to the UK’s commitments to the Paris Climate Agreement. Plaintiffs seek to compel the government to revise the 2050 target, established by the 2008 Climate Change Act. That law required an 80 percent reduction in carbon emissions below 1990 levels. At the time, this was thought to be consistent with limiting global temperature rise to 2 degrees Celsius. The current scientific consensus, however, recognizes that even a 2 degrees C limit is not necessarily “safe.” The Paris Agreement reflects this understanding, setting the more ambitious goal “to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.” “This case is the first major test of the Paris Agreement’s legal significance,” Plan B director Tim Crosland told Climate Liability News. “If our case is successful we will have shown that the Paris Agreement is more than just a fig-leaf for government inaction.”
Running on renewables: how sure can we be about the future? A variety of models predict the role renewables will play in 2050, but some may be over-optimistic, and should be used with caution, say researchers. In a paper published in the journal Joule, Imperial College researchers have shown that studies that predict whole systems can run on near-100% renewable power by 2050 may be flawed as they do not sufficiently account for reliability of the supply. Using data for the UK, the team tested a model for 100% power generation using only wind, water and solar (WWS) power by 2050. They found that the lack of firm and dispatchable ‘backup’ energy systems means the power supply would fail often enough that the system would be deemed inoperable. The team found that even if they added a small amount of backup nuclear and biomass energy, creating a 77% WWS system, around 9% of the annual UK demand could remain unmet, leading to considerable power outages and economic damage. Lead author Clara Heuberger, from the Centre for Environmental Policy at Imperial, said: “Mathematical models that neglect operability issues can mislead decision makers and the public, potentially delaying the actual transition to a low carbon economy.”
At energy summit, climate pits U.S. against Europe (Reuters) - The U.S. energy secretary blasted renewable fuels champions on Wednesday while the head of Royal Dutch Shell urged the energy sector to focus on world efforts to cut carbon emissions, revealing a yawning trans-Atlantic gap on climate issues. Speaking at the CERAWeek conference by IHS Markit in Houston, Shell CEO Ben van Beurden outlined an ambitious plan to reduce the Anglo-Dutch company’s carbon footprint and expand in renewables, and called on others to follow. “The energy landscape is changing fast. So we must change, where change is what the world needs,” van Beurden said. He spoke after U.S. Energy Secretary Rick Perry struck a starkly different tone, blasting the 2015 Paris Climate Agreement to limit global warming. Perry said it was “immoral” to say people should live without fossil fuels. “We are passionate about renewable energy. But the world, especially developing economies, will continue to need fossil fuels, as over a billion people on the planet live without access to electricity,” Perry said. The United States, which under former President Barack Obama helped negotiate the Paris agreement, is now the only country that has backed out of the pact which calls for a gradual shift to renewable energy by the end of the century. President Donald Trump decided to withdraw last year. Van Beurden, in an unusually strong-worded speech, said climate was the biggest challenge facing the energy sector. “There may not be total unity behind the Paris Agreement any longer, but there is no other issue with the potential to disrupt our industry on such a deep and fundamental level.” Perry extolled growing U.S. energy independence, as a boom in onshore shale drilling led to a rapid growth in oil as well as natural gas, the least polluting fossil fuel. The rise of gas at the expense of dirtier coal helped the world’s biggest economy sharply reduce its carbon emissions over the last decade, as gas displaced much domestic coal demand. “The lesson is clear (that) we don’t have to choose between growing our economy and caring for our environment, by embracing innovation over regulation we can benefit from both,” Perry said.
Earth’s Flip-Flopping Magnetic Field is Screwing With Satellites Over Africa - We foolishly assume some things about the Earth will always be the same. Sure, it’s safe to assume the sky will always be above our heads, but to think that compass needles will always point to the geographic north, for instance, is pure folly. Doing so is what is leading to all the fuss over the South Atlantic Anomaly, a region of the Earth’s magnetic field that, as researchers reported in Geophysical Review Letters, has shifted so much that satellites get disrupted when they fly through it.In the paper, published in February, the researchers presented evidence gathered from southern Africa that could help us get a better idea of what the heck is going on the South Atlantic Anomaly, which spans from Chile to Zimbabwe. It definitely is weakening, though there are a number of reasons why that might be happening. The fact is that Earth’s magnetic field reverses polarity relatively often — on average, every couple million years. As the researchers note in their study, that process might be happening again — though the actual make-up of the Earth’s mantle beneath the field may have something to do with it as well.The Earth’s magnetic field is our first defense against the solar wind, which is full of charged particles that can, in turn, destroy the ozone layer, which protects us from ultraviolet radiation from space. The fact that satellites are getting disrupted by the immense radiation that the South Atlantic Anomaly lets in shows us just how serious magnetic pole reversal is. For one thing, it would definitely affect more than just compass needles. As Inverse previously reported, the potential issues arising from a magnetic field shift are huge: The Earth’s satellites, power lines, ocean currents, and animal migration patterns are all dependent on the stability of the magnetic field, which envelops the planet and shields it from harmful cosmic rays like a pair of polarized sunglasses. Modern humans have been lucky to take that stability for granted; the Earth hasn’t experienced a full magnetic pole switcheroo for 780,000 years (though it experienced a temporary one 41,000 years ago).
German government calculates deaths from nitrogen dioxide - Thousands of people die prematurely each year in Germany from the harmful effects of nitrogen dioxide, a gas that’s produced by diesel engines, according to a government-sponsored report published Thursday. The study commissioned by the Federal Office for the Environment concluded that almost 6,000 people died prematurely in 2014 from illnesses that are known to be caused or aggravated by nitrogen dioxide, or NO2. The study, conducted by the publicly funded Helmholtz Center Munich and private company IVU Umwelt GmbH, used widely accepted statistical models to determine how many deaths could be attributed to NO2. It compared deaths from diabetes, asthma and other diseases with emissions records in cities and the countryside. The 172-page report was published a week after a German court ruled that cities can ban the use of diesel cars as part of measures to improve air quality. “This study shows how much nitrogen dioxide harms health in Germany,” the head of the Federal Office for the Environment, Maria Krautzberger, said. “We should do everything to make our air clean and healthy.” The report found that the number of deaths fell from a peak of 8,157 in 2008, in line with a gradual decline in NO2 emissions in Germany. It took a conservative approach, only examining diseases that have a well-established link with NO2 and excluding the impact in areas where emissions are below 10 micrograms per cubic meter. Still, it found the disease burden was up to 50 percent higher in areas with significant NO2 levels than in those areas where emissions were below the study threshold. The study also calculated what’s called the “years lost” as a result of elevated emissions, resulting in a figure of 49,726 fewer years of life for the population across Germany in 2014.
European clocks slowed by lag in continent's power grid (AP) — Millions of Europeans who arrived late to work or school Wednesday had a good excuse — an unprecedented lag in the continent's electricity grid that's slowing down some clocks. The problem is caused by a political dispute between Serbia and Kosovo that's sapping a small amount of energy from the local grid, causing a domino effect across the 25-nation network spanning the continent from Portugal to Poland and Greece to Germany. "Since the European system is interconnected ... when there is an imbalance somewhere the frequency slightly drops," said Claire Camus, a spokeswoman for the European Network of Transmission System Operators for Electricity. The Brussels-based organization, known as ENTSO-E, said in a separate statement that "this average frequency deviation, that has never happened in any similar way in the Continental European power system, must cease." The deviation from Europe's standard 50 Hz frequency has been enough to cause electric clocks that keep time by the power system's frequency, rather than built-in quartz crystals, to fall behind by about six minutes since mid-January. The problem mostly affects radio alarms, oven clocks or clocks used to program heating systems. ENTSO-E said it's working on a technical solution that could bring the system back to normal within "a few weeks," but urged European authorities and national governments to address the political problem at the heart of the issue.
North Korea has built a team of hackers that could target U.S. power grids - North Korean hackers have been accused of orchestrating some of the most high-profile cyber attacks of recent years — including the WannaCry ransomware attack that infected 200,000 computers across 150 countries. Now Pyongyang’s state-backed hackers are shifting focus to critical infrastructure, such as nuclear power plants and oil refineries, according to researchers at Dragos cybersecurity firm. The latest threat comes from hacking group “Covellite,” which was spun out of the state-backed hacker group Lazarus, known for allegedly conducting some of the most high-profile cyber attacks of recent memory. Researchers from Dragos said they were able to link the new group to Pyongyang because the hackers used many of the same cyber weapons and servers tracked in the attack on Sony Pictures in 2014. Dan Gunter, the company’s principal threat analyst, told VICE News that the shift in focus towards critical systems marked an escalation from Pyongyang: “The hackers are now starting to look at industrial control systems, or get into that space, and that is worrisome.” Industrial control systems are the points at which the cyber world meet the physical one. Because of their efficiency, they are increasingly used across major industries and in some of the most critical infrastructures around the world. These systems do everything from controlling nuclear power plants to monitoring electrical grids and oil fields. Recently hackers have started to exploit their vulnerabilities. Dragos says it analyzed 163 new security vulnerabilities that appeared in industrial-control components in 2017. It found that 61 percent of them would likely cause “severe operational impact” if exploited in a cyberattack.
Positive U.S. ethanol margins are driving ethanol production growth - Estimated ethanol production margins at U.S. corn ethanol plants averaged 22 cents per gallon (gal) in 2017. Last year was the fifth consecutive year that margins have averaged more than 20 cents/gal, which has helped drive consistent ethanol production growth over that period. U.S. ethanol production averaged an estimated 1,032 thousand barrels per day (b/d) in 2017, marking a fifth consecutive record level of annual production. Increases in ethanol supply have outpaced increases in domestic demand in 2017, which have contributed to relatively low spot prices and margins that are about 20 cents/gal lower than the previous four-year average but still largely in line with levels in the previous two years. Ethanol producer margins are estimated by EIA for a dry mill corn ethanol plant of average capacity located in the Midwest, a region that is home to more than 90% of domestic fuel ethanol production capacity. EIA estimates these margins by taking the sum of revenue generated from the sale of ethanol and co-products, such as distillers’ dried grains with solubles (DDGS) and corn oil, and subtracting variable and fixed costs. Variable costs include expenses such as the cost of corn and natural gas, along with a fixed operating cost of 35 cents/gal. The price of corn is the largest variable cost associated with a dry mill corn ethanol plant, and profits are generally highest when corn supply is plentiful and demand for ethanol gasoline blending is high. U.S. corn production has been at record high levels in recent years, which has kept corn prices generally stable, ranging between $3.40 and $4.00 per bushel since 2015. A period of drought in 2012 and 2013 led to corn prices greater than $8.00 per bushel, resulting in one of the least profitable periods for ethanol operators.
U.S. energy storage market to nearly triple this year: report - (Reuters) - U.S. deployments of energy storage systems will nearly triple this year thanks to sharply lower costs and state policies that support the case for installing batteries in homes, businesses and along the power grid. That forecasted growth of 186 percent to 1,233 megawatt-hours of storage from 431 MWh compares with the 27 percent increase in 2017, according to a report by GTM Research and the Energy Storage Association trade group published on Tuesday. That’s in part because some large projects that had been expected for 2017 were pushed into the early months of 2018, but also because the market for batteries in homes and businesses is finally taking off, according to GTM analyst Ravi Manghani, who said that part of the market logged growth of 79 percent last year. The growth in the use of batteries for electricity storage has been a boon to manufacturers such as Tesla, LG Corp and others. Storage system costs have fallen by roughly two thirds in the last five years, Manghani said. In addition, more states are mandating utilities procure storage systems. The market for energy storage is still small, generating just $300 million in value last year, the report said. But batteries have long held the promise of solving the intermittent nature of renewable energy sources such as wind and solar, so their development is closely watched by investors, regulators and power companies. The market is expected to exceed $1 billion in 2019, the report said. Pairing big batteries with renewable energy projects improves reliability without creating climate-changing emissions, and more homeowners and businesses are looking to batteries for backup power and to capture the excess energy from rooftop systems to use when the sun is not shining. Large systems for utilities are still the biggest segment of the market, and more utilities are including storage in their solicitations for solar projects, Manghani said, adding that a year from now he would expect most solar project solicitations to include a storage component. “There is a big sort of shift in mindset,” he said.
Utilities to save millions due to federal tax cuts — Xcel Energy has notified regulators that its revenue needs will be reduced by about $140 million this year due to federal tax cuts. The 2017 Tax Cuts and Jobs Act reduced the corporate income tax rate from 35 percent to 21 percent. The Minnesota Public Utilities Commission started an investigation in December into how the law would impact electric and natural gas utility rates and services. But it remains to be seen how much of that savings will be passed to utility customers. Xcel said the commission could decide to use the tax savings to pursue ways to reduce greenhouse gases."We believe the savings from tax reform can help us keep customers' bills low and allow for ongoing investment in clean, reliable and low-cost energy," the company said.Xcel has 1.3 million customers in Minnesota and is the state's largest electric utility company.Minnesota's largest gas utility, CenterPoint Energy, said it plans to return any savings to its customers. The savings could be applied to the utility's current rate hike request of 6.4 percent, the Star Tribune reported.CenterPoint's filing with the commission said the corporate tax cut reduced its federal income taxes by $4.4 million. The filing didn't estimate savings from other utility-related tax changes. The Houston-based utility has 840,000 Minnesota customers. Meanwhile, Minnesota Power, based in Duluth, said its $23 million in savings could be used to cover costs.
US Utilities Find Water Pollution at Coal Ash Dumps (AP) — Major utilities have found evidence of groundwater contamination at coal-burning power plants across the U.S. where landfills and man-made ponds have been used for decades as dumping grounds for coal ash, according to data released by plant owners under a Friday deadline. Heightened levels of pollutants — including arsenic and radium in some cases — were documented at plants in numerous states, from Virginia to Alaska. The Environmental Protection Agency required the plant owners to install test wells to monitor groundwater pollution as a first step toward cleaning up the sites. The future of that effort was cast into uncertainty Thursday when the Trump administration announced it intends to roll back aspects of the program to reduce the industry's compliance costs by up to $100 million annually. "There's no dispute that the underlying groundwater is being contaminated. We see that clearly," said Duke University professor Avner Vengosh, who researches the effects of coal ash and has reviewed some of the new data. "The real question is whether it's migrating toward people or wells next to (coal plants)." Vengosh added that the discovery at some sites of radium at levels far exceeding drinking water standards — which can increase the risk of cancer — were of particular concern. It appears to mark the first time coal ash has been associated with radioactivity in groundwater, he said. Duke Energy spokeswoman Erin Culbert noted that government-sponsored research has shown most coal ash does not have radioactive elements. She said the elevated radium levels reported at some Duke plants reflected raw data that had not been analyzed to determine if the contamination was naturally occurring or came from another source.
Environmental racism case: EPA rejects Alabama town's claim over toxic landfill -- The US Environmental Protection Agency has dismissed a civil rights case brought by residents of a small, overwhelmingly African American town in Alabama who have spent much of the past decade battling a toxic landfill they blame for causing a myriad of physical and mental illnesses. In a 28-page letter, the EPA said there was “insufficient evidence” that authorities in Alabama had breached the Civil Rights Act by allowing an enormous landfill site containing 4m tons of coal ash to operate near residents in Uniontown. A separate claim that the landfill operator retaliated against disgruntled residents was also turned down.Uniontown has been framed by advocates as one the most egregious examples of environmental racism in the US, where a largely poor and black population has had a polluting facility foisted upon it with little redress. “To say there is insufficient evidence is ludicrous; I just can’t take it seriously,” said Ben Eaton, who has lived in Uniontown for 33 years. Eaton blames regular headaches and burning eyes upon the landfill, which he said has an odor than can be smelled from several miles away.“The protection we’ve got from the government is little to none,” he said. The huge Arrowhead landfill rubs up against Uniontown, where about 90% of the population is black and half of the town lives below the poverty line. Arrowhead, operated by Green Group Holdings since 2011, sprawls over an area twice the size of New York City’s Central Park, accepting the waste from 33 different states. “I can’t help but feel it’s because the population is mainly black and poor. This was forced on us. If this was a white, wealthy community, this would’ve never happened.”
After decades of air pollution, a Louisiana town rebels against a chemical giant - Robert Taylor isn't sure why he's alive. "My mother succumbed to bone cancer. My brother had lung cancer," he ticks them off on his fingers. "My sister, I think it was cervical cancer. My nephew lung cancer." A favorite cousin. That cousin's son. Both neighbors on one side, one neighbor on the other. "And here I am. I don't understand how it decides who to take." Taylor is 77. He was born in St. John the Baptist Parish, La., Today, the region's clusters of cancer cases have earned it an infamous nickname: cancer alley. The chemical giant DuPont opened a plant in 1969 that manufactured the chemical chloroprene. Chloroprene is the main ingredient in neoprene, the rubbery material in wet suits, computer sleeves and many other consumer products. The Louisiana facility is the only neoprene manufacturer in the U.S. And, according to an analysis by the EPA's National Air Toxics Assessment, the five census tracts around the plant have the highest cancer risk in the country — more than 700 times the national average in one tract. For decades, Taylor and his neighbors wondered if emissions from the plant were making people in the community sick, but most people thought that challenging a chemical giant was a lost cause. The company was rich, the people were poor. "People say, 'What's wrong with y'all? Ya'll trying to fight DuPont?'" Taylor remembers. "'Y'all crazy? You can't win fighting DuPont!'" And there was a more fundamental problem: No one knew exactly how dangerous the chemical chloroprene was. Until someone established how much was safe for people to breathe, it would virtually impossible for Taylor and his neighbors to know whether they were in danger, and, if so, to act. The EPA is home to one of the most rigorous public chemical hazard assessment programs in the world, called the Integrated Risk Information System, or IRIS. For years, the IRIS program had been analyzing chloroprene. In 2010, the EPA announced that the long-term exposure limit for breathing the chemical was 0.2 micrograms per cubic meter, and classified chloroprene as a "likely human carcinogen." Subra got in touch with Taylor and told him about the IRIS number, and about the high levels of chloroprene showing up on air monitors. Taylor was frightened, angry and energized all at once. "I don't have power," he says. "I have information. That's what I got. That's what got me motivated." Taylor became the lead plaintiff in a lawsuit seeking to reduce pollution from the plant, which was sold to the Japanese chemical company Denka in 2015.
Bosses at world's most ambitious clean coal plant kept problems secret for years - Executives at the world’s most ambitious “clean coal” plant knew for years about serious design flaws and budget problems but sought to withhold key information from regulators before their plans collapsed, according to documents obtained by the Guardian. The Kemper plant in Mississippi – held up as the global model for a new generation of “clean coal” power plants – was the most expensive fossil fuel power plant in US history, with a $7.5bn price tag. Its owners, Southern Company, boasted it was “going to be the cleanest coal plant in the world”, in the words of the CEO, Tom Fanning. But thousands of internal documents reviewed by the Guardian and a series of interviews with Kemper staff uncovered evidence that the company had information showing that the project would blow through state-imposed budget limits five years before the company decided to reverse course and become an exclusively gas-fired energy plant. Kemper’s failure could be a serious setback for global climate policy and plans to reach the Paris climate targets. International climate agreements rely heavily on developing practical carbon capture technologies that have so far largely proved elusive. Kemper was slated to be the largest coal carbon capture plant ever built, touted as potentially the first of many similar projects worldwide. The documents show that Kemper’s design faced what proved to be an insurmountable issue: it required vastly more maintenance downtime than originally predicted, and according to one 2014 report would be offline 45% of its first five years rather than the 25% the company had publicly projected. Those figures doomed Kemper’s “clean coal” plans by raising its lifetime costs dramatically. The company had this information three years before it told regulators it was reversing course and planned to run the plant on natural gas. Southern nonetheless pushed forward, sinking nearly $3bn more into construction.
Trump's tariffs could ricochet on coal country -- President Trump's steel and aluminum tariffs may invite retaliation against American coal, an industry he promised to revive.Surging exports have been one of the only recent bright spots in beleaguered coal country. Demand in the United States has shrunk because of competition from natural gas and renewable energy, but the appetite for coal is strong in the fast-growing economies of Latin America and Asia. But coal country could be harmed if Trump follows through on a vow to impose a 25% tariff on steel imports and a 10% levy on aluminum. Brazil, a major exporter of steel to the United States, has already hinted at retaliation. Brazil's Industry Ministry warned last week that it may take action to "preserve its national interest" in response to Trump's tariffs. The statement pointedly noted that Brazil is the largest importer of U.S. metallurgical coal, the type used in steelmaking. To feed its steel industry, Brazil imported 5.2 million metric tons of so-called met coal through the first three quarters of 2017, according to the U.S. Energy Information Administration. That easily made Brazil the biggest customer for American met coal. "If someone is trying to retaliate, coal would be an easy target given the president's support toward the industry," . The threat is bigger than a possible Brazilian tariff. If the Brazilian steel industry suffers because of Trump's tariffs, that could dry up demand for the American coal that Brazil uses to make it.
Coal industry mired in decline despite Trump pledges | TheHill: President has moved aggressively in his first year in office to roll back regulations he says have harmed America’s coal miners. But the industry itself remains mired in long-term decline, a downturn that one of Trump’s own government agencies predicts will only worsen over time. New projections from the Energy Information Agency (EIA) estimate that Americans will be less dependent on coal, that coal production will fall, and that coal capacity in the nation’s power plants is likely to decline in coming years, according to an annual report released last month. The war on coal, in short, is over. And coal lost. Experts say regulations, like those put in place during the Obama administration, may have hastened the demise of a once-dominant industry. But the decline started with market forces far more powerful than any presidential administration, including changing demands and the low cost of natural gas.“Coal in the U.S. is in secular decline. It’s more than regulation, and it’s more than environmental concerns,” said Anna Zubets-Anderson, a vice president and senior analyst at Moody’s Investors Services. “The deregulation push is not something we think makes a material impact,” said Molly Shutt, a commodities analyst at BMI Research. That’s not to say the administration hasn’t tried to aid the coal industry. But, “The years of mining 400 million tons of coal per year, those days are gone. We’re in a new normal.”
MIT Races to Put Nuclear Fusion on the Grid to Fight Climate Change - Fusion energy—a long-held dream of clean and unlimited power—could be inching closer to reality following a collaboration from the Massachusetts Institute of Technology (MIT) and a startup company. MIT and Cambridge-based Commonwealth Fusion Systems will spearhead the multimillion-dollar effort, which aims to put fusion power " on the grid in 15 years ," with an ultimate goal of rapidly commercializing fusion energy and establishing a new industry, the university announced . "This is an important historical moment: Advances in superconducting magnets have put fusion energy potentially within reach, offering the prospect of a safe, carbon-free energy future," said MIT president L. Rafael Reif in the announcement."As humanity confronts the rising risks of climate disruption, I am thrilled that MIT is joining with industrial allies, both longstanding and new, to run full-speed toward this transformative vision for our shared future on Earth." Nuclear fusion, in very simple terms, is a process where energy is created by smashing together two hydrogen atoms. This process is different from what's going on in today's nuclear power plants, where fission is used to split atoms to create energy—along with a side of radioactive waste. Scientists have pursued nuclear fusion for decades but have been held back by funding cuts and technological roadblocks. One of the main difficulties is that net energy is only produced at extreme temperatures of hundreds of millions of degrees, which is too hot for any container to withstand. To get around that, fusion researchers use magnetic fields to hold the hot gases in place. However, that device uses up more energy than what gets churned out. So how will this latest approach be different? According to Fast Company :"The team at Commonwealth and MIT plans to spend the next three years using the new superconducting material, a steel tape coated with a compound called yttrium-barium-copper oxide, to make new magnets that could be used to make net power output possible and commercially viable. This should be feasible, they say, because magnets that are even stronger have been built using the same material for other purposes. Then the team plans to build a device that can use the magnets, with a design based on decades of research at MIT and elsewhere."
Middle East countries plan to add nuclear to their generation mix - Nuclear electricity generation capacity in the Middle East is expected to increase from 3.6 gigawatts (GW) in 2018 to 14.1 GW by 2028 because of new construction starts and recent agreements between Middle East countries and nuclear vendors. The United Arab Emirates (UAE) will lead near-term growth by installing 5.4 GW of nuclear capacity by 2020. The growth in nuclear capacity in the Middle East is largely attributable to countries in the region seeking to enhance energy security by reducing reliance on fossil fuel resources. Fossil fuels accounted for 97% of electricity production in the Middle East in 2017, with natural gas accounting for about 66% of electricity generation and oil for 31%. The remaining 3% of electricity generation in Middle East countries comes from nuclear, hydroelectricity, and other renewables. Middle East countries are also adopting nuclear generation to meet increasing electricity demand resulting from population and economic growth. Regional electricity production was more than 1,000 billion kilowatthours (kWh) in 2017, and EIA expects electricity demand to increase 30% by 2028, based on projections in the latest International Energy Outlook. This growth rate is higher than the average global growth rate of 18% over that same period, and higher than the 24% expected growth in non-OECD (Organization for Economic Cooperation and Development) countries. Developments in building nuclear capacity in the region include
- Iran is building a two-unit nuclear plant, Bushehr-II, which is designed to add 1.8 GW of nuclear capacity when completed in about 2026. Iran’s original Bushehr-I facility, which came online in 2011, was the first nuclear power plant in the Middle East. Bushehr-I has one 1.0 GW reactor unit producing about 5.9 million kWh of electricity per year.
- The UAE is currently constructing the four-unit Barakah nuclear power plant, which is expected to be completed by the end of 2020. The 1.3 GW Barakah unit 1, which was started in 2012 and completed in 2017, is expected to begin electricity production by mid-2018.
- Turkey began construction of the Akkuyu nuclear power plant in late 2017. Akkuyu is a four-unit facility designed to add 4.8 GW of nuclear capacity to Turkey’s generation mix. The first reactor unit is scheduled to be completed by 2025.
- Saudi Arabia is planning to build its first nuclear power plant and is expected to award a construction contract for a 2.8 GW facility by the end of 2018. It has solicited bids from five vendors from the United States, South Korea, France, Russia, and China to carry out the engineering, procurement, and construction work on two nuclear reactors.
- Jordan plans to install a two-unit 2.0 GW nuclear plant and has been conducting nuclear feasibility studies with Russia’s Rosatom since 2016. In early 2017, Jordan solicited bids for supplying turbines and electrical systems, and construction is expected to begin in 2019 and to be completed by 2024.
The Middle-East's Nuclear Technology Clock Starts Ticking - The Middle East’s nuclear technology clock is ticking as nations pursue peaceful capabilities that potentially leave the door open to future military options. Concern about a nuclear arms race is fuelled by uncertainty over the future of Iran’s 2015 nuclear agreement, a seeming US willingness to weaken its strict export safeguards in pursuit of economic advantage, and a willingness by suppliers such as Russia and China to ignore risks involved in weaker controls.The Trump administration was mulling loosening controls to facilitate a possible deal with Saudi Arabia as Israeli Prime Minister Benyamin Netanyahu prepared, in an address this week to a powerful Israeli lobby group in Washington, to urge US President Donald J. Trump to scrap the Iranian nuclear deal unless the Islamic republic agrees to further military restrictions and makes additional political concessions.Israel has an undeclared nuclear arsenal of its own and fears that the technological clock is working against its long-standing military advantage.The US has signalled that it may be willing to accede to Saudi demands in a bid to ensure that US companies with Westinghouse in the lead have a stake in the kingdom’s plan to build by 2032 16 reactors that would have 17.6 gigawatts (GW) of nuclear capacity.In putting forward demands for parity with Iran by getting the right to controlled enrichment of uranium and the reprocessing of spent fuel into plutonium, potential building blocks for nuclear weapons, Saudi Arabia was backing away from a 2009 memorandum of understanding with the United States in which it pledged to acquire nuclear fuel from international markets.“The trouble with flexibility regarding these critical technologies is that it leaves the door open to production of nuclear explosives,”
Belgium Begins Free Distribution Of Iodine Pills "In Case Of Nuclear Disaster" - As part of the government's new nuclear safety policy, as of today, every Belgian citizen can come to a pharmacy and get free iodine pills. Belgium has two nuclear plants, Tihange and Doel, with a total number of seven reactors, and is one of the world's most nuclear-reliant nations... In 2017 alone, there were seven incidents at the facilities. Free distribution of iodine tablets has started in Belgium as a precautionary measure in the event of a nuclear catastrophe, the Belgian Pharmaceutical Association told Sputnik on Tuesday. Before March 6, only those living within 20 kilometers (12 miles) from nuclear sites were entitled to receive the medication free of charge. As SputnikNews reports, Belgium's neighbors, Germany and the Netherlands, are concerned over the safety of the kingdom’s ageing nuclear reactors.In 2016, Germany requested Belgium to shut down its two reactors because of defects found in their pressure vessels, but the kingdom refused. In September 2017, citizens of Aachen, a western German city located 70 kilometers (43 miles) away from the Belgian Tihange, started getting free iodine tablets.In 2016, the Netherlands started distributing the pills to people who lived within a 100-kilometre (62-mile) radius of the neighboring Dutch Borsselle and Belgian Doel plants.So how would a population react to their government offering iodine pills - just in case... Fear, of course! Scared people are not rational, they’ll buy virtually anything that promises to alleviate their fear. Every totalitarian, every proponent of curtailing freedom, knows this. It’s the equivalent of the smoking hot babe: fear sells government. Free iodine tablets distributed as of today across Belgium in case of disaster at one of country's ageing nuclear power plants. Not reassuring. https://t.co/pjmEZa8pIG
TEPCO Admits Fukushima-Radiation-Blocking "Ice Wall" Is Failing - It has been nearly two-and-a-half years since TEPCO decided to give its "Game of Thrones"-inspired frozen water wall a second chance, despite initially experiencing difficulty getting the temperature low enough to freeze the ground water. At the time, we questioned their sanity, but pointed out that "wasting" tens of billions of yen on the project would, at the very least, help out the region's badly damaged GDP...But today, with two years before the Tokyo Games, the Japanese utility company admitted to Reuters that the costly "ice wall" (more like an ice floor, it's essentially a ground barrier consisting of frozen soil) is failing to stop groundwater from seeping into the ruined nuclear reactors at the ruined Fukushima Dai-ichi nuclear plant. The wall's failure, among other factors, is preventing the company from removing all of the radioactive melted fuel at the site, where one of the world's worst-ever nuclear disasters unfolded seven years ago when a tsunami struck the area. When the "ice wall" was announced in 2013, TEPCO assured skeptics that it would effectively limit the flow of groundwater into the plant's basement, where the water becomes contaminated with radioactive debris. But since the wall became fully operational in August 2017, an average of 141 metric tonnes of groundwater has seeped into the reactor and turbines each day - worse than the 132 metric tonnes a day that seeped into the ruined plant during the nine months before the wall's completion. That's far from the "nearly nothing" that TEPCO executives promised. The unplanned groundwater seepage has delayed TEPCO’s clean-up at the site, the company said, and may undermine the entire decommissioning process for the plant, which the utility is tasked with cleaning up before the 2020 Olympics, though in reality, the process will likely take decades.
Fukushima ‘must do more’ to reduce radioactive water - A government-commissioned group of experts concluded Wednesday that a costly underground ice wall is only partially effective in reducing the ever-growing amount of contaminated water at Japan's destroyed Fukushima nuclear plant, and said other measures are needed as well.The plant's operator, Tokyo Electric Power Co., says the ice wall has helped reduce the radioactive water by half. The plant also pumps out several times as much groundwater before it reaches the reactors via a conventional drainage system using dozens of wells dug around the area. The groundwater mixes with radioactive water leaking from the damaged reactors. Contaminated water also results from rainwater that comes in contact with tainted soil and structures at the plant, which suffered meltdowns of three reactors after a March 2011 earthquake and tsunami.The panel agreed that the ice wall helps, but said it doesn't completely solve the problem. Panel members suggested that additional measures be taken to minimise the inflow of rainwater and groundwater, such as repairing roofs and other damaged parts of buildings. Results from the recent dry season were positive, but they noted that heavy rainfalls caused spikes in the amount of contaminated water."We recognise that the ice wall has had an effect, but more work is needed to mitigate rainfall ahead of the typhoon season," said panel chairman Yuzo Onishi, a Kansai University civil engineering professor. The 1.5-kilometre coolant-filled underground structure was installed around the wrecked reactor buildings to create a frozen soil barrier and keep groundwater from flowing into the heavily radioactive area. The ice wall has been activated in phases since 2016. Frozen barriers around the reactor buildings are now deemed complete.
The Cold War’s Toxic Legacy: Costly, Dangerous Cleanups at Atomic Bomb Production Sites - Seventy-five years ago, in March 1943, a mysterious construction project began at a remote location in eastern Washington state. Over the next two years some 50,000 workers built an industrial site occupying half the area of Rhode Island, costing more than $230 million—equivalent to $3.1 billion today. Few of those workers, and virtually no one in the surrounding community, knew the facility's purpose. The site was called Hanford, named for a small town whose residents were displaced to make way for the project. Its mission became clear at the end of World War II. Hanford had produced plutonium for the first nuclear test in the New Mexico desert in July 1945, and for the bomb that incinerated Nagasaki on Aug. 9. As a researcher in environmental and energy communication, I've studied the legacies of nuclear weapons production . From 2000 to 2005, I served with a citizen advisory board that provides input to state and federal officials on a massive environmental cleanup program at Hanford, now one of the most contaminated sites in the world. As U.S. leaders consider producing new nuclear weapons , I believe they should study lessons from Hanford carefully. Hanford provides one of the more dramatic examples of problems that unfolded—and persist today—at nuclear sites where production and secrecy took priority over safety and environmental protection.Hanford was one of three large facilities anchoring the Manhattan Project – the crash program to build an atomic bomb. It was part of a larger complex linking facilities across the nation. A plant at Oak Ridge, Tennessee, enriched uranium and operated a prototype nuclear reactor. Los Alamos Laboratory in New Mexico assembled a cadre of world-class scientists to design and build the weapons, using materials produced at the other sites. Smaller facilities across the nation made other contributions. As World War II phased into the Cold War and the U.S.-Soviet arms race escalated, new sites were added in Ohio, South Carolina, Florida, Texas, Colorado and elsewhere. Secrecy masked much of the work at these sites until well into the 1980s, with serious consequences for public health, worker safety and the environment. Nuclear and chemical wastes caused severe contamination at Hanford and the other sites, and dealing with them has proved to be difficult and costly.
Ohio’s Utica Shale Fourth Quarter Production Totals Released - ODNR – During the fourth quarter of 2017, Ohio’s horizontal shale wells produced 4,193,562 barrels of oil and 503,066,907 Mcf (503 billion cubic feet) of natural gas, according to the figures released today by the Ohio Department of Natural Resources (ODNR). Total production for the last two years, with the percent change in production for 2016 to 2017, can be found below: The ODNR quarterly report lists 1,897 horizontal shale wells, 1,869 of which reported oil and natural gas production during the quarter. Of the 1,869 reporting oil and natural gas results:
- The average amount of oil produced was 2,244 barrels.
- The average amount of natural gas produced was 269,164 Mcf.
- The average number of fourth quarter days in production was 88.
All horizontal production reports can be accessed at oilandgas.ohiodnr.gov/production
Appeal of charter election rejection now in court's hands - Athens NEWS - The 4th District Court of Appeals heard brief arguments Thursday morning in a local group’s appeal of the Athens County Board of Elections decision last July rejecting an anti-fracking county charter ballot proposal submitted by the group. While supporters of the group, the Athens County Bill of Rights Committee (ACBORC), rallied in protest in the rain outside the Athens County Courthouse, chanting “Let Us Vote,” the three-judge appellate panel heard brief arguments inside the courthouse from each side in the case. A decision in the appeal case is expected no sooner than 30 days and could take several months.Athens County Prosecutor Keller Blackburn, whose office is representing the county Board of Elections in the appeal case, said attorneys for both sides Thursday morning mainly touched on points already included in their legal filings in the appeal.The party appealing the case, described as “a committee of petitioners for the county charter proposal,” on July 28, 2017, appealed Athens County Common Pleas Judge George McCarthy’s decision to uphold the Board of Elections’ July 10 decision to not place on the November 2017 ballot the Athens County Bill of Rights Committee’s proposed county charter. Last July, the local Board of Elections rejected the charter as invalid by stating, among other things, that a proposed executive council (comprised of county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government.Judge McCarthy sided with the Board of Elections and upheld the rejection of the charter. As with initiatives in the previous two years, this county charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through prohibiting the use of local water for fracking operations. It also would outlaw future fracking waste-injection wells, of which Athens County already has several in operation.
The Wayne National Forest to update Land Management Plan - The Wayne National Forest will update its Land Management Plan following a lawsuit by the Center for Biological Diversity. The lawsuit, filed last year against the U.S. Forest Service and Bureau of Land Management, said the sale of gas and oil leases under the current Land Management Plan violated the National Environmental Policy Act and the Endangered Species Act. The Wayne National Forest, Ohio’s only national forest, created its first Land Management Plan in 2006, before Ohio’s fracking boom. “The current land plan is completely outdated,” said Taylor McKinnon, a representative from the Center for Biological Diversity. “It could not and does not anticipate the effects of fracking in Ohio.” The Bureau of Land Management began leasing parcels of land in the Wayne in the 11 years since the Land Management Plan was created. Those oil and gas leases are awarded to companies who may use the land for natural gas extraction. Acquiring the land does not, however, give permission for companies to drill for natural gas. Instead, companies have 10 years to apply to drill on the land, Greg Fuhs, acting deputy state director of external affairs for the Bureau of Land Management Eastern States, said in a previous Post report. Gary Chancey, public affairs officer for the Wayne National Forest, said the land plan needed to be updated to reflect how the uses of the forest have changed in the 11 years since the plan's creation. "This presents an opportunity for the Wayne National Forest to revise its Land Management Plan, creating compatible plans that allow the agencies to work together more efficiently.” McKinnon said the most effective way to update the land plan is to ban fracking completely in the Wayne.
Ohio Gas Well Was Spewing Methane Pollution Three Weeks After Blowout -- An oil and gas drilling pad where a fiery explosion led to the evacuation of about 100 people in Ohio's Belmont County last month was still spewing raw methane into the atmosphere nearly three weeks after the initial well blowout, according to an infrared video released by environmental watchdog group Earthworks on Tuesday. Workers reportedly brought the well under control Wednesday morning. While much of the national media has yet to take notice, Earthworks is comparing the accident in Belmont County to the 2015 natural gas disaster in California's Aliso Canyon, where a storage well blowout allowed more than 100,000 tons of methane pollution to spew into the atmosphere near Los Angeles over a four-month period. The disaster brought national attention to the climate impacts of methane, a natural gas that can cause 86 times more climate damage than carbon dioxide over a 20-year period, according to the Intergovernmental Panel on Climate Change. On February 15, well operators with XTO Energy, a subsidiary of ExxonMobil, lost control of the Belmont County natural gas well while servicing a fracked well at the same site, according to the Environmental Protection Agency (EPA) and local reports. Fires broke out and explosions occurred, spewing thousands of gallons of drilling fluids containing toxic chemicals such as hydrochloric acid and 2-butoxyethanol into the air and a tributary of a nearby stream. XTO workers were able to gain control of the well and stop the leak on Wednesday morning, according to a spokesman for the Ohio Department of Natural Resources (ODNR). In all, the wellhead leaked for about 21 days after the initial blowout. XTO estimated that the damaged wellhead was leaking methane gas at a rate of 100 million cubic feet per day, according to the EPA's initial emergency response report. The Aliso Canyon leak emitted an average of 49 million cubic feet of gas per day, or about half as much for a longer period of time, according to Earthworks. This infrared video taken by optical gas photographer Peter Dronkers on Saturday shows that raw methane was still billowing from the XTO Energy well in Belmont Country at an alarming rate weeks after the accident:
WATCH: Kucinich tells you why he wants to be governor - Sandusky Register (half hour video interview) — Dennis Kucinich took his campaign for governor to Sandusky Thursday and emphasized his support for an assault weapons ban and inexpensive healthcare coverage for all. Kucinich appeared on “Between the Lines Live,” the Register’s public affairs program, and said Ohio has reached a moment “when government has to be returned to the people.” Kucinich, 71, a former Congressman and Cleveland mayor, is a Democrat seeking his party’s nomination in the May primary. Kucinich told Register managing editor Matt Westerhold health care costs “are just killing family budgets.”He said he and his running mate, Akron City Council member Tara Samples, are putting together a plan to offer inexpensive health coverage to all Ohioans. He said he could put the plan on the ballot if lawmakers won’t adopt it. Kucinich said he’s the only candidate in the race from either party who favors a ban on the sale and ownership of assault weapons. He said the step is necessary to deal with a “public health emergency.” He noted he opposes fracking and said as governor, he’ll order the Ohio Department of Natural Resources not to issue any more licenses allowing new drilling for fracking.“I believe we have to protect clean water from fracking,” Kucinich said. “You can’t drink oil. Water is essential for human health.” Kucinich said he likes Cordray personally but described his rival as a “Republican light” who opposes bans on assault rifles and fracking.
PUC orders Sunoco pipeline shutdown after sinkholes expose bare pipe near Exton - Philly The Pennsylvania Public Utility Commission on Wednesday ordered the immediate shutdown of Sunoco Pipeline’s Mariner East 1 system after sinkholes exposed the bare pipeline in Chester County, which PUC investigators said “could have catastrophic results” if not repaired. Gladys M. Brown, the PUC’s chair, granted an emergency order to halt operations on the 8-inch-diameter pipeline, which went into service in 1931 originally to carry motor fuel. It now carries up to 70,000 barrels a day of high-pressure volatile natural gas liquids such as propane from the Marcellus Shale gas region to a Sunoco terminal in Marcus Hook. The emergency order will require Sunoco to run an inspection tool through the pipeline to ensure it is undamaged, and to conduct geophysical testing to determine the extent of underground instability. Operations will not be allowed to resume until corrective actions are taken that satisfy the PUC’s investigators.
PUC shuts down Mariner East 1 pipeline, citing public safety concerns raised by sinkholes - Pennsylvania’s Public Utility Commission on Wednesday ordered a temporary shutdown of the Mariner East 1 natural gas liquids pipeline, saying it could have a “catastrophic” effect on public safety if it leaks. PUC Chairman Gladys Brown approved a request by the commission’s Bureau of Investigation and Enforcement for an emergency order that would halt operation of the line until inspectors are satisfied that it meets safety standards. The panel, in a petition issued earlier Wednesday, argued that the pipeline had been exposed by the appearance of sinkholes near the construction of two other pipelines – Mariner East 2 and 2X – at several places in Chester County’s West Whiteland Township in recent days. The panel said that the construction of the two new pipelines and the sinkholes that resulted from drilling for the pipelines – all of it near ME1 – “compromise the safety of the public.” In a four-page order, Brown agreed with the panel, saying that risks to the public outweigh risks to the shippers of natural gas liquids. “I agree with BIE that permitting the continued flow of hazardous liquids through the ME1 pipeline without the proper steps to ensure the integrity of the pipeline could have catastrophic results impacting the public,” Brown wrote.
MVP asks West Virginia judge to order protesters out of trees along pipeline route - Lawyers for the Mountain Valley Pipeline are asking a West Virginia judge to order the removal of protesters sitting in trees along the pipeline’s route.The protesters’ attempt to block tree cutting for the natural gas pipeline has no legal justification and could delay construction, the attorneys wrote in a motion for a temporary restraining order filed in Monroe County Circuit Court.Since Feb. 26, two self-described pipeline resisters have been sitting on wooden platforms in trees near the spot where the pipeline would cross the Appalachian Trail in the Jefferson National Forest, just across the state line from Giles County. Unless stopped, the “tree-sit” protest “will prevent MVP from engaging in lawful construction activities,” the motion stated.Mountain Valley contends the protesters are violating forest service rules while it has received approval from the Federal Energy Regulatory Commission, the U.S. Forest Service and the federal Bureau of Land Management for its 303-mile buried pipeline.A Circuit Court judge has yet to enter an order or schedule a hearing since the request for a restraining order was filed Friday.Named in the motion is Appalachians Against Pipelines, a group that has posted information about the protests on its Facebook page, and Ashley Brown, who said during a cellphone interview with The Roanoke Times last week that she was one of two protesters about 60 feet above the ground sitting in trees.Five other protesters involved in the tree-sit are not known to Mountain Valley and are identified in court papers as John Does.
Environment Committee Advances Fracking Waste Ban - — The Environment Committee voted 29-1Wednesday to forward a bill banning fracking waste to the Senate. There is currently a moratorium on fracking waste that was approved back in 2014, but environmentalists say they can’t predict what the future holds. The moratorium will stay in place until the Department of Energy and Environmental Protection submits legislation to address hazardous waste from fracking. Fracking waste includes wastewater, sludge and other substances generated in the process of hydraulic fracturing of shale to get to natural gas buried underground. There is currently no fracking happening in Connecticut, but it happens in states like Pennsylvania. In 2014, the Connecticut legislature passed a three year moratorium that temporarily prohibited fracking waste. The measure was prompted after the New York legislature considered lifting its ban on fracking. At the time many environmentalists in Connecticut called the moratorium a “watered down” version of an actual ban on fracking waste.Legislation that featured a permanent ban easily passed in the House last year, but it sat on the Senate calendar for about a month before the session ended.Rep. John Piscopo, R-Thomaston, called the legislation largely symbolic and argued that it was no way to write state law.“There’s no reason for this,” Piscopo said. Rep. Michael Demicco, D-Farmington, who co-chairs the committee, pushed back saying that just because fracking does not occur now, does not mean it will not occur in the future.
A year after fracking ban, Maryland Gov. Hogan’s support for natural gas sparks new battle - Capital Gazette: year after Maryland banned the controversial natural gas harvesting technique known as fracking, Gov. Larry Hogan is pushing to connect more homes in the state to gas lines, sparking a new battle over the fuel. Hogan, who signed last year’s law, wants to require a Canadian energy company to invest more than $100 million in Maryland, including money to establish a program to make natural gas the primary energy source for more homes in the state.The move has drawn fire from environmentalists. They say it’s hypocritical for Hogan, who has backed programs to fight global warming, to expand the use of natural gas. Proponents counter that using more natural gas would reduce the state’s reliance on fuels that produce more pollution. The conflict, along with ongoing friction over a proposed gas pipeline beneath the Potomac River and the soon-to-open Cove Point natural gas terminal in Southern Maryland, is part of a larger debate about how the state should cut fossil fuel emissions and combat climate change. Article continues belowMaryland has decided not to join in the nation’s fracking boom, but natural gas is poised to grow in the state nevertheless. Maryland Environment Secretary Ben Grumbles rejected suggestions that the Hogan administration is being inconsistent in its support for gas infrastructure. He called natural gas “a bridge fuel to a clean-energy future,” reducing dependence on dirtier fuels such as coal and heating oil while the use of wind, solar and other sources grows and costs fall.
Dominion Maryland Cove Point LNG facility exports first cargo (Reuters) - Dominion Energy Inc said on Friday the first vessel carrying liquefied natural gas from its newly constructed Cove Point LNG export terminal in Maryland left the facility, another sign of growing U.S. prowess as an oil and gas producer. The LNG tanker Gemmata left fully loaded, according to energy data provider Genscape, which said it observed the loading of the vessel through its cameras set up to watch the facility. Dominion said it spent about $4 billion to add export facilities at Cove Point, long an LNG import terminal on Chesapeake Bay. The facility is still undergoing final commissioning, the company said. Cove Point is the second big LNG export terminal in the Lower 48 U.S. states after Cheniere Energy Inc’s Sabine Pass terminal in Louisiana, which exported its first cargo in February 2016. After decades of importing massive amounts of gas, the United States became an exporter of the fuel in 2017 for the first time in 60 years due to record U.S. gas production from shale fields. The United States is expected to become the world’s third- biggest LNG exporter by capacity in 2018, furthering President Donald Trump’s goal of American energy dominance by exporting U.S. oil and gas to help create jobs at home and provide more security to the nation’s allies around the world. U.S. LNG export capacity is expected to rise to 10.1 billion cubic feet per day (bcfd) by the end of 2020 from 3.8 bcfd today. Cove Point is designed to liquefy about 0.75 bcfd of gas. One bcfd can power about 5 million homes.
Millennials Interrupt Fracking Lobbyist Meeting at Trump Hotel in D.C. (Video) — A dozen young people interrupted the opening reception to an oil and gas lobbying event Monday at the International Trump Hotel in Washington, D.C. The annual 2018 “Congressional Call-Up” event, which focused on influencing federal officials in Congress and at the Environmental Protection Agency, was held by the Independent Petroleum Association of America, a lobby group representing oil and gas companies. Before the opening reception, over a dozen young people—part of the Sunrise Movement, a millennial-led group looking to make climate change an urgent political priority in the 2018 midterm elections—stood in the reception entrance inside the Trump International Hotel. During the interruption, attendees displayed a banner that read "Oil Lobby Money Buys Climate Wrecking Politics," sang a song to the tune of "God Bless the USA," and spoke about the impacts of climate change and oil drilling on their families. Fracking firms, many represented by the IPAA, fought hard in 2017 to ensure the Trump administration and Republicans in Congress moved swiftly to approve pipeline projects like the Dakota Access Pipeline, gut environmental protections, and expand drilling on public lands. “Fossil fuel executives and their lobbyists are only able to get away with pay-to-play politics because they corrupt our democracy in the shadows of places like the Trump Hotel,” said Stephanie Tulowetzke, a DC-based organizer with Sunrise Movement. “We’re here today to bring their dangerous, corrupt actions into the light. We won’t stop showing up at events like these until our politicians reject campaign contributions from the very CEOs threatening our lives and the lives of millions in this country.”
As Atlantic Coast Pipeline moves to construction, groups urge Northam to act -- More than a year ago, as he was attempting to fend off a primary challenge from an opponent dead set against the Atlantic Coast and Mountain Valley pipelines, then-Lt. Gov. Ralph Northam called for the contentious projects to “be held to the highest environmental standards” in a letter to the state’s environmental agency.Last week, armed with a new report warning of the hazards the pipelines’ construction poses to drinking water, trout streams and wetlands, a trio of environmental groups sought to hold Northam to that pledge.The report, commissioned by the Natural Resources Defense Council, says sediment loads in the streams and wetlands crossed by the pipelines would increase during and after construction, continuing at levels “above baseline on a permanent basis,” among other findings.“We strongly agree with you,” says the letter Northam got last week from the Virginia League of Conservation Voters, the Natural Resources Defense Council and NextGen America. “An individualized evaluation of these pipelines’ pollution impacts, guided by your call to use the best available scientific evidence, in a transparent, public process, is the best way to ensure protection of Virginia’s waters.” Specifically, the groups want Northam to push the state Department of Environmental Quality, which has been excoriated for how it has handled the water quality review of the pipelines, to conduct an individual review of the hundreds of spots where the pipelines will cross waterways. But that ship may have already sailed. The DEQ ceded the review of water crossings to the Army Corps of Engineers. The corps has now issued what critics call “blanket” permits for both pipeline projects, an approval that opponents argue allows some degradation of waterways that impairs existing uses, which state regulations do not permit.
How 'North Carolina' got erased from Atlantic Coast Pipeline fund — Over six weeks of negotiation, a deal to bring $57.8 million to North Carolina as part of the Atlantic Coast Pipeline project morphed from an agreement between the pipeline partnership and the state to a deal between the partnership and Gov. Roy Cooper. Draft versions of the memorandum of understanding laying out terms for the mitigation fund show changes handwritten in the margins by William McKinney, Cooper's in-house attorney, as the deal was worked up in December and January. Instead of the money flowing to the state, it would go into an escrow fund designated by the governor. Repeated references to "the state of North Carolina" were edited to "the governor of the state of North Carolina." The reason? Cooper and his administration don't trust the Republican-controlled General Assembly. The feeling is mutual. After the fund was announced, the Republican majority moved quickly to pass legislation rerouting the promised money to schools along the pipeline route instead of leaving it to Cooper and a still-unwritten executive order contemplated in the memorandum to lay out rules for doling out the money. Republican leaders called the administration's agreement "a slush fund" created outside the treasury to circumvent their power of the purse. "I think that their subsequent actions bore out why we didn't want to involve the legislature," said Ken Eudy, Cooper's senior adviser and the administration's point man for talks with Duke Energy and other companies partnering on the pipeline.
Documents reveal immense outreach on Atlantic Coast Pipeline — Dominion Energy says it’s being a good neighbor by handing out $2 million in grants of around $5,000 to $10,000 in communities affected by its joint venture with fellow energy giants Duke Energy and Southern Co. But critics say Dominion is buying support on the cheap to outflank opponents of the project, which would carry fracked natural gas from West Virginia into Virginia, North Carolina, and potentially further south at a cost that’s swelling to as much as $6.5 billion. ”It continues to astonish me how tiny these grants are and how ready people are to sell their souls,” said Hope Taylor, executive director of Clean Water for North Carolina, a nonprofit fighting the pipeline. Documents obtained by The Associated Press as well as interviews with company officials, supporters and opponents, show the considerable lengths Dominion has gone to as it builds support for its largest capital project. The company says its grant program is charity, and not part of what it calls its largest outreach program in Dominion history. “We wanted to make sure our side is adequately told,” said Bruce McKay, who as senior energy policy director for Richmond-based Dominion oversees the project’s public affairs. He calls the outreach necessary in part because of the pipeline’s complex, multijurisdictional nature and growing opposition to fossil fuel infrastructure. Dominion is the leading percentage owner of the Atlantic Coast Pipeline, responsible for its construction and operation. So far, only some trees have been cleared, but the project aims to go online as early as late 2019, according a recent Securities and Exchange Commission filing. Supporters say the pipeline will meet a critical need for natural gas — primarily for power generation — in a region with constrained supplies. They say it will create jobs, boost economic development and support a shift from coal. Opponents say it will harm the environment, and contend developers are overstating the need to build a project for which regulators will allow them to recoup a handsome return on their investments.
US Colonial Pipeline restarts Lines 1 and 3 - Colonial Pipeline said Friday morning it had restarted its gasoline-only Line 1 and multi-product Line 3 after a respective integrity issue and leak forced the lines to close. The company said Line 1 was shut Thursday afternoon to investigate an undisclosed issue. The 1.37 million b/d line ships gasoline from Pasadena, Texas, to Greensboro, North Carolina. Line 3 was shut Wednesday morning after a small release was found in Bel Air, Maryland. The line carries 885,000 b/d of gasoline, diesel and other products from Greensboro to Linden, New Jersey. Colonial did not provide details of the leak in Bel Air, nor did it specify if the Line 1 and Line 3 issues were related. A company spokeswoman did not immediately return a request for comment.
Report: Russians targeted Sabal Trail pipeline on social media -- Russian agents exploited social media to attempt to disrupt U.S. domestic energy markets and stir up protests against the Sabal Trail pipeline and other pipelines, fossil fuels, climate change and other divisive issues, a Congressional report released this month found. Juno Beach-based FPL, which uses natural gas to generate 70 percent of its power, is the Sabal Trail pipeline’s primary customer. The U.S. House of Representatives Committee on Science, Space and Technology says the same Russian entity indicted by a federal grand jury last month, the Internet Research Agency, is behind the social medial campaigns seeking to undermine U.S. energy markets. The Congressional report on the energy issues found that between 2015 and 2017, there were an estimated 9,097 Russian posts or tweets regarding U.S energy policy or an energy event on Twitter, Facebook and Instagram. For example, a tweet on Dec. 11, 2016 from RT, the Russian-sponsored news agency stated: “Critics call $3 billion #SabalTrail Pipeline #Florida’s Dakota Access Pipeline.” Another Tweet from RT that same day was “Pipeline Protests are Happening in Florida. #NOSabalTrailPipeline.” The Russian agents efforts included attempting to incite Americans to take action against pipeline efforts by promoting links and references to online petitions aimed at stopping Sabal Trail, the Dakota Access and Enbridge Line 5 pipelines, the report states.
Trump drilling plan faces backlash | TheHill: The oil industry has been put on the defensive in the fight over the Trump administration’s plan to expand offshore drilling. The backlash against Interior Secretary Ryan Zinke’s decision to consider oil and natural gas drilling nearly everywhere along the nation’s coasts has been fierce and bipartisan. Drilling opponents have dominated the public conversation since the plan was released in January. Meanwhile, almost all of the Atlantic and Pacific coast governors have come out in opposition to the plan, spurring Zinke to remove Florida’s waters from the proposal just days after it was released.With energy prices, including for gasoline, remaining fairly low, the industry is facing numerous headwinds as it pushes to open up significant new areas for drilling. “We recognize the fact that this is a bit more of an uphill fight because the pressure is off,” said Tim Charters, a lobbyist at the National Ocean Industries Association, which represents oil companies and others involved in offshore oil, gas and wind development. “When Florida’s tourism is getting crushed because gasoline is $4 a gallon, folks want to look at new drilling. When oil has been stable for several years and gasoline is around $2.50, the pressure is off,” he said. “We’re working to remind everyone that these resources belong to the American people and should be used for the benefit of all of America.” One person who works in energy industry advocacy said that the Trump administration is likely to come out with a final drilling plan that oil and gas interests can be proud of. But that person also warned the industry risks losing the narrative unless it steadily makes the case to the public for offshore drilling.
Interior Secretary gets strong GOP resistance to drilling plan, starts backing off -- Facing mounting pressure from fellow Republicans who see little consistuent support for drilling off the Atlantic coast, Interior Secretary Ryan Zinke could be backpedaling on the Trump administration’s initial plans to expand the program, GOP lawmakers told McClatchy. In a meeting with affected coastal GOP representatives last week, Zinke reaffirmed an exemption from the drilling for Florida, hinted to New Jersey officials their state was likely to be spared and left a Virginia congressman optimistic the policy would be overturned for his state, too. And Zinke said he’d travel to South Carolina to get a better sense of their concerns as well. If Zinke carves out exceptions for all these states, the idea of cross-Atlantic oil drilling basis could be dead. The new policy had seemed clear in early January, when Zinke, at the White House’s behest, said he would expand drilling all along the Atlantic. Then he gave an exemption to Florida, and other states — many of which have Republican-dominated congressional delegations — began demanding similar treatment. Seeking to clean up a bureaucratic mess, Zinke has since been visiting Capitol Hill and speaking with governors who want carve-outs. Following a Feb. 27 meeting Zinke convened on Capitol Hill with East Coast Republican representatives, Interior spokeswoman Heather Swift said her boss was “happy to meet with coastal representatives to discuss the offshore plan.” But Zinke is leaving confusion in his wake. Lawmakers from Florida emerged from that recent meeting convinced they were still going to get their exemption, citing a united delegation and a longstanding federal moratorium on drilling in the eastern Gulf of Mexico. New Jersey Republicans said Zinke, a former Montana congressman, strongly implied their coast would be spared, too, because some studies suggested drilling there would not yield much oil. Rep. Scott Taylor, R-Va., said he was confident his state would get an exemption because of tourism and the Navy’s concerns about drilling near a military base. And Rep. Tom Rice, R-S.C., said he was encouraged both by Zinke’s promise to visit the South Carolina coast and his indication “to me that strong resistance (inside the state) will certainly be taken into account.”
Zinke says Interior should be a partner with oil companies - — Interior Secretary Ryan Zinke says his agency should be a partner with oil and gas companies that seek to drill on public land and that long regulatory reviews with an uncertain outcome are “un-American.” Speaking Tuesday to a major energy-industry conference, Zinke described the Trump administration’s efforts to increase offshore drilling, reduce regulations, and streamline inspections of oil and gas operators. “Interior should not be in the business of being an adversary. We should be in the business of being a partner,” Zinke said to a receptive audience that included leaders of energy companies and oil-producing countries. Zinke said the government should shorten the permitting process for energy infrastructure — it shouldn’t take longer than two years. “If you ask an investor to continuously put money on a project that is uncertain because the permit process has too much uncertainty, ambiguity, (it) is quite frankly un-American,” he said. The Interior Department manages 500,000 million acres — one-fifth of the U.S. land mass — as well as the lease of offshore areas for oil drilling. One-fifth of U.S. oil production takes place on land or water that the Interior Department leases to private energy companies. Environmentalists accuse Zinke and the administration of undercutting environmental rules to help oil, gas and coal companies. Alex Taurel, a legislative official with the League of Conservation Voters, said Tuesday that Zinke “thinks our public lands are nothing more than an ATM for his industry friends. If anything is un-American, it’s this administration’s persistent attacks on America’s public lands.” In January, the Trump administration proposed to open up nearly all coastal areas to oil drilling, although Florida was dropped after the Republican governor and lawmakers objected, citing risk to the state’s tourism business.
Appeals court to review halt in Louisiana pipeline work — A federal appeals court has scheduled a hearing next week to review a judge’s order that halted construction of a crude oil pipeline in a Louisiana swamp. Bayou Bridge Pipeline LLC asked the 5th U.S. Circuit Court of Appeals for an “emergency stay” that would lift the suspension of construction work while it appeals the judge’s ruling. A three-judge panel from the court is scheduled to hear to arguments on that request next Tuesday. On Feb. 23, U.S. District Judge Shelly Dick sided with environmental groups and issued a preliminary injunction stopping all Bayou Bridge pipeline construction work in the Atchafalaya Basin until the groups’ lawsuit is resolved. In a court filing last Friday, company attorneys claimed Dick’s ruling “fails the basic requirements” for issuing such an order. Dick concluded the project’s irreversible environmental damage outweighs the economic harm that a delay brings to the company. Her order only applies to the basin and doesn’t prevent the company from working elsewhere along the pipeline’s 162-mile-long (261-kilometer) path from Lake Charles to St. James Parish. Sierra Club and other environmental groups sued the U.S. Army Corps of Engineers in January, saying it violated the Clean Water Act and other environmental laws when it approved a permit for the project. The groups and Bayou Bridge disagree on whether the company could immediately resume construction in the basin if the 5th Circuit lifts the preliminary injunction. The groups’ attorneys claim Bayou Bridge couldn’t, because the Corps’ permit prohibits the work when water levels reach a certain height. “That height has already been reached, and river levels will likely remain high for months,” they wrote in a court filing Monday. But the company’s lawyers say they would have at least a few weeks to make “significant uninterrupted construction progress” before rising water levels disrupt work in the basin
The growing role of VLCC's in US crude oil exports. -- U.S. crude oil exports from the Gulf Coast remain at a high level, as does interest in transporting crude to Asia and Europe in Very Large Crude Carriers (VLCCs) capable of carrying as much as 2 million barrels (MMbbl) each. The catch is that only one Gulf port — the Louisiana Offshore Oil Port (LOOP) — can send out fully loaded VLCCs, and so far LOOP has loaded only one; other Gulf ports need to fill or top off the gargantuan tankers in open waters using reverse lightering. Plans are afoot to allow greater use of VLCCs, but how long will they take to implement? Today, we discuss the economic benefits of exporting crude on supertankers, the growing use of VLCCs for Gulf Coast exports and the challenges exporters face in utilizing them even more this year and next. VLCCs are giants. The supertankers have an average length of about 1,100 feet — longer than Houston’s 75-story JPMorgan Chase Tower is tall — with an average beam (or width) of nearly 200 feet and an average fully loaded draft of 72 feet. There are about 800 VLCCs operating in the world today and, as we’ll get to, an increasing number of these behemoths are being filled with U.S. crude along the Gulf Coast and sent to faraway ports in Europe and Asia.
Global oil players flock to Houston as OPEC, US shale tensions ease (Reuters) - The oil industry’s biggest names gather this week at CERAWeek, the largest energy industry get-together in the Americas, at a time when U.S. shale production is booming, global demand is rising and crude prices are at a sweet spot for both big U.S. producers and OPEC. FILE PHOTO: An offshore oil platform is seen in Huntington Beach, California September 28, 2014. REUTERS/Lucy Nicholso/File PhotoLast year’s decision by the Organization of the Petroleum Exporting Countries to restrain output has drained the global glut that occupied much of the conversation at 2017’s gathering. With oil prices LCOc1 up about 15 percent since oil ministers and top executives convened here last year, fears have receded for a slugfest of OPEC vs. U.S. shale. Rising prices have U.S. shale producers pumping more, sending total U.S. output to an all-time record above 10 million barrels per day. This year, the United States could surpass Russia as the world’s largest oil producer. OPEC, meanwhile, has shown no signs of moving to produce more, with output from members at a 10-month low. The cartel’s leaders have even expressed interest in keeping some production curbs in place through 2019. Oil ministers and their advisers will use the conference to put shale under a microscope, said Dan Yergin, vice chairman of conference organizer IHS Markit (INFO.O) and a Pulitzer Prize-winning oil historian. “OPEC is still really struggling to understand: ‘What is this new oil business called shale?’” said Yergin. “This conference is a field trip for OPEC to a different reality in oil.” They have scheduled dinners with shale executives and financiers for the second time in two years, underscoring the maturation of a relationship between big petrostates and a once-upstart industry that weathered OPEC’s best efforts to bury it under a supply glut from 2014 to 2016. Shale has emerged stronger from that period with the Permian Basin, the largest U.S. oilfield, now producing nearly 3 million barrels of oil per day, triple that of 2009. Presentations will look at shale’s rising role in global markets and the potential for future North American production and export growth.
U.S. shale and OPEC share steak in uneasy truce at Houston dinner (Reuters) - Around the room at Houston’s The Grove restaurant on Monday, at several tables, sat a group of shale executives, interspersed with energy ministers and officials representing OPEC members, where they dined on fish and steak. They should have had a lot to discuss amid the fervor of CERAWeek, the most notable U.S. energy event of the year. But what could have been two of the biggest topics of conversation - oil prices and OPEC output levels - were not in the cards, as such a broad conversation would run afoul of U.S. antitrust rules against price-fixing. “It was quite a congenial group of people. We had a really wonderful conversation,” said Tim Dove, CEO of Pioneer Natural Resources Co (PXD.N). He noted that Mohammed Barkindo, OPEC secretary general, gave a speech, and “his main message was that they believe very strongly that demand is going to be significant moving forward in terms of growth.” Just a year-and-a-half ago, such a gathering would have been difficult. The two sides were involved in a price war that left many shale firms bankrupt. The Organization of the Petroleum Exporting Countries pumped all-out from 2014, pushing down the oil price in a campaign for market share aimed at pushing the shale industry out of business. The price war sparked an industry recession, and oil prices CLc1 LCOc1 plunged to a low of $27 a barrel. But shale cut costs and survived, and eventually the low price was too much for OPEC members to bear. OPEC cut output in 2017, effectively making way for shale. Since then, there has been an uneasy truce between OPEC and the shale industry. Even as OPEC ministers sit down with shale executives, it still grates for them that they have had to cut production and cede market share to U.S. oil firms that pump as much as they can.
Fossil Fuel Execs Very Annoyed #KeepItIntheGround Movement Crimping Their Ability to Pillage Planet -- Pipeline executives are extremely upset that protests by environmentalists and Indigenous groups are disrupting their ability to plunder the planet at will, and they aired their discontent publicly on Thursday at the CERAWeek energy conference in Texas. Singling out the " Keep It in the Ground " movement—which calls for an "immediate halt" to all new fossil fuel development—as a particularly strong obstacle to their ambitious construction projects, pipeline CEOs complained that opposition to dirty energy has grown in "intensity" over the past several years, posing a serious threat to their companies' bottomlines. "There's more opponents, and it's more organized," lamented Kinder Morgan CEO Steven Kean, according tothe Houston Chronicle. Kinder Morgan's Trans Mountain pipeline—which would carry tar sands 700 miles from Alberta to Burnaby, British Columbia—is currently facing fierce resistance from Indigenous groups and local governments. At least 7,000 people are expected to participate in a march and rally against the pipeline in Vancouver on Saturday, the Seattle Times reports . Other pipeline CEOs appearing at the CERAWeek conference echoed Kean's concerns, highlighting the success of efforts by environmental activists to delay, disrupt and cancel projects through non-violent civil disobedience, litigation and other tactics. Bitterly recounting how activists tried to drill a holes in his company's pipelines, Energy Transfer Partners CEO Kelcy Warren reportedly said: "Talk about someone that needs to be removed from the gene pool."
Record crude and gas production leads to record NGL production at just the right time. - In recent weeks, both crude oil and natural gas production have breached all-time records. So it should come as no surprise the same thing happened to NGLs — production blasted to over 4.0 MMb/d in the fourth quarter of 2017, and by our estimates will move considerably higher this year. This is a particularly big deal for the ethane market, which has spent the last eight years waiting patiently for a wave of new Gulf Coast ethane-only petrochemical plants — a.k.a. “steam crackers” — to come online in 2018. Well, here we are in 2018 and new demand from the crackers is finally kicking in. The good news for petchems is that all of the incremental NGL production means the supply of ethane available to the market is growing too, right on cue. What do these developments mean for future NGL production, demand and prices? Today, we begin a new blog series discussing our updated NGL market forecasts, starting with that NGL product whose market is going through the most changes: ethane. NGLs are a frequent topic here in the RBN blogosphere, and in recent months, we’ve discussed the pace of NGL production growth and the need for more infrastructure to handle the incremental barrels. We covered the Permian in Different for NGLs, where we projected that Permian NGLs production is expected to increase nearly 80% over the next five years. From 2016 to 2017, average annual production in the Permian grew by about 160 Mb/d, and the growth rate over the next five years will be even steeper. It was a similar story for the Marcellus/Utica in Unleashed in the (North)East, where we were looking at a 63% increase in NGL production over five years. Now we are talking more like 75%. And in Thank You, we examined the need for ONEOK’s Elk Creek Pipeline being built to move another 240 Mb/d of NGLs out of the Bakken. And in Can't Get There from Here, we looked at ethane in particular, considering the possibility that producers will need to move ethane from more distant sources to meet all the new cracker demand — a development that would likely drive prices higher.
US oil pipelines pivot south as shale surges -- The plumbing of the US oil market is pivoting. Old pipelines have been reversed to deliver crude to Gulf of Mexico terminals. New ones also point at the coast. The changes are cementing the stature of the US in world oil markets, feeding exports of crude from shale fields and fuel made by coastal refineries. More pipelines and expanded ports have enabled American oil producers to reach 10m barrels a day in output, in league with Saudi Arabia and Russia. It is a far cry from the past, when US midstream assets reflected a much greater dependence on foreign oil. For example, in 1967 the Capline pipeline began shuttling imported and Gulf coast crude northwards from Louisiana to Illinois, where it was dispensed to Midwestern refineries. Now, its volumes drying up, Capline’s owners have proposed flipping the 1.2m b/d conduit to flow south instead of north, permitting inland crude to reach the coast. The new BridgeTex, Permian Express and Cactus pipelines now stretch from west Texas oilfields to ports and refineries in coastal Corpus Christi and Houston. Additional pipeline systems able to handle more than 2.1m b/d are planned or under construction, according to RBN Energy, a research company.
U.S. to Unleash 'Major Second Wave' of Fracked Oil - Despite governments around the world enacting measures to reduce carbon emissions to help fight climate change , the latest oil market forecast from the International Energy Agency (IEA) makes it clear that the world is yet to turn its back on fossil fuels .According to IEA's Oil 2018 , global oil production capacity is forecast to hit 107 million barrels a day (mb/d) by 2023. As TIME noted from the report, much of that growth is led by the U.S. due to oil produced from fracking the Permian Basin in western Texas, where output is expected to double by 2023."Non-OPEC supply growth is very, very strong, which will change a lot of parameters of the oil market in the next years to come," Fatih Birol, the head of the International Energy Agency, told reporters at the CERAWeek energy conference hosted by IHS Markit. "We are going to see a major second wave of U.S. shale production coming."The IEA predicts that growth in U.S. oil production will meet 80 percent of the growing global demand over the next three years, with Canada, Brazil and Norway able to supply the rest."Thanks to the shale revolution, the United States leads the picture, with total liquids production reaching nearly 17 mb/d in 2023, up from 13.2 mb/d in 2017," the analysis states.Republican Sen. Dan Sullivan of Alaska said at the CERAWeek energy conference "there has never been a more exciting time for the American energy sector.""It is clear to me the American energy renaissance is now in full swing and is being supported by federal government policies," he added.But environmental activist Josh Fox , the director of Oscar-nominated 2010 documentary Gasland , lamented the resurgent shale boom."A major second wave of fracking is coming," he tweeted. "Ok fractivists, time for a major second wave of organizing, because we don't have a major second planet to live on."
Fracking Will Make US World's Largest Fossil Fuel Supplier By 2023, Says IEA - Fracking will make the United States the largest supplier of oil and gas in the world by 2023, Fatih Birol, head of the International Energy Agency said at the CERAWeek energy conference hosted by IHS Markit in Houston last week.“What is happening in the US between now and 2025 [is] a huge expansion of oil production, about 80% of the global oil production growth comes from the US. It exceeds the huge expansion of Saudi Arabia which we witnessed in the 1960s and 70s,” he told The Guardian before the conference began. “Non-OPEC supply growth is very, very strong, which will change a lot of parameters of the oil market in the next years to come,” Birol told the press in Houston. “We are going to see a major second wave of U.S. shale production coming.” The oil patch kids congregating in Houston are over the moon with joy at the news that the US will now be the tail that wags the fossil fuel dog, at least in the short term. China reportedly has many times the reserves the US has, but has declined to exploit them as of yet because of the unmitigated damage to the environment extracting and burning them would cause. The US, on the other hand, doesn’t care a flying fig about the environment. There are profits to be made and nothing can be allowed to interfere with that. In fact, US fossil fuel companies have been euphoric at the support for their nefarious plans they have received from the Trump maladministration. Interior Secretary Ryan Zinke has been instrumental in formulating plans to remove the protected status of many federal lands, including the Bears Ears and Grand Staircase-Escalante national monuments. Think Progress reports the New York Times has uncovered several e-mails between Zinke and fossil fuel companies promising to strip protection of those lands so the oil, gas, and coal reserves buried beneath them can be exploited. The braying jackass in the White House is ecstatic, making himself out to be the savior of the American oil and gas industry. The IEA puts the kibosh on those claims by pointing out rising demand and higher prices for oil and gas are largely responsible for the current state of affairs. But facts have never been an impediment to the megalomaniac in chief before and won’t be this time either.
Trump touts report US is set to become world’s top oil producer | TheHill: President Trump on Tuesday celebrated a report from the International Energy Agency which claims the U.S. will become the world's leading oil producer by 2023. In a tweet linking to the report, Trump touted his administration's focus on "jobs and security." The report states that U.S. oil exports are expected to double to 4.9 million barrels a day by 2023, a marked change from just a few years ago when the U.S. was prohibited from exporting crude oil by law.Trump's tweet comes on the heels of his announcement of controversial new tariffs on steel and aluminum imports, a new policy that America's petroleum industry says will have a negative effect on its business. "Today’s announcement by the Department of Commerce to recommend sweeping tariffs around all steel and aluminum imports, in the guise of national security concerns, doesn’t make sense for the U.S. economy,” said American Petroleum Institute President Jack Gerard. “These tariffs would undoubtedly raise costs for U.S. businesses that rely heavily on steel and aluminum for the majority of their products — and ultimately consumers.” Trump has said that the expected tariffs could be imposed as early as this week.
America's Oil Boom Is Fueled By A Tech Boom – NPR - The U.S. is on track to become the world's biggest oil producer, pumping out more crude than at its peak nearly a half century ago. For decades, few expected such a comeback, and it's all the more remarkable because the price of a barrel of oil is nowhere near what it was during the last, recent boom."This is an incredible statement, but we're probably making more money at fifty dollars a barrel than a hundred," says Kirk Edwards, president of Latigo Petroleum in Midland, the de facto oil capitol of West Texas.Downtown, not far from Edwards' office, a big LED sign flashes the going price of a barrel of oil. A few years ago, when the number was over 100, rigs were going up everywhere across the state's Permian Basin, as drillers made crazy money. Then came a crash, courtesy of the Organization of Petroleum Exporting Countries."OPEC was trying their best just to slam the door on what was going on here by flooding the oil markets," says Edwards. "They did a phenomenal job."Companies went bankrupt and hundreds of thousands of people lost jobs. In Midland, some laid off workers abandoned cars at the airport as they flew back home. People started to wonder if the good times would ever come back. They have, even though the price of oil is nowhere near its old high.One reason for that is a lower cost of doing business. Oilfield contractors who survived the bust did so by slashing prices. Subcontractors, of which there are many, started charging less. Edwards says that significantly brought down the investment needed to drill a well. The head of ConocoPhillips has even boasted that his company can now break even when the price of oil is below $40 a barrel. Technological advances in the way oil and gas is sucked from the ground are also helping producers cut costs.Inside an air conditioned control center, called a frack van, men can monitor information coming out of the well. "Look at all the computer screens," Taylor says. "We used to frack jobs on the tailgate of a pickup, and so we've come a long ways."
US Shale Is Booming, But Is It Enough To Fuel The World? -- The U.S. is expected to dominate global energy markets in the coming years, but a major question is emerging that puts a damper on global energy optimism. Experts are questioning whether enough is being invested to adequately meet projected demand for oil and natural gas. “The United States is set to put its stamp on global oil markets for the next five years,” Fatih Birol, executive director of the International Energy Agency (IEA), said in a statement on the release of the latest oil market report. U.S. production will make up 80 percent of oil supply growth over the next five years, IEA projects. Hydraulic fracturing and horizontal drilling unlocked vast oil and gas reserves. “But as we’ve highlighted repeatedly, the weak global investment picture remains a source of concern,” Birol said. Operating costs have fallen, but investment in upstream production operations hasn’t recovered a 2015 and 2016 when oil prices took a nosedive. U.S. companies have increased investments as shale oil and gas production surges, but the Organization of the Petroleum Exporting Countries (OPEC) and other countries have not followed suit. Investments need to increase to meet forecast demand, Birol said. Adding to the confusion is chaos in Venezuela, a major OPEC oil-producing nation. Political instability caused production to plummet, offsetting gains made by other OPEC members. “More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth,” Birol said.
Shale oil growth to overwhelm U.S. refiners, fuel exports: study (Reuters) - Rising U.S. shale oil production will overwhelm the nation’s refining capacity, with three-quarters of the additional oil produced in the United States by 2023 shipped to Europe and Asia, according to a new study by consultancy Wood Mackenzie. The research points to the continued impact of U.S. shale on global markets and the mismatch between domestic refining capacity and rising crude output. The oil could bottleneck at U.S. Gulf Coast ports unless new infrastructure is built, researchers said. U.S. refineries will absorb between 900,000 barrels per day (bpd) and 1 million bpd of the expected 4 million bpd of additional production to emerge from U.S. oil fields, Wood Mackenzie said in a study released on Monday. That will leave three-quarters of the additional crude and ultra-light oil known as condensate destined for non-U.S. buyers in the next five years, the researchers said. The oil will vie with Middle East and African crudes in world markets, they said. U.S. refiners prefer to run medium and heavy crudes and will not be able to handle all the additional light crude. The U.S. has been slow to add processing capacity because demand for gasoline is forecast to decline. Since at least 2014, ExxonMobil Corp has considered an expansion of light-crude refining capacity at a Beaumont, Texas, refinery but has yet to approve the project. Most of the crude and condensate exports will head to refineries in Europe through 2022, and new barrels thereafter could land in Asia, according to the study. U.S. crude exports hit 2.1 million bpd late last year. The appetite for U.S. oil may weaken ahead. Worldwide growth in demand for crude is expected to be strong for the next year and level off or possibly decline sometime in the next decade, said Wood Mackenzie Chief Economist Ed Rawle. About half of the new, mostly-light U.S. oil output will come from the Permian Basin in West Texas and New Mexico, according to John Coleman, Wood Mackenzie’s senior analyst for North American crude oil markets. He expects much of the 1.9 million barrels of Permian oil to head to Corpus Christi, a South Texas petroleum export hub. At least two pipelines connecting the area and the Permian are under construction. Researchers said it is unclear whether there will be enough U.S. marine terminal capacity and docks to meet the new flows.
Halliburton's fracking fleet surges as drillers bring on production -- Halliburton Co., the world's largest fracking company, has grown its fleet of pressure pumping equipment by 700,000 horsepower over the past year, a giant growth spurt that comes as U.S. drillers pump more crude from shale plays.That surge brings the Houston oil field service company's high-pressure pumping equipment to more than 4 million horsepower, about 1.6 million horsepower more than its top competitor Schlumberger has, Norwegian energy research firm Rystad Energy said in a report on Tuesday.Rystad believes U.S. fracking companies expanded their high-pressure pumping fleets by 3.3 million horsepower last year and could add another 3.3 million this year, as demand rises for hydraulic fracturing, the process of blasting water, sand and chemicals underground to open shale rock formations to oil and gas production, in places like West Texas and Oklahoma. The rise in demand for fracking could increase spot prices for pressure pumping between 10 percent and 25 percent in the second quarter, squeezing margins that U.S. drillers make on bringing wells into production.Halliburton rival Schlumberger, the largest oil field service company, has signaled plans to increase its frack fleet by 1 million horsepower by refurbishing equipment it purchased from Weatherford International. Other rivals BJ Services and Pro Frac expect to increase their fleets by a combined 2.7 million horsepower this year. "Equipment manufacturers are at full capacity right now, and some pumpers have had to delay deployment of planned additions," said Alex Yang, an analyst at Rystad, in a statement. "Much of the newly built equipment is earmarked for refurbishment programs rather than totally new spreads."
Two 4.2-Magnitude Earthquakes Rattle Northern Oklahoma in a Single Evening - Two 4.2-magnitude earthquakes struck near Enid in northern Oklahoma Sunday at 5:17 p.m and 9:40 p.m., according to the U.S. Geological Survey (USGS). They are the largest recorded this year so far and even felt in neighboring Kansas. The large quakes were followed by two smaller ones around the same area early Monday. The first was a magnitude 2.7 followed by 12:35 a.m. then magnitude 2.6 at 6:16 a.m. At least one home in Breckinridge was damaged by the first earthquake. According to Enid News , the home had major brick separation from doors and windows and other structural damage. The 4.2-temblors are the largest in the state since August 2017 , when a swarm of earthquakes, including a magnitude 4.2, hit the central part of the state. There were five quakes of 4.0 or greater last year. A tremor at that magnitude feels like a heavy truck striking a building, USGS describes on its website. Oklahoma has seen an alarming uptick in seismic activity that's been linked to the injection of saltwater produced from oil and gas drilling activities into disposal wells. State regulators have directed oil and gas producers in the state to close wells or reduce wastewater injection volumes. The regulations have worked to a certain degree . While the Sooner State has dropped from two earthquakes per day to fewer than one per day, some of the post-regulatory quakes have been large and damaging. Two big ones happened in 2016: the 5.0-magnitude earthquake 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. Tulsa World reported this week that if oil and natural gas prices begin to soar, wastewater injection could climb 40 percent more under a regulatory cap.
Spooked by Quakes, Oklahoma Toughens Fracking Rules - After recording swarms of earthquakes caused by hydraulic fracturing, Oklahoma has introduced tougher regulations than those used by any Canadian energy regulator. Last month the Oklahoma Corporation Commission ordered all drillers to deploy seismic arrays to detect ground motion within five kilometres of hydraulic fracturing operations over a 39,000-square-kilometre area in the centre of the state.The commission, which regulates the industry, also lowered the minimum level of earthquakes at which operators must change practices from the current 2.5 magnitude to 2. In addition, frackers must suspend their operations immediately for up to six hours after causing a 2.5 magnitude earthquake which can be felt at the surface. The commission created the new earthquake protocol after hydraulic fracturing operations set off more than 70 earthquakes of at least 2.5 magnitude since 2016. Canada’s energy regulators only make companies stop operations if they cause a magnitude 4 earthquake.The Alberta Energy Regulator (AER), for example, doesn’t shut down an operation until it causes a magnitude 4 event. Even then the halt is temporary. British Columbia’s Oil and Gas Commission requires operators “to immediately report” seismic events greater than magnitude 4 or unusual ground motion experienced by people within three kilometres of their operations. In an attempt to reduce seismic activity, once thought to be solely caused by waste water injection, Oklahoma shut down wells and ordered the reduction of fluid volumes in 700 waste water disposal wells by 800,000 barrels per day between 2014 and 2015.They also stipulated that if a waste water injection site triggered a 3.5 magnitude quake, it had to shut down operations. In contrast neither B.C. nor Alberta, where the industry holds the record for causing magnitude 4-plus earthquakes by high volume fracking, have limited injection fluid volumes or permanently shut down a well.
Wastewater injection limit set due to earthquake worries, but Oklahoma could get shakier if oil prices soar again - If oil and natural gas prices begin to soar, wastewater injection linked to Oklahoma earthquakes could climb 40 percent more under a regulatory cap — a disposal level that also happens to be 40 percent shy of the record but would still be a historically large volume. A year ago state regulators implemented volume limits on the deepest disposal wells in a 15,000-square-mile area prone to earthquakes. But the question lingered of how much injection volumes might increase under the overall threshold if production were to ramp up in the event the crude oil market approached $100 a barrel, such as the $105 peak in June 2014 before the bust.After a request by the Tulsa World, the Oklahoma Corporation Commission provided an overall daily cap of 1.9 million barrels, or about 57 million barrels in a 30-day period.Injection was about 37 million barrels in January, or about 1.1 million per day, according to OCC data analyzed by the World. Peak monthly disposal happened in October 2014 at 95.4 million barrels, or about 3 million a day.For reference, a barrel is equal to 42 gallons. The 95.4 million barrels in October 2014 is equivalent to 88 minutes of Niagara Falls’ average water flow. The 57 million barrel 30-day threshold is equal to about 52 minutes, and the 37 million barrels in January is about 34 minutes.Not coincidentally, the monthly rate of magnitude 3.0-and-higher quakes was highest in June 2015 with 104, then again in January 2016 with 103. Research has found a months-long delay between injection and felt seismicity, with disposal rates and cumulative volume playing roles.There were 10 such quakes in January; a number that low hadn’t been seen since October 2013, when nine quakes measuring at least 3.0 were recorded. Oil and gas drilling operations in Oklahoma have migrated to petroleum basins in the SCOOP and STACK plays, a 12,500-square-mile region south, west and northwest of Oklahoma City. This area is separate and distinct from the 15,000-square-mile area in central and northwestern Oklahoma covered by disposal volume limitations where the majority of the state’s quakes occur.
Federal court in Wyoming to revisit methane rule compliance, following California court decision - A federal court in Wyoming will reopen the case into the Bureau of Land Management’s methane rule, a set of requirements cutting emissions from the oil and gas sector that industry and politicians have repeatedly tried to get rid of.Energy states including Wyoming and Texas are asking the court to suspend the rule until the Bureau of Land Management finishes a revision of the requirements in a few months.Compliance on aspects of the Bureau of Land Management Methane Waste Reduction rule began in January of last year, after a failed attempt in the Wyoming courts to stay the rule’s implementation given a dispute over whether the federal agency was allowed to regulate natural gas emissions.The rule has been on and off the books ever since.The U.S. Congress tried to ax the rule in the spring, but the move failed in the Senate. The Trump administration attempted to withdraw the rule, but was sued for cutting corners to undo the regulations in a hurry without following administrative rules. The administration suspended compliance given the rule’s uncertainty and began a rewrite process.A California federal court ruling recently put the methane requirements back in place, with industry calling foul. Firms argued that mandating compliance on the rules, which include the use of both manpower and infrared equipment to catch leaks in pipelines, is unfair given that the rules are about to change. Supporters of the rule, and the California court, counter that the harm of not having a rule in place to reduce emissions is greater than the burden on industry to comply.
No, Republicans Did Not Expose Extensive Effort By Russia To Fuel Pipeline Opposition - Shadowproof –- A “staff report” from Republicans on the United States House Science, Space, and Technology Committee offers little evidence to prove allegations of Russian efforts to influence U.S. energy markets through “social media propaganda” to incite pipeline protests. Nonetheless, the report, pushed by Republican chairman Representative Lamar Smith, went virtually unquestioned when it was covered by U.S. media. What the report reveals are several Twitter and Instagram posts that Republicans claim were posted by “Russian agents” linked to the Internet Research Agency (IRA), the troll farm which has become a focus of narratives that Russia interfered in the 2016 presidential election. The report recycles unsubstantiated news reporting that strongly suggested the Russian government was behind anti-fracking activism in the U.S. It contends these posts and tweets demonstrate the “broad nature of Russia’s meddling and to reveal Russia’s attempts to deceive and influence the American public, especially as related to domestic energy issues.” “Between 2015 and 2017, there were an estimated 9,097 Russian posts or tweets regarding U.S. energy policy or a current energy event on Twitter, Facebook and Instagram,” according to the report. “Between 2015 and 2017, there were an estimated 4,334 IRA accounts across Twitter, Facebook and Instagram.” To understand how these numbers are incredibly minuscule, there are about 95 million posts to Instagram per day and 800 million or more users, as of September 2017. About 500,000 comments, 293,000 status updates, and 136,000 photos are posted to Facebook daily. There are over 2 billion active users on Facebook. On Twitter, about 500 million or more tweets are posted each day. There are 330 million active monthly users. As for reported posts and tweets, because Republicans are pulling from contents that appeared between 2015 and 2017, they are essentially revealing an average of 3,000 or so posts and tweets appeared each year. What is 3,000 out of the 95 million posts to Instagram? What is 3,000 out of the hundreds of thousands of comments and updates to Facebook? What is 3,000 out of 500 million or more tweets?
Plan to open drilling off Pacific Northwest draws opposition (AP) — The Trump administration's proposal to expand offshore drilling off the Pacific Northwest coast is drawing vocal opposition in a region where multimillion-dollar fossil fuel projects have been blocked in recent years. The governors of Washington and Oregon, many in the state's congressional delegation and other top state officials have criticized Interior Secretary Ryan Zinke's plan to open 90 percent of the nation's offshore reserves to development by private companies. They say it jeopardizes the environment and the health, safety and economic well-being of coastal communities. Opponents spoke out Monday at a hearing that a coalition of groups organized in Olympia, Washington, on the same day as an "open house" hosted by the Bureau of Ocean Energy Management. Attorney General Bob Ferguson told dozens gathered — some wearing yellow hazmat suits and holding "Stop Trump's Big Oil Giveways" signs — that he will sue if the plan is approved. "What this administration has done with this proposal is outrageous," he said. Oil and gas exploration and drilling is not permitted in state waters. In announcing the plan to vastly open federal waters to oil and gas drilling, Zinke has said responsible development of offshore energy resources would boost jobs and economic security while providing billions of dollars to fund conservation along U.S. coastlines. His plan proposes 47 leases off the nation's coastlines from 2019 to 2024, including one off Washington and Oregon. Oil industry groups have praised the plan, while environmental groups say it would harm oceans, coastal economies, public health and marine life.
Interior Moves to Sell Oil Leases in Arctic National Wildlife Refuge -- The Trump administration is initiating the regulatory process of opening the Arctic National Wildlife Refuge (ANWR ) to oil and natural gas leasing. Top Interior Department officials recently visited the Kaktovik and Utgiagvik communities in northern Alaska to let them know that the agency will publish in the coming weeks a notice in the Federal Register of its intent to move toward an environmental impact statement on planned leasing, the Anchorage Daily News reported. Interior Deputy Secretary David Bernhardt relayed similar details at an industry gathering in Anchorage later in the week, where he said , "We expect to move pretty quickly on that project." Additionally, Sen. Dan Sullivan (R-Alaska) said at the CERAWeek oil industry conference in Houston that lease sales could start as early as next year, which would beat the 2021 deadline set in last year's Republican tax bill. "It's my hope, and this is a very aggressive timeline, that we would have the first lease sale ... to be sometime in 2019," Sullivan told the audience.
Alaska senator: Arctic refuge drilling sale could start next year | TheHill: Trump administration officials may be able to hold the first auction for oil and natural gas drilling rights in the Arctic National Wildlife Refuge (ANWR) next year, Sen. Dan Sullivan (R-Alaska) said Monday. Speaking at CERAWeek, a major oil industry conference in Houston, Sullivan said he thinks the Interior Department could beat the 2021 deadline for a lease sale that was set out in last year’s GOP tax bill, though the agency has not committed to a timeline. “It’s my hope, and this is a very aggressive timeline, that we would have the first lease sale ... to be sometime in 2019,” Sullivan told the audience.Sullivan said Interior officials are currently in Alaska laying the groundwork for eventual drilling in the Coastal Plain area of ANWR. He encouraged oil industry officials there to bid in the lease sales. The tax overhaul last year opened ANWR for drilling, settling a 40-year debate over whether to drill in the refuge. It had been a priority of Alaska leaders and some Republicans for decades. Interior must, under the tax law, hold a lease sale by 2021 and another by 2024, with at least 400,000 acres available each time. Environmentalists have fought continuously against ANWR drilling proposals, and they plan to object at every step of the process, including over setting up sales and obtaining permits.
Regulator wants to hold oil companies accountable for spills (AP) — An Alaska regulator has asked the Legislature to make sure oil companies clean up old wells, even after the wells are sold to a different company. Cathy Foerster of the Alaska Oil and Gas Conservation Commission testified before the Senate Resources Committee on Monday, Alaska's Energy Desk reported. Foerster said it's becoming more common for smaller oil companies to operate in Alaska — and those companies may be more financially unstable. Forester warned that if a big oil field such as Prudhoe Bay is sold to a smaller company that goes bankrupt and can't pay for cleanup, it could cost the state billions of dollars. She said the state currently has a $200,000 bond to cover the cost of plugging and abandoning all the wells at Prudhoe Bay. "For $200,000 we couldn't even pay for the engineering study that would give us the estimate on what the true cost is to plug all of those wells," Foerster said. "So we're in a bad situation on having adequate bonding for our wells, and we're working it." Forester gave the example of Aurora Gas, which declared bankruptcy last year. Forester said the company is unable to pay to plug and abandon its wells, three of which are on state land, making the state financially responsible for cleaning them up. "Aurora Gas doesn't exist anymore, we cannot go back to Aurora gas and ask them for the money to (plug and abandon) those wells," she said. "It ain't going to happen."
API: Administration must minimize harm to infrastructure and jobs from steel and aluminum tariffs - – Following the President’s announcement on steel and aluminum tariffs today, API President and CEO Jack Gerard emphasized the need to ensure U.S. oil and natural gas investments in American infrastructure, facilities and jobs can continue. “The actions taken today are inconsistent with the Administration’s goal of continuing the energy renaissance and building world class infrastructure. The U.S. oil and natural gas industry, in particular, relies on specialty steel for many of its projects that most U.S. steelmakers don’t supply,” said Gerard.“Consideration must be given to continue the unprecedented and historic energy renaissance that our industry has driven through important investments that have driven job creation and economic growth.” This afternoon, President Trump announced his intent to impose a 25 percent tariff on imported steel and a 10 percent tariff for imported aluminum, regardless of country of origin, the details of which will be unveiled next week. Implementing this trade policy could create confusion in supply chains, unnecessary costs and impacts to U.S. capital intensive projects, and threaten high-paying industry jobs. The U.S. oil and natural gas industry relies on these global steel imports for the majority of its operations, including steel for drilling, production facilities onshore and offshore, pipelines, LNG terminals, refineries and petrochemical plants. API is the only national trade association representing all facets of the oil and natural gas industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy.
Rick Perry says Trump steel tariffs must be strategic as energy industry criticizes plan --Energy Secretary Rick Perry wants tariffs on steel and aluminum imports to be "strategic," rather than a blanket policy that targets all countries' imports."I think strategically deploying tariffs, and messaging and regulations, is the key here," Perry told reporters Wednesday at the energy conference CERAWeek in Houston. His comments came amidongoing criticism by the oil and natural gas industry that tariffs are the wrong direction for the U.S. energy sector, especially for oil and natural gas pipeline development.The president "does know there are countries out there who are in fact impacting the market by their engagement of subsidies [and] what some would refer to as unfair trade practices," Perry told reporters at the five-day energy conference.He added that Trump is aware of the effects the tariffs would have on the energy sector and wants to keep the energy sector economically viable in any decision he makes. “We see the president’s announcement on the steel and aluminum tariffs as inconsistent with his broader energy vision,” Jack Gerard, the president and CEO of the American Petroleum Institute, told the Washington Examiner on the sidelines of the conference. He pointed out that many of the materials used to build oil and natural gas pipelines are imported.
Trump Tariffs Are Gift OPEC Russia Not US Shale Oil Gas Pipelines - President Donald Trump's planned 25 percent import tariff on steel is a gift to OPEC and Russia. His announcement last week will surely play well in steel towns, as its aim is to protect American producers from "unfair" competition from cheaper foreign suppliers. However, it will inevitably drive up costs for the nation's oil and gas producers. And that could be bad news for the resurgent shale industry, which has set the U.S. on the road to becoming the world's top oil producer.Steel used in oil pipelines has to meet rigorous technical specifications to ensure it doesn't corrode or fracture during a lifetime that may well exceed 30 years -- far longer than that of a domestic appliance or an automobile.But the market is a small one for steel makers, accounting for just 3 percent of the U.S. total, according to the Association of Oil Pipelines, a trade group that represents the interests of owners and operators. That's even with the surge in domestic oil production. U.S. steel makers have largely abandoned this niche market in favor of higher volume products with less rigorous quality specifications. A study conducted by consultants ICT International on behalf of five pipeline industry bodies found that approximately 77 percent of the steel used in line pipe in recent years was imported, either in the form of finished pipe or the raw material used to fabricate it in the U.S. (The report also noted that while the U.S. imports $2.2 billion of steel products related to line pipe from 29 countries, it exports steel and steel products worth five times as much to those same 29 nations). So the higher cost of imported product is unlikely to generate a surge of new domestic supply. Once Trump's tariff becomes law, pipeline companies will see the cost of the steel they need go up -- unless they get an exception. If not, then they'll inevitably pass on higher prices to the oil and gas producers who use their lines.
Bill Nye Confronts Justin Trudeau Over Kinder Morgan Pipeline -- At a recent sit-down at the University of Ottawa, TV personality and science advocate Bill Nye confronted Canadian Prime Minister Justin Trudeau about his approval of the controversial Kinder Morgan Trans Mountain pipeline expansion."I've been to Fort McMurray, Alberta. It really is an amazing place in the most troubling way," the Science Guy said, likely referring to the area's notorious tar sands . "But this pipeline ... tell us about the Kinder Morgan pipeline." Nye cited a study from The Solutions Project that found Canada could entirely replace fossil fuels by 2050 by switching to renewable energy sources. "First of all, I agree," Trudeau replied. "There is tremendous potential for renewable energy ... However, we can't get there tomorrow, right? We're not going to get there tomorrow. So, we are going to have a transition phase while we develop alternatives to fossil fuels."Trudeau touted that his government is working on other environmental initiatives such as establishing a national price on carbon and a $1.5 billion ocean protection plan. All those initiatives, he said, are "pieces that go together."However, he ultimately defended his approval of the pipeline expansion, insisting "the environment and the economy need to go together.""We have to make responsible choices that's going to move us in the direction of gettin off our massive dependence on fossil fuels and do more renewables," Trudeau said. “The way to do it is to move forward responsibly in both protecting our environment and protecting the jobs and the economy that still is reliant on fossil fuels and will be for another number of years."
Alberta Ready To Turn Off Oil Taps For B.C. - Alberta’s government may be considering a suspension of crude oil shipments to British Columbia in the latest episode of what is turning into a drama series starring Canada’s biggest oil producer and its neighbor who wants to stop the extension of a crude oil pipeline to its coast.In the provincial government’s Speech from the Throne, Alberta’s Lieutenant Governor Lois Mitchell said that all options for retaliation against B.C.’s opposition to the Trans Mountain expansion are on the table. Mitchell recalled a decision by a former Alberta PM in the early 1980s to reduce oil flows to refineries in eastern Canada by 15 percent in reaction to the federal government’s National Energy Program that Alberta saw as a threat to its energy industry.The suggestion is clear enough and it should not be unexpected. First, British Columbia’s new government last year openly stated it did not want the Trans Mountain pipeline to be expanded and would use all available legal tools to fight it. The fact that the project was approved by the federal government was ignored. Alberta insisted the expansion is crucial because Canada’s pipeline network is already running at capacity; there is even a shortage rearing its head, and oil is having to be transported by train, which is both costlier and riskier. B.C. was equally insistent that it does not want more oil shipped to its coast and it does not want tankers docking at its ports, since the point of the expansion is to take Alberta crude to foreign markets. In retaliation, Alberta announced a boycott on B.C. wine imports and on electricity imports. B.C. changed its mind about a proposal to change the rules for shipping oil through its territory that would have reduced oil flows for the duration of a study on oil leak response mechanisms. The study would have taken about a couple of years and many saw the proposal as a stalling tactic. The federal government, meanwhile, has so far proved incapable of making the two provinces kiss and make up. At a recent meeting with the public, PM Justin Trudeau reiterated that Ottawa stood behind the Trans Mountain expansion, and that has been about it from the referee.
Don't trust landowners to fight the fracking bosses - New battles against fracking bosses are in the pipeline.Britain’s biggest shale gas company Ineos wants to frack—extract gas—underneath Clumber Park. That’s a national park covering some 3,800 acres in Nottinghamshire.Its plans will pit it against local campaigners, the National Trust—and even sections of landowners.The National Trust has refused access for “seismic testing”, which would identify the best place to drill or frack wells under the grade 1 listed estate and gardens.The Trust has declared it “has no wish for our land to play any part in extracting gas or oil”.James is from nearby Chesterfield Against Fracking and president of Chesterfield trades council. “We’re going to fight this,” he told Socialist Worker. “People are very supportive of the stand the National Trust have taken—it’s a principled rejection of fracking.“We’re planning to keep on campaigning over Clumber Park and make sure Ineos can’t frack.”The government-controlled Oil and Gas Authority last week gave the go-ahead for Ineos to fight the National Trust for access. Once a well is built, a fracking drill can operate horizontally. Fracking companies want licences to test for shale gas underneath land—without necessarily having the owners’ permission.Councils—some of them even led by Tories—are increasingly turning against an industry that is deeply unpopular. But James said the Tories’ opposition “stops at the constituency boundaries”. Ineos is making enemies in even more unexpected places. In a letter published in the Gazette and Herald newspaper in Yorkshire, dozens of major landowners attacked fracking.
NYMEX April natural gas drifts with weather, down 1.2 cents at $2.683/MMBtu - NYMEX April natural gas futures were directionless in overnight US trading due to changing weather and demand expectations. At 7:05 am EST (1205 GMT) the contract was down 1.2 cents at $2.683/MMBtu, after trading a $2.673-$2.726/MMBtu range. Lingering below-average temperature forecasts indicate there could be a demand boost. The National Weather Service projection for the six-to-10-day period shows below-average temperatures holding over the lower tier of the Mid-Atlantic, nearly the entire Southeast, parts of the Gulf Coast, a few areas of the Midwest and Montana, as average to above-average temperatures encompass the Northeast, balance of the Mid-Atlantic, Florida, much of the Midwest, most of the Gulf Coast and almost all of the West. Below-average temperatures expand in scope to overtake the entire Mid-Atlantic, Southeast, most of the Gulf Coast and much of the West Coast in the eight-to-14-day forecast.
NYMEX April gas settles at $2.749/MMBtu, up 4.5 cents on higher demand -- The NYMEX April natural gas futures contract settled 4.5 cents higher Tuesday at $2.749/MMBtu, as a cold weather outlook and an expected uptick in demand trumped robust production continuing across the US.The below-average temperatures expected in mid- to late-March are very different from "below-average [temperatures] in December, January and February," and while the market currently sits in limbo, a price of $2.65/MMBtu-$2.75/MMBtu in the coming weeks is quite reasonable, said Kyle Cooper, analyst and principal at IAF Advisors.Currently "bears are looking at production" and the "bulls are looking at storage" to drive prices going forward, Cooper said. But over the next few weeks, neither bulls nor bears will get what they want "to promote their position" and it is anyone's guess as to what will push prices, he said. The most recent six- to 10-day outlook from the National Weather Service calls for lower-than-average temperatures along the West Coast, Northeast, Southeast, Midcontinent and parts of the Midwest and Texas.The colder-than-average weather over the next week raise the possibility of a demand spike, as over the next seven days US demand is expected to average 84.2 Bcf/d, a 3.1 Bcf/d jump from the 81.1 Bcf/d averaged over the previous seven days, according to S&P Global Platts Analytics.The rise in prices experienced so far during the April front-month contract may not continue, as the bump in demand is expected to subside and production is expected to continue at its current strong levels. According to Platts Analytics, US demand is expected to average only 77.5 Bcf/d over the next eight- to 14-day period, a 3.6 Bcf/d drop from the average over the previous seven days and a 3.8 Bcf/d drop from the 81.3 Bcf/d averaged in March 2017. US dry production is expected to average 77.7 Bcf/d over both the next seven days and the eight- to 14-day periods, a 6.4 Bcf/d increase from the 71.3 Bcf/d averaged in March 2017.
NYMEX April natural gas futures up 2.5 cents overnight at $2.774/MMBtu --NYMEX April natural gas futures ticked higher overnight ahead of Wednesday's open as traders considered mixed fundamentals.At 6:47 a.m. ET (1147 GMT) the contract was 2.5 cents higher at $2.774/MMBtu, trading in a $2.744-$2.778/MMBtu range.Mid-range weather projections continue to reflect lingering cold that should generate residual natural gas demand for heating as winter gives way to spring, but higher low temperatures associated with the calendar looks to keep a lid on weather-related demand support.Total working gas stocks are currently 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average, following a 78 Bcf drawdown reported by the US Energy Information Administration in its latest storage data for the week ended February 23. Early estimates for the upcoming inventory reports show a fluctuation in the rate of storage withdrawals relative to the closely watched five-year average.
EIA reports a 57 billion-cubic-foot weekly decline in U.S. natural-gas supply --The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 57 billion cubic feet for the week ended March 2. Analysts surveyed by S&P Global Platts had forecast a decrease of 59 billion, but the five-year average withdrawal is 129 billion. Total stocks now stand at 1.625 trillion cubic feet, down 680 billion cubic feet from a year ago, and 300 billion below the five-year average, the government said. April natural gas was down 2.7 cents, or 1%, at $2.75 per million British thermal units, little changed from before the data.
NYMEX Apr natural gas falls 1.1 cents to $2.745/MMBtu as warmer weather seen - NYMEX April natural gas futures moved lower in overnight US trading Friday on a below-average storage draw and forecasts of warmer weather. At 7:30 am EST (1230 GMT) the contract was 1.1 cents lower at $2.745/MMBtu. The contract is under pressure from Thursday's Energy Information Administration report of a net 57-Bcf withdrawal from US gas storage during the week ended March 2 that was on par with the corresponding week in 2017 but well below the five-year average of 129 Bcf. The National Weather Service forecast for the eight-to-14-day period shows the area of below-average temperatures shrinking in the East to include only a portion of the Northeast and mid-Atlantic. Average and above-average temperatures dominate in the eastern half of the country, while below-average temperatures span most of the western half of the country.
Momentous Shift in US Natural Gas, with Global Consequences - Wolf Richter - The year 2017 was when the US became a net exporter of natural gas for the first year in history. The production of natural gas has been surging since 2007, when fracking turned into a boom, whittling away at the need for importing natural gas via pipeline from Canada and via LNG from the global markets. Last year, according to the EIA’s just released data, the US exported 129 billion cubic feet (Bcf) more natural gas than it imported. And this is just the beginning: Exports to Mexico via pipeline have been rising for years as more pipelines have entered service and as Mexican power generators have switched from burning oil to burning cheap US natural gas (the US imports no natural gas from Mexico). In 2017, natural gas pipeline exports to Mexico surged 12% year-over-year to 1,543 Bcf. But in 2016, a new trend became visible: US natural gas exports via LNG tanker to Mexico (marked in red in the chart below), which rose from negligible in prior years to 28 Bcf in 2016 and to 141 Bcf in 2017. Total exports to Mexico jumped 20% year-over year in 2017, to 1,684 Bcf The US has a bilateral natural-gas trading relationship with Canada, both importing and exporting. Exports to Canada have surged from almost nothing in the late 1990s to a peak of 2,145 Bcf in 2016 but fell 5% in 2017 to 2,043 Bcf. Imports from Canada, while they rose over the past two years, remain in the range established over the past two decades. But due to the surge in exports to Canada, net imports (imports minus exports) have plunged 43% from a peak of 3,600 billion cubic feet in 1999 to 2,042 Bcf: The LNG export terminals that have gone into service in 2016 and 2017 – they convert natural gas into liquefied natural gas – opened up the rest of the world to US natural gas. So for example, US LNG exports to China have surged from nothing two years ago to 103 Bcf in 2017. This chart shows monthly LNG exports to China: US natural gas production has been surging since the fracking boom took off in 2007. The chart below shows the monthly (not annual) production in billion cubic feet. Note the impact of the oil-and-gas bust in 2015 and 2016, when some natural gas drillers filed for bankruptcy. But since then, Wall Street opened its wallet again, and new money has flowed into the sector and production has spiked, not only from wells primarily producing natural gas but also from the renewed oil boom as many oil wells also produce natural gas — this used to be flared, but the installation of processing equipment and pipelines allows it to reach the market:
Risk-taking trading firms eye riches in global gas market -- The world’s biggest independent commodity traders have carved out reputations and built their billion-dollar balance sheets on a willingness to take calculated risks in oil and metals markets that more staid and established rivals shunned.Now trading houses, including Trafigura, Vitol, Glencore and Gunvor, are focusing on a new arena they see as rich with potential profit: liquefied natural gas, a once-sleepy corner of the energy industry that is rapidly transforming into the next major commodity for swashbuckling trading houses.For decades this super-cooled fuel market was dominated by state-owned producers, international energy companies such as Royal Dutch Shell and BP and rigid long-term contracts that restricted freewheeling trading activity. However, growing LNG supply from the US and Australia is starting to make the market truly global, handing more power to buyers of the fuel and creating the opportunity for independent trading firms to provide short-term deals. The four commodities houses traded about 27m tonnes in 2017, representing 10 per cent of the market and a jump of two-thirds from 2016, according to estimates from energy consultants Wood Mackenzie.
Royal Dutch Shell to Investors: The World Needs (Lots) More LNG -- In an incredibly rapid yet somewhat overlooked shift, global trade volumes of liquefied natural gas (LNG) have doubled since 2005 -- and they're not done growing yet. Demand will continue to rise, and the countries lucky enough to be flush with natural gas reserves are racing to keep up with it.The United States will boast 9.5 billion cubic feet per day (Bcf/d) of LNG export capacity by the end of 2019. That will make it the third-largest LNG exporter on the planet, right behind Australia and Qatar. While that alone is amazing, the U.S.'s overnight ascension up the global rankings is even more incredible: America had just 0.8 Bcf/d of export capacity at the start of 2016. Judging by the supply growth in the U.S. and elsewhere, it seems the market will have plenty of LNG to go around. But an astonishing industry outlook published by Royal Dutch Shell sounded the alarm bells, concluding that the world soon won't have enough LNG production to meet demand. That flies in the face of what investors have been told over the years. Countries around the globe have turned to LNG imports for various reasons -- sometimes to displace dirtier coal-fired power generation, sometimes to replace falling domestic production of natural gas, sometimes to lower geopolitical risk, and sometimes for all those reasons. Cheap and abundant natural gas reserves in Australia and the U.S. have made the global LNG boom possible, as have billions in investments planned years ago. Royal Dutch Shell is a majority owner in a floating LNG (FLNG) facility hovering over the massive Prelude field in Australia, which is nearly 300 miles offshore. Meanwhile, Cheniere Energy, America's top LNG exporter, employs more traditional land-based liquefaction facilities along the Gulf Coast. The company actually embodies the national and global trends in the industry quite well. Cheniere made huge bets a decade ago on the potential opportunity in LNG exports. It will see most of its production capacity (nearly half of America's total) come online between 2017 and 2019, and then it plans to kick back and let cash flows accumulate. According to Shell, that last part is the problem facing the global industry.
Shell Outsmarts Competition In The Gulf Of Mexico -- Mexico’s latest deepwater auction in the Gulf of Mexico at the end of January was a success. It was a success for Shell, too: the Anglo-Dutch oil major snapped up 9 out of the 19 awarded blocks and bid aggressively on the deepwater blocks closest to the U.S. maritime border.Shell’s aggressive bidding, especially on the blocks in the Perdido area next to the U.S. border, puzzled some analysts and observers. But Shell knew something that its competitors did not. Six months earlier, Shell had made a large deepwater oil discovery on the U.S. side of the Perdido area. Since oil firms are not legally obliged to announce discoveries, Shell postponed the announcement of the discovery until the day of the Mexican auction, as it wanted to secure the adjacent blocks in the Mexican waters.While the cat was out of the bag as early as in July 2017, Shell issued the official announcement about the Whale discovery in the U.S. Gulf of Mexico on January 31, 2018—the day on which Mexico held its deepwater auction and all bids had already been submitted. In the six months following the Whale discovery—which Shell described in the January release as “one of its largest U.S. Gulf of Mexico exploration finds in the past decade”—the oil major had the time to additionally study the geology of the Whale. It was also such good fortune that Mexico was offering Perdido areas in its deepwater auction. So Shell—hoping that the Mexican blocks would have geological characteristics similar to Whale’s and could hold more oil—moved on to secure most of the adjacent blocks. Commenting on the timing of the Whale announcement, Andy Brown, Upstream Director at Shell, told Reuters: “Post the Whale discovery we had some geological insights. It is not by accident we didn’t announce it until the day of the bid.” In the Mexican auction, the Shell-led consortia grabbed five of the six awarded blocks in the Perdido area. Shell also won four more blocks in the Cuencas Salinas area. On the same day, announcing the Whale discovery, Shell said that Whale—operated by Shell with a 60-percent interest and co-owned by Chevron with 40 percent—is adjacent to the Shell-operated Silvertip field and lies some 10 miles from the Shell-operated Perdido platform.
Mexico eyes extra-heavy crude for quick win: (Argus) — Mexico's vision of the future of exploration and production in Latin America includes a throwback — developing extra-heavy crude oil reserves to feed US Gulf coast refineries calibrated for that grade. While the country recently launched a tender for unconventional onshore reserves along its northern border, the country's national hydrocarbon agency director Juan Carlos Zepeda said today that the country sees its 3.1bn bl of 3P extra-heavy oil reserves as a "short-term investment opportunity." "The margin between WTI and heavy Canadian crude is at its narrowest in several years," Zepeda said at the CERAWeek conference in Houston today. "The Gulf coast refineries were designed to process heavy oil from Mexico and Venezuela, where its production has been in decline. Heavy oil in the Gulf of Mexico is going to be in high demand." Zepeda said about half of these reserves are in the Ayatzil field, for which state-run Pemex holds the rights. Investment there would depend on additional farm-out agreements. The other half are clustered nearby in what could be offered in another round to auction exploration and production (E&P) rights, Zepeda said. Mexico is in the midst of a series of staggered bidding rounds to offer E&P rights in its upstream sector as part of its sweeping energy reform enacted in 2014. Mexico has already awarded 91 contracts in 12 bidding rounds, with an average take for Mexico's government of 70pc, Zepeda said. Earlier this week Mexico released details of its first ever auction for rights in shale formations in its northern region, seen as extensions of prolific basins across the border in Texas.
ExxonMobil Takes Heat For 7.5 Magnitude Earthquake In Papua New Guinea - An earthquake in Papua New Guinea rattled ExxonMobil’s gas project on the island nation to the tune of $19 billion, and a backlash against the U.S. company’s activities is becoming more difficult to contain.A group of locals are blaming the activities of Exxon and its local partners for the 7.5-magnitude earthquake that hit the island on February 26. Aftershocks after the initial quake compounded the effects of the natural disaster.The project, known as PNG LNG, is recognized as one of the world’s most successful liquefied natural gas projects, but the foreign presence is becoming more and more unpopular amongst locals. The country’s Vice Minister for Petroleum and Energy, Manasseh Makiba told Reuters that Exxon should open an official inquiry to identify the causes of the aftershocks to address the locals’ concerns.“It could be man-made but that cannot be confirmed until a proper scientific inquiry can be done,” Makiba said. “We need to resolve that.”Finance Minister James Marape also asked the company to take action in a Facebook post: “In a world of science and knowledge, I now demand answer(s) from Exxon and my own government as to the cause of this unusual trend in my Hela.”The islands of Papua New Guinea sit on the Pacific Ring of Fire, known for its regular volcanoes and earthquakes. Chris Mckee, PNG's head of Geohazards Management Division, claims the recent activity was just part of the area’s normal geological climate.“Earthquake activity has been going on much longer than the oil and gas industry presence in the region - there is no connection at all,” he said.
PNG LNG to remain shut for eight weeks of post-earthquake repairs: Santos - The Papua New Guinea LNG facility, which was closed February 26 following an earthquake in the region, is expected to remain closed for approximately eight weeks, project stakeholder Santos said Monday. "Santos has been advised by the PNG LNG operator that following the earthquakes in the Southern Highlands and Hela provinces during the week of February 26, 2018, preliminary assessments of damage to PNG LNG facilities indicate it may take approximately eight weeks to complete repairs and restore production," Santos said. There is recovery work taking place at the Hides gas conditioning plant which is focused on restoring camp and associated facilities. While the plant is safely shut in, there has been some damage to various pieces of equipment and foundation supports that is yet to be fully inspected and repaired, Santos said. It added that initial visual inspections of the major processing equipment indicate they have not been significantly impacted. "In addition, the operator has brought forward scheduled maintenance activity at the LNG plant and has redeployed maintenance and support staff from the Hides gas conditioning plant to assist," Santos said. It said that surveillance of the pipeline has confirmed it has not been damaged. PNG LNG has a nameplate capacity of 6.9 million mt/year, which it consistently operates above. In December, the plant averaged 8.6 million mt/year and compressor upgrades taken last year should enable it to maintain rates at or above 8.5 million mt/year, Oil Search said recently.
US LPG cancellations could reach 10 cargoes in March as Asia arbitrage narrows -- About seven to 10 LPG cargoes loading in March from the US bound for Asia could be canceled as the arbitrage is crunched by persistently soft Asian prices, traders say. This is more than the three to five cargoes canceled in the February-loading program. Some traders estimated March shipments to total around 1.4 million-1.5 million mt, while others said it could be even lower than 1.4 million mt. This is down from around 1.6 million mt estimated for February loading. In canceling a term cargo, a company opts to pay a cancellation fee rather than lift the product to sell in a weak market. That fee can be as much as 75% of the cost of lifting. Assuming lifting fees are 12 cents/gal, as some sources have estimated, a cancellation fee would be about 8 cents/gal, meaning a company with a similar contract might opt to cancel if spot terminal fees fall below 4 cents/gal. Trading company Vitol was reported to have canceled three or four cargoes for early March loading from Enterprise Products Partners, sources said. A fifth Vitol stem was also said to be canceled for H2 March loading, though other sources said the cargo would be lifted after all.
Chevron expects LNG supply shortage by 2025 (Reuters) - Chevron Corp said on Tuesday it expected supply shortage in the global liquefied natural gas (LNG) market by around 2025, echoing comments made last month by top LNG trader Royal Dutch Shell. Demand for natural gas, which burns cleaner than coal and oil, has surged as countries such as China look to curb environmental pollution. Chevron, owner of the giant Gorgon and Wheatstone LNG projects in Australia, said it expects global demand to be nearly 600 million metric tonne per annum (mmtpa) by 2035, while supply could be just about half of that. “China’s demand is increasing significantly - they’ve had a very active program to move off of coal in heating industrial applications, and that’s pulled on LNG,” Pierre Breber, EVP -downstream at Chevron, said during the company’s analyst day, when asked about spot LNG prices. China imported record levels of LNG in January, as the world’s second-largest economy shored up supplies ahead of the Lunar New Year celebrations. Shell in February estimated that more than $200 billion of investments in LNG is needed to meet the boom in demand by 2030. The global LNG market is set to continue its rapid expansion into 2020 as facilities approved for construction in the first half of the decade come on line. However, a decline in spending in the sector since 2014 will create a supply gap from the mid-2020s unless new investments emerge, Shell said in its 2018 LNG Outlook.
Factbox: Russia-Ukraine natural gas war reignites after final arbitration ruling - On February 28, the Stockholm arbitration court issued its final ruling in the long-running dispute between Russia's Gazprom and Ukraine's Naftogaz Ukrayiny over the two companies' 10-year natural gas supply and transit contract signed in 2009. The court ruled in Naftogaz's favor on the transit element of the dispute, forcing Gazprom to pay $4.63 billion for having underused the Ukrainian transit system to deliver gas to Europe. The final net award to Naftogaz was $2.56 billion after taking into account the court's ruling in 2017 on the supply element of the contract, which stated that Naftogaz must pay Gazprom for gas it took but did not pay for in 2014 and 2015. Gazprom has accused the court of "double standards" and vowed to both appeal against the court's rulings and to cancel the contract altogether. CEO Alexei Miller said Gazprom on Monday had officially sent Naftogaz notification of the beginning of the procedure for termination of the supply and transit contracts." Following are the key elements of the dispute.
Ukraine Closes Schools To Save Natural Gas - Amid freezing temperatures in a Europe-wide cold snap, Ukraine has switched its thermal power plants to fuel oil from natural gas and is closing schools until March 6 in an effort to save gas after Russia’s Gazprom declined to resume shipments to Ukraine.Without the Gazprom gas deliveries that had to begin on March 1, Ukraine currently has a gas deficit of up to 20 million cubic meters per day, Ukrainian Energy Minister Ihor Nasalyk told Parliament on Friday. Switching thermal power plants to fuel oil could save the country some15 million cubic meters of gas a day, Nasalyk said, adding that his ministry had also asked local authorities to close schools and universities until March 6.The current gas shortage in Ukraine is equal to one-tenth of its daily consumption, according to Reuters calculations.Just hours after an arbitration court had ruled in favor of Naftogaz in a long-running payment dispute between the Ukrainian state company and Gazprom, a fresh gas dispute flared up on Thursday after Naftogaz said that Gazprom had not stood by its commitment to resume gas supplies, forcing Ukraine to reduce gas usage amid Arctic temperatures as the ‘Beast from the East’ freezing weather front sweeps across Europe. The new rift comes after years of bitter disputes between the gas companies of Russia and Ukraine, exacerbated by the 2014 Russian annexation of Crimea. On Wednesday, the Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years and also for failing to pay the full transit fees for the gas it did pump in that direction.
US Army Docs: Plan to ‘Dethrone’ Putin for Oil Pipelines May Provoke WW3 -- A study by the US Army’s Command and General Staff College Press of the Combined Arms Center at Fort Leavenworth reveals that US strategy toward Russia has been heavily motivated by the goal of dominating Central Asian oil and gas resources, and associated pipeline routes. The remarkable document, prepared by the US Army’s Culture, Regional Expertise and Language Management Office (CRELMO), concedes that expansionist NATO policies played a key role in provoking Russian militarism. It also contemplates how current US and Russian antagonisms could spark a global nuclear conflict between the two superpowers. The document remains staunchly critical of Russia and Putin, but finds that Russian belligerence cannot be understood without accounting for the context of ongoing US interference in what Russia perceives to be its legitimate ‘sphere of influence.’ Simultaneously, the document admits that far from the US being some innocently hapless victim of Russian interference, the US has at various times run covert “information, economic and diplomatic” campaigns to either “dethrone Putin”, or at least undermine his rule.An irony of the document is that despite repeatedly recognizing NATO’s own role in provoking Russian militarism, the US Army study refuses to contemplate a fundamental change of course with respect to NATO policies and interests.The document contains the usual caveat included with these sorts of internal US military studies, noting that its findings represent the views “of the author(s) and not necessarily those of the Department of the Army or the Department of Defense.” Yet in its foreword, Major General John S. Kem, Commandant of the US Army War College in Carlisle, notes that the volume’s insights “are important for Army professionals who lead Soldiers in a variety of missions across the globe”, and should be considered “by planners and policymakers alike.” Titled Cultural Perspectives, Geopolitics & Energy Security of Eurasia: Is the Next Global Conflict Imminent?, the study — which was published in March 2017 and has not been reported publicly until now — pinpoints the roles of competing US, European and Russian energy interests in driving growing tensions which could convert regional flashpoints into the next world war.
US Navy Boosts Mediterranean Presence As Exxon Set To Explore Offshore Cyprus - The U.S. Navy has increased its Mediterranean fleet, just a couple of weeks before Exxon is due to send two surveying vessels to explore offshore Cyprus near the area where Turkey blocked an Eni drilling ship from prospecting in February, Turkish news outlet Ahval reports. Last year, ExxonMobil and Qatar Petroleum signed an exploration and production (E&P) sharing contract with the Cyprus government, under which the companies will start drilling in a block offshore Cyprus this year. Two weeks ago, Turkish Navy vessels threatened to sink a drilling ship that oil major Eni has hired to explore for oil and gas offshore Cyprus - a divided island whose northern part is run by Turkish Cypriots and is recognized only by Turkey. According to local media reports, four or five ships of the Turkish Navy tried to prevent Saipem’s 12000 drilling vessel from performing exploration in the Exclusive Economic Zone (EEZ) of Cyprus. Turkey, which recognizes the northern Turkish Cypriot government and doesn’t have diplomatic relations with the internationally recognized government of Cyprus, claims that part of the Cyprus offshore area is under the jurisdiction of Turkish Cypriots or Turkey. Earlier this month, Eni said that together with France’s Total, it had made a promising gas discovery offshore Cyprus, confirming that the Zohr-like play - where Eni found the biggest gas deposit in the Mediterranean offshore Egypt - extends into the Cyprus Exclusive Economic Zone. According to Greek newspaper Ekathimerini, Exxon is intent on surveying its block offshore Cyprus despite the Turkish Navy activities and the blockade on Eni’s prospecting in the area. Cypriot Energy Minister Giorgos Lakkotrypis confirmed in the middle of February that Exxon had contacted Cyprus to express its support to the government of Cyprus and to confirm that it intended to meet its commitment to explore in Block 10, as per the exploration contract. Exxon is said to be sending two vessels with special robots to survey the best prospects for drilling that will begin in the second half of this year.
Aging Oil Fields Defy Gravity to Pump More Crude - Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude. “I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston. The fact that Dudley isn’t alone in seeing mature fields dwindling less than expected -- and in BP’s case surprisingly increasing -- means the Organization of Petroleum Exporting Countries has one more thing to worry about. As if the shale boom wasn’t enough of a headache.Better results from legacy fields, also observed by producers like Royal Dutch Shell Plc and countries like Norway, further complicate efforts by petro-states like Saudi Arabia to push prices higher by curbing supplies.Across the industry, the results weren’t as spectacular as BP’s, but still impressive, executives and officials at CERAWeek said. According to the International Energy Agency, production from mature oil fields dropped last year by about 5.7 percent, the least in data going back one decade. That comes as a huge surprise because the oil industry cut spending dramatically during the three-year downturn it’s just started to emerge from, and managing deep-water fields to arrest their demise can be a multibillion-dollar affair. So, OPEC was hoping thriftier times would lead to faster declines from mature wells that still account for more than half of the world’s output.But the need to stretch each dollar spent is exactly why Big Oil is getting more from those fields, according to Wael Sawan, executive vice-president for deep water at Shell. The lower decline rates are part of the response to low oil prices.
ExxonMobil sees hydrocarbons production growth of 1 million b/d by 2025 -- ExxonMobil expects to increase hydrocarbons production by more than 1 million b/d of oil equivalent by 2025, from 3.985 million boe/d in 2017, as output from the Permian Basin grows five-fold and 25 new startups globally come online, CEO Darren Woods said Wednesday. Higher production in the Permian Basin, where ExxonMobil has increased reserves to 9.5 billion barrels of oil equivalent from less than 3 billion boe over the past year, will complement ExxonMobil's massive refineries along the US Gulf Coast, Woods added. He did not say what the company's current output from the basin is. "We are in a solid position to maximize the value of the increased Permian production as it moves from the wellhead to our Gulf Coast refining and chemical operations, where we are focused on manufacturing higher-demand, higher-value products," said Wood speaking at ExxonMobil's 2018 Analyst Meeting at the New York Stock Exchange. ExxonMobil has two large refineries on the Texas Gulf Coast -- the 560,500 b/d Baytown and 362,300 b/d Beaumont plants -- that it is upgrading to increase production of higher-value products. It also plans "strategic investments" at its 502,500 b/d Baton Rouge refinery in Louisiana. A hydrofiner will come online this year at Beaumont, and expansion of light sweet crude processing capacity to run more Permian crude is expected to come online after 2020. The international projects that will contribute to growth out to 2025 include deepwater projects in Guyana and Brazil as well as LNG projects in Papua New Guinea and Mozambique.
Planes, Trains and Trucks: Global Trade Boom Fires Up Oil Demand - For clues on accelerating oil demand, look to the seas and skies. The strength of oil consumption took analysts by surprise last year, and played a big role in crude’s recovery to a three-year high in January. Demand this year could even turn out to be “way in excess” of 2017’s exuberant levels, Khalid al-Falih, the normally cautious energy minister of Saudi Arabia predicts. Data from industries like aviation, shipping and trucking suggest he might be right. Oil demand growth hasn’t been this strong in decades: even the gloomiest estimates from three heavyweights of global forecasting -- the International Energy Agency in Paris, the U.S. Energy Information Information, and the Organization of Petroleum Exporting Countries -- show consumption expanding by a minimum of 1.4 million barrels a day every year from 2015 to 2018. For part of that time, OPEC and allied producer states have been cutting crude supplies to eradicate a global glut. “The market has certainly come very far in terms of rebalancing,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “OPEC and non-OPEC have taken much credit for that, but stronger-than-expected demand was a key contributor.” While a lot of that growth is being driven by consumers in emerging markets taking to the roads for the first time, the strongest run in global trade expansion for several years is also boosting demand as planes, trucks and ships move more goods around the world. Though it may yet be at risk from the protectionist talk coming from Washington, the International Monetary Fund’s most recent estimates for world trade growth are that it will exceed 4 percent for three consecutive years through 2019, a feat last achieved when oil prices were surging to all-time records a decade ago. Here’s a run-through of some additional data points that support the idea of 2018 being a stronger year for oil demand than some expect:
First Oil, Now Natural Gas: U.S. Emerging As India’s New Energy Partner -- India will be importing its first ever consignment of U.S. liquefied natural gas (LNG), a mere nine months on from signing up for its first consignment of American crude oil. In a statement on Monday (March 5), coinciding with the first day of IHS CERA Week in Houston, U.S. – an event that's considered one of the oil and gas sector's signature jamborees – Cheniere Energy, a leading American LNG exporter, said it would be sending its first consignment to India via the Sabine Pass Terminal in Louisiana. The importer – Gas Authority of India Limited – one of New Delhi’s state-owned energy companies, said the takings would be under a 20-year sale and purchase agreement (SPA). Of course, the SPA is not new. It was signed back in December 2011 with Sabine Pass in its infancy. But with the facility’s clout and future potential now clearly apparent in 2018, the dispatching of 3.5 million tons of LNG per year to India is no small matter. For Cheniere President and CEO Jack Fusco, the shipment marks the start of “a long and productive relationship” between his company and its Indian client.
Chad, Congo, Malaysia Apply to Join OPEC - Congo, Chad and Malaysia have filed applications to join the Organization of the Petroleum Exporting Countries (OPEC), Equatorial Guinea’s Minister of Industry, Mines and Energy Gabriel Mbaga Obiang Lima told Sputnik on Wednesday.“In Africa,you have countries like Congo, you have initially a country like Chad, they are up-and-coming producers that are interested. Of course they are not producing right now, they are developing, but at the end they could be having 3,000 to 4,000 barrels per day,” Obiang said on the sidelines of the CERAWeek conference in Houston, Texas.The official added that new members would make the international community “see OPEC with a new face.” “The Asian countries — some of them are Indonesia, who initially left OPEC to be observers and now they want to return back and then you have other ones like Malaysia. The countries have already sent a letter, we are evaluating,” the minister explained. The minister also said that OPEC in general supports Venezuela’s proposal to extend the work of the OPEC, non-OPEC oil market monitoring by additional five years.
Frenemies: OPEC Finds U.S. Shale Oil an Intractable Problem - In front of the Petroleum Club of Midland, Texas -- capital of the booming Permian shale region -- an electronic display flashes two crucial pieces of information: the oil price and the number of drilling rigs. For the past year, both figures have been climbing as OPEC oil production cuts led to higher prices, spurring added drilling activity in the U.S. But the rise in the latter inevitably threatens the former. With the number of rigs up almost a third over the last year, U.S. production has surged above 10 million barrels a day, surpassing the all-time high set in 1970. That, in turn, puts downward pressure on crude prices, disrupting OPEC’s plans. And a lot more shale oil is coming, both in 2018 and beyond, executives and traders said. "At current prices, the market is incentivizing U.S. shale companies to produce more," said David Garza, a veteran oil executive who runs the Houston office of energy trading house Gunvor Group Ltd. The Organization of Petroleum Exporting Countries has been struggling with U.S. shale for almost a decade now. For the first few years, it downplayed the production as a mere blip. Then, in 2014, with the market oversupplied, it decided to fight head-on, opening the spigots and sending oil prices to below $30 a barrel in a war of attrition. After a two-year pump-at-will period, OPEC blinked first and cut production in 2016 in an effort to revive prices. After downplaying and then attacking, OPEC has spent the last year making nice with its U.S. shale adversaries, in an effort to understand the magnitude of the problem and perhaps convince the rival producers to show restraint. But despite dinner invitations and behind-closed-doors conversations, shale continues to increase output and grab market share. Rising global oil demand has so far absorbed the extra U.S. crude barrels, limiting the impact on prices. But for the cartel, shale remains as intractable as in the past.
IEA Predicts Nightmare Scenario For OPEC - The U.S. will supply much of the world’s additional oil for the next few years, according to a new report from the International Energy Agency (IEA).Over the next three years, the U.S. will cover 80 percent of the world’s demand growth, the IEA says in its newly-released Oil 2018 annual report. Canada, Brazil and Norway will cover the remainder, leaving no room for more OPEC supply.The irony is that the substantial gains in output from shale will only be possible because of the OPEC cuts, which has tightened the market and boosted prices. This fact is not lost on OPEC producers. "If you are a shale oil producer, who brought you back? It was OPEC," the UAE’s oil minister Suhail Al Mazrouei, said at a recent industry conference, according to Bloomberg. "Without OPEC there’d be chaos in the market."Indeed, the IEA’s new report paints a pretty gloomy picture for OPEC members, who are hoping to phase out their supply cuts after this year. With non-OPEC supply rising quickly, particularly in the U.S., OPEC may struggle to figure out a way to increase output without pushing down prices, according to the IEA’s analysis.That could put pressure on the cartel to keep the production cuts in place for longer than they had wanted, although it seems hard to imagine they maintain the production ceilings for another three or four years. Doing so would mean handicapping themselves and ceding even more market share to U.S. shale and other non-OPEC producers. Still, it is unclear how this plays out – returning to full production, even if phased in gradually, presents its own problems, if the IEA’s forecast is accurate. The IEA sees demand for OPEC oil actually declining in absolute terms over the next few years as it is edged out of the market by non-OPEC supply. OPEC production only grows by 750,000 bpd through 2023 under the energy agency’s forecast, although that also takes into account a 700,000-bpd decline in Venezuela. The bottom line is that the IEA sees oil demand rising by 6.9 million barrels per day (mb/d) by 2023, with more than half of those increases coming from China and India. Meanwhile, supply grows by about 6.4 mb/d, with a whopping 3.7 mb/d coming from the U.S., nearly 60 percent of the total global supply increase.
Is “US Energy Dominance” Overhyped? Top Experts Doubts Claims About Future Net Energy Exports - U.S. shale has effectively upended the oil industry, with predictions that total U.S. oil production will surpass Saudi Arabia’s output this year, in turn rivalling Russia’s to become the preeminent global producer. From its position of being dependent on, and subordinate to OPEC, the U.S. has seemingly become the big bad wolf. Through a catalogue of tactical errors and misplaced belief in its own muscle, the mighty brick edifice of OPEC has begun to look more like a bundle of sticks. The International Energy Agency (IEA) forecasts that the U.S. will become a net energy exporter by the late 2020s, but how accurate is that forecast, and to what extent is it mere hyperbole? In October last year there were already caveats about the nature of U.S. shale, with some warning that aggressive expansion was leading to rapid initial growth that would ultimately peak too soon. Mark Papa, former head of EOG Resources, raised the question of flatlining output in the face of the doubling of the oil rig count, “(h)ow can a rig count be double and yet production be stagnant?” Figures have also been influenced by the rapid pace of technological development, a pace which has itself plateaued. Robert Clarke, WoodMac research director for Lower 48 upstream, said that “(i)f future wells … are not offset by continued technology evolution, the Permian may peak in 2021”. IEA forecasts then, may be based on rapid growth and technological development that simply isn’t sustainable. Is U.S. shale just a sheep in wolf’s clothing, its bite ultimately as benign as grandma’s? The IEA is still forecasting that the U.S. will be the number one oil exporter by 2023 at 12.1 million bpd, but at the CERAWeek Conference in Houston on Tuesday, Papa is set to turn that thinking on its head when he warns the industry that shale will hit roadblocks that prevent such forecasts from being realized. He says the best drilling locations in North Dakota and South Texas are already tapped out. “The oil market is in a state of misdirection now,” Papa told the WSJ. “Someone needs to speak out.” How much of this is indeed misdirection on his part? Papa is CEO at Centennial Resource Development, which holds the rights to 77,000 acres in the oil-rich Delaware sub-basin of the Permian. A slowdown in expansion and its potential consequence of increased oil prices is advantageous to Centennial’s shareholders, so who are we to believe guilty of misdirection?
China aims to produce record coal, natural gas volumes this year (Reuters) - China will cut its coal consumption to around 59 percent of the nation’s primary energy mix while raising natural gas consumption to 7.5 percent of the mix in 2018, the National Energy Administration (NEA) said on Wednesday. China also aims to slash coal consumption to just half of its energy mix by 2020 by raising output and demand for renewable fuels. The NEA said China will produce around 160 billion cubic meters of natural gas, a record and up 8.5 percent from 2017. Domestic coal production in 2018 will also reach an all-time high at 3.7 billion tonnes, up 7.3 percent from last year.
U.S. crude exports to Asia are slumping as WTI outperforms other oils: Russell (Reuters) - Exports of U.S. crude oil to Asia appear to be starting to struggle under the weight of a narrowing discount for its domestic benchmark crude to international grades and efforts by other suppliers to maintain competitiveness. Vessel-tracking and port data suggest Asian imports of U.S. crude were equivalent to about 560,000 barrels per day (bpd) in February, down sharply from 676,190 bpd in January. March’s figure may be even weaker with data compiled by Thomson Reuters Oil Research and Forecasts pointing to Asian imports of only about 290,000 bpd. While these estimates are subject to revision, the March data shouldn’t change dramatically given any cargo due to be offloaded in Asia this month would have to have left a U.S. port by now, or at least within the next day or so. The main culprit for a slowdown in U.S. shipments to Asia is likely the narrowing discount of benchmark U.S. West Texas Intermediate (WTI) to Brent, the light crude grade used as a price marker for the rest of the world. The discount of WTI to Brent was $3.11 a barrel at Monday’s close, slightly more than $3 on March 1, which was the smallest gap in seven months. The spread between the two benchmarks blew out to $7.07 a barrel in late September in the aftermath of Hurricane Harvey, which knocked out refineries along the U.S. Gulf Coast, cutting demand for WTI crudes. It remained relatively wide for several months after that, ending the year at $6.48 a barrel, but the differential has been steadily narrowing this year in response to strong demand from U.S. refineries and from overseas buyers. Asian imports of 726,600 bpd of U.S. crude in November and January’s 676,190 bpd were the strongest two months on record, showing that the region’s traders were quick to take advantage of the weakening of WTI relative to Brent. It’s also likely that the spread for physical crude is actually narrower than that implied by the futures contracts.
Nigeria Can Produce Oil At $20 A Barrel -- The Nigerian National Petroleum Corporation can produce crude oil at around US$20 a barrel, but there are plans to bring this even lower, to US$15 a barrel, the company’s group managing director Maikanti Baru told media. "The more we bring down the cost, the more the money that comes to the federal government and into the pockets of state and local governments," Baru said. Nigeria has pledged to keep its oil production at 1.8 million barrels daily after OPEC asked it to join the cut efforts to bring down the global inventory overhang. Yet independent local producers are eager to boost their production by 250,000 bpd by 2020. That’s part of a plan to bring Nigeria’s total to 2.5 million barrels daily. At such low production costs, the urge to expand production makes perfect sense. The independents’ plans go counter to Nigeria’s pledge to support OPEC in its oversupply reduction efforts, but this doesn’t seem to have deterred the independents. Nigeria’s plans are for a total 700,000-bpd increase in production by 2020. How this will sit with OPEC is anyone’s guess, especially now, after the IEA warned that new non-OPEC supply would be enough to cover the growth in oil demand globally in the next five years.
The Next Entrant in the Shale Revolution? Saudi Arabia -- Saudi Aramco, the world’s largest oil exporter, is set to join the shale revolution with plans to start producing unconventional natural gas this month and exploit a deposit that could rival the Eagle Ford formation in Texas.Saudi Arabia’s gas resources from shale and other alternative supplies are “huge,” Khalid Al Abdulqader, general manager of unconventional resources at Aramco, said Wednesday in Manama, Bahrain. Production at the kingdom’s North Arabia basin will start by the end of March and reach its target by the end of this year, he said, without giving details.Aramco is also drilling for unconventional gas in the South Ghawar and Jafurah basins, he said. Jafurah in eastern Saudi Arabia is similar in size to Eagle Ford, the second-biggest U.S. shale play for gas, Al Abdulqader said, without giving an estimate of the gas contained at Jafurah.“It’s completely believable,” Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, said of the comparison. “Can they make a commercial proposition of it? That’s the question.” State-run Aramco, formally known as Saudi Arabian Oil Co., plans to spend $300 billion on projects over the next 10 years to maintain its spare production capacity for oil and boost exploration for and output of conventional and unconventional gas, Chief Executive Officer Amin Nasser said in July. Any increase in supplies of gas drilled from shale and other hard-to-access rocks would free up crude that Saudi Arabia uses in its power plants, enabling the country to export the oil for a bigger profit. Aramco plans to double its production of gas resources to 23 billion cubic feet a day over the coming decade, Nasser said. Saudi Arabia is also the biggest producer in the Organization of Petroleum Exporting Countries. Jafurah is located between Ghawar, the world’s largest oil field, and the Persian Gulf, near the hub of the Saudi energy industry. Pipeline networks and other facilities needed for Aramco to produce unconventional gas at Jafurah are nearby, and this existing infrastructure should help expedite the basin’s development, Mills said.
Oil Production Vital Statistics February 2018 - Last month I wrote this on the price of oil: A correction is now overdue and I suspect we see $65 before a significant move above $70. The only bearish signal is US+Canada production growth. The Brent front month corrected to ~$63 and now stands on $64.37. Art Berman has an interesting article Oil Price Crossroad recognising that we are now in the territory of market indecision. The IEA OMR is confusing saying both “rebounding US production underpinned non-OPEC output growth” and “Non-OPEC output dropped by 175 kb/d in January” (I think the former is YoY and the latter MoM). Below the fold I simply try to look at the bare facts. The chart below from the February OMR is one of the more important produced by the IEA showing the balance between supply and demand leading to either stock draw or additions. My version of the IEA chart taken from my 2018 oil price scenario is shown below and is based on their data. It is rather difficult to reconcile the historic data on their chart with mine. The February IEA OMR says this; It is clear that strong demand growth in 2017, alongside a modest increase last year in non-OPEC output, and the cuts made by leading producers, has contributed to the extraordinarily rapid fall in OECD oil stocks. A year ago, they were 264 mb above the five-year average and now they are only 52 mb in excess of it, with stocks of oil products actually below the benchmark. Although the OECD is not the whole world, the leading oil producers who agreed to cut output identified the level of the group’s stocks as an indicator of the progress of their initiative. With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand. I have been following biofuel production, pointing out that it had been on a cyclical high last autumn and was scheduled to fall by ~ 1 Mbpd over the winter. Afall of 810,000bpd has now duly happened. Falling biofuel production will now cease to support the oil price and the coming rise may have the opposite effect. In summary, variance within OPEC+Russia is effectively “noise”, both groups pegged to production agreements. Production decline in Asia and Europe is offset by production growth in N America. The USA and Canada are the only countries displaying strong production growth.
Lawmakers fear Russian influence on energy markets | TheHill: Lawmakers are expressing concerns following a new House committee report detailing how Russians attempted to use social media platforms to manipulate U.S. energy markets. It’s the first acknowledgment from politicians that such websites were used to influence U.S. affairs outside political and social discourse. “I’m shocked,” Senate Intelligence Committee Chairman Richard Burr (R-N.C.) said on Thursday after the House Science, Space and Technology Committee released its findings.“Russia is continuing to extend its digital tentacles into every aspect of American life, it is absolutely chilling and profoundly dangerous to our future,” said Sen. Richard Blumenthal (D-Conn.). Blumenthal is a member of the Senate Judiciary Committee, which has examined Russian meddling efforts on social media. “We are in effect inviting them to a social media buffet of options to interfere with our Democracy and undermine our way of life without adequate response,” he said. The Science committee report found that 4 percent of all Kremlin-linked social media account posts were energy related, a number that it believes is significant given that 8 percent of posts by such accounts were found to be about the election.
Hedge funds recover nerve after oil sell-off: Kemp (Reuters) - Hedge funds rediscovered some of their confidence in the oil market in the final week of February, as OPEC reiterated its commitment to output restraint and benchmark prices stabilised above $60 per barrel.Hedge funds and other money managers boosted their combined net long position in the six most important futures and options contracts linked to petroleum prices by 68 million barrels in the week to Feb. 27.Portfolio managers boosted their net long position for the first time after reducing it by a total of 263 million barrels over the previous four weeks, according to records published by regulators and exchanges.Net length increased in Brent (+21 million barrels), NYMEX and ICE WTI (+18 million barrels), European gasoil (+15 million barrels), U.S. gasoline (+9 million barrels) and U.S. heating oil (+5 million barrels).The mild bout of liquidation that occurred between mid-January and the middle of February appears to have run its course without making much of a dent in hedge fund long positions (http://tmsnrt.rs/2D1lwfo).Fund managers still hold more than 11 long futures and options positions for every short across the petroleum complex, not far off the record set at the end of January.Bullish positions in crude and refined fuels remain at levels that had never been recorded before the start of this year, with fund managers holding long positions amounting to more than 1,400 million barrels.Yet few dare express a contrary bearish view. Short positions actually declined by 11 million barrels in the most recent week to just 126 million, the lowest level since June 2014, when Islamist militants were threatening the oilfields of northern Iraq.Lopsided hedge fund positioning remains an important source of downside risk to oil prices if and when fund managers try to realise some of their profits.For the time being, however, most portfolio managers seem convinced prices will rise further before the eventual correction. Global growth remains strong and oil consumption is set to increase by more than 1.5 million barrels per day for the fourth year running in 2018.
US Will Be World's Largest Oil Producer By 2023, But There Is A Catch - Last month, the US accomplished a historic achievement: thanks to soaring shale production, America surpassed Saudi Arabia as the world's second largest oil producer, pumping over 10 million barrels per day, while Saudi Arabia remains stuck just below the key mark as a result of the ongoing self-imposed production limit, meant to push the price of oil higher (a boon to US shale producers) and to reduce the global inventory overhang. Meanwhile, the world's top producer, Russia, remains safely in first place, with a daily output of roughly 11 million bpd. That, however, is set to change however in the coming years according to the International Energy Agency, which in its highly anticipated Oil 2018 report released overnight predicted that the U.S. will overtake Russia to become the world’s largest oil producer by 2023, accounting for most of the global growth in petroleum supplies. The IEA now expects the US to reach a record of 12.1 million barrels a day in 2023, up about 2 million barrels a day from this year, in the process surging past Russia. Furthermore, the IEA predicted that of the 6.4 million new barrels of oil that will be pumped every day between now and 2023, almost 60% will come from the U.S., the IEA said. Meanwhile, counting all liquids, including those derived from natural gas, U.S. production will rise to nearly 17 million barrels a day over the next five years from about 13 million today, the IEA predicted, far more than Saudi Arabia or Russia. As the WSJ reports, the IEA’s closely watched five-year forecast showed the U.S. hitting new strides in its oil and gas boom, "helped by technological advances, improved efficiency and a fragile recovery in oil prices that is encouraging shale companies to ramp up their drilling." In other words, becoming "energy independent." In doing so, American influence on global oil markets will also rise, with U.S. oil exports more than doubling to 4.9 million barrels a day by 2023, according to the IEA. Until 2015, the U.S. didn’t export any crude oil by law, but in five years it is expected to be among the world’s biggest exporters.That may be a tall order for a world where even the skeptics admit the US is headed for a recession in 1,2 years.
Oil prices score biggest one-day gain in nearly 3 weeks --Oil prices settled higher Monday, tallying their largest single-session dollar and percentage gain in nearly three weeks, following a reported drop in crude stocks at the U.S. storage hub in Cushing, Okla.Prices had seen some support from reports of temporary supply disruptions in Libya over the weekend and traders weighed comments from the International Energy Agency on U.S. production and global demand growth.On the New York Mercantile Exchange, April West Texas Intermediate crude rose $1.32, or 2.2%, to settle at $62.57 a barrel. May Brent crude, the global oil benchmark, added $1.17, or 1.8%, to $65.54 a barrel on London’s ICE Futures exchange. WTI and Brent marked their biggest dollar and percentage gains since Feb. 14, according to FactSet data.Traders “focused on the key Nymex delivery point that recently has been running dry,” said Phil Flynn, senior market analyst at Price Futures Group. Data from Genscape reportedly show a sizable decline in last week’s crude supplies at Cushing, according to Bloomberg, which notes that supplies at the key pipeline hub are already at their lowest level since 2014. A forecast complied by Bloomberg also revealed that crude inventories at the hub fell by 600,000 barrels last week. Meanwhile, the International Energy Agency on Monday forecast the U.S. would become the world’s top crude producer by 2023 with production hitting a record of 12.1 million barrels a day. ”The IEA said that “rising oil production from the U.S. alone will need to cover 80% of the world’s demand growth over the next two years,” with U.S. output set to grow by 3.7 million barrels per day over the next five years,.“If they are wrong and the U.S. misses that growth target, it is likely the globe will be woefully undersupplied,”
What’s Driving Oil Prices Back Up? | OilPrice.com - Oil prices rose on Monday and in early trading on Tuesday on news that Libya’s largest oil field was temporarily idled, as well as news that U.S. crude inventories may have posted a surprise decline last week. OPEC officials, along with energy executives and oil analysts, gathered in Houston on Monday for the annual CERAWeek Conference. On Monday, several OPEC officials downplayed what is often billed as a rivalry with U.S. shale. OPEC Secretary-General Mohammed Barkindo said there is a “common understanding” between the two sides and that “we all belong to this industry.” OPEC officials had dinner with top shale executives on Monday in an effort to increase dialogue. However, Nigeria’s oil minister was a little less diplomatic than Barkindo, arguing that shale companies need to share the burden with OPEC. “We need to begin to look at companies that are very active in these areas and begin to get them to take some responsibilities in terms of stability of oil prices,” Nigerian Oil Minister Emmanuel Ibe Kachikwu told Reuters. The IEA published its annual Oil 2018 report on Monday, which detailed two broad conclusions: U.S. shale would dominate the supply picture for the next few years, leaving little room for OPEC to boost production. However, by the 2020s, the dearth of upstream investment over the past few years will finally start to bite, and with little spare capacity, the oil market could suffer from a supply crunch. Genscape Inc. reported a drop in inventories at Cushing, OK last week, with storage levels already at the lowest level in four years. The bullish report stands in sharp contrast to expectations of a new wave of shale supply. “The trend in global inventories shows that the market is fundamentally under-supplied and that emphatically remains the case,” Pavel Molchanov, an energy research analyst at Raymond James, told Bloomberg. Still, overall crude inventories are expected to have increased last week. Oil prices jumped on Monday because of the outage of Libya’s largest oil field, the Sharara. However, by Monday, output resumed at the 340,000-bpd field. Libya has been producing about 1.0 to 1.1 million barrels per day recently, before the outage, although a separate field was shuttered last week, temporarily knocking 90,000 bpd offline.
Oil Prices Fall After API Reports Major Crude Build -- The American Petroleum Institute (API) reported a huge build of 5.661 million barrels of United States crude oil inventories for the week ending March 2, according to the API data. Analysts had expected a build of 2.723 million barrels in crude oil inventories. Last week, the American Petroleum Institute (API) reported a build of 933,000 barrels of crude oil. Last week’s API report showed a build in gasoline inventories of 1.914 million barrels. This week, the API reporting a build for crude oil, but a draw for gasoline, possibly dampening the affects that such a large crude oil build could have. The API reported a draw of 4.536 million in gasoline stockpiles, compared to a 1.201-million-barrel draw that analysts had expected. The WTI benchmark was down on Tuesday, trading mostly down by $.05 (-0.08%) at $62.52, while Brent trading up $0.18 (+0.27%) at $65.72 at 3:32pm EST. Both benchmarks were trading down from last Tuesday afternoon. As crude oil inventories built for the week, US crude oil production for week ending February 23 also increased, coming in at 10.283 million bpd, well on its way toward the 10.7 million bpd that the EIA suspects will be seen in 2018. If met, this would be the “highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million bpd set in 1970,” the EIA said in its latest Short Term Energy Outlook issued today. The EIA expects next year’s US production to average 11.3 million bpd, the report said. Distillate inventories saw a build this week of 1.487 million barrels. Analysts had forecast a decline of 1.20 million barrels. Inventories at the Cushing, Oklahoma, site decreased by 790,000 barrels this week. By 4:35pm EST, the WTI benchmark was trading down even more at .019% on the day to $62.45 while Brent was trading up 0.18% on the day at $65.66.
WTI Down, RBOB Up After Huge Gasoline Draw, Crude Build - WTI/RBOB prices chopped around today, but drifted lower into the API data which shocked both ways. A larger than expected crude build sparked WTI selling and the biggest gasoline draw since October sparked RBOB gains. API
- Crude +5.66mm (+3mm exp)
- Cushing -790k exp
- Gasoline -4.536mm - biggest draw since Oct 2017
- Distillates +1.487mm
Prices limped lower into the print, but WTI kneejerked lower and RBOB higher after the data... “People are waiting to see: Will storage volumes point toward a tighter fundamental outlook?” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. “It does appear as if we need more evidence that the rebalance continues to really ignite a rally again.”
EIA's Short Term Energy Outlook Is Posted -- March 6, 2018 -- Oil Markets:
- In February, the average Brent crude oil price dropped by $4 to $65 per barrel. EIA’s forecast expects prices to decline gradually, averaging $60 per barrel in the second half of this year. EIA expects annual average Brent crude oil prices to remain near $62 per barrel in both 2018 and 2019, which is lower than prices in recent weeks but is higher than the average in 2017 by less than $8 per barrel.
- EIA estimates that U.S. crude oil production averaged 10.3 million barrels per day in February, up by 230,000 from the January level, which included some well freeze-offs in the Permian and Bakken. This month, we are reporting that total U.S. crude oil production averaged 9.3 million barrels per day in 2017, ending the year with production at 9.9 million in December.
- EIA projects that U.S. crude oil production will average 10.7 million barrels per day in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million barrels per day set in 1970. [Another nail in Hubbert's coffin.]
- EIA forecasts that 2019 crude oil production will average 11.3 million barrels per day.”
- For all of 2018, the forecast expects production to continue hitting new monthly highs—barring any significant energy disruptions. By the end of 2018, the short-term outlook is forecasting a new record average of 10.7 million barrels per day in U.S. crude oil production, and we continue toexpect production to average above 11 million barrels per day in 2019.
- Following record high gas inventory withdrawals in early 2018, the short-term outlook estimates that inventories for March 2018 will total 1,481 billion cubic feet, which represents a nearly 28% drop from March 2017. In fact, March 2015 was the last time inventories came close to that level.
- EIA expects U.S. natural gas production to reach new records in 2018. The forecast suggests that production will near 82 billion cubic feet per day in 2018 and, as a consequence, inventory levels will fully recover from this year’s low levels by next winter
The Truth About U.S. Energy Dominance -- President Trump tweet-gloated this morning: "We are getting it done - jobs and security!" - in response to the headlines that USA is set to become the world's largest oil producer. The bigger question is the narrative of US global dominance in the energy markets and the ugly narrative-bashing reality that USA is still a net-importing nation - somewhat battering the "security" meme Trump crowed about. As OilPrice.com's Kurt Cobb explains, much of the media coverage of the American energy industry implies that America has become a vast and growing exporter of energy to the rest of the world and that this has created a sort of "energy dominance" for the country on the world stage. Whether such reports qualify as so-called "fake news" depends very much on three things: 1) How one defines "fake news," 2) whether writers of such reports qualify the words "imports" and "exports" with the word "net" and 3) which energy sources they are discussing. By that criterion anyone who claims that the United States is a net energy exporter would certainly be guilty of propagating "fake news." Energy statistics from the U.S. Energy Information Administration (EIA) show that in November 2017 (the most recent month for which figures are available) the United States had net imports 329.5 trillion BTUs of energy in all its forms.* That's down from a peak of 2.74 quadrillion BTUs in August 2006, something that is certainly a turnabout from the previous trend. But all claims that the United States is a net energy exporter must be labeled as unequivocally false. It turns out, however, that most people making misleading claims about America's energy situation don't actually say or write things which are technically false. What they do is use language which intentionally or unintentionally misleads the reader or listener. For example, the claim that the United States is an exporter of crude oil is true. But that claim is entirely misleading. While the United States exports about 1.5 million barrels a day (mbpd) of crude oil, it also imports 7.5 mbpd. That puts the net imports of crude oil at about 6 mbpd. (All numbers are four-week averages as of February 23.)
Oil prices fall as Trump adviser's exit stokes trade war fears (Reuters) - Oil prices fell on Wednesday, pulled down by weaker stock markets after a key advocate for free trade in the U.S. government resigned, stoking concerns Washington will go ahead with import tariffs and risk a trade war. Soaring U.S. crude oil production and rising inventories also dragged on crude prices, traders said. Gary Cohn, economic adviser to U.S. President Donald Trump, seen as a bulwark against protectionist forces within the government, said on Tuesday he was resigning, triggering a more than 1 percent fall in S&P 500 futures in early Wednesday trade. Crude oil followed suit, with Brent futures down 51 cents, or 0.8 percent, from their previous close at $65.28 per barrel at 0414 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $62.13 a barrel, down 47 cents, or 0.75 percent. “The overhang from the Cohn resignation ... could see oil prices move lower during today’s session,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore. A voice for Wall Street in the White House, Cohn’s move to resign came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs. Major powers, including the European Union and China, have warned that such tariffs could lead to retaliatory action and trigger a global trade war, which could grind to a halt economic growth and, by extension, oil consumption. Traders said oil prices were also weighed down by a reported rise in U.S. crude oil inventories. Crude inventories rose by 5.661 million barrels in the week to 426.880 million barrels, data from the American Petroleum Institute showed on Tuesday.
Trump’s Trade Wars Could Spark A Massive Drop In Oil - I generally try to steer clear of politics and to avoid being alarmist or overly sensational. What has forced me to ignore both rules is the announcement on Thursday by Donald Trump that he is going to enact tariffs on steel and aluminum next week. Politicians in general have less influence on economies than they think, but they can cause disruption, and particularly when they make economic decisions for political reasons. That is what this is, and it has the potential to cause a massive selloff of oil and other commodities. You may feel that this is ultimately good policy and given the circumstance, a strong argument can be made that is true. Here though, the timing of the announcement suggests that it is in response to what looks like increasing chaos in the administration and a Special Counsel’s investigation that seems to be moving inexorably closer to the President himself. In other words, it is a political play, regardless of the potential short-term economic consequences. The actual results of imposing tariffs and sparking retaliation, however, are not the point. What matters, as is so often the case, is perception, and the perception of traders will be that measures such as those proposed could pose a serious threat to global growth and thus cripple demand for oil. . Again, even if that is not the end result here, the fear of it is enough to cause disruption. The reaction to the announcement so far, both in oil and stocks, has been somewhat muted. Both have dropped over the last two days, but in a relatively orderly fashion. Presumably that is because some people believe that pressure from the President’s economic advisors such as Gary Cohn and fellow Republicans appalled by what they see as policy that is ideologically unsound will force a change of heart. That, however, looks unlikely. Consistency has not exactly been a hallmark of Trump’s political career thus far, but the one area where it has been seen is in protectionism. It was a theme throughout his campaign and has remained one, so hoping for a reversal at this point makes no sense.
WTI/RBOB Rebound After Inventory Data Despite Record Production - RBOB has given up its post-API gains and RBOB is sliding into the DOE data but both jumped as Gasoline inventories drew down and crude's build was bigger than the whisper number. Production jumped to a new record high. Notably, Bloomberg Intelligence Energy Analyst Fernando Valle points out that the prospect of a trade war raised by U.S. President Donald Trump is narrowing distillate crack spreads even as demand remains robust. The fear is that a dispute would dampen industrial activity, reducing demand for diesel fuel that powers trucks and machinery. DOE:
- Crude +2.408m (+3mm exp, whisper +2mm)
- Cushing -605k (-600k exp)
- Gasoline -788k (+1mm exp)
- Distillates -559k
Inventories are just 2% above the five-year norm, with Cushing stockpiles more than 45% below the average. All eyes are again on US crude production after EIA upped its forecasts and OPEC begged for Shale to stop... but production jumped 86k last week to a new record high...
Oil prices fall with Wall Street and as US crude output, stocks rise (Reuters) - Oil prices tumbled on Wednesday as financial markets slid amid concerns that Washington’s plans for import tariffs could spark a trade war, and after U.S. government data showed an increase in crude inventories and output. Brent crude futures for May delivery fell $1.45 to settle at $64.34 a barrel, a 2.20 percent loss. Brent traded between $63.83 and $65.80 during the session. West Texas Intermediate (WTI) crude futures for April delivery fell $1.45 to settle at $61.15 a barrel. It fell 2.3 percent on the day, its biggest daily percentage loss since Feb. 9, and traded between $60.58 and $62.58. The resignation of Gary Cohn, economic adviser to U.S. President Donald Trump, who was seen as a bulwark against protectionist forces in the government, triggered a drop in Wall Street’s three main stock indexes and tempered investor risk appetite. Oil has recently moved in tandem with the equity market. Cohn’s resignation came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs. Major powers, including the European Union and China, have said such tariffs could lead to retaliatory action and trigger a global trade war. “The generalized market anxiety over what could end up being a global trade war is dragging everything down,” “It does not bode well for future economic growth and increased energy demand.” A further increase in U.S. output also weighed on prices. Weekly data from the U.S. Department of Energy showed weekly U.S. crude production hit a record high last week of almost 10.4 million barrels per day (bpd). The EIA said on Tuesday it expects U.S. crude output in the fourth quarter of 2018 to reach an average of 11.17 million bpd, up from the previous forecast a month ago of 11.04 million bpd. This would make it a bigger producer than Russia, now ranked No. 1. Last year, the United States surpassed Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.
Exxon Says Watch for Oil Shocks as Demand Becomes Market Driver -- Soaring demand is the main reason for the rebound in oil prices -- but if the economy falters, crude could tumble back to $40 a barrel, according to Exxon Mobil Corp.Cuts by OPEC countries have helped, but economic expansion is what’s “really driving demand at levels much higher than recent history,” Chief Executive Officer Darren Woods said Wednesday in a presentation to analysts in New York.Surging production from U.S. shale, particularly the Permian Basin in Texas, is swallowing up most demand growth and will do so to 2020, the International Energy Agency said this week. That leaves OPEC with a tough choice: either maintain cuts and risk losing market share, or end them and see the price of crude plunge.“When that demand starts to tail off, if Permian production continues to rise, I think that you’re going to see a different rebalancing of the market and OPEC will have to make some calls around how they want to manage that,” Woods said. West Texas Intermediate crude dropped 2.6 percent to $60.99 a barrel at 1:21 p.m. in New York. Exxon can’t rely on short-term market swings to make long-term investment plans, so the company tests its decisions with oil at $40 a barrel, Woods said. “You could find yourself back in there, depending on how this all plays out.”
Crude Oil’s Next Move? Clues from Soybean Oil - CME Group - As we observed in our past research , soybean oil prices often lead the movement in crude oil prices. The past year has been no exception. Even as WTI crude prices soared from $42 to $66 per barrel between June 22, 2017, and January 25, 2018, soybean oil traders weren’t buying in. Soybean oil prices peaked on November 9, 2017, at 35.38 U.S. cents per pound and began a 10% sell off that started two and a half months before the recent peak in crude oil prices (Figure 1). This is the eleventh such episode of soybean oil prices leading crude oil prices since 2005. Here is a list of the various episodes: [11 items]Soybean oil prices have not to-date staged any sort of sustained recovery and this might suggest lower prices for WTI in the weeks ahead. Once soybean oil does eventually hit bottom, however, it will be interesting to see if WTI once again follows it higher for a 12th episode as outlined in our brief history of the relationship between soybean oil and crude oil – a story that works just as well when one looks at Bursa Malaysia’s palm oil futures when converted from the Malaysian ringgit to U.S. dollars.On another note, WTI and soybean options traders perceive largely opposite risks. While they agree that there isn’t a huge amount of risk going forward – at-the-money (ATM) volatility is closer to historic lows than to record highs for both products – (Figure 2), the ‘smile’ chart of option volatility suggests that soybean oil traders fear upside risk (Figure 3), whereas the concerns of WTI traders are dominated by the downside (Figure 4).
Oil rally stalls amid rising production forecasts: Kemp (Reuters) - Despite the overwhelmingly bullish sentiment that still dominates talk about oil prices, the rally that started at the end of June 2017 seems to have run out of momentum. Front-month Brent futures prices peaked in the final week of January and have since been on a gently declining trend (http://tmsnrt.rs/2DaeVPS). Brent calendar spreads peaked even earlier in January and have also been gently softening for nearly two months now. Prices and spreads are back to levels they first reached in the middle of December ensuring there has been no real increase for three months. Hedge funds and other money managers remain overwhelmingly bullish, with a net long position in futures and options linked to Brent equivalent to 544 million barrels. Hedge fund long positions in Brent outnumber short ones by a ratio of more than 14:1, suggesting most portfolio managers still believe prices will rise further in the short term. But the net position also peaked in late January and has been slowly slipping since then, according to exchange data. Gross long positions have declined from a record 643 million barrels on Jan. 23 to 585 million barrels on Feb. 27. Hedge fund managers have been quietly liquidating some of their bullish long positions as prices have stopped rising. In the oil market, actions speak louder than words, and fund managers have turned more cautious over the last six weeks. The critical question is whether this is merely a pause, and the rally will resume shortly, or whether it marks a peak, at least temporarily. Brent prices have averaged just over $67 per barrel so far in 2018, which is not far from the forecast of $65 predicted by energy professionals in a survey at the start of the year. Recent news flow has been mixed, with oil consumption rising strongly, but production forecasts also being revised sharply higher.
Oil falls with U.S. output climb pushing prices to a more than 3-week low - Oil logged a second straight decline on Thursday, as continued gains in U.S. crude production pushed prices to their lowest finish in more than three weeks.Prices had dropped by more 2% Wednesday, pressured by a report that showed U.S. oil production hit a new weekly record. President Donald Trump's plans to set tariffs on steel and aluminum imports and the recent resignation of top White House economic adviser Gary Cohn also sparked worries over a potential trade war—raising concerns about global demand for U.S. oil.April West Texas Intermediate crude fell $1.03, or 1.7%, to settle at $60.12 a barrel on the New York Mercantile Exchange, after a 2.3% drop Wednesday. It marked its lowest finish since Feb. 13, according to FactSet data. May Brent crudethe global oil benchmark, lost 73 cents, or 1.1%, to $63.61 a barrel on the ICE Futures Europe exchange, also the lowest finish since mid-February.“The surging growth in U.S. oil production has again become a growing headwind on the energy market as growth levels are three-to-four times what was expected in 2018,” “The market had not priced in such a rapid rise in domestic upstream operations,” he said. “Unless we see material moderation in the U.S. production trends in the coming weeks, or a bullish development overseas, the energy rally is at risk.” The Energy Information Administration on Wednesday reported that total U.S. crude production continued to climb to a fresh weekly record—up 86,000 barrels in the latest week to 10.369 million barrels a day. On Nymex Thursday, April gasoline RBJ8, +0.31% fell 2.2% to $1.868 a gallon, while April heating oil HOJ8, +0.22% lost 0.8% to $1.859 a gallon. In other energy action, natural-gas futures maintained earlier declines after the EIA on Thursday reported that domestic supplies of natural gas fell by 57 billion cubic feet for the week ended March 2. Analysts surveyed by S&P Global Platts had forecast a decrease of 59 billion, but the five-year average withdrawal is 129 billion.
Crude Oil Prices Settle 1.68% Lower as Rising US Production Fears Persist - WTI crude oil prices settled sharply lower as traders continued to fret rising U.S. production while a stronger dollar added to downside momentum. On the New York Mercantile Exchange crude futures for April delivery fell 1.68% to settle at $60.12 a barrel, while on London's Intercontinental Exchange, Brent fell 0.84% to trade at $63.80 a barrel. Crude prices looked set for a second-straight weekly decline as negative sentiment on oil prices continued after the Energy Information Administration weekly crude totals Wednesday showing crude supplies rose less than expected failed to lift sentiment amid persistent rise in U.S. output. Inventories of U.S. crude rose by 2.408 million barrels for the week ended March 2, below expectations for a 2.723 million barrels increased but that was offset by a rise in U.S. output to a record high per day of nearly 10.4 million barrels last week. The dollar also played its part in keeping oil prices languishing at lows as the greenback rose sharply after the euro slumped on dovish ECB remarks. Dollar-denominated assets such as oil are sensitive to moves in the dollar – a rise in the dollar tends to make oil more expensive for holders of foreign currency and thus, reduces demand. Upbeat comments from Saudi oil minister Khalid Al-Falih suggesting that OPEC together with Russia could continue agreed production cuts after 2018 failed to stem losses in crude prices as investors continued to bet that with oil prices at $60 barrels, U.S. shale producers would add to oil output. "When it’s time to lift, we will lift gradually’ Al-Falih said. “We adjust to the seasonality. If we lift the curbs in the first quarter, we will need to be conscious of refining maintenance season and lower demand. So we cannot lift all of the curbs and flood the market at a time when demand is less."
Oil Prices Bounce After A Tough Week - Oil posted some steep losses mid-week after the EIA reported another crude oil inventory increase. Some fears about U.S. steel tariffs, and follow up tit-for-tat protectionist measures, also weighed on crude sentiment. But news that Trump would allow some exceptions to the tariffs, as well as a strong jobs report and a falling U.S. oil rig count sent oil prices bouncing back up on Friday. Over the next 25 years, the oil industry will need another $25 trillion in investment just to meet expected demand, while also accounting for natural depletion at existing fields, Aramco’s CEO Amin Nasser said at the CERAWeek Conference on Tuesday. The sentiment came after the IEA warned that the oil market will be short on supply in the 2020s without an increase in upstream spending. In fact, there is a growing chorus of analysts who agree with the basic premise that the oil market could be well-supplied in the near-term because of U.S. shale, but faces supply risks in the early- to mid-2020s because of low upstream investment. "I am not losing any sleep over peak oil demand or stranded resources," Nasser added. Total OPEC production dropped to 32.14 million barrels per day in January, according to Argus Media, a 9-month low. That was largely the result of a sharp decline in output from Nigeria and Venezuela, and OPEC officials waived away concerns about the drop. "There is no plan to do anything (about Venezuela's output) at this point," Saudi oil ministry adviser Ibrahim Al-Muhanna said at the CERAWeek Conference. "The market has not reached the point of balance … there is no need to address it this year." . After vociferously opposing President Trumps’ steel tariffs, some in the energy industry were somewhat relieved when the White House said it would allow certain companies and industries to apply for an exemption if they cannot procure enough steel domestically. Many parts of the energy industry, including pipeline construction, involves a special type of steel that is difficult to source in the U.S. A long list of companies warned that the tariffs could have a negative impact on oil and gas. For instance, Royal Dutch Shell said that the duties could impact the company’s decision to move forward on a major oil project in the Gulf of Mexico.
Baker Hughes: US rig count up 3 from last week -The US drilling rig count is up 3 units for the second week, reaching 984 rigs working during the week ended Mar. 9, data from Baker Hughes indicate. This total is up 216 units from a year ago. Offshore units were down 1 unit from last week with 13 rigs working in the Gulf of Mexico. A total of 967 rigs were drilling on land, up 4 from last week. The number of rigs drilling in inland waters remained unchanged at 4 units.Rigs targeting oil were down 4 units from last week to 796, but up from the 619 rigs drilling for oil this week a year ago. Gas-targeted rigs were up 7 rigs to reach 188 units. This time a year ago, 151 units were drilling for gas.Among the major oil and gas-producing states, Texas saw the largest increase in rigs week-over-week with a 7-unit gain to reach 490 rigs working. North Dakota is up 3 rigs from last week to reach 50 rigs running. Pennsylvania and Colorado each gained 1 unit to reach respective counts of 42 and 31 rigs running.Oklahoma dropped 4 units, falling to 120 rigs running, and Alaska lost 2 rigs to reach 9 units. New Mexico, Louisiana, and Utah each dropped 1 unit to reach 87, 58, and 9 rigs running, respectively. Five states remained unchanged, namely Wyoming, 31; Ohio, 22; West Virginia, 16; California, 14; and Arkansas, 0. Canada lost 29 rigs to 273 from a week ago. There are 42 fewer rigs working than this week a year ago. Oil-directed rigs decreased 15 units this week to 196, while those targeting gas fell 14 units to 77.
US Oil Rig Count Falls As Gas Rig Count Soars - Baker Hughes reported another 3-rig increase to the number of oil and gas rigs this week.The total number of oil and gas rigs now stands at 984, which is an addition of 216 rigs year over year.Despite the overall increase, the number of oil rigs in the United States decreased by 4 this week, for a total of 796 active oil wells in the US—a figure that is 179 more rigs than this time last year. The number of gas rigs rose by 7 this week, and now stands at 188; 37 rigs above this week last year.The oil and gas rig count in the United States has increased by 60 in 2018.Canada continued its losing streak, with a decrease of 29 oil and gas rigs for the week. Canada now has fewer rigs than it did a year ago. Despite multiple bearish events this week, oil prices managed to climb, buoyed in part on Friday by positive job reports and reports about a possible meeting between President Donald Trump and North Korea’s leader, Kim Jong Un. Neither the threat of steel tariffs—which some analysts opine could increase pipeline and other oil infrastructure costs—nor US crude oil production, which rose again in the week ending March 2nd to 10.369 million bpd, according to the EIA were able to keep oil prices down.At 11:45 am EST, the price of a WTI barrel was resilient, trading up $1.72 (+2.86%) to $61.84—a significant increase from last week’s prices. The Brent barrel was also trading up on the day, by $1.76 (+2.77%) to $65.37.Alaska, Louisiana, New Mexico, Oklahoma, and Utah all lost rigs this week, with Texas adding 7 rigs for a total of 490 active rigs—an increase of 98 over this time last year. At 1:09pm EST, both benchmarks had lost some ground, with WTI trading at $61.77 (+$1.65) and Brent trading at $65.13 (+$1.52).
Crude Oil Prices Settle Higher as US Oil Rigs Fall For First Time in 7 Weeks - WTI crude oil prices notched a weekly gain after settling more than 3% higher on Friday as traders cheered data showing the number of U.S. oil rigs fell for the first time in seven weeks, pointing to a potential slowdown in U.S. oil output. On the New York Mercantile Exchange crude futures for April delivery rose $1.92 to settle at $62.04 a barrel, while on London's Intercontinental Exchange, Brent rose 2.97% to trade at $65.50 a barrel. The number of oil rigs operating in the U.S. fell by four to 796, according to data from energy services firm Baker Hughes. That helped ease investor concerns somewhat that rising U.S. production - largely driven by shale - would continue unabated after data this week showed that U.S. output rose to a record high. The Energy Information Agency reported Wednesday that U.S. output jumped to a record high per day of nearly 10.4 million barrels last week. Also adding support to oil prices was data showing the labor market added 313,000 jobs last month, pointing to underlying strength in U.S. economy, raising hopes for an increase in oil consumption. "Economic optimism and oil consumption go hand-in-hand, therefore, any adverse impact on the health of the global economy will dampen oil demand growth prospects," said Stephen Brennock. The weekly gain for oil prices this week was far from straightforward after slipping on both Wednesday and Thursday as traders feared that with crude prices above $60 a barrel, U.S. shale producers would continue to ramp up output. “The United States is set to put its stamp on global oil markets for the next five years,” said Fatih Birol, the IEA’s executive director, in a statement. He added that the IEA could revive its estimate for US output upward should oil prices remain above $60.
Oil gains for the week, buoyed by potential U.S.-North Korea meeting - Oil prices received a boost on Friday, notching a gain for the week, as the possibility of a meeting between U.S. President Donald Trump and North Korea’s leader prompted investors to take some geopolitical risk out of the equation for the crude market.News of the first weekly decline in the U.S. oil-rig count in seven weeks also contributed to oil’s price rise.April West Texas Intermediate crude CLJ8, +3.33% rose $1.92, or 3.2%, to settle at $62.04 a barrel on the New York Mercantile Exchange, turning what would’ve been a weekly loss into a climb of roughly 1.3% from the week-ago settlement. May Brent crude LCOK8, +2.96% the global oil benchmark, rose $1.88, or 3%, to end at $65.49 a barrel on the ICE Futures Europe exchange—up 1.7% for the week. Both WTI and Brent on Thursday had marked their lowest settlements since mid-February.Oil prices responded positively to an announcement late Thursday that Trump accepted an invitation to meet with North Korea’s Kim Jong Un.“Geopolitical stability defiantly supports” demand for oil, said Naeem Aslam, chief market analyst with ThinkMarkets.Crude futures had a turbulent week, with prices pulled down in earlier sessions after Energy Information Administration data showed U.S. crude stocks rose 2.4 million barrels and production hit a record high in the week ended March 2. Analysts warn that oil prices aren’t out of the woods. “The rapid growth of oil production in the U.S. is continuing to generate selling pressure,” said analysts for Commerzbank in a recent note. “After all, it is attractive to drill for shale oil at prices above $60.”
OPEC Feb crude oil output 32.39 mil b/d, down 70,000 b/d from Jan: Platts survey -- A continued collapse in Venezuela's oil industry to a historic nadir and field maintenance that dropped UAE output to almost two-year lows drove down OPEC's crude production to 32.39 million b/d in February, according to an S&P Global Platts survey released Tuesday. Related tables: OPEC crude oil output and production vs. cut allocations That is a 70,000 b/d decline from January, even as Libyan and Nigerian production hit multi-year highs in their recovery from civil unrest, the Platts review of analysts, industry sources and proprietary data found. The February output figure was 340,000 b/d below OPEC's notional ceiling of about 32.73 million b/d, when every country's quota under its production cut agreement is added up. The cuts, which began January 2017 and are scheduled to run through the end of this year, are aimed at rebalancing the market by inducing draws of barrels held in storage. Venezuelan production, which has been in freefall as the country struggles with a host of economic and financial afflictions, slumped another 70,000 b/d in February to 1.57 million b/d, as Platts survey participants cited state oil company PDVSA's difficulties in securing diluent and other chemicals needed to pump crude, keeping its refineries operational and maintaining deteriorating infrastructure. This was the seventh straight month in which Venezuelan output fell and is the lowest level recorded since Platts began its OPEC survey in 1988, save a major industry strike in late 2002 and early 2003. Analysts expect further declines, which could be exacerbated if the US imposes additional sanctions that hamper PDVSA's ability to export crude, import diluent or refinance its debt, as the Trump administration is considering.
Global oil sector needs $20 trillion investments over 25 years: Aramco CEO (Reuters) - The global oil and gas industry needs to invest more than $20 trillion over the next 25 years to meet expected growth in demand and compensate for the natural decline in developed fields, Saudi Aramco Chief Executive Officer Amin Nasser said on Tuesday. Speaking at the CERAWeek conference in Houston, Nasser said the industry has already lost $1 trillion of investments since the oil price downturn from 2014 to 2016. Future investments needed “will only come if investors are convinced that oil will be allowed to compete on a level playing field, that oil is worth so much more, and that oil is here for the foreseeable future,” Nasser said. “That is why we must push back on the idea that the world can do without proven and reliable sources. We must challenge mistaken assumptions about the speed with which alternatives will penetrate markets.” He noted that about 99 percent of passenger vehicles on the road use internal combustion engines, even hybrid vehicles, and said electricity produced for battery-powered vehicles comes through power generation, which is still dominated by coal, particularly in markets like India and China. Nasser said that even with the growth of electric vehicles, increased demand from petrochemical markets over the next two decades will necessitate additional investment and need for crude oil. He noted “even conservative estimates” suggest the need for about 20 million barrels per day of new capacity in the next five years. He said he was confident that oil market fundamentals and future demand growth would be healthy, despite significant oil price volatility and forecasts of rising shale oil production.
Saudi Arabia's former oil minister says don't worry about demand - Saudi Arabia’s former oil minister has some advice for anyone worried about a possible drop in future demand for crude: Chill. "I would like to put everyone at ease, there are no such worries," Ali al-Naimi said in Manama, Bahrain, when asked if he sees a threat to oil demand from climate policies and increasing use of electrical vehicles. Any slowdown in demand from transportation will be more than offset by growth in other industries, he said. Saudi Aramco, the world’s biggest oil exporter, is investing in developing more efficient gasoline-powered engines to prolong the global demand for petroleum for decades to come, even as electric vehicles and alternative sources of energy nibble away at crude’s market share. Rapid adoption of EVs could mean oil demand peaks by the 2030s, according to Bank of America and BP Plc. Aramco, with an estimated 260 billion barrels of oil reserves, is the centerpiece of Saudi Arabia’s mission to re-invent itself as a diversified economic powerhouse. The government plans this year to sell about 5 percent of the company, known officially as Saudi Arabian Oil Co., in what could be a record public offering. Al-Naimi served for almost 21 years as the kingdom’s petroleum and mineral resources minister before stepping down in 2016. He was the most influential minister in the Organization of Petroleum Exporting Countries, and the oil market hung to his every word as he steered the group through wild price swings, regional wars, technological progress and the rise of climate change as a key policy concern.
Saudi Aramco international share sale might never happen: Kemp - (Reuters) - Saudi Aramco's partial privatisation has loomed over the oil market for the last two years, influencing expectations about oil prices, but what if it never happens?The possibility of selling a minority stake in the giant oil company was first mentioned in a newspaper interview published in January 2016 by then-Deputy Crown Prince Mohammed bin Salman.The possibility merited little more than a brief mention in a section about economic reforms, diversification and privatisation of state assets. ("Interview with Muhammad bin Salman", Economist, Jan. 6, 2016).But this passing reference has spawned an enormous amount of activity from consultants, bankers, stock exchanges, governments and journalists all competing to benefit from the sale of the century.Saudi Aramco has reportedly prepared a set of corporate accounts to international standards and commissioned an external audit of its oil reserves ready for investors.The pending sale has triggered a scramble among stock exchanges, including in the United States, the United Kingdom and Hong Kong, to secure a slice of the listing, with each receiving government backing.Technical preparations for a sale appear to have been largely completed over the last two years but the actual date for any sale has been repeatedly pushed back.The decision on whether, where and when to list shares lies with the government rather than Aramco, which means that it is in the hands of the newly promoted crown prince.But there is still no timeline for a decision, let alone an actual listing, and the timetable now appears to have slipped into 2019.Saudi policymakers have indicated shares will be listed on the domestic stock exchange but there is in fact no firm commitment to list them internationally.
Saudi's Foreign Exchange Reserves Take An Unexpected Dip -- March 5, 2018 - Just when it appeared that Saudi Arabia had turned the corner with regard to "foreign exchange reserves," a small hiccup, as they say. In September, 2017, Saudi's foreign exchange reserves hit a recent low but then gradually increased (coincident with a number of things, including a shakedown of a hundred or so Saudi princes, but that's another story for another day). Saudi's foreign exchange reserves showed a small increase over the next three month, but then, in January, 2018, the most recent month for which we have data, foreign exchange reserves fell. Considering that the price of oil has trended upward this past month, the decrease was unexpected. See chart below at this link: Foreign Exchange Reserves in Saudi Arabia decreased to 1854380 SAR Million in January from 1861588 SAR Million in December of 2017. Foreign Exchange Reserves in Saudi Arabia averaged 2209808.62 SAR Million from 2010 until 2018, reaching an all time high of 2796941 SAR Million in August of 2014 and a record low of 1569145 SAR Million in April of 2010.
Saudi crown prince seeks solution to banks' $2.6 billion Islamic tax row: sources (Reuters) - Crown Prince Mohammed bin Salman has directed the Saudi government to resolve a dispute with banks facing higher Islamic tax liabilities, banking sources say, in an attempt to avoid any damage to his push to diversify the economy. It follows disclosures by major Saudi banks in recent weeks that the government’s General Authority of Zakat and Tax (GAZT) is asking them for additional payments of zakat - the name of the tax - for years going back as far as 2002. In some cases, the demands exceed half of a bank’s annual net profit. Banks are contesting the extra payments, which are estimated at around 9.8 billion riyals ($2.6 billion) across 11 of the kingdom’s 12 listed banks. Analysts have warned the liabilities could hurt liquidity at the banks, the majority of which are main financiers of the budget deficit through purchases of local bonds. They would also restrict banks’ ability to lend to the private sector, a key element in the government’s reform plan to move the economy away from reliance on oil and create jobs for hundreds of thousands of unemployed Saudis. A committee with representatives from GAZT, the central bank and other parties was recently formed to look into the issue at the behest of the crown prince, widely known by his initials MbS, the sources told Reuters. The committee, chaired by former central bank governor Fahad al-Mubarak, currently an adviser to the Royal Court, has handed its recommendations to the court and they could be announced as soon as in the next few weeks, one of the sources said.
Saudi Arabia's powerful crown prince is opening the military to women — moving the kingdom in 'almost an unthinkable direction' -- If you are a Saudi woman with a high school diploma, between the ages of 25 and 35, at least 155 centimeters tall and in good physical condition, Saudi Crown Prince Muhammad bin Salman may want you in the Saudi Arabia defense forces. Last week, the crown prince, known as MBS, took his ambitious reform program a step further by opening the ranks of non-combat positions in the military to women. According to two leading Israeli analysts of Saudi Arabia, Joshua Teitelbaum of Bar-Ilan University's Besa Center and Brandon Friedman of Tel Aviv University's Dayan Center, bringing about greater equality for women is an integral part of MBS's drive to transform Saudi Arabia into a more open and modern 21st century society and to diversify its economy beyond oil exports. "In analyzing reform you have to compare declaration to implementation. But here even the declaration is important," Friedman said. "It's signaling a new direction and if you look back five to ten years, it's almost an unthinkable direction."
Made in America, But Lost in Iraq -- The U.S. company that repairs Iraq’s American-made M1A1 Abrams tanks has pulled many of its people from Iraq after at least nine of the armored vehicles ended up in the hands of pro-Iran militias. Now, many of Iraq’s tanks are immobilized for want of maintenance, potentially jeopardizing the country’s ongoing campaign against Islamic State militants. Iraq bought 140 of the 63-ton M1s for $2 billion starting in 2008 in order to re-equip some armored units that previously operated Soviet-made vehicles — many of which the U.S.-led coalition destroyed when it invaded Iraq in 2003. As part of the tank sale, the Pentagon brokered an arrangement whereby workers from Michigan-based General Dynamics Land Systems, which manufactures the Abrams, would maintain Iraq’s tanks, repair battle damage and train Iraqi mechanics to fix the vehicles themselves. The U.S. Army has paid General Dynamics $320 million for the work starting in 2012. Then in late December 2017, most of the General Dynamics contractors abruptly left Iraq. “We were informed that the [U.S. government] shut the program down until such time [as] the few M1s are returned to us,” one contractor told Foreign Policy on the condition we not print their name, as they’re not authorize to speak to the press. As early as 2015, at least nine M1s showed up in the arsenals of several pro-Iran militias that have been fighting the Islamic State alongside the Iraqi army, according to a quarterly report from the inspector general for the U.S. war efforts in Iraq and Syria, released in February. In January 2015, a video circulated depicting an M1 flying the flag of Kataib Hezbollah, which the United States has labeled a terrorist group. A second video from February 2016 showed an M1 flying the flag of Kataib Sayyid Al Shuhada, another militia with ties to Iran.
US Threatens to Sanction Iraq If They Buy Russian Air Defense Missiles --Buying up equipment for their military, Iraq is in the market for some new air defense systems. That’s got the potential of putting them at odds with the United States, and potentially facing US sanctions for buying the wrong product.As with other nations in the region, Iraqi Foreign Minister Ibrahim Jaafari is confirming his nation is considering buying the S-400, an advanced Russian-made air defense system which is favored as both cost-effective and capable.Buying that instead of a pricier US equivalent could have consequences, with State Department spokeswoman Heather Nauert confirming Iraq and other governments have already been warned they’d face sanctions for buying Russian, saying it’s in violation of US law.Iraqi officials confirm the US opposition is an obstacle to buying the S-400, but they’re not necessarily ruling it out. Turkey, Iran, and Syria are all going with similar Russian air defenses, so it likely makes sense from Iraq’s perspective to go that route. While the US expressed anger at Turkey for buying S-400 instead of US equivalents, they didn’t ultimately do anything to sanction the Turks. That may, however, reflect Turkey’s regional influence and status as a NATO member, while the US may feel going after Iraq is easier and has less chance of backfiring.
Syria Sitrep – Afrin, Idlib and East-Ghouta - After a slow start the Turkish and Jihadi attack on the Afrin canton in north-west Syria is making some progress. Despite intimate knowledge of the terrain and years of preparation the local Kurdish forces of the YPK have little chance to withstand. Turkish air and artillery support for the attacking force opponents is overwhelming the Kurds. The ground troops Turkey is using are mostly Islamist Free Syrian Army fighters directed by Turkish officers. A few Turkish special forces are acting as forward observers to call in artillery and airstrikes. Only yesterday the Turkish air force flew more than 30 bombing missions on a rather small front. Today some 36 fighters were killed by Turkish air strikes. Last week the local Kurdish forces were reinforced by other Kurdish forces and Syrian government paramilitaries. Some of the Kurdish groups had split off from the U.S. supported SDF in east Syria, crossed through Syrian government held land and reached Afrin. Kurdish groups in Aleppo city gave control of two of the three districts they held to the Syrian government to join their brethren in Afrin. A contingent of 500 Syrian paramilitary fighters from two Shiite towns near Afrin also joined the fight. The Turkish army tried to interdict the convoys reinforcing Afrin but most of the fighters reached the front lines. The Syrian Red Cross sent a convoy with humanitarian goods for the about one million inhabitants of the canton. The Kurdish YPG forces in control of Afrin have a choice. The Russian and the Syrian government have offered their full support if the Kurds submit to Syrian government control just like any citizen of Syria is supposed to do. If they agree, the Turkish planes will immediately vanish from the skies over Afrin. But the Kurds insist on keeping their own military and police forces as well as their unelected local administration. If they keep doing so the Turkish forces will role them up and all will be lost. It is a simple and obvious choice to make.
The Truth About the Russian Deaths in Syria -- Der Spiegel - "Son of a bitch" is the mildest cuss word that comes out of the militia member's mouth as he rants furiously about the inferno created by the hours-long American airstrike southeast of the city of Deir ez-Zor. Even as smoke continues to billow from burned out SUVs around them, he and five other men have come to remove the shattered body of one of their fellow fighters from the glowing embers of a bombed-out building. The scene comes from a two-minute video of the battlefield that one of the fighters took on the afternoon of Feb. 8, hours after the firestorm, and provided to DER SPIEGEL and the Euphrates Post, a news site providing coverage of the region. It's the first photographic documentation of one of the most mysterious battles yet in this increasingly complex war. Initially, the United States military announced on Feb. 8 it had attacked "pro-regime forces" of Bashar Assad's southeast of the city Deir ez-Zor to ward off an attack on a base belonging to the Kurdish-led Syrian Democratic Forces (SDF), who are allies of the Americans. The U.S. said the pro-Assad forces had attacked the SDF base with tanks and mortars. The U.S. fired back in response, claiming to have killed "more than 100" of the fighters in what was described as an act of self-defense. But who exactly were these attackers? And what really happened that night in the small, half-deserted villages on the east bank of the Euphrates River? Did American bombs decimate Russian troops? Could the attack even be a foreboding of coming skirmishes between the Americans and Russians?A team of DER SPIEGEL journalists spent two weeks interviewing both witnesses to, and participants in, the battle. The team also spoke to a staff member at the only hospital in Deir ez-Zor as well as an employee of the local military airport in an attempt to get a clear picture of exactly what took place during the three-day battle. The accounts largely corroborate each other and the image of events that emerges is one that contradicts what has been reported in the Russian and international media.
Turkey Threatens Exxon Mobil & The US 6th Fleet Off Cyprus - Turkish Prime Minister Binali Yıldırım threatened not only hydrocarbon survey ships of oil giant Exxon Mobile but also the US 6th Fleet is participating in a naval exercise in the area 7-18 March 2018. As KeepTalkingGreece.com reports, Yildirim said: “The Republic of Cyprus would not be allowed to get away with selling the energy resources surrounding the island,” Yildirim said on Wednesday. With reference to the turkey-occupied North part of Cyprus, he added “the natural riches surrounding the island of Cyprus is the common wealth of all the people who live on the island.” And he threatened that:“This and other provocative activities that create faits accomplis will be responded to in an appropriate fashion.”It was a clear message even to the US Fleet as some media have linked its presence off Cyprus to the Exxon survey, saying the Fleet was going to protect the Exxon Mobile survey vessels. Last month, Turkish war ships threatened to sink drilling ship commissioned by Italy’s ENI and ultimately managed to block the process as the Italian diplomacy did not dare to put the lives of their fellowmen at risk. A day earlier, President Recep Tayyip Erdogan, reacting to U.S. Sixth Fleet heading to East Mediterranean, said , “while European states’ boats abandoning refugees to death, we try to rescue every innocent’s life. You can only make it there with your Sixth Fleet, aircraft carrier.” Turkey has been illegally occupying 40% of Cyprus since 1974. It is only Turkey that recognizes “North Cyprus” as ‘state’, while the rest of the world considers as an “illegal” …something with no sovereign rights at all.
US tariffs? Chinese steelmakers say they have other things to worry about | South China Morning Post: Chinese steelmakers say US President Donald Trump’s move to slap across-the-board duties on steel imports is not a huge concern, given that China supplies just a small proportion of them. They are more worried about Beijing’s campaign to fight pollution and curb excess steelmaking capacity. “We have other things to worry about – the United States is not our market,” said Zhang Wuzong, head of Shiheng Special Steel Group in eastern Shandong province. Hou Jun, vice-chairman of the China Iron and Steel Association, which represents 80 per cent of the country’s steel producers, agreed that the US move would have a “limited” impact on Chinese companies. Both of the steelmakers, who are in Beijing this week for the annual session of the National People’s Congress, China’s legislature, said domestic challenges were the more pressing issue for the industry. Trump came the closest yet to a long threatened trade war this week, with his move to impose tariffs of 25 per cent and 10 per cent on all steel and aluminium imports at the final stage of confirmation. Although it is the world’s largest steelmaker, China supplies about 2.9 per cent of American steel imports, while the US buys just 1 per cent of China’s steel exports. But Beijing has vowed to stand by the other affected countries if Washington applies the tariffs.
Europe Renews Tariffs On Chinese Steel Pipes As High As 72% - As the world watches breathlessly if Trump will follow through with his threat to slap steel and aluminum import tariffs, Europe continues to quietly ratchet up its own trade war with China and nobody seems to mind.On Tuesday, as China was trying to define its future trade relations with the US, it was delivered a broadside from the European Commission after Brussels announced it had renewed tariffs on Chinese steel imports, some as high as 71.9%, saying producers in France, Spain and Sweden face a continued risk of imports from China at unfairly low prices. Ironically, that's the same thing that Trump is saying.The original measures, imposed last April, saw Europe setting anti-dumping duties on imports of hot-rolled flat steel products from China at a higher rate than the preliminary tariffs already in place. The European Commission explained it had set final duties of between 18.1% and 35.9% for five years for producers including Bengang Steel Plates, Handan Iron & Steel and Hesteel. This compared with lower provisional rates in place of 13.2 to 22.6%, following a complaint by EU producers ArcelorMittal, Tata Steel and ThyssenKrupp.Fast forward to today when Bloomberg reported that the European Commission reimposed for another five years the duties, which punish Chinese exporters including Huadi Steel for allegedly dumping pipes and tubes in Europe; the levies range from 48.3% to 71.9%, depending on the Chinese exporter."The repeal of the measures would in all likelihood result in a significant increase of Chinese dumped imports at prices undercutting the union industry prices," the commission - the 28-nation EU’s executive arm in Brussels - said in the Official Journal; the five-year renewal will take effect on Wednesday. And even though China’s share of the EU market for stainless steel seamless pipes and tubes has been negligible, and hovering at around 2% since 2013, Brussels had no problem with pursuing what it thought was fair remedies, oblivious of the blowback. And now we turn our attention back to Washington, and whether Trump will do the same.
China is ramping up its military spending to $224 billion per year - CHINA is ramping its military spending up to 1.1 trillion yuan per year — the equivalent of $A224 billion. The figure is a dramatic mark-up of 8.1 per cent on the previous year, and comes as China makes an effort to modernise its armed forces.This marks the rising superpower’s biggest increase in three years.Speaking at the opening of China’s 13th National People’s Congress, Premier Li Keqiang said China will “advance all aspects of military training and war preparedness, and firmly and resolvedly safeguard national sovereignty, security and development interests”.Mr Li said the country had “basically completed” the target of reducing the size of the armed forces by 300,000 troops, which would leave the People’s Liberation Army’s strength at around two million troops. President Xi Jinping has vowed to turn China’s defence force into a “world-class force” capable of fighting and winning wars.That said, the Chinese Communist Party insists it poses no threat to other countries. China is in the process of developing new military capabilities as it looks to assert dominance on the battlefield. These include stealth fighters, electromagnetic railguns, aircraft carriers and anti-satellite missiles. The country now boasts the world’s second-largest defence budget, but still pales in comparison to the United States’ proposed budget of $716 billion ($A922 billion) for next year. Zhang Yesui, a spokesman for the legislature, said China’s defence spending as a share of GDP and the budget still remains lower than that of other major nations. According to the Stockholm International Peace Research Institute, China spends 1.9 per cent of its GDP on the military, compared with 3.3 per cent for the US and 2 per cent for Australia.
Vietnam seeks to pacify China as landmark U.S. carrier visit signals warming ties (Reuters) - The visit of a U.S. aircraft carrier to Vietnam for the first time since the end of the Vietnam War is a powerful symbol of the growing strategic ties between the former foes. But the arrival on Monday of the USS Carl Vinson also illustrates Hanoi’s complex and evolving relationship with Beijing over the disputed South China Sea. For months now, Vietnamese envoys have been working to ease the concerns of their giant Chinese neighbor over the visit and the prospect of broader security co-operation between Hanoi and Washington, according to diplomats and others familiar with discussions. Vietnamese diplomats and military officers have repeatedly stressed the country’s independent foreign policy and its desire for broad foreign relations - hoping to maintain stable ties with China while standing up to it over the South China Sea, the sources said. The Vinson will mark the biggest U.S. military presence in the country since 1975 when it berths in Danang for a five-day stay. The port city on Vietnam’s central coast is close to its Blue Whale gas field now being developed by U.S. oil major Exxon Mobil, as well as the increasingly fortified Paracel islands, which China occupies and Vietnam also claims. China’s rapid construction and build-up of the seven features it holds in the disputed Spratly group further south has alarmed Vietnam and other regional governments. As it seeks to enforce its claims to much of the South China Sea, China’s navy and coastguard now routinely patrol vast swathes of the area through which some $3 trillion in trade passes annually.
South Korea delegation heads to Pyongyang for talks - A South Korean delegation headed by two top security officials is due to arrive in Pyongyang today for high-level talks aimed at lowering acute tensions on the Korean Peninsula and paving the way for negotiations over North Korea’s nuclear and missile programsA statement from the presidential Blue House in Seoul said National Security Office (NSO) head Chung Eui-yong and National Intelligence Service (NIS) chief Suh Hoon, would be part of a 10-person delegation. The presence of Chung and Suh suggests that South Korean officials want to put the issue of North Korea’s denuclearisation on the agenda.The presidential statement indicated that the delegation will attempt to arrange talks between North Korea and the United States despite the obstacles involved. The Trump administration has repeatedly insisted that the Pyongyang regime must take steps to denuclearise—that is, agree to US demands in advance—before any talks can proceed.North Korea has emphatically ruled out any preconditions to talks with the US. The foreign ministry on Saturday condemned Washington’s refusal to hold a dialogue with conditions as a “preposterous action.” “We have [the] intention to resolve issues in a diplomatic and peaceful way through dialogue and negotiation, but we will neither beg for dialogue nor evade the military option claimed by the US,” Pyongyang declared, adding: “We have the full capability and will to confront any option favoured by the US.”
Kim Jong-un, senior South Korean officials meet for first time | Asia Times: North Korean leader Kim Jong-un met senior South Korean officials for a four-hour dinner on Monday evening, the first time he has met South Korean officials since taking power in 2011. North Korean state media on Tuesday described the visit of South Korean envoys as “satisfactory.” The dinner included discussions about “easing the acute military tensions on the Korean peninsula” and activating a range of dialogue channels and contacts. Media added that Kim seeks to “write a new history of national reunification.” However, it is not yet clear if the key issue of North Korea’s willingness to discuss steps toward denuclearization was discussed. A further meeting between officials from North and South is expected today.South Korean President Moon Jae-in’s National Security Director, Chung Eui-yong, is leading a ten-member delegation to Pyongyang. It is the first major South-to-North diplomatic deploymeny since the sister of Kim Jong-un, Kim Jo-yong, invited Moon to meet her brother during her visit to the South last month.
Kim’s initiative: The breakthrough the world has been waiting for? | Asia Times: The Korean Peninsula is arguably the world’s most dangerous geopolitical flashpoint, but rarely – if ever – in inter-Korean relations has one side offered so much so swiftly. According to South Korean officials who returned from two meetings in Pyongyang on Tuesday and delivered a press briefing in the South, North Korean leader Kim Jong-un offered a summit with the South and “candid” talks with the United States, while unilaterally freezing missile and nuclear tests during the anticipated negotiation process. Most notably, according to the briefing, North Korea is open to denuclearization. “The North side clearly affirmed its commitment to the denuclearization of the Korean Peninsula and said it would have no reason to possess nuclear weapons should the safety of its regime be guaranteed and military threats against North Korea removed,” Seoul’s delegation head and National Security Advisor Chung Eui-yong said. Chung and other officials are expected to fly to Washington on Thursday to brief their US counterparts. Willingness to discuss denuclearization was the key pre-condition set by the US administration for talks – meaning Kim’s offer punts the ball deep into Washington’s court. US President Donald Trump has responded with guarded optimism, tweeting, “For the first time in many years, a serious effort is being made by all parties concerned….May be false hope, but the U.S. is ready to go hard in either direction!”
BOJ’s Kuroda Joins Queue of Central Banks Looking Toward Exit - The end of the easy money era which spanned the global economy for the last decade came into even sharper focus as the Bank of Japan gave fresh insight into when it might slow its stimulus program. Governor Haruhiko Kuroda’s remarks on Friday that the central bank will start thinking about how to complete its unprecedented easing around the fiscal year starting April 2019 was the clearest signal yet that a conclusion might be in sight to emergency support for the Japanese economy. While Kuroda’s statement in response to questions from lawmakers was in some ways stating the obvious -- the BOJ forecasts inflation to reach its 2 percent target in fiscal 2019 -- the significance is that he’s put down a marker in public that he can be held to. "It’s notable how over the past few weeks Kuroda has been forced into talking more specifically about the exit," said Izumi Devalier, head of Japan economics at Bank of America Merrill Lynch. "A year and a half ago he would have shut down the discussion altogether with the blanket ‘it’s too early to talk about it’ statement." That means the last of the big central banks is finally thinking out loud about policy normalization or how to begin the process of unwinding years of asset purchases and ultra-low interest rates that were used to stoke growth after the 2008 financial crisis sparked the worst global recession in decades. The Federal Reserve, Bank of Canada and Bank of England have already raised interest rates and may do so again soon, while the European Central Bank is debating how soon to end its own bond-buying. China’s central bank is sticking to what it describes as neutral policy settings and is ratcheting up money market rates to cool the pace of borrowing. Bloomberg Economics estimates net asset purchases by the main central banks will dwindle to around zero around the start of 2019.
Philippines Changes Inflation Calculation After CPI Shows Overheating Economy - When it comes to domestic or foreign policy problems, Rodrigo Duterte's Philippines usually has efficient, if often brutal, solutions. The same appears to apply to the economy as well, because just when the country's latest CPI print showed that the economy was overheating - which would force the central bank to hike rates, something it has long resisted - the country had a radical solution: change how CPI is calculated. Overnight the Philippines reported that in February prices surged by 4.5% yoy, well above the central bank’s target range of 2% to 4% from 2018 to 2020. Core inflation also rose sharply to 4.4% yoy in February, from 3.9% yoy in January, with headline inflation momentum at 0.9% mom sa versus an already elevated 0.7% mom sa in January Rodrigo Duterte's tax reform program pushes up prices of key consumer items. Inflation was driven higher by continued pass-through of higher excise taxes on sweetened beverages and tobacco under the new tax reform package, an increase in food prices on weather-related disruptions, higher fuel prices and the weaker PHP. In short: a clear recipe for a rate hike one would say. Yes... but not the local central bank: Bangko Sentral ng Pilipinas has resisted pressure to tighten monetary policy even though inflation is accelerating and the economy is now clearly overheating. Which is why the proposed solution was as ingenious as it was simple: alongside the "old" CPI series, the country's statistics office released a second CPI number which overhauled how inflation is measured. In a stroke of brilliance, the central banks switched from a 2006 to a 2012-base year, which meant that consumer prices rose only 3.9% in February from a year ago, and up from 3.4% in January, and well below the 4.5% print that the "old" print showed concurrently. More importantly, the 3.9% fell inside the bank's 2-4% inflation target band, removing the pressure to tighten.
By rewriting history, Hindu nationalists aim to assert their dominance over India (Reuters) - During the first week of January last year, a group of Indian scholars gathered in a white bungalow on a leafy boulevard in central New Delhi. The focus of their discussion: how to rewrite the history of the nation. The government of Hindu nationalist Prime Minister Narendra Modi had quietly appointed the committee of scholars about six months earlier. Details of its existence are reported here for the first time. Minutes of the meeting, reviewed by Reuters, and interviews with committee members set out its aims: to use evidence such as archaeological finds and DNA to prove that today’s Hindus are directly descended from the land’s first inhabitants many thousands of years ago, and make the case that ancient Hindu scriptures are fact not myth. Interviews with members of the 14-person committee and ministers in Modi’s government suggest the ambitions of Hindu nationalists extend beyond holding political power in this nation of 1.3 billion people - a kaleidoscope of religions. They want ultimately to shape the national identity to match their religious views, that India is a nation of and for Hindus. In doing so, they are challenging a more multicultural narrative that has dominated since the time of British rule, that modern-day India is a tapestry born of migrations, invasions and conversions. That view is rooted in demographic fact. While the majority of Indians are Hindus, Muslims and people of other faiths account for some 240 million, or a fifth, of the populace. For India’s Muslims, who have pointed to incidents of religious violence and discrimination since Modi took office in 2014, the development is ominous. The head of Muslim party All India Majlis-e-Ittehadul Muslimeen, Asaduddin Owaisi, said his people had “never felt so marginalised in the independent history of India.” “The government,” he said, “wants Muslims to live in India as second-class citizens.”
Social media giants work with Indian government to censor Internet --Indian Prime Minister Narendra Modi’s government, working in conjunction with Facebook, Twitter, YouTube and Internet technology companies, is intensifying its censorship of selected websites and social media accounts.According to recent data, 1,329 social media URLs were blocked on the recommendations of a government committee dealing with “objectionable content” during the first 11 months of 2017. That was an almost 38 percent increase on the 964 URLs blocked or removed for the whole of 2016. In 2014, 10 URLs were blocked, followed by 287 in 2015.Attempting to justify the censorship, an internal note from India’s Ministry of Electronics and Information Technology, declared: “While social media sites are a good medium to share and exchange information, some miscreants are also using this platform to spread rumours and posting objectionable content thereby causing disturbance in the society.”Elected in 2014, Modi’s Hindu-supremacist Bharatiya Janatha Party (BJP)-led government has implemented pro-investor economic “reforms,” including privatising public sector enterprises, slashing subsidies and further opening sectors of the economy to foreign investors.To divert the growing opposition to its big business policies, the Modi government is whipping up Hindu communalism and ultra-right chauvinist elements to be used against the working class in general, and its political opponents in particular. Extreme-right Hindu fundamentalists have been mobilised to intimidate or silence anti-government sentiment among university students. The ministerial note’s reference to “causing disturbance in the society,” indicates that New Delhi is acutely nervous about the mounting dissent and any exposure of its promotion of Hindu communalism and complicity in the communal violence.
How accurate is investment reporting on China in Africa? - An ‘Africa Investment Report‘ published by the Financial Times (FT) Group is being criticized for what some analysts say are misleading statistics about Chinese investment in Africa.The widely-cited report, which was issued in September and is the product of several FT services, contends that China is the No. 1 source of foreign investment in Africa based on capital expenditure, and notes that Chinese interests poured US$36.1 billion into the continent in 2016, accounting for 39% of US$92.3 billion in total foreign investment.However, some Africa watchers question the accuracy of the FT report’s figures and methodology, which they say exaggerate the scale of Chinese investment on the continent. The report is intended to provide data and promote foreign investment in Africa. While it aims to be constructive, it has appeared amid other articles in Western media that assert China is engaging in an economic takeover of African countries.China-Africa expert Thierry Pairault recently wrote a critique of the FT report that was posted on the China Africa Research Initiative Blog, which is published by the Johns Hopkins School of Advanced International Studies (SAIS) in Washington. Pairault is a research director at the Centre National de la Recherche Scientifique, France’s largest government research center.He voices “profound doubts” in his piece about the accuracy of the US$36.1 billion, 39% share apportioned in the report to Chinese investment in Africa, arguing that it’s overblown. Pairault further cites conflicting official data which shows that Chinese investment in Africa, in foreign direct investment (FDI) terms, is much smaller, and falling year on year. “Nobody bothered to read the abundant information (on Africa) that China disseminated on both its government and corporate websites,” Pairault told Asia Times in an email interview. “The majority of people just read the press releases in English but do not check the meaning of words and information by going to the source.”
Africa should avoid forfeiting sovereignty to China over loans: Tillerson (Reuters) - U.S. Secretary of State Rex Tillerson said on Thursday that African countries should be careful not to forfeit their sovereignty when they accept loans from China, the continent’s biggest trading partner. Tillerson is using his first diplomatic trip to the continent to bolster security alliances on a continent increasingly turning to Beijing for aid and trade. He may also seek to smooth relations after U.S. President Trump reportedly dismissed some African nations as “shithole countries” in January. Trump later denied making the comment. “We are not in any way attempting to keep Chinese dollars from Africa,” Tillerson told a news conference in the Ethiopian capital. “It is important that African countries carefully consider the terms of those agreements and not forfeit their sovereignty.” The United States is the leading aid donor to Africa but China surpassed it as a trade partner in 2009. Beijing has pumped billions into infrastructure projects, though critics say the use of Chinese firms and labor undermines their value. Tillerson said Chinese investments “do not bring significant job creation locally” and criticized how Beijing structures loans to African government. If a government accepts a Chinese loan and “gets into trouble”, he said, it can “lose control of its own infrastructure or its own resources through default.” He did not give examples. The growing Chinese lending to the continent has also attracted criticism from some Africans, who say China’s agenda is to feed its appetite for African raw materials like oil, timber and minerals, and secure contracts for its firms. Russian Foreign Minister Sergei Lavrov, visiting Zimbabwe on Thursday, told reporters it was inappropriate for Tillerson to criticize China’s relationship with African countries. “It was not appropriate to criticize the relations of his hosts — when he was a guest there — with another country,” he said. Many African governments enjoy close ties with both Washington and Beijing. Kenya, for example, inaugurated a $3.2 billion railway funded by China last year. For the last three years, Kenya has received more than $100 million annually in U.S. security assistance. Asked about Tillerson’s criticism of China’s approach on the continent, Kenya’s foreign affairs minister Monica Juma said: “This country is engaging with partners from across the world driven by our own interests and for our own value.”
Kenya lecturers’ strike paralyzes public universities - Lecturers at public universities across Kenya went on strike on March 1, citing low salaries and back pay owed to them. The action is a renewed effort by the lecturers’ unions—the Universities Academic Staff Union (UASU) and the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU)—nearly three months after a strike in December that ended with lecturers receiving non-binding promises from the government to negotiate a new collective bargaining agreement, including increased salaries. This time the lecturers have vowed to continue the strike until their demands for increased salaries and funding to upgrade facilities are met by the government. The lecturers have additionally demanded access to other services that are generally available to employees in the public sector, such as car loans and higher quality medical insurance. On the issue of poor wages, the lecturers and other public employees have blamed pervasive government corruption, which allows officials to swipe funds allocated to the public sector. In announcing the strike, UASU General Secretary Constantine Wasonga stated, “We want salary structures that will do away with distortions that barely make sense. As a professor, I earn less than my students who are KMPDU members.” The walkout by lecturers has paralyzed public universities across the country, with facilities shuttered and classes suspended. A number of public hospitals and clinics have also been closed, as several hundred medical student interns are participating in the strike.
The Logic of Power - Blockades are the workhorse of Bolivian political protest. People who live in La Paz, the seat of government, have grown accustomed to them. They know that, nearly any day, they can expect to be descending one of the steeply angled downtown streets, or squeezed into the back of one of the minibuses, or vans, that compose the mass transit system, when suddenly traffic will stop or dynamite will explode. In the tropical region of Chapare, where President Evo Morales first made his mark as an organizer with the coca growers’ union, a blockade can sever the main link connecting the highland plains to the lowland river basin and effectively bring the country to a halt. The blockade is a simple tactic. In many cases, it requires just enough people to span the width of a road, although the ones with more staying power generally employ barriers or burning tires. For all the disruption they cause, I have rarely heard someone in Bolivia complain about a blockade. The political culture of Bolivia is defined by extreme grassroots discipline and a history of agitation; unions are strong, and neighborhood associations are often the most surefire way to obtain basic services. Despite all of this, a blockade that took place in fall 2016 was distinct. For one, its leaders insist it was more of a vigil; they let certain people through. Secondly, it was on water; the mode of transport being blocked was fluvial. The blockade took place on the Beni River, upstream from the Amazonian town of Rurrenabaque. It was achieved with a rope strung across the river. People from little towns along the river’s edge remained there for nearly two weeks, the men armed with bows and arrows. They did not let through any boat carrying food or equipment that could have been intended for a team of geologists and engineers who were preparing a study of the site for two extremely large hydroelectric dams. Eventually, an engineer came to the site of the blockade and announced that his team was leaving. His company didn’t want to pursue a project that ran contrary to the will of the local people.
New Evidence the Trump Administration Is Meddling in Venezuela's elections - In recent weeks, the Trump administration has stepped up its efforts at "regime change" in Venezuela. In the past, Trump himself has even mentioned military action as a possible option, but the most recent moves appear more likely to be implemented, and some are already operational. According to a source with knowledge of the matter, the leading opposition contender for Venezuela's May presidential election, Henri Falcón, was told by U.S. officials that the Trump administration would consider financial sanctions against him if he entered the presidential race. The U.S. has backed the main opposition coalition decision to boycott the election. Falcón is a former governor and retired military officer. He is leading in the latest polls, and according to the most reliable opposition pollster, would defeat Maduro in the election by a margin of nearly 7 percentage points. Why would the Trump administration want to prevent an opposition leader who could possibly win the presidency in Venezuela from running in this election? There is no way to know for sure, but high-level sources from inside the administration have stated that Florida Sen. Marco Rubio is determining U.S. policy toward Venezuela. Rubio is a hardliner who does not seem interested in an electoral or negotiated solution to Venezuela's political crisis. On Feb. 9, he appeared to support a military coup when he tweeted:The world would support the Armed Forces in #Venezuela if they decide to protect the people & restore democracy by removing a dictator— Marco Rubio (@marcorubio) February 9, 2018 Such open support from Washington for a military coup against an elected government – before the coup has occurred – is unusual, to say the least, in the 21st century. But the Trump team is not just sitting around waiting for it to happen. The Rubio/Trump strategy seems to be to try to worsen the economic situation and increase suffering to the point where either the military, or the insurrectionary elements of the opposition, rise up and overthrow the government.
Hundreds of Canadian doctors demand lower salaries - WaPo - In a move that can only be described as utterly Canadian, hundreds of doctors in Quebec are protesting their pay raises, saying they already make too much money. As of Wednesday afternoon, more than 700 physicians, residents and medical students from the Canadian province had signed an online petition asking for their pay raises to be canceled. A group named Médecins Québécois Pour le Régime Public (MQRP), which represents Quebec doctors and advocates for public health, started the petition Feb. 25. “We, Quebec doctors who believe in a strong public system, oppose the recent salary increases negotiated by our medical federations,” the petition reads in French. The physicians group said it could not in good conscience accept pay raises when working conditions remained difficult for others in their profession — including nurses and clerks — and while patients “live with the lack of access to required services because of drastic cuts in recent years.” A nurses union in Quebec has in recent months pushed the government to address a nursing shortage, seeking a law that would cap the number of patients a nurse could see. The union said its members were increasingly being overworked, and nurses across the province have held several sit-ins in recent months to push for better working conditions. In January, the situation was encapsulated in a viral Facebook post by a nurse in Quebec named Émilie Ricard, who posted a photo of herself, teary-eyed, after what she said had been an exhausting night shift. Ricard said she had been the only nurse to care for more than 70 patients on her floor; she was so stressed that she had cramps that prevented her from sleeping, she added.
Why Putin Is Rattling His Superweapons - Russian President Vladimir Putin's surprise dissertation on Russia's new strategic weaponry, attached to Thursday's state of the nation address, mixed some well-known technological advances with a few genuine revelations. But the technical specifics are perhaps less important than the message Putin sent to the U.S.: The cost of a conventional war remains far too high. Putin's boast about the many young scientists leaving behind Soviet designs while building next-generation technology was only partly true. There's nothing particularly new about an ICBM such as Sarmat, and nuclear-powered missiles and torpedoes were in development both in the Soviet Union and in the U.S. in the 1950s and 1960s. Back then, however, the technology was prohibitively costly. Putin is right that only relatively recent technological advances made them, as well as hypersonic missiles, feasible. Experts can argue about whether Putin oversold the new weapons' supposed invulnerability to U.S. missile defense systems, especially those that, like the weapons themselves, may still be in development. U.S. officials have already claimed that the country was fully prepared for whatever Putin could throw at it. The problem with these arguments is that they bring alive the terrifying reality of a nuclear war between the U.S. and Russia; they provide symmetry to Putin's thinly veiled threats. The nature of those threats, meanwhile, is more important than the credibility of Putin's claims about the power of his superweapons. It would be wrong to read this part of Putin's state of the nation address as electioneering ahead of Russia's March 18 presidential ballot. Putin's "victory" in the fake election is in no doubt, so he doesn't really need a nuclear argument for Russians. Besides, he has long been more interested in foreign policy than in domestic matters. His message is aimed squarely at the U.S., which, in its recent doctrinal documents, has revived the idea of superpower competition. Says Kofman: Putin is showing his teeth from a position of weakness, seeking to make the U.S. understand that its strength is irrelevant in dealing with him. It's unlikely, however, that the U.S. will read his message as he intends: It will want to keep its position of strength and more likely engage in a new arms race than sit down to talk about arms control and some accompanying deal to divide up spheres of influence.
Putin Is Not Rattling Nuclear Sabers – It’s Real - The annual speech of Russian President Vladimir Putin on March 1 to the Russian Federal Assembly, televised to the nation, contained a section on Russian military cutting edge technologies that NATO-friendly media chose to either downplay as a propaganda ploy or an election campaign stunt. Given the hints of Russian military technology developments unveiled in the Syrian war theater since September 2015, Washington ignores what is clearly a strategic game-breaking development and makes all the hundreds of billions of dollars of so-called US missile defense technology being deployed from South Korea, Japan, Poland and beyond into little more than a Pentagon defense boondoggle. The military security section of Putin’s two hour speech to the Russian Federal Assembly on March 1 began some two-thirds into his remarks, after extensive discussions of plans to lift the economy, transform health care, improve education.The keystone of Putin’s security remarks, ignored in mainstream western media coverage, was the Russian response has been to the “unilateral US withdrawal from the 1972 Anti-Ballistic Missile Treaty and the practical deployment of their missile defense systems both in the US and beyond their national borders.”
Thieves Steal 600 Computers Used To Mine Bitcoin - Approximately 600 computers in Iceland used to mine bitcoin and other cryptocurrencies were stolen from data centers in what has been dubbed the "Big Bitcoin Heist." Eleven people including a security guard were arrested following four separate heists, according to Fortune. Two of the suspects were ordered to remain in custody by a Reykjanes District Court judge while the rest were released. The name of the company involved in the thefts have not been reported. Three of the burglaries happened last December, and the fourth occurred in January. Authorities kept the incidents under wraps while their investigation was ongoing. The computers are worth nearly $2 million - however the potential value of the untraceable cryptocurrencies they could produce makes the heist quite a bit more lucrative. "This is a grand theft on a scale unseen before," said police commissioner Olafur Helgi Kjartansson. Two of the burglaries took place in his district on the southwestern Reykjanes peninsula. "Everything points to this being a highly organized crime." Cryptocurrency mining in Iceland has boomed in the last several years - so much that the "mining industry" is projected to use approximately the same 100 mW in 2018 as the entire 334,000 population of the island nation.
Hand Grenades and Gang Violence Rattle Sweden’s Middle Class - Weapons from a faraway, long-ago war are flowing into immigrant neighborhoods here, puncturing Swedes’ sense of confidence and security. The country’s murder rate remains low, by American standards, and violent crime is stable or dropping in many places. But gang-related assaults and shootings are becoming more frequent, and the number of neighborhoods categorized by the police as “marred by crime, social unrest and insecurity” is rising. Crime and immigration are certain to be key issues in September’s general election, alongside the traditional debates over education and health care.Part of the reason is that Sweden’s gang violence, long contained within low-income suburbs, has begun to spill out. In large cities, hospitals report armed confrontations in emergency rooms, and school administrators say threats and weapons have become commonplace. Last week two men from Uppsala, both in their 20s, were arrested on charges of throwing grenades at the home of a bank employee who investigates fraud cases. Paulus Borisho, 55, was in his kebab shop around 50 feet away, and the explosion made his windows shudder. That a grenade should be found on the sidewalk outside a kebab shop, a few steps from an elementary school, was difficult for him to take in. “Now, when I think of the future, I am afraid,” he said. “I am afraid for Europe.” Illegal weapons often enter Sweden over the Oresund Bridge, a 10-mile span that links the southern city of Malmo to Denmark. When it opened, in 2000, the bridge symbolized the unfurling of a vibrant, borderless Europe, but in recent years it has been more closely associated with smuggling, of people, weapons and drugs. The influx of heavy weapons has caught Sweden’s criminal justice systems unprepared. The border with Denmark is open, with insufficient personnel to search every vehicle entering the country. Hand grenades were, until last year, classified as “flammable products” rather than weapons, so sentences for detonating them were mild. The police are struggling to gather information in immigrant neighborhoods, and clearance rates for gun homicide cases have fallen steadily since the 1990s.
Norway's $1 trillion wealth fund earned less money due to ethical profile (Reuters) - Norway’s $1-trillion sovereign wealth fund, the world’s largest, has earned less money because of divestments it has made over the past twelve years due to ethical and environmental considerations, it said on Tuesday. The fund funnels the proceeds of Norway’s oil and gas production. It invests in around 9,100 companies worldwide and holds on average 1.4 percent of global listed shares. It is forbidden by law from investing in firms that produce nuclear weapons or landmines, or are involved in serious and systematic human rights violations, among other criteria. The fund returned 1.6 percentage points less between 2006 and 2017 as a result of exclusions of companies on ethical grounds, according to a report on return and risk it published. Some 73 companies are excluded on ethical grounds, based on the recommendation of the fund’s ethical watchdog, the Council on Ethics. Another 69 firms are excluded directly by the fund based on their dependence on thermal coal. The biggest loss of 2.4 percentage points was caused by not being invested in products such as tobacco or nuclear weapons. But there was an upside on some types of investments. By being divested from firms the fund deemed were involved in severe environmental damage, corruption or gross human rights violations, it earned 0.9 percentage point more than if it had stayed invested in those firms, the report said.
German Social Democratic Party votes to form grand coalition --The membership of Germany’s Social Democrats (SPD) voted Sunday by a large majority in favour of a grand coalition in the party’s membership ballot. Of the more than 363,000 SPD members who voted, more than two thirds backed a continuation of the alliance with Germany’s conservative parties, the Christian Democratic Union/Christian Social Union.The result was announced by SPD treasurer Dietmar Nietan in the SPD’s Berlin headquarters on Sunday morning. “We now have clarity: the SPD will enter the next federal government,” enthused acting SPD leader Olaf Scholz.With this vote, the SPD has cleared the way for the formation of the most right-wing government in Germany since the downfall of the Nazis. A new instalment of the grand coalition would not simply continue the policies of its predecessor, but escalate its hated policies of militarism, the strengthening of the police state apparatus and social counterrevolution, and enforce these policies by resorting to increasingly authoritarian methods against growing opposition among the population.In the coalition agreement, which the World Socialist Web Site analysed carefully, the CDU/CSU and SPD committed to increase military spending to more than €70 billion per year by 2024, hire 15,000 police officers, and adopt the far-right Alternative for Germany’s (AfD) refugee policy. In addition, the “new beginning for Europe” proclaimed in the title of the agreement includes the intensification of austerity policies, which the grand coalition used during the last legislative period to drive millions of people in Germany and across Europe into poverty. The ruling class celebrated the SPD vote and is pressing for a rapid implementation of the right-wing programme. Acting German Chancellor Angela Merkel (CDU), whose re-election is expected on March 14, congratulated the SPD for “this clear result” on Twitter. CSU leader Horst Seehofer, who will pursue a hard-line law-and-order agenda as the new Interior Minister or “homeland minister,” commented, “The result is a good basis for a stable federal government. Every opportunity for Germany’s renewal now exists.”
Merkel secures fourth term in power after SPD backs coalition deal - Angela Merkel has secured her fourth term in power after Germany’s Social Democratic party (SPD) agreed to form another “grand coalition” government with the conservative Christian Democratic Union (CDU). The SPD announcement ends almost six months of uncertainty in German politics, the longest the country has been without a government in its postwar history, and puts Europe’s largest economy in a position to answer the challenges for EU reform laid down by the French president , Emmanuel Macron. Congratulating the SPD for its “clear result”, Merkel said she was looking forward to “further cooperation for the good of our country,” according to a tweet attributed to her on her CDU party’s account. Macron’s office welcomed the decision, saying “this is good news for Europe.” But with both Merkel’s party and the SPD facing internal calls for a programmatic reboot and the far-right Alternative für Deutschland (AfD) now the biggest opposition party in parliament, the new government’s stability will likely be tested. When the Social Democrat treasurer, Dietmar Nietan, announced on Sunday morning that a majority of SPD members had given the green light to a new “GroKo” or “grand coalition”, it was met with quiet relief rather than enthusiastic applause. “We now have some clarity,” said the Social Democrats’ caretaker leader, Olaf Scholz, a contender for the role of finance minister, speaking at Willy Brandt House in Berlin, the party’s headquarters. “The SPD will enter into government.”
Italy’s angry election -- Italy’s general election could be brutal for the establishment — because voters are angry.That’s what a look at the numbers ahead of Sunday’s vote shows. Even though the economy is finally growing, by almost 1.5 percent a year, it’s not being felt by ordinary Italians who are also incensed at political corruption and wealth inequality.The first victim of the anger could well be the ruling Democratic Party, which is set to take a hit in Sunday’s ballot — especially in the south. In the country’s brand new, and untested, electoral system, 232 members of the lower chamber, and 116 of the Senate, will be elected in a local first-past-the-post race (and the rest — 386 seats in the lower chamber and 193 in the upper chamber — through a proportional voting system). The center right is likely to benefit most from that reform.Yet all sides are predicted to fall short of an absolute majority. That means this messy election could lead to messy coalition negotiations. Support for the 5Star Movement is strong but scattered: it is only a few percentage points behind the center-left and center-right coalitions, and easily outstrips individual parties within those coalitions. Support for the 5Stars depends heavily on voters’ age and professional background. With little support among pensioners, the Movement is strong among workers — and has a striking lead among blue collar workers. As in other European elections, including in France and Austria, blue collar workers appear to have abandoned the left.The 5Star Movement grew on a platform of resentment of the establishment, and criticism of the euro. But in the run up to the election, they have toned down their rhetoric and dropped their demand for a referendum on membership of the single currency. In that, they are in step with public opinion, which has softened toward the eurozone. Italy’s Euroskepticism is rather peculiar. While Italians distrust the establishment across the board, support for EU institutions is stronger than for Italian local and national ones — strikingly so compared to other EU countries. What’s more: Italians don’t trust their politicians to improve matters: 72 percent of Italians say they don’t believe any of the promises politicians make.
Italian election results LIVE updates: Anti-EU SURGE - Salvini REJECTS Five Star coalition - ANTI-EU party Five Star Movement is now the single largest party in the Italian election 2018 according to the latest exit polls as the nation takes one step towards anti-establishment and anti-EU parties leading the country. Here is the latest information and LIVE updates on the results.
- Italy is set for a hung parliament with Centre-right, Centre-left, 5 Star Movement not able to secure a majority - a Grand Coalition is needed
- Three options: Centre-right with some support from the centre-left, 5 Star Movement with some support from the centre-left or 5 Star Movement and the League
- Italy election is a triumph of anti-establishment rhetoric - the victory is in the same league as Brexit and Trump from the eurozone's third largest country.
- More than half of the voters have backed the Five Star Movement and the League.
- Renzi's centre-left Democratic Party has had an abysmal election - falling to about 19% of the vote
Determined Italians waited in long queues at polling booths on Sunday to vote in an election that could change history in Europe amid a growing populist movement in the bloc. Exit polls show former prime minister Silvio Berlusconi's centre-right party and his far-right allies, Lega Nord, could emerge as the largest bloc in parliament but fall short of a majority. While the anti-establishment Five Star Movement has emerged as the biggest single party, according to exit polls.
As populists surge, Italy heads for political impasse - — Populist, anti-establishment parties were the big winners of Sunday’s Italian election, raking in a combined total of more than 50 percent of the vote. Early results indicate the country may be headed for a hung parliament or drawn out negotiations, with no single party or coalition garnering enough votes to govern alone. The anti-establishment 5Stars led by 31-year-old Luigi Di Maio is likely to emerge as the largest party, with over 30 percent of the vote. That would signal major gains for the group, which has tried to appeal to voters disaffected with traditional Italian politics. “That would mean the 5Star Movement will be the pillar of the next legislature,” said Alfonso Bonafede, a 5Star lawmaker, hailing it as an “extraordinary” result if confirmed. The biggest upset is the emergence of the Matteo Salvini’s far-right League (formerly the Northern League) as the most popular force on the right. The League was headed for about 18 percent of the vote, making it the country’s third-largest party. Its share of support also makes it by far the largest member in a right-wing alliance with former Prime Minister Silvio Berlusconi’s Forza Italia and the far-right Brothers of Italy. The coalition is expected to receive about 37 percent of the vote, according to projections as the official results come in — short of the 40 percent needed to avoid a hung parliament. If confirmed, the result would give Salvini a stronger claim to be prime minister than the man chosen by 81-year-old Berlusconi to rule in his place (the media tycoon is barred because of a fraud conviction), the current European Parliament President Antonio Tajani. Such a result would be a dramatic turnaround from previous coalitions between the two forces, which were always dominated by Forza Italia.
Historic defeat for social democrats in Italian election --In the European Union’s fourth-largest country, amid mass poverty and unemployment and growing popular disaffection with the centre-left parties and their pseudo-left apologists, Sunday’s parliamentary election in Italy resulted in a historic defeat for the governing Democratic Party (PD) and a victory for the right-wing and extreme-right parties.Italy’s desperate levels of social distress—with youth unemployment at 30 percent—are largely the product of policies pursued by centre-left governments. While right-wing governments under Silvio Berlusconi were characterised by unrestrained corruption, the names of the centre-left prime ministers—Romano Prodi, Massimo D’Alema and Matteo Renzi—are inseparably linked to social cuts and austerity directed against the working class.The main beneficiaries of Sunday’s election were right-wing and far-right forces—above all, Beppe Grillo’s Five Star Movement and the racist Lega led by Matteo Salvini. At 73 percent, voter participation was relatively low by Italian standards.The right-wing parties’ electoral victory has deepened the crisis of the European Union because the Five Star Movement and Lega are either critical or oppose Italy’s membership in the EU. Financial observers also fear that an extended government crisis could lead to the collapse of Italy’s fragile banking system.No party or electoral alliance secured the majority required to govern.The PD, the former governing party, won just 18.7 percent of the vote. It now holds only 105 of 630 seats in the Chamber of Deputies and 50 of 315 seats in the Senate. Free and Equal (LeU—Liberi e Uguali), a split-off from the PD led by anti-mafia state prosecutor Pietro Grasso, won just 3.4 percent of the vote. Matteo Renzi declared his resignation as PD leader Monday evening. The alliance he led, which included a group around Giuseppe Pisapia (Insieme) and the pro-EU +Europa, won just 22.9 percent of the vote and came in third place behind Berlusconi’s right-wing alliance and Grillo’s Five Star Movement.
Italy: What Happens Next, And Why Goldman Just Soured On "European And Market Stability" - --Curious "What Happens Next in Italy" after this weekend's elections which resulted in a surge for anti-establishment parties, doomed Matteo Renzi after a disastrous showing by the PD, and resulted in a hung parliament, or perhaps even a goverment of Euroskeptic parties (Five-Star and Northern League)? Then the following primer courtesy of Ransquawk should answer most of the pressing questions. Italy exit polls pointed to a hung parliament with anti-establishment 5-Star Movement as the largest single party and the Centre-Right seen as the leading coalition, with far-right junior coalition partner Northern League having possibly outperformed Berlusconi’s Forza Italia. Timeline:
- 23rd March: Parliament will gather for the first time
- 23rd – 30th March: Both the upper and lower houses will elect their respective Presidents and then begin consultations with President Mattarella
- 30th March – 6th April: President Mattarella will name his chosen candidate to form a government. Note, Mattarella will choose the candidate which he deems to have the best chance of forming a government, not necessarily the candidate whose party gained the largest share of the vote.
- **In the week that follows this, the candidate will either accept the mandate and both houses will hold a vote on the appointment. Alternatively, if no deal can be agreed, Italy will then move on to a fresh round of consultations.**
Potential outcomes
- Centre-right coalition (Forza Italia/Northern League): This had been touted as a likely option heading into the election. However, that’d been under the assumption that Forza Italia would outperform the Northern League. Since this has not been the case, serious questions have been raised over the possibility of this partnership being formed as Berlusconi (Forza Italia) is unlikely to want to play junior to the Northern League or back its leader Matteo Salvini as a candidate for PM. Therefore, some serious compromises would need to be made in order for this option to go-ahead.
- Grand coalition (Forza Italia/Democratic Party): Heading into the election, this had been touted as the most likely outcome. However, the below-par performance by the Democratic Party makes this option mathematically difficult without involving the support of one of the more radical parties; an unlikely outcome. Furthermore, the poor performance of the Democratic Party makes the prospect of a centre-left coalition unviable.
- Populist Government (Five Star/Northern League/Brothers of Italy): Such a coalition would depend on the willingness of the Five Star Movement which at this stage appears to be unlikely (despite a recent softening of their opposition to coalitions) given their anti-establishment views. Furthermore, despite being of the populist mould, the coalition would hold fairly wide-ranging views.
- Repeat elections: Should all of the above options fail, Italian voters would be sent back to the voting booths in an attempt to break the deadlock. During this period, the current Gentiloni government would operate on a caretaker basis but the ongoing political uncertainty would likely act as a negative to Italian assets.
Finally, here is Goldman explaining why Italy is now "more vulnerable than before the general election", and why the vote has "negative medium-term implications for stability in the Euro Area and markets."
Italy’s political earthquake will shake the old European hegemony to its foundations - Ambrose Evans-Pritchard - Italian voters have swept away their country's pro-European establishment after seventy years of unbroken rule, marking a revolutionary turn in Europe’s post-war history.Populist parties of Left and Right command the political landscape of a major eurozone state for the first time, vowing openly to defy EU fiscal rules, banking codes, and migrant policies.Both wings have pledged to roll back reforms forced on Italy by the European Commission and the European Central Bank.Both are committed to manifestos that put them on an unstoppable collision course with the Franco-German hegemony.Economic recovery has come too late to reverse the political legacy of economic depression and austerity overkill.Youth unemployment above 50 per cent across the southern Mezzogiorno - a level once thought morally unthinkable in a modern democracy - was tolerated by Europe’s policy class for too long and too lightly.Even today, Italy's GDP is still six per cent below its pre-Lehman peak in 2007. Benito Mussolini did better in the 1930s.“The euro is and remains a failure,” was the opening salvo of Matteo Salvini, triumphant leader of populist Lega.“It is clear in our minds that the system of monetary union is destined to end, and therefore we wish to prepare for that moment.”He warned the global "bond vigilantes" and Europe’s political leaders that a newly sovereign Italy will not again be cowed into submission. “We couldn’t give a damn about bond spreads. It is ‘No’ to Berlin, ‘No’ to Paris, and ‘No’ to Brussels: Italians are going to decide for Italy from now on,” he said. Mr Salvini claimed first right to form a government as top vote-winner of the centre-right coalition bloc, lifting his party’s tally from four per cent to 18 per cent by reinventing the northern separatist movement as the scourge of “delinquents and parasites” and the voice of pan-Italian identity.
Italy’s howl of nihilism Politico — Politics can create strange bedfellows, but nobody knows who will sleep with the winners of Italy’s election: Matteo Salvini, the nationalist leader of the far-right League, and Luigi Di Maio, the moderate face of the furious 5Star Movement. No parliamentary majority is in sight. The populists won; they crushed Italy’s last traditional party — former Prime Minister Matteo Renzi’s Democratic Party — and swept away old, smiling Silvio Berlusconi. But they didn’t win enough seats to rule. Everything is possible, of course, and much depends on who President Sergio Mattarella decides to entrust with the task of forming a government — as well as on the disinclination of the newly elected parliamentarians to risk their salaries and undergo the spectacle of a new election. But for the moment, there isn’t even the slightest showing of a new political order. On the contrary, what we’re witnessing looks like nothing more than a nihilistic obliteration of the old system in a blind flight toward an uncertain future. Di Maio has gained a reputation as the leader that brought the 5Stars in from the cold. The markets are, so far, apparently unperturbed by the possibility of political instability in Italy. And the European public is tired of looking at Italy as a problem to be dealt with, with sirens going off at all hours — celebrating instead the country’s ability to extricate itself from the troubles its leaders put it in. But this time could be different. The last time Italy’s political foundations collapsed — in 1993 when the parties that had governed Italy since the end of World War II were swept away by mafia and corruption scandals — the political leader who emerged was Silvio Berlusconi. But while Berlusconi was radically new, what he offered was also more of the same. What Italians call “the Second Republic” has spent nearly 25 years tottering on this fluctuating mix of promised renewal and old habits (good and bad).
Silvio Berlusconi Backs Leader Of Euroskeptic Party To Form Italy's Next Government - In what's probably a nightmare scenario for the millions of Italians who supported left or center-left candidates, Forza Italia leader and former four-time prime minister Silvio Berlusconi has decided to support Matteo Salvini, the candidate of the euroskeptic Northern League, in his attempt to form a government after Euroskeptic and anti-establishment parties performed (once again) far better than expected. Italy's March 4 election was widely viewed as a victory for Berlusconi and the other members of his "center-right" coalition with two far-right parties. And now Berlusconi has confirmed that the coalition will unify behind the candidate of the anti-immigrant Northern League. Berlusconi's Forza Italia garnered just 14% of the vote compared with 17% for the North Northern League, and the members of the coalition had agreed before the vote to support whoever received the largest share. Before the vote, polls expected Forza Italia to win the largest share of the vote. Still, with a combined 37% of the vote total, the coalition still fell short of the 40% threshold needed to form a government, setting Italy up for a leadership showdown that could last for months. "I am happy for Matteo Salvini and the League," the 81 year-old said. Berlusconi didn't run for office because of a law banning him because of his criminal convictions.Still, Berlusconi emphasized that he's still the center-right coalition's indispensable power broker in what ended up being his first public statement since the vote, according to EuroNews."I confirm that...I remain Forza Italia’s leader, I will be the coordinator of the centre-right, I will be the guarantor for the unity of the coalition." Both the League an the 5-Star Movement say Italy's president should name the leader of their own parties as prime minister.
"The World Stops Without Us!" - Millions Of Spanish Women Take To Streets In 24-Hour Strike - In Mississippi, lawmakers celebrated International Women's Day by passing the most restrictive abortion law in the US. In Spain, women celebrated the occasion by embarking on an "unprecedented" strike that saw millions of women flood the streets in towns and cities across the country, shouting their slogan: "Without us, the world stops." Women organized walkouts at their workplaces, with some demonstrations lasting up to 24 hours. Two leading trade unions, the CCOO and UGT, said that by lunchtime the strike had snowballed into a "great success", with 5.3 million women across the country joining the first of three two-hour work stoppages. In Madrid, 80% of workplaces were observing the strike, they said after a picket at the doors of the city hall in Plaza Cibeles, according to the Telegraph. Demonstrators - which included men and women - marked the start of the strike at midnight on Wednesday with a traditional cacerolazo: The collective banging of pots and pans to create a hellish racket. Strikers even briefly blocked some of Madrid's chief traffic routes during rush hour. In one of the few outbreaks of violence, four dumpsters near Madrid's Complutense University were set on fire. In Barcelona, groups of women blockaded several roads, with around 30 protesters blocking Gran Via, the city's main road for an hour before they were removed by police. As AFP explained, 10 unions called the strike to demand gender equality in compensation. It was meant to be a 24-hour strike. Famous female television broadcasters remained absent from radio or television. Organizers also urged women not to spend money - and to avoid products like deodorant that typically cost more for the feminine version. The CCOO and UGT didn't participate in the 24 hour strike, but rather organized strike windows for workers to stop working. The strike was meant to imitate Iceland's 1975 work shutdown, when women took a day off in October of that year to demonstrate their vital contribution to the economy. Pilar Lahoz, a 35-year-old office worker who carried a sign that read "Without us the world stops" in Madrid, told AFP that she has struggled to change jobs because potential employers rule her out when she says she is planning on having children. "While we have advanced a great deal there is still much to do," she said. According to Eurostat, Spanish women earn 14.9% less than Spanish men .
Macron going for broke – A former finance minister under a socialist government, who later founded a neoliberal party in his own image, described how to create a market society: ‘Do not try to advance one step at a time. Define your objectives clearly and move towards them by quantum leaps. Otherwise the interest groups will have time to mobilise and drag you down. Speed is essential: it is impossible to go too fast. Even at maximum speed, the total programme will take some years to implement. Don’t stop until you have completed the programme. Opponents’ fire is much less accurate if they have to shoot at a rapidly moving target. Go as fast as you can.’ This was not Emmanuel Macron, but Roger Douglas in New Zealand in November 1989, explaining the recent neoliberal counter-revolution in his country (1). Nearly 30 years later, President Macron has adopted all the tricks of this shock strategy. Everywhere – the SNCF (the national rail company), the civil service, hospitals, schools, labour legislation, capital taxation, immigration, public broadcasting (which Macron has called ‘a national shame’) – ‘reform’ is going full steam ahead on the pretext of impending catastrophe or soaring debt. A report on France’s railways, which Macron commissioned from a like-minded expert, Jean-Cyril Spinetta, has revived the as yet unfulfilled neoliberal wish list: ending the privileged status of railway workers, converting the SNCF to a PLC, closing loss-making lines. Five days after its publication, the government began ‘negotiations’ in an attempt to disguise the diktat it wanted to impose on the unions. It urgently needs to take advantage of the climate of political detente, divisions among the unions, and passenger frustration over delays, accidents, dilapidated track and high ticket prices. The French government is also counting on the media to produce fake official news and come up with catchphrases that will help its plans. The idea (quickly spread) that ‘the SNCF costs every French citizen €1,000, even if they don’t use the railways’ closely resembles the infamous claim that ‘every French person will have to pay €735 to wipe out Greece’s debt’, which in 2015 helped the EU to establish its financial stranglehold on Greece.
European Union demands Google, Facebook step up Internet censorship -In a new attack on free speech, the European Union (EU) is calling on major social media and Internet firms including Facebook, Twitter and Google to automatically and immediately censor online material.On March 1, the EU Commission called on companies and EU states to ensure “the detection and removal of illegal content through reactive (so called ‘notice and action’) or proactive measures.” It also identified a vast amount of material targeted for censorship. According to the Commission, its recommendations apply to all forms of “content ranging from terrorist content, incitement to hatred and violence, child sexual abuse material, counterfeit products and copyright infringement.”“Considering that terrorist content is most harmful in the first hours of its appearance online, all companies should remove such content within one hour from its referral as a general rule,” it said.The measures the EU is discussing would force companies to create programs, answerable to no one, to trawl the Internet and delete users’ content. This would consolidate censorship measures the EU proposed last year via the EU Internet Forum, which called on tech firms to work to develop automatic removal of online content.The EU hailed moves in this direction that have already taken place. According to the EU, “Twitter reported that three quarters of the 300,000 accounts removed between January and June 2017 were deleted before posting their first Tweet. According to YouTube, more than 150,000 videos have been removed since June 2017. Once aware of a piece of terrorist content, Facebook removes 83 percent of subsequently uploaded copies within one hour of upload.”The EU justified its policy with shopworn claims about the fight against terrorism. “While several platforms have been removing more illegal content than ever before ... we still need to react faster against terrorist propaganda and other illegal content which is a serious threat to our citizens’ security, safety and fundamental rights,” said Digital Commissioner Andrus Ansip.
Breaking the Stalemate on European Deposit Insurance - In the wake of the European financial and sovereign debt crisis, the euro area embarked in 2012 on establishing a banking union. Its aim was to elevate parts of banking sector policy from the national to the European level, particularly bank supervision and resolution. Successive EU-level reports, including the Four Presidents’ Report of 2012 and the Five Presidents’ Report of 2015, have highlighted a European Deposit Insurance Scheme (EDIS) as a necessary component of banking union. In 2015, the European Commission published a legislative proposal (hereinafter EC 2015) to set up a fully integrated, country-blind deposit insurance system by 2024.A number of different proposals have arisen in this area. A recommendation by Daniel Gros (Gros 2015), director of the Centre for European Policy Studies, would retain a permanent autonomous role for the existing national deposit insurance schemes in a re-insurance system. Meanwhile, none of these options has met sufficient consensus among euro-area countries, producing a deadlock in the policy discussion, with no apparent progress in the legislative discussion of the EC 2015 proposal.[1] In a Franco-German report in January, we proposed, jointly with our coauthors, to end the deadlock with an EDIS design that is institutionally integrated but financed in a way that is differentiated across countries. Our recommendations are outlined here and compared with EC 2015 and Gros 2015.[2]
ECB To Phase Out QE With €10Bn In Monthly Purchases By End Of 2018: Report - While Mario Draghi succeeded in slamming the Euro today by telegraphing his renewed displeasure at the escalating trade wars between the US and Europe while modestly reducing the central bank's inflation forecast, the unmentioned elephant in the room remained front and center: the ECB is rapidly running out of eligible (German) bonds to monetize.But while Draghi removed the easing bias language in the ECB's statement - hardly a surprise that the central bank won't be buying more bonds in the coming months - there was no discussion of either the timing, sequencing or specifics of the ongoing taper. Instead the ECB appears to have picked Bloomberg as its "trial balloon" conduit du jour, and in a report published moments ago, Bloomberg writes that according to leaked ECB "internal staff calculations on the future path of monetary policy", the central bank projects that asset purchases will total €30bn in Q4, 2018 "according to euro-area officials familiar with the matter."This means that the ECB would be monetizing only €10 billion per month in October through December, at which point QE will supposedly end, or as Bloomberg puts it:A 30 billion-euro extension in the final three months of the year would allow for a short taper. The current pace of purchases is about 90 billion euros a quarter, or 30 billion euros a month.The reason for the mini taper, is that "policy makers have long been in agreement that QE shouldn’t stop abruptly -- a view ECB President Mario Draghi has publicly voiced in the past."To be sure, while Bloomberg is quick to hedge that "the assumptions are technical and don’t constitute a pre-commitment on bond buying past September, when the current program is scheduled to end" which is obvious since Draghi wouldn't even touch on this topic, "there’s broad agreement among Governing Council members that quantitative easing should probably come to a halt by the end of 2018" according to Bloomberg's sources. The ECB has so far tapered its QE on two occasions: once in December 2016, when it trimmed monthly purchases from €80 to €60BN, and again last October, when Draghi announced that future monthly purchases would be chopped further in half, to just €30BN per month.
European Court of Justice Nixes “Investor-State Dispute Settlement” Intra EU, Raising Doubts About Their Future ---In a surprise move, the European Union’s top court has ruled that Investor-State Dispute Settlement (ISDS) clauses contained within almost 200 bilateral investment treaties (BITs) between EU member countries violate EU law, casting doubt on such deals as well as others struck by the bloc as a whole. ISDS clauses allow foreign investors or corporations to sue governments for passing laws or regulations that could undermine the value of their investments.The Court of Justice of the European Union (ECJ) found that an award of damages to Dutch-based insurer Achmea from Slovakia under a bilateral investment treaty inherited from former Czechoslovakia contravened EU law since the arbitration tribunal that made the ruling was “not a court of a member state.” As such, it had no power to refer matters to the ECJ, the highest court of the EU.“The arbitration clause in the BIT has an adverse effect on the autonomy of EU law, and is therefore incompatible with EU law,” the court said.The ruling could have widespread repercussions, not only for EU-based investors seeking redress for changes in government regulation that affect their bottom line but also for investors from outside the bloc. In total 196 BITs between EU members contain such clauses, some concluded between western EU countries to protect investments of their companies in former Soviet countries before the latter joined the EU.ISDS cases do not get heard in a court of law, under the scrutiny of a judge and/or jury, but rather in front of arbitration panels made up of three professional arbitrators — one representing the company, one representing the country and the other chosen by the first two to sit as president of the panel. None of these arbitrators are trained judges; they are very handsomely paid private individuals, often representing some of the biggest international corporate law firms, mostly from the U.S. and Europe. In recent years, ISDS has become such a toxic concept that even Beltway institutions such as the Cato Institute have called for its purging from future trade agreements — an idea that appears to be supported by US Trade Representative Robert Lighthizer and could even be applied to a newly negotiated NAFTA agreement. Europe is already halfway there, but not everyone’s on board. The Czech Republic, Estonia, Greece, Spain, Italy, Cyprus, Latvia, Hungary, Poland and Romania have all came out in Slovakia’s defense against Achmea, as has the European Commission. By contrast, the governments of Germany, France, the Netherlands, Austria and Finland believe that the clause at issue and, more generally, clauses of a similar kind used in the 196 BITs currently in force between EU Member States are perfectly valid.
What “mutual recognition” really entails: analysis of the Prime Minister’s Mansion House Brexit policy speech -- EU Law Analysis --Theresa May’s speech at Mansion House in London on 2 March 2018 has attracted a torrent of comment. It has been greeted as, on the one hand, shallow and unrealistic and, on the other, as the most thoughtful contribution to the debate offered so far by a member of this government. In truth both descriptions are accurate. I want here to focus on Mrs May’s aspiration to promote “mutual recognition” as a means to manage the future economic partnership she envisages between the EU and the UK. In her portrayal of the treatment of goods after Brexit, Mrs May insists that “both the UK and the EU have a strong commercial interest in preserving integrated supply chains that have built up over forty years”, and she envisages “that trade at the UK-EU border should be as frictionless as possible”. Much of what passes for “negotiation” on the UK side since the despatch of the Article 50 letter of withdrawal in March 2017 has involved a desire to retain the benefits of EU membership while shrugging off the status and responsibilities of membership. But when Mrs May appeals for “a comprehensive system of mutual recognition” she is going still further. She is not asking for something that applies within the EU. Mutual recognition in primary EU law is most prominently found in the area of free movement of goods, persons and services, but it is not absolute mutual recognition. Instead it is conditional or non-absolute mutual recognition. That means that where something is good enough for the market of one Member State, it is to be treated as good enough for the market of all the other Member States – unless the target (or host) State can show a good reason why it should be entitled to rely on its stricter standards to exclude something that is acceptable elsewhere in the EU. The reservation unless is structurally crucial in the law of the EU’s internal market. A State is not inevitably obliged to open up its market to a product or service which does not conform with local laws. It may appeal to its tougher standards of health protection, its more assiduous concern for consumer protection or its particular fastidiousness in the area of environmental protection – and it will need to be judged, ultimately by a Court, whether the State has a strong enough justification of this type to place obstructions in the way of the impulse towards market integration.
Post-Brexit, no need for a financial freeze - Handelsblatt -- In little over a year from now – 392 days, to be exact – the United Kingdom will leave the European Union. At the moment, we only know one thing about life after Brexit: The EU will no longer have a global financial center. If the EU fails to act, key finance channels for the Continent’s economies could weaken or wither away. But there is an alternative reality: The financial hubs of Frankfurt, Dublin and Paris could interconnect to work as one. Liquidity, traded products and expertise could be bundled into one platform, keeping the EU’s financial markets globally competitive and efficient. What would we need to build such a digital finance center? We already have a good foundation: The EU, which will remain the world’s second-largest economy even post-Brexit. People, goods and services flow swiftly and freely throughout the domestic market, while political conditions and regulatory frameworks are stable and reliable. The EU has the benefit of the highly stable euro, the second most-trusted reserve currency worldwide. Regulatory conditions are mostly unified, the banking union strengthens our resistance to crisis, and the capital-markets union brings us closer to financial integration. Powerful market infrastructures make simple and speedy cross-border transactions possible. But the finance centers across the future EU’s 27 member countries are competing for market share, taxes and jobs. All of the bigger cities meet some of the requirements for global financial success, but none ticks all the boxes. Connectivity can give the financial centers a virtual advantage through proximity of market actors. But we have some catching up to do when it comes to digital infrastructure. New York and London set up an Atlantic cable just for high-frequency trading; this kind of connection doesn’t exist between Paris and Frankfurt. But creating faster, better and cheaper connections between sellers and buyers is the only way to compete with classic financial centers.
Sinn Féin 'meeting of minds' with EU chief - BBC News: Sinn Féin shared a meeting of minds at talks with the EU's chief negotiator on Monday, the party said. Party President Mary Lou McDonald made the comments after she and her party colleagues met Michel Barnier in Brussels. It follows comments from Prime Minister Theresa May that she did not want to see a hard border between Northern Ireland and the Republic of Ireland. Ms McDonald said the issue was now "in Mrs May's court". She said the British government had to come up with Plan A and Plan B, and there could be be no overall agreement on Brexit unless the issue of the border was solved. The Sinn Féin leader said her party was "not looking for a border down the Irish Sea". She said there was now a challenge for Mr Barnier to "hold steady", but that "he gets it" on the issue of Brexit and the border. Mrs May has also said she did not want a customs border between Northern Ireland and the rest of the UK. The prime minister was responding to a legal text published by the EU as part of the Brexit negotiations with the UK. The EU's draft legal agreement proposes a "common regulatory area" after Brexit on the island of Ireland - in effect keeping Northern Ireland in a customs union - if no other solution is found. Mr Barnier hosted a Sinn Féin delegation including party president Mary Lou McDonald, vice president Michelle O'Neill and MEPs Martina Anderson and Matt Carthy. Sinn Féin is keen to stress that there should be a special status for Northern Ireland.
Brexit-Induced Pillaging of the UK Starts: US Fleecing UK on Must-Have Air Transport Pact -- Yves Smith - The Financial Times, apparently cowed by Brexit-boosters, has started underplaying Brexit train wrecks. For instance, a story in the pink paper with the anodyne headline UK-US Open Skies talks hit Brexit turbulencewould be more aptly called “US Using Open Skies Negotiations to Eviscerate UK Airlines.” As we and others have warned, as of Brexit, meaning March 2019, the UK is out of all sorts of agreements with third countries that it had participated in via membership in the EU. A transition agreement with the EU will not extend to these deals with other countries and trade blocks. The UK has a daunting number of agreements to try to stitch up in a bit more than a year, and it barely seems to be taking this looming problem seriously. We’ve cited this section and visual from a May 2017 Financial Times article before to underscore the magnitude of what needs to get done:While Brexit is often cast as an affair between Brussels and London, in practice Britain’s exit will open more than 750 separate time-pressured mini-negotiations worldwide, according to Financial Times research. And there are no obvious shortcuts: even a basic transition after 2019 requires not just EU-UK approval, but the deal-by-deal authorisation of every third country involved…Each agreement must be reviewed, the country approached, the decision makers found, meetings arranged, trips made, negotiations started and completed — all against a ticking clock and the backdrop of Brexit, with the legal and practical constraints that brings. Most inconvenient of all, many countries want to know the outcome of EU-UK talks before making their own commitments…. At its most granular level, the sheer administrative scale of the “third country” question is striking. Through analysis of the EU treaty database, the FT found 759 separate EU bilateral agreements with potential relevance to Britain, covering trade in nuclear goods, customs, fisheries, trade, transport and regulatory co-operation in areas such as antitrust or financial services. Par for the utter lack of any Brexit-related planning, the closest the Government had done to even acknowledge that this problem existed was a pathetic request in a technical paper last month that amounted to the UK asking the rest of the world to be nice and act as if those old deals they had though the EU were still operative. As we pointed out even before the Financial Times did the heavy lifting of scoping out how many third country pacts were in play, the UK is going to be at the mercy of pretty much everyone. Unless a country is a decidedly one-sided beneficiary of its current arrangement with the UK, having the UK reopen the agreement gives the other side the opportunity to demand better terms.
Crash Out Brexit Now the Defender Position - The EU has no choice to take the positions it is taking but that’s not exactly helpful to its PR image. The UK’s popular press is notoriously Eurosceptic already and the EU’s unavoidable proposals are being used to further heighten anti-EU sentiment. There is no viable parliamentary route for a second referendum because there is no window for the procedural steps for it to happen before next March when the UK is leaving the EU. Passage of the necessary Bill through parliament, approvals by the Electoral Commission, inevitable legal challenges and organisation at a local level (polling stations) would be essential — and it would all have to happen by the end of November 2018 because you can’t outside of emergency situations have a poll in the middle of winter; last week (until 2nd March) was a case in point, any vote would have been disputed because of extensive travel disruption which the UK was subject to. The UK has technical options to avoid a crashing out Brexit (no deal and no transition period) but these are not acceptable politically. The UK has politically viable options, but these are neither implementable in the timeframes available or not technically or legally acceptable (or both). There is no foreseeable change pending to the UK’s political makeup either in terms of a general election or, even if there were a general election, the stances of the main political parties which would be vying for power. Situations can change and a year is a long time in politics. But given the current position, the limited possibility of new vectors being introduced and the unmoveable constraints on the various stakeholders, a crash out Brexit is now the most likely outcome.
EU Plans Vague Trade-Deal Offer in Blow to U.K. Hopes --The agreement on post-Brexit trade that Theresa May will bring back from Brussels is likely to be short on detail, leaving Britain in the vulnerable position of having to negotiate substantial chunks of a trade deal after it’s lost much of its leverage. According to four people familiar with the situation, the bloc is planning to keep the final wording on the agreement on the future trade relationship fairly vague. It will start working on the text over the next three months and aim to publish it before the summer, two people said. The U.K. continues to say at least in public that it expects to secure a detailed trade deal before it leaves the EU in March 2019. It wants to do this because once it leaves the bloc it will have already agreed to pay a hefty financial settlement and so will have lost a lot of its leverage. EU officials say even in public that the deal it’s hoping to pin down by Brexit day is mainly on the divorce issues, and on the future relationship all Britain can expect is a non-binding political statement of intent. What they haven’t said in public is how much detail there will be. U.K. officials say they want at the very least a "heads of agreement" that can be smoothly turned into a full trade deal.The agreement on the future relationship, in the form of a political declaration to sit alongside the withdrawal agreement, may run to around just 30 or 40 pages, compared with the 1,600-page trade-deal with Canada. There’s some tension on the EU side: Some of the 27 remaining EU governments are open to setting out more detail in some sectors which could include where the U.K. agrees to remain in alignment with EU rules and standards, two of the people said. As well as tying the British government down to fixed principles it could also help build trust when it comes to fleshing out the full deal, they said.A greater level of detail could hinge on how quickly the British government can provide a concrete negotiating position and accept the EU’s conditions, one official said.
EU rejects UK’s plans for post-Brexit trade relationship -The EU has forcefully rebuffed Theresa May’s vision for trade after Brexit, laying out a narrow view of future relations with the UK and warning of the “negative economic consequences” of her choices.Donald Tusk, the European Council president, circulated draft guidelines instructing EU negotiators to take an austere approach, with severely limited arrangements for services and regulatory co-operation. No mention of financial services is made.“Being outside the customs union and the single market will inevitably lead to frictions,” the guidelines state. “Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU Single Market as well as of the UK market. This unfortunately will have negative economic consequences.”The guidelines running to 5-6 pages are the most detailed presentation yet of the EU’s goals for future relations, cast as a response to London’s proposals. It sketches an economic relationship based around a free-trade agreement that could maintain zero tariffs and quotas on goods, but stops short of the kind of “dynamic” alignment of market rules sought by Britain.The text says any future UK-EU relationship should be overseen by the European Court of Justice in cases of dispute settlement, which will also include the possibility of “sanctions and cross retaliation measures”. It also rules out prime minister May’s desire for Britain to stay part of EU agencies such as the European Medicines Agency after Brexit. “The Union will preserve its autonomy as regards its decision-making, which excludes participation of the United Kingdom as a third-country to EU Institutions, agencies or bodies”, says the draft.
Brexit is already raising tough questions about the unity of the United Kingdom itself – and we need answers --- Brexit has focused attention – almost obsessively – on several ongoing dramas: on the negotiations between the UK and the EU; on the shifting balance of power within the Cabinet; and on the UK Parliament’s role in the process of leaving the EU. But London and Brussels, where these stories play out, are only a part of the story. Britain’s decision to leave the EU is already unsettling and altering the nature of the United Kingdom itself. Theresa May’s recent Mansion House speech put the dilemmas this creates front and centre. The Prime Minister argued that any Brexit deal must strengthen the union of nations. It must also, she insisted, benefit, and gain the support of, coastal towns and large cities with divergent views on the EU. Yet relatively little attention has been paid, however, to what this means in practice. In a new report, a number of leading scholars have attempted to understand what Brexit might mean for the future of what Tony Travers neatly describes as “this unitary state with some devolved parts”. How will different parts of the UK be affected? And, where will powers and competences returned from the EU ultimately land?These questions are crucial. After all, the Brexit vote has disturbed the devolution settlement. Politics in Northern Ireland have been roiled by the Brexit vote and its aftermath. The referendum triggered a (brief) revival of interest in a second Scottish independence referendum. There was of course some discussion during the referendum campaign about the potential implications for the unity of the UK. In the weeks prior to the vote, for instance, Tony Blair and John Major, campaigning together in Northern Ireland,warned that a vote to Leave might have a destabilising effect not only in Stormont, but also in Scotland. Subsequently, however, these debates have become more urgent. Discussions over the future relationship of Northern Ireland both with the Republic of Ireland and with the rest of the UK have of course featured prominently in press coverage of late. Brexit has fed directly into the sectarian divide, further disrupting a settlement already under pressure.
Brexit Bulletin: Pushing Evolution - The European Union dropped a strong hint on Wednesday of what its Brexit strategy might be: force Theresa May to rub out her red lines and keep Britain as close to the bloc as possible.The draft negotiating stance on the future trading relationship contained a clause that states that if the U.K. changes its mind on certain key issues, then the EU “will be prepared to reconsider its offer.” EU officials call this the “evolution clause,” and leaders may look at whether the U.K.’s position has evolved when they meet for a summit in June. As it happens, those are issues that are taboo for the Brexit enthusiasts in May’s party.The timing is key. The prime minister is facing increasing pressure from pro-EU rebels within her own party to shift her stance and keep the U.K. in a customs union with the bloc, something businesses also want to ease trade. They have been emboldened by a shift in the opposition Labour party’s position on the customs union, which means there’s now a majority in parliament that backs such an arrangement.Former Prime Minister John Major put steel in the spines of the rebels with a recent speech, and anti-Brexit lawmakers are actively thinking about how they can keep the U.K. close to the bloc to avoid the economic damage they expect the divorce to bring. The latest idea is to seek an extension of the deadline for Britain’s exit, to give lawmakers and voters more time to weigh up if they really want to leave. And if May doesn’t shift her stance, then the EU is clear what’s being offered: a regular trade deal that keeps tariffs and quotas off goods, but does little for service industries such as finance. The EU rejected May’s ideas that certain industries could opt back into the single market or that the two sides could agree to recognize each others’ regulations. Being outside the customs union and single market “will inevitably lead to frictions,” and have “negative economic consequences,” the draft said. EU Council President Donald Tusk was even clearer: “I fully understand, and of course I respect, Theresa May’s political objective to demonstrate at any price that Brexit could be a success and was the right choice,” he said. “Sorry, it’s not our objective.”
Brexodus: The UK May Leave the EU, but the EU May Already Be Leaving the UK -- New data released on 22 February by the Office for National Statistics (ONS) shows that net EU migration decreased to 90,000 over the last year. This is 75,000 lower than the previous year. In fact, it is a five year low. It also shows that 130,000 EU citizens left the UK – the most since 2008. Despite stalled progress in divorce talks with Brussels, Whitehall has made unwitting headway towards a trademark Brexit goal. EU migration is decreasing. The figures clearly show that current and potential EU migrants are re-evaluating living in the UK. This seems to be the case across profiles; students, the low and high skilled. It is also the case for western and eastern Europeans alike. For example, Poles and Spaniards were especially likely to leave, and data from the Department for Work and Pensions (DWP) shows national insurance number (NIN) registrations decreased 34% and 25% for those nationalities respectively.Meanwhile, recent data show 17,000 Brits sought citizenship of another EU country in the year following the referendum. Ireland was the most popular, as applications from the UK increased by 1025% in this period. Over the same year, Italy saw an eightfold increase. British passport applications have also risen markedly for Germany, France, Sweden and Denmark, both from UK residents and British citizens in those countries. For now more Brits are just getting other passports; how many living in the UK will actually leave is a separate question. In any case, the fact that life rafts are being prepared should concern the UK government, and for Brexiteers this will not be a story to advertise. The UK has clearly become less attractive for many EU citizens. Unable to vote on Brexit, many EU citizens are now voting with their feet. May’s insistence that she prioritised EU citizens’ rights has rung hollow and in the harsh rhetoric characterising UK-Brussels negotiations, they have become negotiating collateral. Meanwhile, many applying for UK residence permits and citizenship have muddled through Home Office processes from Kafkaesque to unjust – some were mistakenly sent letters ordering them to leave the country. This has only served to erode confidence in the system. Interestingly, EU citizens have been deciding to leave the UK despite an actual change in status, highlighting the power of uncertainty. For many, over 18 months without visibility of their future has overridden other considerations.
Brexit brain drain: elite universities say they are losing future research stars - Many top European academics working in Britain arrived as young PhD students. Now universities fear discoveries and research are at risk because of a drop in applications from bright EU PhD candidates. Early figures from the Russell Group universities reveal a 9% fall in non-British EU students starting postgraduate research courses in 2017-18, compared with last year – a big concern in universities that rely on European talent. Overall 16% of Russell Group PhD students are from the EU, but this rises to 27% for maths, 22% for computer science and 19% for the physical sciences. Michael Arthur, president and provost of University College London, says: “If I look at the top research teams at UCL Europeans are over-represented, and many of them first came here as PhDs or post docs.” Arthur says he was relieved by the government’s December announcements offering “settled status” for Europeans already here, and the acknowledgement that his researchers can leave the country and work elsewhere for up to five years without losing that status. But many European researchers and students still fear for the future. “I try to reassure academics but it takes time to rebuild trust. There was a long period in which European citizens felt they were being used as bargaining chips. That has eroded confidence.”Calster can understand why young students are being put off Britain. “Just after the Brexit vote most of us assumed there would be some sort of coordinated, predictable approach. But that impression that things are under control and people will be reasonable is no longer valid.” Other doubts contributing to the potential PhD brain drain include uncertainty over the right to remain after studying, and whether Britain will have access to EU research funds after 2020.
Teacher tried to create ‘army of 110 children’ to launch IS terror attacks in London | South China Morning Post: A British teacher and supporter of IS who showed 110 children beheading videos in order to turn them into a child army that could launch terror attacks on London has been convicted. Umar Haque, 25, showed the children violent militant propaganda, forced them to re-enact deadly attacks on the British capital and made them role-play attacking police officers. “His plan was to create an army of children to assist with multiple terrorist attacks throughout London,” said Dean Haydon, head of the Metropolitan Police’s Counter Terrorism Command. “He tried and he did, we believe, radicalise vulnerable children from the ages of 11 to 14.” He tried to prepare the children for martyrdom by making them role-play terrorist attacks Dean Haydon, head of the Metropolitan Police’s Counter Terrorism Command Despite having no qualifications and being employed as an administrator, police say Haque used the guise of teaching Islamic studies to groom 110 children into becoming militants. He enacted his plan at the Lantern of Knowledge, a small private Islamic school, and at a madrassa connected to the Ripple Road Mosque in East London. Of those children, 35 are now undergoing long-term safeguarding measures involving social services and other authorities. Six of the group gave evidence at Haque’s trial, detailing how he taught them fighting was good and had given them training such as doing push-ups to build their strength. His intention was to use them to attack London targets such as the Big Ben tower, soldiers from the Queen’s Guards, a large shopping centre, banks, and media stations, prosecutors said.
Why Saudi Crown Prince Mohammed bin Salman's UK visit matters - BBC News: Mohammed bin Salman is just 32 years old. He is Saudi Arabia's crown prince - not its head of state - and he has only been in his post for nine months. Yet when this relative novice on the world stage arrives in London on his first global tour since taking office, he will be granted the reddest of red carpets. There'll be lunch with the Queen at Buckingham Palace, and dinner with the Prince of Wales and Duke of Cambridge at Clarence House. There will be meetings with the prime minister at Chequers and Downing Street. And garland upon rhetorical garland of praise will be placed at his feet. MBS - as he is known - will be granted this warm welcome not just because he is the de facto leader of his country. But also because Saudi Arabia has had a long alliance with the UK, a relationship that will take on a different shape after Brexit.For now, the relationship is based on deep and close security links. Saudi Arabia shares intelligence which the prime minister says has saved British lives on British streets. The Saudis are keen on UK cyber expertise to help them tackle the threat from Iran. There is also a close defence relationship with Britain selling - controversially - billions of pounds worth of arms to Saudi Arabia, on which ministers insist tens of thousands of British jobs depend. But this visit will not just be a case of two allies refreshing their relationship. The Crown Prince is looking for international support for his internal economic reforms while at the same time trying to offer reassurance to nervous international investors. And the British government is keen to transform a security and defence relationship into one that includes broader economic ties as well.
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