Q1 GDP Revised down to 2.2% Annual Rate --From the BEA: National Income and Product Accounts Gross Domestic Product: First Quarter 2018 (Second Estimate) Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018, according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2017, real GDP increased 2.9 percent.The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.3 percent. With this second estimate for the first quarter, the general picture of economic growth remains the same; downward revisions to private inventory investment, residential fixed investment, and exports were partly offset by an upward revision to nonresidential fixed investment. Here is a Comparison of Second and Advance Estimates. PCE growth was revised down from 1.1% to 1.0%. Residential investment was revised down from no change to -2.0%. Most revisions were small. This was slightly below the consensus forecast.
Q1 GDP Second Estimate: Real GDP at 2.2% -- The Second Estimate for Q1 GDP, to one decimal, came in at 2.2% (2.17% to two decimal places), a decrease from 2.9% for the Q4 Third Estimate. Investing.com had a consensus of 2.3%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2017, real GDP increased 2.9 percent. The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.3 percent. With this second estimate for the first quarter, the general picture of economic growth remains the same; downward revisions to private inventory investment, residential fixed investment, and exports were partly offset by an upward revision to nonresidential fixed investment (see "Updates to GDP" on page 2). [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.21% average (arithmetic mean) and the 10-year moving average, currently at 1.59%.Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 14.5% below trend. A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. Five of the eleven recessions over this timeframe have begun at a higher level of current real YoY GDP.
Q1 GDP Revised To 2.2%, Misses Across The Board - One month after the first take of Q1 GDP surprised to the upside, printing at 2.3%, more than the 2.0% consensus estimate, moments ago the BEA reported that as part of its 1st revision of Q1 GDP data, the US economy grew slightly less than expected, with GDP rising an annualized 2.2% (technically 2.17%), missing expectations of a 2.3% print, and down from last month's 2.32%. The reason for the decline was a downward revision in Private Inventories, which dipped from the initial reading of 0.43% to just 0.13%, however offset by an increase in Fixed Investment from 0.76% to 1.05%. Meanwhile, net trade was also revised modestly lower, down from 0.2% in the first estimate to 0.08% currently. Where there was no revision, however, was in personal consumption, which as noted last month, dropped from 2.75% to just 0.73%, the lowest since Q2 2013, largely as a result of a sharp drop in spending on autos and various other durable goods. On an annualized basis, Personal consumption rose 1.0% in 1Q after rising 4.0% prior quarter.Today's release also disclosed that Corporate profits decreased 0.6% at a quarterly rate in the first quarter of 2018 after decreasing 0.1% in the fourth quarter of 2017. However, on a Y/Y basis, corporate profits rose 4.3% in 1Q after rising 2.7% prior quarter. Meanwhile, in what was a blockbuster quarter for banks, financial industry profits increased 0.5% Q/q in 1Q after falling 3% prior quarter. Oddly, Federal Reserve bank profits down 2.9% in 1Q after rising 0.7% prior quarter. Finally, rate hike odds will likely ease further after today's PCE data showed more softness, with the GDP deflator deflating from 2.0% to 1.9% (below the 1.9% expected), Core PCE rising 2.3%, also below the 2.5% expected, while Headline PCE of 2.6% completed the trifecta of misses, declining from 2.7% and missing the 2.7% consensus estimate. Overall, between today's miss in ADP and disappointing GDP print, we may see even more weakness on the dollar before the day is done.
Q1 Real GDP Per Capita: 1.53% Versus the 2.17% Headline Real GDP - The Advance Estimate for Q1 GDP came in at 2.2% (2.17% to two decimals), down from 2.9% in Q4. With a per-capita adjustment, the headline number is lower at 1.53% to two decimal points. Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.2% below the pre-recession trend.
Employment Report and GDP - U.S. Economic Snapshot - (8 graphs) The BEA’s 2nd estimate of Q1 GDP shaved off 0.1 percentage points to a now revised growth rate of 2.2% at a seasonally adjusted annualized rate. Personal consumption expenditures were quite weak, revised down from 1.1% to 1.0% , the lowest reading since 2013 Q2. The change also resulted from downward revisions to private inventory investment, residential fixed investment (revised from 0.0% to -2.0%), and exports, but partly offset by an upward revision to non-residential fixed investment (from 6.1% to 9.2%). Today’s employment report from the BLS revealed continued strength in the labor market with an increase of 223,000 jobs, of which 218,000 were in the private sector. The only significant declines were found in motor vehicles and parts, down 4,400 and temporary help services, down 7,800. Average weekly hours remained at 34.5 for the fourth month in a row. Average hourly pay increased from $26.84 to $26.92. The household survey also showed continued strength with the number of unemployed persons falling by 281,000 leading to a further decline in the unemployment rate from 3.93% to 3.75%…the lowest since 1969! The week ended on a high note with both the GDP and employment reports showing continued strength.
Is GDP Overstating Economic Activity? – San Fran Fed - Two common measures of overall economic output are gross domestic product (GDP) and gross domestic income (GDI). GDP is based on aggregate expenditures, while GDI is based on aggregate income. In principle, the two measures should be identical. However, in practice, they are not. The differences between these two series can arise from differences in source data, errors in measuring their components, and the seasonal adjustment process. In this Economic Letter, we evaluate the reliability of GDP relative to two alternatives, GDI and a combination of the two known as GDPplus, for measuring economic output. We test the ability of each to forecast a benchmark measure of economic activity over the past two years. We find that GDP consistently outperforms the other two as a more accurate predictor of aggregate economic activity over this period. This suggests that the relative weakness of GDI growth in recent years does not necessarily indicate weakness in overall economic growth.
Fed's Beige Book: "Economic activity expanded moderately", "concern about trade policy" -- Fed's Beige Book "This report was prepared at the Federal Reserve Bank of Cleveland based on information collected on or before May 21, 2018." Economic activity expanded moderately in late April and early May with few shifts in the pattern of growth. The Dallas District was an exception, where overall economic activity sped up to a solid pace. Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong." Fabricated metals, heavy industrial machinery, and electronics equipment were noted as areas of strength. Rising goods production led to higher freight volumes for transportation firms. By contrast, consumer spending was soft. Nonauto retail sales growth moderated somewhat and auto sales were flat, although there was considerable variation by District and vehicle type. In banking, demand for loans ticked higher and banks reported that increased competition had led to higher deposit rates. Delinquency rates were mostly stable at low levels. Homebuilding and home sales increased modestly, on net, and nonresidential construction continued at a moderate pace. Contacts noted some concern about the uncertainty of international trade policy.Still, outlooks for near term growth were generally upbeat. Employment rose at a modest to moderate rate across most Districts. Again, the Dallas District was the exception, where solid and widespread employment growth was reported. Labor market conditions remained tight across the country, and contacts continued to report difficulty filling positions across skill levels. Shortages of qualified workers were reported in various specialized trades and occupations, including truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals. Many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages. In the aggregate, however, wage increases remained modest in most Districts.
The alarming statistics that show the U.S. economy isn't as good as it seems The U.S. economy has a problem. The usual economic bench marks look really good: America in 2018 is enjoying faster growth, low unemployment, record numbers of job openings and a stock market near an all-time high. Yet an alarming number of Americans are still struggling to get by.In the past week, two reports — a new Federal Reserve survey of more than 12,200 Americans about their finances and a new United Way report on financial hardship — reveal just how unstable life remains for a large number of people. Here's a rundown of the key findings:
- Forty percent of American adults don't have enough savings to cover a $400 emergency expense such as an unexpected medical bill, car problem or home repair.
- Forty-three percent of households can't afford the basics to live, meaning they aren't earning enough to cover the combined costs of housing, food, child care, health care, transportation and a cellphone, according to the United Way study. Researchers looked at the data by county to adjust for lower costs in some parts of the country.
- More than a quarter of adults skipped necessary medical care last year because they couldn't afford it.
- Twenty-two percent of adults aren't able to pay all of their bills every month.
- Only 38 percent of non-retired Americans think their retirement savings is “on track.”
- Only 65 percent of African Americans and 66 percent of Hispanics say they are “doing okay” financially vs. 77 percent of whites.
The Fed and United Way findings suggest the U.S. economy isn't nearly as strong as statistics such as the unemployment rate and the GDP growth rate suggest. Taken alone, these metrics mask the fact that some Americans are doing well and some are not.
Recession 2020? | Econbrowser -- Goldman Sachs (Hatzius et al., May 24): Ongoing rate hikes are likely to tighten financial conditions, at least gradually, and we expect growth to slow to a trend pace through 2019 even with fiscal stimulus still helping. From 2020, when the fiscal impulse ends, the risk of recession looks set to rise, but the lack of cyclical excesses in borrowing and spending suggest that an outright contraction is far from a foregone conclusion—so long as Fed officials manage to prevent a big overheating. When I first read of this comment, I was dubious. Then I remembered we were already halfway through 2018, and so only a year and a half remains before 2020… and the yield curve looks like this: While no inversion yet (at the 10yr-3mo, 10yr-2yr), there is a definite flattening. The flattening in the 10yr-30mo spread over the last year has come from higher short rates (see this post). As remarked upon in this excellent review of the yield curve/recession literature by Cyrille Lenoel at NIESR: [U]sing the yield curve to predict upcoming recessions is an easy and model-free way of extracting some of the information contained in the government bond market to forecast an event that is otherwise very difficult to predict. Our own research and that of the New York Fed and the San Francisco Fed3 suggest that the possibility of a recession in the US has risen somewhat over the past year but it is still far from our central case outlook. Lenoel uses the methodology used in Chinn and Kucko (2015), but instead of predicting recession 12 months ahead, he forecasts the onset of the recession within the next 12 months. This leads to the following recession onset probabilities (through March 2018): The implied probability of recession onset within the next 12 months is nearly 31%, for a March 10yr-3mo spread of 1.1%. The spread in May was essentially the same (while the 10yr-2yr spread has shrunk). See also the SF Fed discussion of alternative spread and asset price based predictors of recession.
Budget battle brews as Trump threatens another shutdown (AP) — President Donald Trump has warned Congress that he will never sign another foot-tall, $1 trillion-plus government-wide spending bill like the one he did in March. His message to lawmakers in both parties: Get your act together before the next budget lands on my desk. After a brief government shutdown earlier this year, Democrats and Republicans now agree on the need for budgeting day-to-day operations of government by the old-fashioned way. That means weeks of open debate and amendments that empower rank-and-file lawmakers, rather than concentrating power in the hands of a few leaders meeting in secret. But Capitol Hill's dysfunction is so pervasive that even the most optimistic predictions are for only a handful of the 12 annual spending bills to make it into law by Oct. 1, the start of the new budget year. The rest may get bundled together into a single, massive measure yet again. The worst-case scenario? A government shutdown just a month before Election Day, Nov. 6, as Republicans and Democrats fight for control of the House and possibly the Senate. Trump is agitating for more money for his long-promised border wall with Mexico. So far, he has been frustrated by limited success on that front. "We need the wall. We're going to have it all. And again, that wall has started. We got $1.6 billion. We come up again (in) September," Trump said in a campaign-style event in Michigan last month. "If we don't get border security, we'll have no choice. We'll close down the country because we need border security." At stake is the funding for daily operations of government agencies. A budget deal this year reversed spending cuts that affected military readiness and put a crimp on domestic agencies. A $1.3 trillion spending bill swept through Congress in March, though Trump entertained last-minute second thoughts about the measure and promised he would not sign a repeat.
US Congress Set To Fund New Low-Yield Nuclear Warhead - There had been a long fight with fiery speeches, long-winded discussions presenting opposing views, publications and statements in support of “resolute steps” on the one hand as well as the calls for carefully weighing pros and cons on the other. Finally, the concept of “racing headlong into the unknown” has prevailed.On May 23, the US House of Representatives turned down a measure that would limit the fiscal 2019 funding for the new 6.5 kt W76-2 low-yield (LY) or “flexible” nuclear warhead. The ordnance is to be installed on Trident II submarine-launched ballistic missiles (SLBMs), which normally carry 100 kt W76 warheads. The nuclear weapon (NW) is to be developed in accordance with the provisions of Nuclear Posture Review (NPR). Before the vote, 32 former top security officials opposed the idea of low-yield nuclear warhead in a letter sent to the members of Congress. The appeal failed to influence the outcome of the vote in the House. With the funding approved, the W76-2 could be in service during the current presidential term. The new flexible warhead dangerously lowers the nuclear threshold. Any commander-in-chief would feel less restrained from using LY ordnance in a crisis. The temptation might be too strong to resist. Actually, the very idea that a limited nuclear war is possible appears to be erroneous as there is no way to draw the line and prevent escalation. If Russia sees a US strategic nuclear missile flying into its direction, it will have no choice left but launch a warning response. It has no reason to assume the best-case scenario. There is no way to know if it’s low-yield weapons or eight powerful thermonuclear warheads launched as part of a wider foray. Evidently, the very idea of mixing low-yield and powerful strategic weapons on the same missile atop the same platform is very damaging and provocative. Instead of de-escalation, the low yield concept will trigger a nuclear exchange.Russia (the Soviet Union) and the US have concluded 9 major arms control agreements during the recent 50 years. The W76-2 is destabilizing enough to make all the arms control long standing efforts go down the drain.
War Finance Methods and Public Support for War - There are two primary ways countries finance their wars: through borrowing money or by taxing their citizens. Each of these finance options affects the economy differently, and presumably opinions on war will vary based on how the costs of war are reflected in the day-to-day lives of those paying for it. Although numerous studies have examined the way public support for war is influenced by the costs of war—through lives lost and injuries suffered by combatants, military families, and communities—fewer studies have examined the way public support for war is influenced by the way it is financed. In this article, the authors conduct a study to measure if the way countries finance war has a noticeable effect on the public’s support for that war.Theories of democratic accountability, beginning with Immanuel Kant in 1775, have long argued that, although democracies engage in war, the costs of war will be heavily scrutinized because the citizens in a democracy will ultimately bear the expense and will therefore hold their leaders accountable for the total costs. This theory, however, predates today’s borrowing economy where governments can acquire debt instead of implementing taxes to pay for wars. Importantly, the authors point out, modern wars waged by the U.S. have all been financed entirely through borrowing money, breaking away from the long-standing tradition of a “war tax” that paid for previous U.S. wars. The authors argue that how individuals experience the financial costs of war will affect their attitudes toward war and the pressure they apply on their leaders, as taxation has a “direct impact on an individual’s purchasing power and draws an explicit connection between the individual and the war, whereas the costs of borrowing are deferred.” The “explicit connection” of taxation is important because it makes the prospect of a war financed through taxes less agreeable to the public compared to a war financed through borrowing, which lacks the direct financial consequence to the public and in turn may translate into greater public support for a non-taxed war. In short, the authors propose that borrowing as a form of war finance is tantamount to borrowing public support for war.
How a Pentagon Contract Became an Identity Crisis for Google - The company’s relationship with the Defense Department since it won a share of the contract for the Maven program, which uses artificial intelligence to interpret video images and could be used to improve the targeting of drone strikes, has touched off an existential crisis, according to emails and documents reviewed by The Times as well as interviews with about a dozen current and former Google employees. It has fractured Google’s work force, fueled heated staff meetings and internal exchanges, and prompted some employees to resign. The dispute has caused grief for some senior Google officials, including Dr. Li, as they try to straddle the gap between scientists with deep moral objections and salespeople salivating over defense contracts.The advertising model behind Google’s spectacular growth has provoked criticism that it invades web users’ privacy and supports dubious websites, including those peddling false news. Now the company’s path to future growth, via cloud-computing services, has divided the company over its stand on weaponry. To proceed with big defense contracts could drive away brainy experts in artificial intelligence; to reject such work would deprive it of a potentially huge business. The internal debate over Maven, viewed by both supporters and opponents as opening the door to much bigger defense contracts, generated a petition signed by about 4,000 employees who demanded “a clear policy stating that neither Google nor its contractors will ever build warfare technology.” Executives at DeepMind, an A.I. pioneer based in London that Google acquired in 2014, have said they are completely opposed to military and surveillance work, and employees at the lab have protested the contract. The acquisition agreement between the two companies said DeepMind technology would never be used for military or surveillance purposes. About a dozen Google employees have resigned over the issue, which was first reported by Gizmodo. And “Do the Right Thing” stickers have appeared in Google’s New York City offices, according to company emails viewed by The Times. Those emails and other internal documents, shared by an employee who opposes Pentagon contracts, show that at least some Google executives anticipated the dissent and negative publicity. But other employees, noting that rivals like Microsoft and Amazon were enthusiastically pursuing lucrative Pentagon work, concluded that such projects were crucial to the company’s growth and nothing to be ashamed of.
Trump-Putin summit in the works, report says - A possible summit between President Trump and Russian President Vladimir Putin is reportedly in the works.Trying to organize the meeting between the two world leaders “has been an ongoing project” for Jon Huntsman, the U.S. ambassador to Russia, a senior administration official told the The Wall Street Journal on Friday. The ambassador has reportedly been in the nation's capital working on it. “This has been an ongoing project of Ambassador Huntsman, stretching back months, of getting a formal meeting between Putin and Trump,” the official told the outlet. The potential meeting is reportedly at a preliminary point, as neither a date nor a location have yet to be determined. If the sit down happens, it would be the third time the leaders had met.
The Latest: Trump says Korea talks ‘going along very well’ (AP) — The Latest on diplomatic efforts involving the Koreas (all times local): President Donald Trump says negotiations over a potential summit with the leader of North Korea are "going along very well."Trump told reporters Saturday that: "We're doing very well in terms of the summit with North Korea," adding that "there are meetings going on as we speak."Trump said they are still considering June 12 in Singapore for the summit with Kim Jong Un. He said there is a "lot of good will" and denuclearization of the Korean peninsula would be "a great thing."Trump also said that talks between North Korean leader Kim Jong Un and South Korean President Moon Jae-in have "gone very well."South Korea's president says North Korean leader Kim Jong Un remains committed to holding a summit with President Donald Trump and to the "complete denuclearization of the Korean Peninsula."South Korean President Moon Jae-in met Kim at the border on Saturday for the second time in a month to discuss how to keep Kim's summit with Trump on a track. The Kim-Moon meeting followed a whirlwind 24 hours that saw Trump cancel the highly anticipated June 12 meeting before saying it's potentially back on.Moon told reporters Sunday that Kim reaffirmed his denuclearization commitment and told Moon he's willing to cooperate to end confrontation for the sake of the successful North Korea-U.S. summit. Moon says his meeting with Kim was arranged at Kim's request.
Five signs the US-North Korea summit might still happen | TheHill: President Trump's abrupt announcement on Thursday that he would back out of a highly anticipated summit with North Korean leader Kim Jong Un raised new fears that tensions would rise once again on the Korean Peninsula. The move, made public in a letter to Kim, came less than three weeks before the June 12 meeting was set to take place in Singapore. In the letter, Trump accused the North of bad faith, and decried the summit's cancellation as a "truly sad moment in history." But despite initial concerns of a total breakdown in the dialogue with Pyongyang, officials in the U.S. and North Korea have appeared relatively optimistic that a meeting is still possible. Trump's letter to Kim on Thursday morning announcing his withdrawal from the June 12 summit bore some of the hallmarks of the president's more antagonistic rhetoric on North Korea. At one point, Trump sought to remind Kim that the U.S. nuclear arsenal was much more "massive and powerful" than that of North Korea. But the letter also struck a mournful and conciliatory tone at times. Trump lamented the cancellation as a "missed opportunity" and "a truly sad moment in history."He also held out the possibility that talks could still come to fruition, writing, "if you change your mind having to do with this most important summit, please do not hesitate to call me or write."The letter — and reports that Trump dictated the message himself — appeared to suggest that diplomacy was still on the table, and that the future of negotiations rested on the shoulders of North Korea. Pyongyang, often known for its aggressive rhetoric, issued a strikingly conciliatory response to Trump's letter on Thursday, saying that it remained willing to talk with the U.S. president. "We reiterate to the U.S. that there is a willingness to sit down at any time, in any way, to solve the problem," Vice Foreign Minister Kim Kye Gwan said in a statement carried by state-run media.
The Unthinkable with North Korea: A Tilt at the Fulcrum of World Power? -- Mercurial prospects for the Trump-Kim summit may give the impression that North Korea and the United States simply share no significant interests. But there is a geopolitical threat shared by both nations that, if prudently exploited, could draw them into limited strategic cooperation. The Democratic People’s Republic of Korea (DPRK) canceled a meeting with officials from the Republic of Korea (ROK), citing its displeasure with the ongoing air exercises between the United States and the ROK called Max Thunder. This is just the kind of bluster for which North Korean negotiators are infamous. The more serious development last week was the statement by North Korean vice foreign minister Kim Kye-gwan, who did not mention Max Thunder. Instead, responding to a TV interview with U.S. national security advisor John Bolton, he called into question future talks if the United States simply demands that the North surrender its nuclear capabilities. Indeed, Bolton had outlined a total denuclearization process akin to Libya’s. While the three leaders—Moon, Trump, and Kim—have all talked of total denuclearization as a goal, Bolton is the first high-ranking official to assert what the process would look like. In his view, the North would need to give up its nuclear weapons in short order and with full verification—or presumably we’d stay where we are, with the United States exerting maximum economic and diplomatic pressure and considering military options. The response from the vice foreign minister was that unilateral nuclear disarmament is simply not on the table. No kidding. Bolton may have been posturing or following a different game plan from the president, but the North’s decades-old and remarkably successful nuclear and missile programs are essential to its security and progress toward other goals. Expecting North Korea to commit to immediate total denuclearization is wholly unrealistic.
The Korean nuclear roller coaster: Has time run out for a Summit? - Brookings - The turbulence and drama on the Korean Peninsula over the past week defies imagination. On May 24, President Trump withdrew from his planned summit with North Korean leader Kim Jong-un, acting almost as impulsively as when he first agreed to the meeting in early March. Following a conciliatory response from Pyongyang’s senior nuclear negotiator Kim Kye-gwan, the president two days later sharply reversed course and said that the summit might still take place. Not to be outdone, on May 26 Kim Jong-un abruptly convened a second meeting with South Korean President Moon Jae-in on the North Korean side of the truce village of Panmunjom. The next day, American and North Korean officials began to interact on the language of a possible communiqué. Separate consultations between the United States and North Korea in Singapore were expected to begin today, on May 29, with North Korea represented by Kim Jong-un’s de facto chief of staff, Kim Ch’ang-soon. Additional discussions have taken place between Chinese and North Korean officials in Beijing, perhaps connected to a possible stopover by Kim Jong-un while traveling to Singapore, which would be his third visit to China in less than two months. One of Kim Jong-un’s closest aides and a vice chairman of the Korean Workers Party Central Committee, General Kim Yong-chol, is now en route to New York, and is expected to serve as the lead point-of-contact with U.S. officials in deliberations over the Singapore meeting.These heightened activities all suggest that the summit will indeed go forward, though there has been no formal announcement to this effect. However, two facts remain incontestable. There is as yet no U.S.-North Korea agreement on the terms of a summit, and time is running out to reach such an understanding. An unspoken but unmistakable anxiety thus pervades these intensified political and diplomatic maneuvers. Only 10 days before President Trump’s presumed departure for Singapore, it is stunning how little remains agreed to, even in broad conceptual terms. Advocates of diplomacy argue that this is the purpose of face-to-face negotiations. But the contrasts in the language and expectations of the two leaderships remain glaring, even after two visits by Mike Pompeo to Pyongyang, first as CIA director and subsequently as secretary of state.
Trump All But Confirms Historic Summit With Kim Is Back On As US Officials Enter North Korea - Update: confirming that Trump's "dear Kim" letter was just a negotiating tactic, the WaPo reports that the US exploratory team is back in North Korea as Reuters previewed yesterday: According to WaPo sources, former US ambassador to South Korea, Sung Kim, crossed into North Korea on Sunday to hold talks with Pyongyang’s Vice-Foreign Minister, Choe Son Hui. The US envoy is accompanied by Allison Hooker, the Korea specialist on the National Security Council and an undisclosed official from the Defense Department, the source said.The meetings between US and N.Korean officials are expected to continue on Monday and Tuesday with the aim of organizing “any summit” between Trump and Kim on the North Korean nuclear program. Sung Kim and Choe reportedly know each other well as they were both involved in nuclear talks in previous years.One day after Saturday's "surprise" second summit between the leaders of North and South Korea, President Moon Jae-in said on Sunday that his Northern counterpart Kim Jong Un reaffirmed his commitment to “complete” denuclearization of the Korean peninsula and to a planned meeting with U.S. President Donald Trump.“Chairman Kim clearly appealed once again that his intent to completely denuclearize the Korean Peninsula is firm,” Moon said quoted by Reuters.The statement came one day after Moon and Kim agreed that the possible North Korea-U.S. summit must be held: “Chairman Kim and I have agreed that the June 12 summit should be held successfully, and that our quest for the Korean peninsula’s denuclearization and a perpetual peace regime should not be halted,” Moon said. Moon also explained that he held Saturday’s impromptu summit - the second between the two sides in a month - after Kim asked for a meeting “without any formality”. The meeting was the latest dramatic turn in a week of diplomatic ups and downs surrounding the prospects for an unprecedented summit between the United States and North Korea, and the strongest sign yet that the two Korean leaders are trying to keep the on-again off-again meeting on track.
North Korea summit: Trump says Kim aide on way to New York - A top aide to the North Korean leader, Kim Jong-un, was on his way to the US on Tuesday, Donald Trump said in a tweet. Another key aide to Kim arrived in Singapore on Monday night, a Japanese broadcaster said, adding weight to indications a planned summit with Trump will go ahead.Kim Chang-son, Kim’s de facto chief of staff, flew to Singapore via Beijing, the report by public broadcaster NHK said. South Korea’s Yohnap news agency reported that Kim Yong-chol, a former North Korean spy chief and senior official, was headed to the US after stopping over in Beijing.Trump appeared to confirm that in a tweet on Tuesday morning, sent in the middle of a sequence of complaints about the Russia investigation. “We have put a great team together for our talks with North Korea,” the US president wrote. “Meetings are currently taking place concerning Summit, and more. Kim Young [sic] Chol, the Vice Chairman of North Korea, heading now to New York. Solid response to my letter, thank you!”Kim Yong-Chol is vice-chairman of the Workers’ Party’s Central Committee. Trump’s reference to a letter was to his cancellation of the summit last Thursday.A team of US officials including Joe Hagin, the White House deputy chief of staff for operations, left the Yokota airbase in Japan for Singapore on Monday, NHK said. The White House said a “pre-advance” team was travelling to meet North Koreans.It said Trump and the Japanese prime minister, Shinzo Abe, talked on the phone on Monday and confirmed they would meet before the “expected” US-North Korea summit. Trump and Abe “affirmed the shared imperative of achieving the complete and permanent dismantlement of North Korea’s nuclear, chemical, and biological weapons and ballistic missile programmes,” the White House said in a statement. The historic summit was initially scheduled for 12 June but Trump called it off last week. A day later, he said he had reconsidered and officials from both countries met to work out details.
Kim Jong Un Sends Right-Hand Man to U.S. for Pre-Summit Talks - North Korean leader Kim Jong Un has dispatched one of his top aides to New York for talks ahead of his planned summit with Donald Trump next month, the U.S. president said on Twitter."Meetings are currently taking place concerning Summit, and more," Trump said in a Twitter posting that misspelled the envoy’s name. "Kim Young Chol, the Vice Chairman of North Korea, heading now to New York. Solid response to my letter, thank you!"Kim Yong Chol, North Korea’s former spy chief, would become the highest-ranking official from the isolated nation to visit the U.S. since 2000, when Pyongyang sent Vice Marshal Jo Myong Rok to meet then-President Bill Clinton. Yonhap News Agency reported Kim Yong Chol will meet U.S. Secretary of State Mike Pompeo, with whom he dined in Pyongyang earlier this month.The veteran official’s trip is another sign that preparations for the on-again, off-again June 12 meeting in Singapore are moving forward. Just three days after Trump abruptly called off the unprecedented meeting in a letter to the North Korean leader, the president appeared to confirm the talks were back on.Kim Yong Chol accompanied Kim Jong Un at all of his recent meetings with both Chinese President Xi Jinping and South Korean President Moon Jae-in, according to North Korean state-media reports. South Korea said Tuesday it wasn’t aware of the trip by Kim Yong Chol, who is vice chairman of North Korea’s ruling Workers’ Party Central Committee. He’s set to land in New York on Wednesday on a flight from Beijing, Yonhap said. Chinese Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing that she has no information on Kim Yong Chol’s visit.
The North Korea Summit Might Actually Work - The professionals are taking over the U.S.–North Korea summit. It’s a bit late—serious diplomacy usually precedes pageantry by many months, not two weeks—but if President Trump can give up his Nobel-laced daydreams of instant peace and, instead, live with a modest reduction of tension, then the summit might end in success.Several signs of new seriousness have emerged in just the past few days. First, Sung Kim, the U.S. ambassador to the Philippines, was reassigned to lead a team of negotiators who have flown to Pyongyang for pre-summit talks with senior North Korean officials. Sung Kim has previously worked as President Obama’s ambassador to South Korea and his special representative on North Korean policy—as well as President George W. Bush’s special envoy to the Six-Party Talks on North Korean arms control.In other words, for the first time, Trump has an experienced, nonpartisan Korea specialist working at a high level on his Korea policy. Second, a U.S. travel ban was lifted on North Korean Gen. Kim Yong-chol so that he can fly to New York, presumably to discuss the summit with Secretary of State Mike Pompeo. Gen. Kim, his country’s top spy and vice chairman of its ruling party, accompanied Kim Jong-un to the Winter Olympics in South Korea, and has attended the key pre-summit meetings since. Scott Snyder, senior fellow at the Council on Foreign Relations and author of South Korea at the Crossroads and Negotiating on the Edge (the latter being one of the best books about North Korea’s diplomatic style), sees the general’s presence as “the first sign of an attempt to address substance alongside protocol.”It is significant, in this respect, that during their two recent meetings, Kim Jong-un and South Korean President Moon Jae-in were both accompanied by intelligence chiefs—Kim by Gen. Kim, Moon by Suh Hoon. Snyder says that if Moon had brought along his national security adviser instead, then the subsequent channel with Washington would have been through Trump’s national security adviser, John Bolton. Suh’s presence signaled Pompeo as the appropriate link, especially since the two have had a working relationship since Pompeo’s days as CIA director.
CIA Undermines North Korea Summit By Leaking Report To Media Asset - Just as it was reported that the summit between the United States and North Korea was back on and that Kim Young Chol, the Vice Chairman of North Korea was on his way to New York to meet with officials in preparation for the June 12 summit, the CIA leaked an intelligence assessment concluding that “North Korea does not intend to give up its nuclear weapons any time soon.” The timing of this leak is striking, as it seems to be an effort to undermine negotiations between the two nations and comes just days after ranking members of the Democratic Party and Republican hardliners attacked President Donald Trump over his efforts to meet with North Korean leader Kim Jong Un.The identity of the reporter who helped break the story also raises serious questions about whether or not a faction within the CIA deliberately attempted to undermine diplomatic efforts to ease tensions on the Korean Peninsula. According to NBC News, the report was leaked to none other than NBC national security reporter Ken Dilanian, known as “The CIA’s Mop-Up Man.”In 2014, The Intercept reported on Ken Dilanian’s correspondence and relationship with the CIA while Dilanian was a reporter for the Los Angeles Times.According to The Intercept, “Email exchanges between CIA public affairs officers and Ken Dilanian, now an Associated Press intelligence reporter who previously covered the CIA for the Times, show that Dilanian enjoyed a close collaborative relationship with the agency, explicitly promising positive news coverage and sometimes sending the press office entire story drafts for review prior to publication. In at least one instance, the CIA’s reaction appears to have led to significant changes in the story that was eventually published in the Times.” According to the Huffington Post, while writing for the Los Angeles Times, Dilanian also reported a CIA claim as fact by stating that “there was no collateral murder in a 2012 drone strike on Al Qaeda leader Abu Yahya al-Libi.” Dilanian’s article was directly disputed in an Amnesty International report.
Trump Says June Summit With Kim Jong Un Is Back On - President Donald Trump said his on-again, off-again summit with North Korean leader Kim Jong Un will proceed in Singapore on June 12 as initially planned, another dramatic turn in a diplomatic saga that has veered from threats of nuclear showdown to talk about peace over a matter of days.Mr. Trump’s reversal on Friday followed an extraordinary Oval Office meeting with North Korean Gen. Kim Yong Chol, one of Mr. Kim’s top lieutenants and a former spymaster who has been sanctioned by the U.S. Treasury for his role in cyberattacks against American companies. Gen. Kim received a special exemption from the sanctions to travel to Washington to hand-deliver a letter to Mr. Trump.The letter, from Kim Jong Un, expresses the North Korean leader’s interest in meeting Mr. Trump without making any significant concessions or threats, according to a foreign government official briefed on the contents. Speaking to reporters outside the Oval Office after Gen. Kim’s departure, Mr. Trump described the letter as “very nice” and “very interesting.” He acknowledged a few minutes afterward that he hadn’t yet read the message.
Trump confirms North Korea-US summit in Singapore is back on | Asia Times: The historic Singapore summit between United States President Donald Trump and North Korea’s leader Kim Jong-un is back on after a frantic round of diplomacy. Just a week after pulling out of the scheduled talks on June 12, Trump announced that they would take place following a meeting with North Korean envoy General Kim Yong-chol at the White House. During the talks, the general hand-delivered a letter from the North Korean leader. According to the US media, Trump initially told reporters the letter was “very interesting” before later admitting that he had not read it yet.“We’re meeting with the chairman on June 12 and I think it’s probably going to be a very successful – ultimately a successful process,” Trump said on the South Lawn after his meeting with Kim Yong-chol for more than an hour in the Oval Office.This latest development came after US and North Korea both deployed the widest range of diplomatic assets.With North Korea customarily preferring its diplomatic engagement to take place well behind closed doors, little information had leaked out before Trump’s announcement. However, three channels came into play.Senior officials met in New York in the US, while mid-level officials were in Panmunjom, the truce village in the Demilitarized Zone between the two Koreas. Working-level officials also met in Singapore, the venue for the big event.The overtime work by officials from the two nations, which have been at daggers drawn since the Korean War broke out in 1950, and whose leaders have never met, indicated that both parties were seriously searching for common ground to form the basis of the summit. Meanwhile, Russian Foreign Minister Sergei Lavrov also met with Kim Jong-un in Pyongyang, the North Korean capital. In New York, Vice-Chairman of the [North] Korean Workers Party Central Committee Kim Yong-chol met US Secretary of State Mike Pompeo on Wednesday, US-time. Kim Yong-chol is the highest level North Korean official to visit the US since 2000.Images released showed Pompeo, Kim Yong-chol and two aides talking, apparently amicably, over a meal at Millennium Hilton New York One UN Plaza. Earlier video footage showed Kim Yong-chol arriving at the venue, with a plain-suited security presence, both US and North Korean, much in evidence. Kim Yong-chol and Pompeo are believed to have held extensive talks on Thursday, paving the way for the meeting with Trump. Pompeo, a former CIA director, led Trump’s diplomatic outreach to Pyongyang and has met North Korean leader Kim Jong-un on at least two occasions.
Trump team doesn’t know what it wants from North Korea - South China Morning Post: At a House committee hearing earlier this month, Democratic Rep. Joaquin Castro of Texas was grilling Secretary of State Mike Pompeo on the Trump administration's plans for North Korea. "How do you define the denuclearization of the Korean Peninsula?" Castro asked. "Well, we've said 'complete,'" Pompeo responded. Pressed further, Pompeo cited several components of North Korea’s nuclear program — including missile capability and fissile material production — that he said would have to go. "Will you leave them with a civilian nuclear program?" Castro asked. After a long pause, Pompeo replied that “we have said that it won't be appropriate for them to have the capacity to enrich." But he quickly modified his answer. "I can't answer that question,” Pompeo admitted. “I'm not in a position that I can answer that question for you today." The back-and-forth, which took place May 23, illustrated a major challenge for the United States as President Donald Trump prepares for a historic summit with North Korean leader Kim Jong Un: Trump and his top advisers don't seem to know what they want to get out of it. Is the goal of the summit an arms control deal with Pyongyang that includes only nuclear weapons, or will it also cover chemical and biological threats? It is a grand bargain that covers every facet of the U.S.-North Korea relationship? Will it involve a rapid North Korean disarmament or a years-long drawdown? Will the talks address all ballistic missiles, including ones that can strike Japan and South Korea but not the U.S.?The answers are far from clear. A POLITICO review of public statements from the administration in recent weeks found that Trump and his senior aides have articulated different goals at different times — even on a basic question like the meaning of denuclearization. Officials such as Pompeo, national security adviser John Bolton, Vice President Mike Pence and Trump himself have contradicted one another, sometimes raising and lowering expectations within a span of hours.
John Bolton Names Professional Islamophobe and Bush Official Fred Fleitz to National Security Staff - Democracy Now! - Video Interview & transcript - A longtime senior staffer at an anti-Muslim think tank has been named by National Security Adviser John Bolton as his new chief of staff. Fred Fleitz formerly served as Bolton's undersecretary of state in the George W. Bush administration. He now joins the Trump administration from the Center for Security Policy, a think tank founded by former Reagan administration official Frank Gaffney. The Southern Poverty Law Center designated the organization an anti-Muslim extremist group. We speak with Eric Levitz, associate editor for New York Magazine's "Daily Intelligencer," whose recent piece is headlined "Bolton Installs Anti-Muslim Wingnut as NSC Chief of Staff."
US vows to veto UN resolution on protecting Palestinians The United States will "unquestionably veto" a UN draft resolution calling for the protection of Palestinians in Gaza and the West Bank, US Ambassador Nikki Haley said on the eve of a Security Council vote on Friday. Haley described the text put forward by Kuwait on behalf of Arab countries as a "grossly one-sided approach that is morally bankrupt and would only serve to undermine ongoing efforts toward peace between the Israelis and Palestinians." The vote is scheduled for 3:00 pm (1900 GMT) on Friday. The United States circulated its own rival draft resolution blaming Hamas for the recent flare-up in Gaza and demanding that Hamas and Islamic Jihad "cease all violent activity and provocative actions, including along the boundary fence", according to the text seen by AFP. It was unclear whether there would be a vote on the US text, which could fail to garner enough support. Kuwait presented its draft two weeks ago, initially calling for an international protection mission for the Palestinians as protests turned violent on the Israeli-Gaza border. At least 122 Palestinians have been killed by Israeli fire in the unrest since the end of March. A final, watered-down version however urges "the consideration of measures to guarantee the safety and protection" of Palestinian civilians and requests a report from Secretary-General Antonio Guterres on a possible "international protection mechanism."
India won’t follow US sanctions on Iran | TheHill: India's foreign minister said Monday that her nation will follow sanctions imposed by the United Nations but not ones leveled by individual countries, including those the U.S. is restoring on Iran, Reuters reported. “India follows only U.N. sanctions, and not unilateral sanctions by any country,” Sushma Swaraj said at a news conference. Earlier this month, President Trump withdrew the U.S. from the Iranian nuclear deal and ordered sanctions against Tehran that were suspended by the agreement be reimposed.Iran, one of India’s top oil suppliers, has strong and long-standing economic and political ties with India, Reuters noted. Iranian Foreign Minister Mohammad Javad Zarif met with Swaraj in New Delhi on Monday to build support in opposition to the U.S. withdrawal from the nuclear deal, according to the news service. “Zarif briefed about the discussions that Iran has undertaken with parties to the Joint Comprehensive Plan of Action following the U.S. decision to withdraw from the Agreement,” the Indian government said in a statement obtained by Reuters. Even though India continues to trade with Iran, it had to reduce oil imports because sanctions cut access to banking channels and insurance for oil tankers, according to Reuters.
India Rejects Trump’s Economic War on Iran - The Trump administration wants increased economic pressure on Iran, but one of Iran’s most important trading partners won’t be cooperating:President Donald Trump may have ordered the re-imposition of sanctions on Iran, but one of Asia’s biggest oil importers — and a strategic partner of the U.S. — plans on ignoring them.India, a long-time buyer of oil from both Iran and Venezuela, only complies with United Nations-mandated sanctions and not those imposed by one country on another, said foreign minister Sushma Swaraj at a press conference in New Delhi on Monday.The U.S. had previously been able to get India to reduce purchases of Iranian oil before the nuclear deal was concluded, but once the agreement was made and Iran was abiding by it India had no reason to continue this practice. Like many other states that do business with Iran, India obviously isn’t interested in helping American plans to strangle Iran’s economy and has strong incentives to ignore U.S. wishes. There is no global consensus in support for what the administration is trying to do, and there isn’t going to be one. The Trump administration seeks to wage economic war on Iran, and it can certainly do some damage by scaring many Western companies into leaving Iran. As long as many of the major economic powers in Asia refuse to cooperate, the administration’s pressure campaign can’t work. The lack of international cooperation ensures th at the administration’s attempt to dictate terms to Iran will fail.
Iran To Bring International Lawsuit Against "ISIS Founder" America Based On Trump Statements -- After a US federal judge in New York ordered Iran to pay billions of dollars to the families of victims of the September 11 terror attacks earlier this month in a largely symbolic default judgement, Iran is reportedly prepping to sue Washington for terror attacks carried out against Tehran within the last year.Iran says the US is responsible for the rise of ISIS, and is therefore indirectly to blame for twin terror attacks that rocked the Iranian parliament building and a popular religious shrine in June 2017, which left 17 civilians dead and 43 wounded, according to Iranian media figures.“During the presidential campaign, Trump clearly spoke about the performance of his rival, Mrs. Clinton, saying that the US has created the ISIL,” Abolfazl Aboutorabi, a member of parliament’s judicial commission, announced on Tuesday in comments carried by Iranian state media. “The public prosecutor has also filed a lawsuit in this regard,” Aboutorabi added. Iran hopes the initiative will shine an international spotlight on the Obama administration's role in facilitating the rise of ISIS in Iraq and Syria — something President Trump repeatedly affirmed while on the campaign trail.Trump also famously blamed then Democratic presidential nominee Hillary Clinton for the rapid rise of ISIS, especially in relation to policies she oversaw in Libya and Syria as Obama's Secretary of State. Trump first told his supporters in January 2016 that “Hillary Clinton created ISIS with Obama.” And in a CBS 60 Minutes interview that aired July 17, 2016, he said again, “Hillary Clinton invented ISIS with her stupid policies.” Trump: Obama and "crooked Hillary Clinton" are the "founder" and "co-founder" of ISIS: (video)
Mattis: US Will Confront China With "Steady Drumbeat" Of American Ships Over Weaponized Islands - U.S. Secretary of Defense Jim Mattis vowed on Tuesday that American ships will continue to confront China over its militarization of man-made islands in the South China Sea, where Beijing has established an extensive military presence despite its promise not to do so. Mattis said that U.S. forces are maintaining a "steady drumbeat" of naval operations around the disputed Spratly islands, adding that "only one country" seems to be bothered by the maneuvers. “We are going out of our way to cooperate with Pacific nations, that’s the way we do business in the world,” Mattis told reporters. “But we are also going to confront what we believe is out of step with international law, out of step with international tribunals that have spoken on the issue.”Mattis's comments follow Beijing voicing "strong dissatisfaction" on Sunday after two US warships sailed past the Paracel Islands, which lie north of the Spratlys. Reuters, citing anonymous sources, said the USS Higgins (DDG-76), a United States Navy Arleigh Burke-class destroyer (flight II) and the USS Antietam (CG-54), a Ticonderoga-class guided missile cruiser of the United States Navy, came within 12 nautical miles of the heavily disputed, weaponized Paracel chain in the South China Sea.“The U.S. military vessels carried out maneuvering operations near Tree, Lincoln, Triton and Woody islands in the Paracels,” a source told Reuters. The sources claim the passage had been planned month ago, as missions to sail warships around Beijing’s weaponized islands in the South China Sea have become more routine. Washington’s motive behind the operation is said to counter Beijing’s efforts to restrict freedom of navigation in critical shipping lanes around the islands. "Our diplomats are robustly engaged on this," Mattis said. "The concerns have come to me not just from American government circles, but also from foreign nations that are concerned, very concerned about this continued militarisation of features in the South China Sea."
US Pushes China to Buy its Oil and Gas in Wake of Trade Row – Reports - In April, Beijing was given a list of goods that China buys in various countries that can be replaced by American ones. The list includes oil, oil products, liquefied natural gas, beef, poultry and soybeans. Washington is pressuring Beijing by lobbying long-term contracts for the supply of energy resources and agricultural products to China in order to reduce the multi-billion-dollar trade deficit between the countries, according to the Financial Times. Washington also intends to seek the abolition of quotas on US supplies to China. If the parties agree to remove trade barriers, then the expansion of energy supplies, according to the US Treasury, will bring the US an additional 50-60 billion dollars a year. As for agricultural products, the supply to China will double from the $19.6 billion in 2017. The multiyear contracts to buy US agricultural and energy imports are a part of a broader trade deal aimed at reducing the $337 billion bilateral trade deficit with China.By the end of May, US Secretary of Commerce Wilbur Ross is set to meet with Chinese authorities, where the parties will discuss Washington’s proposal.Ross’ trip comes after Donald Trump announced a deal to allow Chinese telecoms firm ZTE to resume operations in the US after paying a $1.3 billion fine and taking other measures. The publication Financial Times noted that a decision on long-term cooperation, if adopted, will affect Chinese business with US allies: the European Union, Australia, Brazil and Argentina, which also supply goods and products to China. Administration officials also stated that they are pushing for other long-term changes in China, “such as reform of its intellectual property rules and alterations to Xi Jinping’s Made in China 2025 policy to lead the world in 10 key sectors, the original targets of US tariff threats earlier this year,” the FT reported. Earlier, Beijing and Washington agreed not to unleash a new trade war because of increased US customs duties on Chinese goods and tit-for-tat measures by China.
Donald Trump and ZTE: a Party of One - Dean Baker -- A couple of weeks ago Donald Trump stunned political observers and many of his supporters with a tweet expressing concern about the jobs being lost in China due to the troubles facing ZTE, a Chinese electronics manufacturer. He told his Commerce Secretary, Wilber Ross, to see what he could do to help ZTE.Even from a president who seems to take pride at being unpredictable, this tweet was extraordinary. At the most basic level, the concern for jobs in China appears 180 degrees at odds with the “America First” philosophy he proudly announced in his inaugural address.Certainly, if someone believes that the short-term interests of the United States should be the top policy priority, it is hard to see how the loss of jobs in China can be a central concern. After all, reducing the US trade deficit with China pretty much means that we will be replacing jobs in China with jobs in the United States, at least in the short-term.The other reason why the concern about employment prospects at ZTE seem out of place is that the company is suffering because it is being punished for violating sanctions against North Korea and Iran that were the results of international agreements. Trump is prepared to impose unilateral tariff penalties on trading partners and allies based on nothing more than ill-defined national security considerations.In many cases, these tariffs would cost jobs in countries that are close US allies. Also, this job loss would not be the result of any improper behavior, just Trump’s way of reducing the trade deficit. Trump’s sudden concern for jobs at ZTE took on a different light a few days later when it was revealed that China’s state enterprises would loan hundreds of millions of dollars to a Trump resort project in Indonesia. Were Trump’s efforts to help ZTE simply payback for the assistance in Indonesia?
US presses China to sign long-term import contracts - Washington is pressing Beijing to enter into multiyear contracts to buy US agricultural and energy imports as part of a broader trade deal aimed at reducing the $337bn bilateral trade deficit with China. But the move could mean taking Chinese business away from key US allies such the EU, Australia, Brazil and Argentina, whose exports could be hit by President Donald Trump’s gambit. Commerce secretary Wilbur Ross is expected to discuss a list of products that China sources from other countries but could buy from the US on a visit to Beijing later this week. The list was presented to Beijing this month. Mr Ross’s trip comes after Mr Trump announced a deal to allow Chinese telecoms firm ZTE, whose fate has been caught up in the trade talks, to resume operations in the US after paying a $1.3bn fine and taking other measures. The US push for long-term “product-by-product” contracts with China is intended to insulate an eventual trade deal from political pressures on either side of the Pacific, according to people familiar with the discussions. China, they say, would be less able to cancel purchases if it objected to comments by Mr Trump on sensitive subjects such as Taiwan. In the US, the move is intended to show Mr Trump is securing long-term results.
US To Impose 25% Tariff On Chinese Tech Goods - The White House issued a statement Tuesday morning declaring that it would be taking more steps to protect the intellectual property of US companies from China. According to the statement, the US is planning to impose 25% tariffs on $50 billion in Chinese imports. The list of affected goods will be announced on June 15. Meanwhile, the US will issue investment restrictions and export controls for Chinese groups and people on June 30. Once again, the US cited "national security" as the reason for the tariffs, which will impact "industrially significant technology, including those related to the 'Made in China 2025' program". "To protect our national security, the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology," the release said. "The proposed investment restrictions and enhanced export controls will be announced by June 30, 2018, and they will be implemented shortly thereafter." [...] "Under Section 301 of the Trade Act of 1974, the United States will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the "Made in China 2025" program," the release said. The news comes a day after Chinese and US representatives battled at the World Trade Organization over US President Donald Trump's claim that China is stealing American technology. According to Chinese law, foreign firms hoping to do business in China often must partner with local firms, with whom they're expected to share their technology. This practice has been going on for years. The US said Tuesday morning that it will continue "pursuing litigation" at the WTO, where it filed a complaint accusing China of improperly stealing technology, while China has filed a complaint of its own over US steel tariffs. Treasury Secretary Steven Mnuchin said earlier that the US and China had both put a hold on tariffs and agreed to a deal framework. "This is not the rule of law. In fact, it is China’s laws themselves that enable this coercion," U.S. Ambassador Dennis Shea told the World Trade Organization's dispute settlement body, according to a copy of his remarks obtained by Reuters. "Fundamentally, China has made the decision to engage in a systematic, state-directed, and non-market pursuit of other (WTO) members’ cutting-edge technology in service of China’s industrial policy." China has long denied that it requires these technology transfers.
U.S. Tariff Threat Could Scuttle Planned Trade Talks With China - WSJ —The White House’s renewed trade offensive against China is putting this weekend’s planned settlement talks at risk, as well as fueling nationalistic calls for China to take a tougher stance against U.S. demands. A U.S. advance team landed in Beijing Wednesday to prepare for Commerce Secretary Wilbur Ross’s arrival Saturday, according to people with knowledge of the matter from both governments. But they say the surprise U.S. decision a day earlier to move forward with tariffs against China—less than two weeks after both sides declared a truce—is casting doubt over whether those talks can advance to the next level. If the two sides’ teams fail to agree on the issues to be discussed, Mr. Ross’s trip could be canceled, according to the people. If they succeed, however, the high-level talks would proceed as planned, they said. Mr. Ross on Wednesday suggested he was still planning to attend the weekend meetings. “We’ve had several sessions” with the Chinese, Mr. Ross said at a forum in Paris, “and I’m currently scheduled to go over again on Friday.“ For its part, China is looking to line up other countries, especially in Europe and Asia, against the U.S., Chinese officials say. Their companies could benefit from China’s plans to allow foreign companies better access to its markets. The State Council, China’s cabinet, said late Wednesday it had decided to lower tariffs on imported washing machines, cosmetics and other consumer goods, starting July 1. The council also said that by the same date it would complete a “negative list” specifying areas closed to foreign investors, so opening more sectors. The U.S. and other countries have asked China to fundamentally change how it approves foreign investment. Currently it responds to specific applications, but Western nations have urged a negative-list approach that opens the economy to investment apart from certain restricted sectors such as defense.
U.S. Moves Ahead on China Trade Curbs, Catching Beijing Off Guard - The Trump administration sent a sudden, harsh message to its Chinese counterparts, saying the U.S. was moving forward with its threat to apply tariffs on Chinese imports and other actions to restrict Beijing from accessing sensitive U.S. technology.Tuesday’s move surprised many observers after the White House had for days trumpeted the outlines of a deal in which any trade war with China would be put on hold while negotiators—led on the U.S. side by Treasury Secretary Steven Mnuchin —worked on a deal that would have China reduce its $375 billion annual trade advantage by buying more U.S. goods.With Commerce Secretary Wilbur Ross heading to Beijing later this week, the administration’s decision to move ahead with tariffs and other measures could give the U.S. added leverage as the trade talks with China resume. The White House said Tuesday that it would announce by June 15 a final list of $50 billion in imports from China that would be subject to tariffs of 25%, with the duties implemented “shortly thereafter.” Planned investment restrictions aimed at preventing Chinese acquisition of U.S. technology would also be announced by June 30, the White House said in a statement. The tariffs on $50 billion in Chinese imports is the first tranche in a package that the White House said could lead to tariffs on a total of $150 billion in Chinese imports. In a response hours later, China’s Commerce Ministry pledged to defend its “core national interests,” issuing a statement calling the U.S. action both “unexpected” and “within expectations.”Officials in Beijing, who were working on measures to ease trade tensions, were caught off-guard by the announcement in Washington, according to people with knowledge of the matter. A few days ago, U.S. trade negotiators led by Mr. Mnuchin, and their Chinese counterparts, led by Liu He, President Xi Jinping’s economic envoy, had called a truce in the simmering trade conflict, saying both sides would put threatened tariffs on hold.
China Trade Deal On The Verge After Beijing Slams Trump's Latest Surprise "Flip-Flop" -- One day after Trump surprised trade watchers by announcing he would impose 25% tariffs on up to $50 billion in Chinese tech imports as well as other sanctions, a confused Beijing hit back at the US president, saying that if the U.S. insists on unilateral measures, China will respond accordingly, according to foreign ministry spokeswoman Hua Chunying told reporters in Beijing on Wednesday.“Every flip-flop in international relations simply depletes a country’s credibility,” Hua added following the White House's statement on Tuesday that a final list of imported goods to be targeted will be released by June 15, and levies imposed “shortly thereafter.” Trump’s latest u-turn was greeted with dismay in the Chinese state media, though pledges to retaliate were muted: "The world faces an extremely mercurial White House administration,” an editorial in China’s Global Times tabloid read. “The Chinese government has the ability and wisdom to handle such situations."As Bloomberg notes, the announcement by Trump, which seemed to tear up an agreement reached only 10 days ago in Washington, is the latest twist in a trade dispute between the U.S. and China that has rattled financial markets for months and could threaten the broadest global upswing in years, according to the International Monetary Fund.Earlier on Wednesday, the Wall Street Journal reported that the trade talks between the two countries scheduled for June 2 in Beijing may be derailed by the fresh threat from Washington. Specifically, the WSJ reported that in order to test the waters after Trump's surprising announcement, a U.S. advance team was scheduled to arrive in Beijing Wednesday afternoon ahead of Commerce Secretary Wilbur Ross’s planned arrival on Saturday. Members of the U.S. team, consisting of staffers from the Commerce, Treasury, Agriculture and Energy departments and the office of the U.S. Trade Representative, are set to meet with their Chinese counterparts to hammer out broad outlines of the talks. If the two sides fail to reach accord about issues to be discussed, Ross’s trip could be canceled, the people said.
War Erupts Between Trump's Two Top Trade Advisors Over China - Commenting on the latest, surprise escalation in the US-China trade ceasefire war, in which Trump unexpectedly announced 25% tariffs on up to $50BN in Chinese imports, prompting a fresh round of outrage and confusion in Beijing which was confident it was done with Trump's "flip-flopping", we observed that "the latest move by Trump signals the more hawkish wing of Trump’s trade team is trying to amplify its hard line, after Treasury Secretary Steven Mnuchin said this month that any talk of a trade war was suspended for now."“Mnuchin’s ‘trade war on hold’ comments look to have been repudiated,” said Derek Scissors, a China analyst at the American Enterprise Institute in Washington. “It may be the administration has shifted somewhat to appease the Congress on the lifting of the ZTE sanctions.”Which, we concluded, begs the question:is China trade hawk dragon Peter Navarro back in Trump's good graces, and if so, is the countdown to Mnuchin's resignation officially on?Then just moments later, none other than Peter Navarro himself confirmed that there may be another major battle behind the scenes, when in a rare public rebuke of Steven Mnuchin, Navarro - who the media recently relegated to D-grade advisor status when he was excluded from China talks after reportedly exploding at Mnuchin and Wilbur Ross two weeks ago - called Mnuchin's claim that the trade war with China was "on hold" an "unfortunate sound bite" and admitting that there’s a dispute that needs to be resolved.“What we’re having with China is a trade dispute, plain and simple,” Navarro said in an interview broadcast Wednesday with National Public Radio. “We lost the trade war long ago" with deals such as Nafta and China’s entry into the World Trade Organization, he said. Navarro also said that "we can stop them from putting our high tech companies out of business" and "buying up our crown jewels of technology.... Every time we innovate something new, China comes in and buys it or steals it."
Trump sets out timetable for anti-China tariffs -- The Trump administration has set out a detailed timetable for the imposition of tariffs on Chinese imports and restrictions on Chinese investments in the US, less than two weeks after Treasury Secretary Steven Mnuchin declared the trade war was “on hold.”The measures were announced on Tuesday as a delegation, led by Commerce Secretary Wilbur Ross, was preparing to visit Beijing over the weekend to discuss measures to increase US exports of energy and agricultural products to China.A White House statement said it would “impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to ‘Made in China 2025.’”As this makes clear, the central target of the tariff measures, introduced under section 301 of the 1974 Trade Act, is not the Chinese trade surplus as such. Rather, they are aimed at China’s efforts to develop high-tech industries—a program regarded as a threat to the economic and military dominance of the US.This was underscored by a further passage in the White House statement. “To protect our national security, the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology,” it said. The list of goods targeted for tariffs will be made public on June 15, with the measures to be imposed “shortly” thereafter. The restrictions on investment and export controls will be announced on June 30.The statement said the measures were part of “multiple steps to protect domestic technology and intellectual property from certain discriminatory and burdensome trade practices by China.” China responded with a Commerce Ministry statement saying it would defend its “core national interests” and the US move “clearly contradicts the consensus reached by China and the US in Washington recently.”
Trump Plows Ahead on China Tariff Threats, Investment Curbs - Industry Week - President Donald Trump signaled his intention to impose tariffs on $50 billion in Chinese imports and curbs on investments in sensitive technology, sending a hawkish message to Beijing days before the latest round of trade talks between the world’s two largest economies.In a statement on May 29, the White House said a final list of covered imports will be released by June 15 and the tariffs will be imposed “shortly thereafter.” It’s the most specific the administration has been about when the duties will take effect.The White House also said new restrictions on Chinese investment and enhanced export controls will be announced by June 30, with implementation soon after.“The United States will continue efforts to protect domestic technology and intellectual property, stop non-economic transfers of industrially significant technology and intellectual property to China, and enhance access to the Chinese market,” the statement said. “The United States will request that China remove all of its many trade barriers, including non-monetary trade barriers, which make it both difficult and unfair to do business there.”It’s the latest twist in a trade dispute between the U.S. and China that has roiled financial markets and prompted the International Monetary Fund to warn of a trade war that could undermine the broadest global upswing in years. The announcement raises the stakes for the third round of talks between the two economies. Commerce Secretary Wilbur Ross is scheduled to meet with officials in Beijing on June 2-4 to continue negotiations.
Ross’ hard sell in Beijing - Commerce Secretary Wilbur Ross’ skills as a salesman will be on full display when he travels to Beijing in the coming days to try to clinch long-term contracts for U.S. agriculture and energy exports amid the pall of President Donald Trump’s decision to move forward with U.S. tariffs on $50 billion worth Chinese goods. Further complicating the picture is that no single administration official, not even Trump, has emerged a reliable spokesman on the China issue, since the administration has changed course so many times in recent months, said Phil Levy, a former Treasury Department official who’s now a senior fellow at the Chicago Council on Global Affairs. The result of that confusion “is that if you’re trying to send signals, you’ve completely muddied this and nobody knows what signal you’re sending,” he said. Pressing play on the trade war: Just over a week after Treasury Secretary Steven Mnuchin asserted that the trade war with China was “on hold,” Trump took officials in Beijing and Washington by surprise Tuesday when he issued a statement pledging to move forward once again with tariffs, investment restrictions and WTO litigation. The three measures are a result of the administration’s seven-month investigation into China’s handling of intellectual property. The Trump administration declined to specify on Tuesday what had changed that led the White House to make its latest announcement. But one administration official said it should be viewed as negotiating leverage rather than as a rebuke of the idea that the trade war is on hold. "You can't go soft too quickly or you are not going to get where you want to go," the official said.
United States’ threat of tariffs on Chinese imports ‘just a negotiating tactic’, business leader says | South China Morning Post An advance party of US officials arrived in China on Wednesday ahead of the latest round of high-level trade negotiations, and the same day Beijing lambasted US President Donald Trump for his apparent turnaround on the issue of punitive tariffs on Chinese imports.China’s commerce ministry said the advance group comprised 50 officials. A person familiar with the matter told the South China Morning Post they would probably seek to set the tone for the main trade talks, which are set to get under way on Saturday.The US delegation for those will be led by US Commerce Secretary Wilbur Ross. The planned negotiations were shaken up on Tuesday with the White House’s announcement that it would publish a list of the Chinese imports – with a combined value of about US$50 billion – that would be subject to new 25 per cent tariffs by June 15, and its restrictions on China’s access to sensitive US technology on June 30. Beijing was quick to lash out at the statement, which appeared to contradict comments made two weeks ago by US Treasury Secretary Steven Mnuchin that Washington had put the tariffs “on hold” while the trade talks were ongoing.“We urge the United States to keep its promise,” Chinese foreign ministry spokeswoman Hua Chunying said, in reference to a joint statement released by the two countries after their latest round of negotiations.“When it comes to international relations, every time a country does an about face and contradicts itself, it’s another blow to, and a squandering of, its reputation,” she said. Despite the upset caused in Beijing, Trump’s decision to push ahead with the tariff plan should be seen as a negotiating tactic, and China should be more concerned with providing a level playing field for foreign companies, an American business leader said.Lester Ross, who heads the policy committee of the American Chamber of Commerce in China, told a press conference on Wednesday that the latest announcement from Washington should be seen in the context of move and countermove. “Threats of tariffs are very powerful and useful negotiation tactics,” he said. “[But] the White House decision won’t necessarily affect the overall sentiment.”
US will push China to let its firms hold majority stakes in companies, says Trump economic adviser Larry Kudlow | South China Morning Post: The United States will pressure China to allow US investors to hold a majority stake in their Chinese ventures in the latest round of trade talks, according to Larry Kudlow, a senior economic adviser to Donald Trump. The US advance team for the trade talks landed in Beijing on Wednesday afternoon and preparatory discussions are under way ahead of the start of the formal talks on Saturday. Chinese observers have said Beijing was expected to continue loosening restrictions on foreign investors and companies at its own pace rather than yielding to US pressure – especially given Trump’s inconsistent approach towards China. Trump to hit US$50 billion of Chinese imports with 25pc tariffs The Trump administration has accused Beijing of using restrictions on ownership and technology licensing, which prevent foreign companies holding a majority stake, to force US investors to transfer their most sophisticated technology to their Chinese joint venture partners. Foreign businesses have complained that mandatory technology transfers are rife in the car, semiconductor and new energy industries. In a radio interview late on Wednesday, Kudlow, director of the National Economic Council, said that in addition to lowering trade imbalances, the issue of equity ownership has been raised during the previous two rounds of talks, but China had not seriously addressed the issue. “American businesses, in many cases, are forced to go into joint ventures with Chinese companies in order to produce,” he told The John Batchelor Show. He continued that because US companies are not allowed more than a 49 per cent stake, the Chinese majority owners can “force the transfer of technology to these new companies they create”.
U.S., China Haggle Over Purchases of American Goods —U.S. and Chinese trade negotiators are haggling over how to get Beijing to carry out recent promises to purchase more American farm and energy products, with Washington pushing for long-term contracts that Chinese officials are reluctant to commit to.The snag is hanging over high-level negotiations scheduled for this weekend. U.S. administration officials, having said earlier that a lack of progress by the advance team might lead to Commerce Secretary Wilbur Ross canceling a trip to Beijing, said Mr. Ross remains scheduled to be in China on Saturday. The plan is for two-days of talks in Beijing with China’s top trade negotiator, Liu He, but the White House’s recent moves to revive the threat of tariffs on Chinese imports have complicated the prospects for his mission. During the discussions, held by a U.S. advance team and its Chinese counterpart in Beijing on Thursday and Friday, U.S. officials pressed their Chinese peers to commit to multiyear purchase agreements, according to people with knowledge of the exchanges from both sides. For the U.S., such pacts could be useful in prodding China to significantly lower tariffs and ease regulations and other barriers to imported goods.Chinese officials have been reluctant to get locked into long-term commitments, these people said. Beijing wants “control and leverage,” one of them said. The U.S. team, which includes officials from the Commerce, Treasury, Agriculture and Energy departments and the office of the U.S. Trade Representative, was scheduled to make recommendations late Friday to Mr. Ross on whether he should travel to Beijing this weekend as planned to lead the negotiations, according to the people. Chinese officials said their government is committed to dialogue to fend off a trade war with the U.S. Mr. Ross wanted to take the trip to maintain conversations with Beijing, the people said. The trip was initially seen as a positive move in the months of wrangling between the U.S. and China over trade, a follow-up after both sides declared a truce two weeks ago. On Tuesday, however, the Trump administration unexpectedly declared it would move forward with tariffs on $50 billion in Chinese goods and take other actions aimed at restricting China’s access to U.S. technology.
China Holds The Cards In Trump's Trade War - The Trump administration continues to play hardball games with China on trade. The latest news has China angry over Trump going forward with 25% tariffs on an array of Chinese goods after having reached a deal earlier over phone-maker ZTE.As Bloomberg notes, the announcement by Trump, which seemed to tear up an agreement reached only 10 days ago in Washington, is the latest twist in a trade dispute between the U.S. and China that has rattled financial markets for months and could threaten the broadest global upswing in years, according to the International Monetary Fund.That said, if Bloomberg is upset about this policy from Trump I’m inclined to be sympathetic. But, that’s just me being churlish. Reality is that this kind of behavior only adds fuel to the building devaluation fire building in Beijing. I discuss why China can and should aggressively devalue the Yuan over the next few months to assist its central Asian partners, namely Iran and Turkey, resist aggressive U.S. sanctions policy over at Strategic Culture Foundation:Secondly, China devalues the Yuan alongside these struggling emerging market countries’ currencies, not to the same degree but enough to still encourage capital inflow into China, to soften the blow and make the Yuan more attractive to procure needed goods in international markets.And, since Trump doesn’t dare sanction Chinese banks without destroying the U.S. economy, this is just one of the paths available for countries like Turkey, Iran and the EU-27 to circumvent Trump’s aggressive trade war. China’s moves are bigger than simply the petroyuan. As I pointed out last week, China is preparing a broad swath of new metals futures contracts through the London Metals Exchange. This is in addition to the gold futures contract launched last year. The more alternatives that countries like Turkey, Venezuela and Iran have to keep their supply chains full the better they can resist the obvious push towards regime change which is what the sanctions are trying to achieve. These moves are subtle. They operate below the headlines in the practical world of actual markets, not the avaricious dreams of Certified Crazy People like John Bolton, Mike Pompeo and Nikki Haley.
EU’s Trade Chief to Press U.S. Counterparts on Tariffs Wednesday - The European Union’s top trade official will meet U.S. counterparts in Paris on Wednesday, according to EU officials, in a last-ditch effort to secure waivers from steel and aluminum tariffs and to engage Washington on efforts to tackle China’s market-distorting policies. European Trade Commissioner Cecilia Malmstrom will press U.S. Commerce Secretary Wilbur Ross for exemptions just ahead of a Friday deadline, when President Donald Trump’s temporary waivers to the 28-member bloc expire.Ms. Malmstrom will also meet with U.S. Trade Representative Robert Lighthizer on Wednesday to discuss the global trade agenda, and the two officials will join their Japanese counterpart, Hiroshige Seko, Thursday to advance a joint push targeting unfair practices.The crunch meetings, following months of uncertainty, will take place on the sidelines of a ministerial gathering of the Organization for Cooperation and Economic Development in Paris. The OECD discussions will focus on the “state and outlook for multilateralism,” just as Mr. Trump enacts his “America First” policies to the chagrin of U.S. allies led by the EU.European officials have been scrambling to address Mr. Trump’s demands amid deepening policy differences between the trans-Atlantic allies on issues ranging from trade to foreign policy and defense. Brussels and Washington have made little headway in talks since early March over Mr. Trump’s steel and aluminum tariffs, seeking to avert a trade war as both the EU and the U.S. threaten tit-for-tat measures. ”We simply don’t know where this will land,” an EU official said.Representatives for the U.S. Commerce Department and USTR didn’t immediately respond to requests for comment on Monday. Mr. Ross, the commerce secretary, has said the U.S. would only waive the tariffs on steel and aluminum for countries that agree to quotas—restrictions on the volume of steel or aluminum they can export. By restricting the steel trade, the move would still boost reliance on the U.S. domestic steel industry and would prevent countries from simply avoiding the tariffs by shipping everything through a country with a waiver. The countries that have been granted waivers, including South Korea and Argentina, have agreed to accept such quotas. Meanwhile, EU officials have been trying to convince their U.S. partners to work together against China’s growing economic might. Mr. Trump’s imposition of tariffs against the bloc would ignore the root cause of steel and aluminum overcapacity in China that is driving the global glut, and unfairly punish an ally, EU officials say.
U.S. Plans to Hit EU With Steel, Aluminum Tariffs – WSJ - The Trump administration, unable to win concessions from European Union counterparts ahead of a Friday deadline, is planning to make good on its threat to impose tariffs on European steel and aluminum, people familiar with the matter said.The administration is expected to make an announcement as early as Thursday. The move, which has been threatened for months, is almost certain to draw a response from the EU, which has threatened to retaliate with its own tariffs on such American products as motorcycles, jeans and bourbon.President Donald Trump announced in March global tariffs of 25% on imported steel, and 10% on aluminum, based on national security concerns.The White House delayed implementation for some countries, giving those trading partners a chance to offer concessions to avoid the tariffs.The U.S. is now planning to let the EU’s exemption lapse. One person familiar with the matter said the administration’s plans could still change, particularly if the two sides are able to cobble together a last-minute deal, though both sides suggest such a deal is unlikely.Commerce Secretary Wilbur Ross, who led the investigation into metal imports as a possible threat to national security, hinted on Wednesday that the EU would face tariffs. But he emphasized the U.S. wants to keep negotiating a possible deal that opens markets in Europe to U.S. exports. “It’s not that you can’t talk just because there are tariffs,” Mr. Ross said in Paris at the Organization for Economic Cooperation and Development. “God knows there are plenty of tariffs the EU has in place on us.”
Europe Braces For Trade War As Trump Tariff Plan "99.9% Done", Coming Later This Morning -- In addition to the ongoing political turmoil in both Italy and Spain, today's trifecta of risks is completed by the threat that President Trump will impose metal tariffs on Canada, Mexico and EU, according to reports in Washington Post. Overnight, Commerce Secretary Wilbur Ross said that US steel and aluminum tariffs on EU are to be announced before markets open or after markets close today, while CNBC added that the US plan to impose steel and aluminum tariffs on Canada, Mexico, and EU is '99.9%' done and expected to come later this morning. It gets worse: according to Germany's, Wirtschaftswoche, Trump told French President Macron that he would block German premium cars from entering the US market (prompting some to muse that Porsches might actually hold their values). As a result, the European Union - which had hoped to avoid this outcome - is now bracing for Trump to open another front in his confrontation with the bloc, as the EU’s top negotiator prepares for the U.S. to impose either tariffs or quotas on metals imports from America’s closest allies. As a reminder, back in March Trump slapped 25% tariffs on imported steel and 10% on aluminum, but granted a reprieve to the EU, Canada and Mexico until June 1 for further talks to take place. Those talks have been unsuccessful it appears, even after EU Trade Commissioner Cecilia Malmstrom met with U.S. Commerce Secretary Wilbur Ross in Paris on Wednesday in a last-ditch attempt to reach a compromise. Ahead of the meeting, Malmstrom said that she doesn’t think the EU will get a full reprieve from tariffs or quotas. “Hopefully we will be able to have a positive agenda with the U.S. side, with no tariffs or quotas,” she told the EU Parliament on Tuesday, a message she reiterated after her meeting with Ross. “Realistically, however, we do not think we can hope for that.”
Bye-Bye Benz: Trump Planning Ban On Luxury German Autos - Having cornered his European allies over the Iran sanctions, and tightened his grip on the EU economy over metals tariffs, an exclusive report by German magazine WirtschaftsWoche claims that President Trump is taking direct aim at Merkel and is preparing to impose a total ban on German luxury carmakers from the U.S. market. Citing several unnamed U.S. and European diplomats, the weekly business magazine reported that Trump told French President Emmanuel Macronlast month he would maintain his trade policy with the aim of stopping Mercedes-Benz models from driving down Fifth Avenue in New York.WiWo reports that Trump's grudge against the German automaker - and especially against Mercedes models in New York - is not new. In January 2017, prior to his inauguration, he said in an interview, "When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house." But that's not reciprocity. "How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it's a one-way street," said the real estate billionaire. Although he is for free trade, but not at any price: "I love free trade, but it must be a smart trade, so I call him fair."The report comes less than two weeks after the U.S. Department of Commerce launched an investigation into automobile imports to determine whether they "threaten to impair the national security" of the U.S. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose metal imports charges in March.WiWo also points out that an import duty of 25 percent would also have a significant economic impact - the Ifo Institute comes in own calculations alone in the German carmakers at the cost of about five billion euros. That would depress German GDP by 0.16 percent.
Trump Plans To Unleash Steel, Aluminum Tariffs On EU, Mexico, & Canada - A month ago, President Trump delayed his EU steel and aluminum tariffs decision and as of Friday, that deadline is over and the US allies across Europe will face big decisions on retaliation. Amid threats from various European leaders - and the potentially unipolar world order repressing blowback from Trump's Iran decision and subsequent sanctions - The Wall Street Journal reports that the Trump administration, unable to win concessions from European Union counterparts ahead of a Friday deadline, is planning to make good on a threat to apply tariffs on European steel and aluminum, according to people familiar with the matter. The announcement is reportedly likely to occur on Thursday, and will be 25% on imported steel and 10% on imported aluminum. However, one person familiar with the matter said the administration’s plans could still change, particularly if the two sides are able to cobble together a last-minute deal, though both sides suggest such a deal is unlikely. Update: The Washington Post adds to the reports that President Trump will also impose tariffs on Mexico and Canada and will take effect on Friday.
On trade, NAFTA trumps everything - - American Enterprise Institute --There’s not much to like about President Trump’s trade policies. His administration now claims cars might be vital to national security. After years of vowing to take on China, he’s bailing out a Chinese company because Communist Party General Secretary Xi Jinping asked. There’s been no progress on bilateral deals the president says he wants. All of this and more is still less important than passing a NAFTA update that works for the three countries. US trade policy can be rescued and the economy boosted, but time is running out.Start with what’s wrong with “Trump trade”:
- 1) All talk, no action. The president’s style has long been to first be bombastic, then negotiate. Now the whole world knows. The gap between word and deed on China trade, for example, is so huge that no one takes his words seriously. Unless . . .
- 2) Making an Obama mistake. President Obama was repeatedly accused of treating adversaries better than allies. On trade, President Trump may be similar, especially if he eventually retaliates against Europe for breaking Iran sanctions after winking at ZTE.
- 3) Possibly abusing national security. National security was previously cited to justify aluminum and steel tariffs. That covered a bit over $50 billion in 2017 US imports before exceptions were handed out. US auto and parts imports are approximately $325 billion, with US defense treaty allies the main suppliers. The notion of a national security risk is not credible.
- 4) The China flip-flop. President Trump has long said the PRC steals millions of jobs from the US and he’s going to stop it. A few weeks ago, action against a single company was leading to “too many jobs in China lost.” What did he think was going to happen?
Even so, NAFTA is the big game. The importance of Canada and Mexico is often overlooked: $1.3 trillion in goods and services trade last year, almost one-fourth of the US total. The trade deficit with the two combines to $70 billion, only 12 percent of the full deficit (the Chinese share is 59 percent).
Trade war: ‘America First means Europe United’ says Germany as EU joins Canada and Mexico with counter-measures on Donald Trump’s steel and aluminium tariffs | South China Morning Post: French President Emmanuel Macron has warned that US President Donald Trump is heading for “war” after the US placed tariffs on European Union, Canadian and Mexican steel and aluminium on Thursday. “This decision is not only unlawful but it is a mistake in many respects,” Macron said in a speech after the US announcement. “Economic nationalism leads to war.” All three economies vowed to subject the US to counter-tariffs on American products as varied as jeans, motorbikes and peanut butter in the wake of the action, potentially costing the US billions of dollars. That came after US Commerce Secretary Wilbur Ross told reporters on Thursday morning that a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium imports would go into effect at midnight in Washington. “We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” he said. Our answer to ‘America First’ can only be ‘Europe United’. Trade wars don’t have any winners German Foreign Minister Heiko Maas Ross said that talks with Canada and Mexico over the North American Free Trade Agreement (Nafta) were “taking longer than we had hoped” and that negotiations with Europe had “made some progress” though not enough to merit an exemption. He offered little detail about what the EU, Canada and Mexico could do to have the tariffs lifted. In response, European Commission president Jean-Claude Juncker said that the US tariffs decision left the bloc with “no choice” but to impose counter-measures and pursue a case in the World Trade Organisation.
EU Rages At "Unacceptable" US Tariffs, Vows Retaliation "In Coming Hours" - Confirming expectations, Wilbur Ross announced the steel, aluminum tariffs exemptions were lifted on EU, Mexico, and Canada. This prompted angry responses from the head of the EU bloc's executive Jean-Claude Juncker who said that the European Union will impose counter measures immediately. "This is a bad day for world trade," Juncker said in a speech in Brussels. "So we will immediately introduce a settlement dispute with the WTO and will announce counter balancing measures in the coming hours." "It is totally unacceptable that a country is imposing unilateral measures when it comes to world trade." Juncker also said that he is "concerned by this decision" which he defined as "protectionism, pure and simple." The European head with a penchant for alcohol said that steel overcapacity remains at the heart of the problem, and "the EU is not the source of but on the contrary equally hurt by it", clearly referencing China. He also said that the EU has consistently indicated openness to discussing ways to improve bilateral trade relations with the US "but have made it clear that the EU will not negotiate under threat" and added that "by targeting those who are not responsible for overcapacities, the U.S. is playing into the hands of those who are responsible for the problem." "The U.S. now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law." Needless to say, the export-heavy Germans were furious too:
U.S. hits EU, Canada and Mexico with steel, aluminum tariffs - The United States on Thursday said it was moving ahead with tariffs on aluminum and steel imports from Canada, Mexico and the European Union, ending a two-month exemption and potentially setting the stage for a trade war with some of America’s top allies. U.S Commerce Secretary Wilbur Ross told reporters on a telephone briefing that a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the EU, Canada and Mexico would go into effect at midnight (0400 GMT on Friday). “We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” he said. Ross offered little detail about what the EU, Canada and Mexico could do to have the tariffs lifted.
Trump imposes tariffs on closest allies, Mexico and Europe announce retaliation –[ President Trump on Thursday imposed tariffs on imported steel and aluminum from the European Union, Canada and Mexico, triggering immediate retaliation from U.S. allies and protests from American businesses and farmers.The tariffs — 25 percent on steel and 10 percent on aluminum — take effect at midnight Thursday, marking a major escalation of the trade war between the United States and its top trading partners. Stung by the U.S. action, the allies quickly hit back. The E.U. said it would impose import taxes on politically sensitive items like bourbon from Senate Majority Leader Mitch McConnell’s home state of Kentucky. Mexico said it would levy tariffs on American farm products, while Canada zeroed in on the same metals that Trump had targeted. Capping the extraordinary day, Canadian Prime Minister Justin Trudeau revealed that he had rejected an ultimatum from Vice President Pence that any new North American trade deal be renewed at five-year intervals. “Today is a day when the Trump administration pretty much signaled it is throwing out the rule book on trade,” said Rufus Yerxa, head of the National Foreign Trade Council and a former U.S. negotiator. “I’ve been dealing with this stuff for four decades and I’ve never seen anything like this.” After 17 months in the White House, Trump’s “America First” program has landed the United States in increasingly bitter standoffs with customers and suppliers that account for nearly two-thirds of the nation’s $3.9 trillion annual merchandise trade.
As US tariffs go into effect, Europe, Canada and Mexico strike back -- The US introduced a 25-percent tariff on steel and a 10-percent tariff on aluminum from the EU, Canada and Mexico on Friday, sparking furious reactions from those countries' leaders who had been hoping for an exemption from the measures. The EU and Canada have filed complaints at the World Trade Organization (WTO) in response, and the EU has also vowed to hit back with retaliatory tariffs on an array of US products.
- EU Trade Commissioner Cecilia Malmstrom said the US decision has damaged trans-Atlantic relations and rejected a US offer to continue negotiations while the tariffs were in place. "For the moment that door is closed," she said.
- Canadian Foreign Minister Chrystia Freeland said the US had imposed the tariffs under a "false pretext of safeguarding US national security" and added that "Canada will closely collaborate with the European Union" on challenging the tariffs at the WTO.
- German Finance Minister Olaf Scholz condemned Washington's move, saying: "This one-sided decision is wrong and in my view against international law."
- French Finance Minister Bruno Le Maire warned of the consequences, saying: "It's entirely up to US authorities whether they want to enter into a trade conflict with their biggest partner, Europe."
- French President Emmanuel Macron recalled the pre-World War II period, saying: "Economic nationalism leads to war. This is exactly what happened in the 1930s."
Canada Unleashes Retaliatory Tariffs On US: Here Is The Full List Of Affected Products - In slightly more than a strongly-worded email Canadian PM Justin Turdeau exclaimed his indignance at the Trump administration's decision to impose tariffs on Canadian steel and aluminum imports, saying it is an "affront":“Let me be clear, these tariffs are totally unacceptable,” Trudeau said “Canada is a secure supplier” of metals to the U.S. military, and the idea of a security threat “is inconceivable.” He called the tariffs “punitive” noting that US has a $2billion steel trade surplus with Canada.With that he announced retaliatory tariffs against the US. Canadian Foreign Affairs Minister Chrystia Freeland announced “dollar-for-dollar tariffs for every dollar levied against Canadians by the U.S.,” starting July 1 that will remain in place as long as U.S. tariffs do. The tariffs cover Whiskey, Orange Juice, and other food products as well as steel and aluminum. Measures will apply to up to C$16.6 billion dollars of products. Canada's full list of actions includes 25% tariff on the following...[list] And 10% tariff on the following items... [list] As Goldman explains, the decision to impose tariffs on Canada and Mexico (and now seeing Canada's response) suggests that prospects for a NAFTA agreement in the near-term are fading. The Administration’s negotiating stance is often unpredictable so there is a risk of over-interpreting any single event. That said, this represents another signal that prospects for a near-term NAFTA deal are fading, just a few weeks after it had appeared fairly likely that a “skinny” agreement involving the auto sector might be reached. However, Goldman note that the incremental inflation effect of these tit-for-tat tariffs should be small. We estimate that adding Canada, Mexico, and the EU to the countries facing a tariff of 25% on steel and 10% on aluminum could boost core PCE by roughly 1bp. Imports from NAFTA and EU countries make up just under half of steel and aluminum imports. Finally, in his Q&A Trudeau made it clear that "Canada's relationship with US is deep and complex" but warned that "US will harm its own people with such measures." Mexico said earlier that it would impose its own retaliatory tariffs on a wide range of products from US steel to pork, sausages and fruit.
Europe Launches Challenge to U.S. Tariffs - The European Union fired its first shot Friday against U.S. steel and aluminum tariffs, launching a World Trade Organization challenge and vowing swift duties on American exports, in a sign that the bloc would go blow-for-blow with President Donald Trump over trade.Brussels says Washington’s measures are “pure” protectionism. With its WTO complaint, it is challenging the U.S. national-security justification for Mr. Trump’s levies, in an unusual rift between the trans-Atlantic allies.“The U.S. is playing a dangerous game here,” European Trade Commissioner Cecilia Malmström said Friday. For Europe, “Not responding will be the same as accepting these tariffs, which we consider illegal under WTO rules.” The White House didn’t immediately respond to a request for comment. An EU-U.S. trade war risks undermining joint efforts to counter China. Highlighting Europe’s desire to compartmentalize differences with the U.S. and engage Washington in challenging Beijing’s state-backed capitalism, the EU on Friday also filed a WTO case against China for undermining intellectual-property rights with forced technology transfers. At stake in Europe’s fight with the U.S. is the future of the international order forged by the allies after World War II, with the goal of slashing trade barriers and opening markets to bolster free enterprise world-wide. Now, Mr. Trump’s “America First” policies are undermining that system and efforts to combat causes of global trade imbalances, driven by Chinese overcapacity, subsidies, and Beijing’s other trade practices, EU officials say. “If players in the world do not stick to the rule book, the system might collapse—and that is why we are challenging today both the U.S. and China at the WTO,” Ms. Malmstrom said. “We are not choosing any sides, we stand for the multilateral system.” Chinese Foreign Minister Wang Yi said Friday in Brussels after meeting his EU counterpart, Federica Mogherini, that Beijing is committed to rules-based, multilateral trade. He expressed hope for a “mutually beneficial outcome” in the continuing Beijing-Washington negotiations, as Mr. Trump oscillates between threatening massive tariffs and striking a bargain to close the U.S. trade deficit with China. “China’s position is not only trying to uphold China’s own interests, but also upholding international rules and the global free-trade system,” Mr. Wang said, echoing the European position against U.S. moves. The EU complaints against the bloc’s top two trading partners also come on the heels of an agreement among the EU, Japan and the U.S. this week, when the three outlined a joint road map to reform WTO rules on industrial subsidies.
U.S. isolated at G7 meeting as tariffs prompt retaliation (Reuters) - The United States’ closest allies attacked the Trump administration on Friday for imposing tariffs on steel and aluminum imports and mounted challenges with the world’s top trade body, fouling the mood at a G7 finance leaders meeting. U.S. Treasury Secretary Steven Mnuchin was the prime target of the criticism at the meeting of Group of Seven finance ministers and central bank governors in Canada, with the six other G7 member countries subject to the U.S. metals tariffs, which were imposed on national security grounds. The tariffs also are complicating U.S. efforts to gain cooperation to challenge China’s trade practices as U.S. Commerce Secretary Wilbur Ross arrives in Beijing on Saturday for talks aimed at averting a U.S.-China trade war. Japanese Finance Minister Taro Aso, whose country’s steel and aluminum producers have been paying the U.S. metals tariffs since March 23, called the U.S. action “deeply deplorable.” “This doesn’t happen that often at G7 meetings, but it was U.S. against everyone else,” Aso told reporters. The European Union and Canada both filed challenges with the World Trade Organization. Canadian Foreign Minister Chrystia Freeland said in a statement that the tariffs were “imposed under a false pretext of safeguarding U.S. national security.” At the G7 meeting in the Canadian ski resort of Whistler, British Columbia, Canadian Finance Minister Bill Morneau said he expressed to Mnuchin “our absolute view that this is absurd that Canada could in any way be a security risk.” French Finance Minister Bruno Le Maire also said Mnuchin was clearly isolated at on the tariff issue, with the group devolved to a “G6 plus one” with the six expressing “total incomprehension” over the destabilizing U.S. move. “We must find a way to get out of this,” German Finance Minister Olaf Scholz told reporters.
Trump trade policies threaten 2.6 million US jobs, Chamber of Commerce says -- President Trump's strict stance on trade could put 2.6 million American jobs at risk, the head of the Chamber of Commerce says. Tom Donohue, president and CEO of the business organization, issued the forecast in a memo to the board of directors Thursday that was obtained by CNNMoney. The memo, citing outside studies, adds the possible job losses from tariffs both threatened and enacted by the administration, plus a possible US withdrawal from NAFTA, the trade agreement with Canada and Mexico. A NAFTA withdrawal would kill as many as 1.8 million American jobs in the first year, the memo warned. In addition, tariffs against China could cost 134,000 US jobs, steel and aluminum tariffs could cost 470,000 jobs, and tariffs on autos and auto parts could cost 157,000 jobs, Donohue warned. He sent the memo on the same day the administration said it would impose steep tariffs on steel and aluminum from three of America's biggest trading partners — Canada, Mexico and the European Union. The trade penalties, 25% on imported steel and 10% on imported aluminum, take effect at midnight. Canada, Mexico and the EU quickly announced plans to retaliate with their own tariffs on American goods. "On each of these issues, the Chamber has privately and publicly expressed our concerns to the administration and to Congress about the economic damage that an escalating series of back and forth tariffs would have on our own country," Donohue wrote.
What Is Trump’s Trade War Supposed to Accomplish? - American Conservative - Trump’s decision to hike steel and aluminum tariffs on allies and major trading partners is flawed in several respects. One of those flaws is that it seems very unlikely to accomplish anything except to drive up costs for all sides. The president is using a bogus national security justification for the action, and that is bad enough in its own right. That should set off alarms all by itself that the policy is a bad one and is being carried out through an abuse of power. It also suggests that the tariff hikes will remain in place indefinitely to secure us from the menace of imported Canadian and German steel. This seems silly, and it also means that there is nothing that any of the governments on the other side can do to satisfy the administration to get them to reduce these tariffs in the future. That makes this action a case of escalation for its own sake. In addition to inviting retaliation that will impose additional costs on American businesses and consumers, there is no plausible case for how hiking these tariffs will make any of these trading partners more cooperative or inclined to compromise on trade issues. On the contrary, the gratuitous and insulting nature of the action gives our trading partners strong incentives to reject future U.S. demands. Like any coercive tactic, it will breed resentment and encourage resistance among the affected nations. The tariff hikes have certainly done that. French President Macron denounced the action as illegal. Canada, Mexico, and the EU have all announced retaliatory measures. Canadian Prime Minister Trudeau excoriated the move as “totally unacceptable.” Like any misguided use of economic pressure, the costs of this policy are going to be borne by the people of all the countries involved, and the effects will hit the least well-off hardest. Trump is arbitrarily imposing a regressive tax on Americans and damaging relations with some of our oldest and closest allies and neighbors, and he’s using a bogus national security reason to do it.
US government admits to losing track of nearly 1,500 immigrant children in sponsor homes -- The US government recently admitted to losing track of almost 1,500 unaccompanied immigrant children who were placed in foster care. Steven Wagner, a top official from the Department of Health and Human Services (HHS), told a Senate subcommittee last month that the Office of Refugee Resettlement (ORR), which is tasked with placing immigrant children in the homes of sponsors, could not account for 1,475 missing youths in the last three months of 2017.Wagner, the acting assistant secretary for the Administration for Children and Families, part of the HHS, said the Department of Homeland Security (DHS) referred more than 40,000 immigrant children to the ORR in the 2017 fiscal year.Upon leaving an ORR shelter, the children are typically placed in the home of a parent or close relative, but sometimes when this is not an option, they are given to “other-than-close relatives or non-relatives.”Wager told the subcommittee that between October and December 2017, the ORR checked up on 7,635 unaccompanied children but “was unable to determine the whereabouts of 1,475 children.” At least 52 were relocated with a non-sponsor, 28 ran away, and five were deported, according to Wagner. The rest were assumed missing. Despite losing track of more than 19 percent of the children his agency was tasked with overseeing, nearly one in five, Wagner insisted that the HHS was not responsible for them. He testified, “I understand that it has been HHS’s long-standing interpretation of the law that ORR is not legally responsible for children after they are released from ORR care.”
US Border Patrol agent executes Guatemalan woman -- US Customs and Border Protection (CBP) is seeking to whitewash the extrajudicial execution of an unarmed Guatemalan woman by a Border Patrol agent on Wednesday, in the Texas border town of Rio Bravo, 15 miles southeast of Laredo. The woman, identified as 20-year-old Claudia Patricia Gomez Gonzalez, left her home town of San Juan Ostuncalco, Guatemala, more than two weeks before in the hope of joining her boyfriend and finding work in Virginia. She was traveling through Rio Bravo as part of a group of Central American migrants who had just made the treacherous journey across the Rio Grande and into the United States without immigration documents, when they were confronted by an as yet unidentified Border Patrol agent at about 12:30 p.m. local time. Under circumstances that remain unexplained, the agent fired a single shot from his handgun into the back of Gomez’s head, killing her instantly. CBP has since given multiple accounts attempting to justify the agent’s actions. An initial statement issued by the agency claimed that one of its agents was investigating reports of “illegal activity” in the town when he was attacked by immigrants wielding “blunt objects,” later identified as two-by-four pieces of lumber. In response, the agent “fatally wounded one of the assailants.” Two days later, on Friday, CBP released another statement making no mention of any objects used to attack the agent, but instead claiming that the officer commanded the immigrants to “get on the ground,” but “the group ignored his verbal commands and instead rushed the officer.” In this latest version of events, CBP no longer claims that the victim was an “assailant,” but merely a “member of the group.”
Caged Migrant Children Photo Goes Viral As Left Rages At Trump; Except It Happened Under Obama - A photograph of two migrant children sleeping in a cage at an ICE detention facility quickly went viral on Sunday after several prominent liberals tweeted it in a white-hot rage at President Trump's immigration policy. After a laundry list of journalists and public figures angrily tweeted the photo - including CNN's Hadas Gold, NYT Mag's editor-in-chief Jake Silverstein, Obama speechwriter Jon Favreau and former LA mayor Antonio Villaraigosa, they deleted their tweets in shame when it emerged that the photo was taken in 2014, under Obama. Indeed - nobody thought to check the date on the attached article, published in June of 2014.
President Trump signs executive orders attacking federal employees - President Donald Trump signed a series of executive orders Friday making it easier for federal agencies to discipline and fire employees. The unilateral moves follow the president’s vows during the 2016 election to “reduce the federal workforce through attrition” and otherwise shrink the number of government employees to their lowest level in decades.The orders will give federal managers the power to fire workers alleged to be “struggling” in their performance after “improvement periods” lasting up to a single month. Previously, workers in such a status were given from 60 to 120 days to improve, depending on the agency.The orders will likewise force government unions to negotiate labor contracts with departments at a faster rate, tie layoffs to performance instead of seniority, charge unions rent for using federal office space, and limit the amount of official time an employee can spend attending to union-related affairs.“These executive orders make it easier for agencies to remove poor-performing employees and ensure that taxpayer dollars are more efficiently used,” stated White House Director of the Domestic Policy Council Andrew Bremberg. Far from the bureaucratic behemoth that conservatives have painted it as, civilian employment within the federal workforce, numbering 2.7 million, has dropped to levels lower than during the 1960s as a result of multiple bipartisan cutbacks over the past quarter century.The executive orders build upon legislation enacted last June. The Department of Veterans Affairs Accountability and Whistleblower Protection Act, passed by Congress in response to numerous scandals at the Department of Veterans Affairs, has led to over 1,600 staff firings, mainly of food service, nursing and housekeeping workers, in the past 11 months, according to statistics from the American Federation of Government Employees union. Such policies reflect measures enacted at the state level, including in Indiana, where then-Governor Mike Pence tied employee pay to performance. Far from getting the government to behave more efficiently, the current executive orders will have the effect of continuing the assault on federal workers and draining resources from public agencies already starved of funding.
Trump signs executive orders making it easier to fire feds, overhaul official time - President Donald Trump signed three executive orders Friday that aim to reduce the time it takes to fire poor-performing federal employees and overhaul federal employees union rights, including cuts to official time. In a conference call with reporters on Friday, senior White House officials said the executive orders call back to a promise Trump made at his State of the Union address, in which he sought to empower every cabinet secretary with the authority to award good federal employees and to remove poor performers more quickly. “Today, the president is fulfilling his promise to promote more efficient government by reforming our civil service rules,” said Andrew Bremberg, the assistant to the president and the director of the Domestic Policy Council. “These executive orders will make it easier to remove poor-performing employees and ensure that taxpayer dollars are more efficiently used.” One of the executives orders aims to make it easier for agencies to fire poor-performing employees and makes it harder for those employees to hide adverse employment information when seeking re-employment at another agency. The Government Accountability Office has found it takes between six months and a year, on average, to remove federal employees flagged for misconduct, plus an average of eight more months to resolve appeals. “Every year, the Federal Employee Viewpoint Survey has consistently shown that less than one-third of federal employees believe the poor performers are adequately addressed by their agency,” Bremberg said. Under this EO, agencies will be required to report disciplinary actions records and management of poor performers to the Office of Personnel Management.
Trump’s Pick To Head CDC Believes AIDS Was ‘God’s Judgement’ Against Homosexuals - Dr. Robert Redfield has held controversial opinions regarding AIDS throughout his lengthy career. President Donald Trump’s choice to lead the Centers for Disease Control and Prevention worked has previously expressed his belief that AIDS is God’s judgment upon homosexuals and spread through the U.S. due to lax family values. Via CNN: [Dr. Robert] Redfield's early engagement with the AIDS epidemic in the US in the 1980s and 90s was controversial. As an Army major at Walter Reed Medical Institute, he designed policies for controlling the disease within the US military that involved placing infected personnel in quarantine and investigating their pasts to identify and track possible sexual partners. Soldiers were routinely discharged and left to die of AIDS, humiliated and jobless, often abandoned by their families. Redfield also worked closely with the Christian organization Americans for a Sound AIDS/HIV Policy (ASAP) in the 1980s.The group maintained that AIDS was "God's judgment" against homosexuals, spread in an America weakened by single-parent households and loss of family values. Redfield wrote the introduction to a 1990 book, "Christians in the Age of AIDS," co-written by Smith, in which he denounced distribution of sterile needles to drug users and condoms to sexually active adults, and described anti-discrimination programs as the efforts of "false prophets." Redfield and ASAP supported a House bill – H.R. 2788, sponsored by ultra conservative Rep. William Dannemeyer (R-Calif.) – that would have subjected HIV positive individuals to “testing, loss of professional licenses and would have effectively quarantined them.”
Neoliberalism’s Assault on the Veteran’s Administration Continues --Lambert Strether - Before they sink beneath the waves of the latest moral panic or election horse-race hot take, I want to draw your attention to two stories that are presented as separate but are in fact intertwined. Both concern the Veterans Administration (VA), one of America’s several eligibility-determined single payer systems. (Like Britain’s NHS, but unlike Canadian or American Medicare, the VA owns its facilities and employs its own medical personnel. That makes it a target-rich environment for neoliberals.)
- 1) A newly-signed contract with Cerner Corporation for a new VA Electronic Health Record (EHR), the same as the Defense Department’s
- 2) The VA Mission Act, now on President Trump’s desk
The stories intertwine because they look like they’re part of the neoliberal privatization playbook, here described in a post about America’s universities: It’s almost like there’s a neo-liberal playbook, isn’t there? No underpants gnomes, they! [1] Defund [or sabotage], [2] claim crisis, [3] call for privatization… [4] Profit! [ka-ching]. Congress underfunds the VA, then overloads it with Section 8 patients, a crisis occurs, and Obama’s first response is send patients to the private system. Congress imposes huge unheard-of, pension requirements on the Post Office, such that it operates at a loss, and it’s gradually cannibalized by private entities, whether for services or property. And charters are justified by a similar process. (I’ve helpfully numbered the steps, and added “sabotage” alongside defunding, although defunding is neoliberalism’s main play, based on the ideology of austerity.) We can see this process play out not only in public universities, public schools, the Post Office, and the TSA, but in Britain’s NHS, a national treasure thatthe Tories are systematically and brutally dismantling.) I’ll begin by looking at the VA’s EHR project, and then move on to the VA Mission Act.
Republicans confirming Trump's court nominees at record pace | TheHill: Senate Republicans are poised to confirm more of President Trump's nominees to appeals courts next week, putting Trump on pace to have more of those nominees approved in the first two years of his tenure than any other recent president. It’s the latest milestone for GOP senators who have worked frantically to confirm nominees to the key bench, where judges have played crucial roles in cases involving controversial issues like the Deferred Action for Childhood Arrivals (DACA) program and Trump’s travel ban. Republicans were already setting a record pace for circuit court picks, breaking a record in December for the most confirmed during a president’s first year and confirming Trump’s 15th appeals court nominee late last month. Now they’re poised to confirm, as soon as next week, more circuit nominees for Trump than President Obama, President George W. Bush or President Clinton got confirmed by the end of their second year in office.In addition to the 15 appeals court nominees already confirmed, Senate Majority Leader Mitch McConnell (R-Ky.) has set up votes on six additional circuit court nominees for next week, when the chamber returns from a week-long recess. That will bring the total number of appeals court nominees confirmed for Trump up to 21. By comparison, the Senate confirmed 16 circuit court nominees for Obama by the end of his second year in office, with the final tranche of picks not being confirmed until December of 2010, according to the Senate Judiciary Committee.
Why It Matters That Phoenix Is Suing the Trump Administration - Last week, the city of Phoenix became the latest to jump into the legal fray when City Council members voted to pursue a lawsuit against the federal government, a move that ran in direct opposition to their state’s decision in April to steer clear of the lawsuits. The councilmembers’ primary argument was a financial one: If the Census includes a question about citizenship, Phoenix’s many noncitizen residents will likely skip the questionnaire, depressing the count and leading, ultimately, to a huge reduction in federal funds for the city. How huge? Phoenix Deputy City Manager Karen Peters estimated thst the city could lose as much as $350 for each person not counted by the Census, leading to losses of more than $107 million per year. (Others, meanwhile, suggested the figures could run even higher if some citizens also opt out). “Phoenix and its residents have too much to lose in the 2020 Census count if it’s not done right,” Mayor Greg Stanton said in a statement. But Phoenix isn’t the only place where activists got busy this past month, and the Census wasn’t the only battleground. A tax that demands accountability from large corporations. A program to restore drivers licenses to tens of thousands of residents. An effort to curb mass incarceration by banning private jails. These are just some of the efforts proposed and passed in May by cities seeking a more progressive path forward. Here are the details.
CNN Audience Plunges 25% As Fox News Dominates Prime Time - In a new TV ratings report published Wednesday by Nielsen Media Research, Fox News Channel continues to reign supreme in the cable news wars, while CNN’s primetime audience has collapsed by a shocking 25%. ” Fox News extended its run of consecutive months at number one to a staggering 197, while building hitting another impressive milestone: Fox News has now beaten every other network in basic cable for 23 months straight, based on total day ratings, with an average total day audience in May of 1.4 million viewers,” said Forbes. “In prime time, Fox News destroyed its competition, with an average total audience of 2.381 million viewers, compared to MSNBC’s 1.384 million and CNN’s 835,000. Among viewers 25-54, the group most coveted by advertisers, Fox News shook off a challenge in recent months from MSNBC to claim a clear victory: 461,000 viewers, well ahead of MSNBC (329,000) and CNN (265,000).” Nielsen reported that Fox News secured an impressive ten of the top fifteen shows in all of the cable news, with Fox News’ Sean Hannity finishing in the top most-watched cable news show in May. Aside from ESPN and the NBA playoffs, Hannity had more viewers than any other show on cable. In total viewers, “Hannity” had 3.261 million, followed by MSNBC’s “The Rachel Maddow Show” (2.627 million), and Fox News’ “Tucker Carlson Tonight” (2.617 million), “The Ingraham Angle” (2.617 million) and “The Five” (2.153 million). On a year-over-year basis, Fox News viewership increased +6 percent to 2.381 million viewers during primetime. MSNBC declined -2 percent to 1.654 million viewers, and CNN collapsed -25 percent in viewers to 888,000. When it comes to financial news, most Americans have now gravitated to Fox Business for their daily dose of mainstream economics. Fox has been leading the financial segment of news for twelve consecutive months in a row over its rival CNBC.
Ivanka Trump's suspiciously-timed Chinese business deals - She got several new Chinese trademarks just as President Donald Trump was helping ZTE. Ivanka Trump’s business recently secured five more valuable trademarks from China (with a sixth given trial approval), allowing her to expand her business there to the tune of millions of dollars in profits. The timing of the approval suspiciously overlaps with President Trump’s own dealings with China.The new trademarks were approved on May 7, just days before Trump promised on Twitter to help save the Chinese phone company ZTE. ZTE had previously been banned from buying American technology because it violated U.S. sanctions against Iran and North Korea. On Friday, Trump announced that ZTE would be allowed to continue business after paying a $1.3 billion fine, a deal that both Democrats and Republicans in Congress oppose. In fact, more than 60 House Democrats are now calling for an ethics investigation into Trump’s ties to China. Ivanka’s trademarks are not the only way the Trump family seems to have conspicuously benefited from Trump’s support for one of China’s biggest telecom companies. In the days before that public promise, China also loaned $500 million to an Indonesian theme park that will include a Trump-branded golf course and hotels. The Trump administration could not explain the apparent conflict of interest of the Trump organization benefiting from Trump’s actions as president. It is also noteworthy that this isn’t the first time that Ivanka’s business has been approved for Chinese trademarks under suspicious circumstances. Last year, three such trademarks were approved within hours of Ivanka and her husband Jared Kushner meeting with Chinese President Xi Jinping at Mar-a-Lago. Following that meeting, Trump also reneged on his campaign promise to label China a “currency manipulator” and instead praised the country’s leader.
Secret recording by Spanish police could mean trouble for Donald Trump Jr. -- Spanish police secretly recorded conversations between Alexander Torshin, an official at Russia’s Central Bank with close ties to the NRA, and Alexander Romanov, a Russian who was convicted of money laundering, Yahoo News reports. The discussions were related to a meeting Torshin had with Donald Trump Jr. at the NRA convention in May 2016.The tapes were then turned over to the FBI earlier this year. According to José Grinda, a Spanish prosecutor, that could be bad news for Trump Jr. “Mr. Trump’s son should be concerned,” Grinda told Yahoo News. Torshin’s connections to the NRA — and the potential use of the group by Russia to influence the 2016 election — has drawn considerable interest, including from Senator Ron Wyden (D-OR). McClatchy reported in January that the FBI is investigating whether Torshin “illegally funneled money to the National Rifle Association to help Donald Trump win the presidency.” The NRA spent more than $30 million to boost Trump’s campaign.Torshin was one of 17 Russians recently sanctioned by the U.S. Treasury Department.In April, the NRA acknowledged receiving “23 donations from individuals tied to Russia since 2015” but denied receiving any substantial sums. The NRA told Wyden that Torshin only paid his annual dues but said that “[b]ased on Mr. Torshin’s listing as a specially designated national as of April 6, we are currently reviewing our responsibilities with respect to him.” A report released in May by Dianne Feinstein, the ranking member on the Senate Intelligence Committee, said the committee received “a number of documents that suggest the Kremlin used the National Rifle Association as a means of accessing and assisting Mr. Trump and his campaign.” Feinstein’s report concluded that the “extent of Russia’s use of the NRA as an avenue for connecting with and potentially supporting the Trump campaign needs examination.”
Grassley: Fusion GPS Testimony "Extremely Misleading, If Not An Outright Lie" - Senate Judiciary Committee Chairman Chuck Grassley (R-IA) has accused Fusion GPS founder Glenn Simpson of giving "extremely misleading" testimony that may have been an "outright lie" regarding his post-election work conducting opposition research on the Trump matter. Of note, when Rep. Adam Schiff (D-CA) asked Simpson if he was still being paid for work related to the dossier, Simpson refused to answer. “So you didn’t do any work on the Trump matter after the election date; that was the end of your work?” Schiff asked.Simpson responded, saying: “I had no client after the election.”where we do have actual evidence of misleading testimony in Committee interviews, we should treat it seriously. For example, when the Committee staff interviewed Glenn Simpson in August of 2017, Majority staff asked him: “So you didn’t do any work on the Trump matter after the election date, that was the end of your work?” Mr. Simpson answered: “I had no client after the election.” As we now know, that was extremely misleading, if not an outright lie. -Sen. Chuck Grassley “Contrary to Mr. Simpson’s denial in the staff interview, according to the FBI and others," Grassley notes, "Fusion actually did continue Trump dossier work for a new client after the election." Grassley also noted comments made by Senate Intelligence Committee staffer Daniel Jones, who is conducting an ongoing, private investigation into Trump-Russia claims is being funded with $50 million supplied by George Soros and a group of 7-10 wealthy donors from California and New York.
Trump says he’s giving full pardon to Dinesh D’Souza — President Donald Trump says he will pardon conservative commentator Dinesh D’Souza, who pleaded guilty to campaign finance fraud. Trump tweeted Thursday: “Will be giving a Full Pardon to Dinesh D’Souza today. He was treated very unfairly by our government!” In 2014, D’Souza was sentenced to five years of probation after he pleaded guilty to violating federal election law by making illegal contributions to a U.S. Senate campaign in the names of others.
Judge Orders Stormy Daniels' Lawyer To Choose Between "Publicity Tour" Or Court Case: Guess Which He Picked - A federal judge excoriated the lawyer for former porn star Stormy Daniels on Wednesday, warning him that his attacks against President Trump's personal attorney, Michael Cohen, could impact Cohen's right to a fair trial. During a tense one-hour hearing Wednesday morning, U.S. District Judge Kimba Wood noted that the proceedings may be a precursor to a criminal trial "if charges are filed against Mr. Cohen," and that attorney Michael Avenatti would need to choose between his "publicity tour" on various television networks, or the court case. It appears the judge told @MichaelAvenatti he could represent his client in court or he could continue his daily appearances on CNN and MSNBC, but he could not do both. Guess which one he chose? — Byron York (@ByronYork) May 30, 2018 “I either want you to participate, or not be in the matter at all,” Wood told Avenatti. “I don’t want you to have some existence in a limbo where you’re free to denigrate Mr. Cohen, and I believe potentially deprive him of a fair trial by tainting a jury pool. … This conduct is inimicable to giving Mr. Cohen eventually a fair trial.” Judge Wood told @MichaelAvenatti today she wouldn't agree to his motion to intervene in Cohen's case if he's planning to continue his stream of inflammatory press conferences & TV interviews. Faced with that choice… Avenatti withdrew his motion. #Kugel https://t.co/33Iejiakt9 pic.twitter.com/1FBZaVEg9h
Listen To Michael Cohen Threaten A Reporter Over Donald Trump Story - A vitriolic audiotape of a phone call between Donald Trump’s personal attorney Michael Cohen and a reporter reveals how the lawyer tried to protect his boss with threats and fury. “What I’m going to do to you is going to be fucking disgusting,” Cohen tells the journalist in a rage on the tape aired for the first time Thursday by National Public Radio.The phone call offers a fascinating glimpse into the way a bristling Cohen dealt with people to get them to back off Trump, establishing his reputation as a “fixer.” Cohen “was supposed to say and act the way Donald wanted him to act,” “Michael had even expressed sometimes regret that he did certain things — because it was at the direction of Donald.” The phone call involved then-Daily Beast reporter Tim Mak, who wrote the NPR story and provided a tape of his conversation with Cohen. He had reached out to former Trump aide Hope Hicks in 2015 for a response to claims made by Trump’s first wife, Ivana Trump, in a 1993 deposition during divorce proceedings that her husband had once raped her. Ivana Trump confirmed that she used the word “rape” but later clarified that she didn’t mean rape in a “literal or criminal sense.” Mak heard back from Cohen, who first told the reporter, falsely, that by “definition you can’t rape your spouse.” Cohen then became increasingly heated — and threatening. “Tread very fucking lightly because what I’m going to do to you is going to be fucking disgusting. Do you understand me? Don’t think you can hide behind your pen because it’s not going to happen. I’m more than happy to discuss it with your attorney ... because, motherfucker, you’re going to need it.”
Latest scandal revelations raise questions on Obama agencies' roles | TheHill: With the avalanche of new disclosures about the Obama Justice Department’s and FBI’s alleged political spying on the Trump campaign and presidential transition, we must ask President Obama and all of his top lieutenants what they knew and when they knew it. A good place to start would be with Obama’s CIA director, John Brennan, notorious anti-Trump agitator and apparent ringmaster of the “deep state” resistance. Much of the focus regarding the infiltration and surveillance of the Trump team has been on the Obama DOJ and FBI. But what role, if any, did the Obama CIA play? Did it help concoct the Russian collusion story as a pretext to spy on domestic political adversaries? And if the CIA did act on a prefabricated deception, did it work independently of the DOJ and FBI or in conjunction with them? In recent weeks, Brennan has escalated his Twitter assault on Trump while watching him dismantle Obama-era foreign policies, from withdrawing from the Iran nuclear deal, the Trans-Pacific Partnership and the Paris Climate Accord to moving the U.S. embassy in Israel to Jerusalem. Trump is smothering Obama’s progressive “achievements,” halting his leftist revolution; that’s the driving reason behind the Obama team’s obsession with crushing him. Brennan was uniquely positioned to assist with that, including helping to shepherd the Russia fable right into the waiting maw of multiple investigations which have been used, just as intended, to undercut Trump and ultimately serve as grounds for his removal from office. Consider some of the Obama team’s critical intelligence gathering moves. As investigative journalist Sharyl Attkisson reminds us, in 2011 the “U.S. intel community vastly expand[ed] its surveillance authority, giving itself permission to spy on Americans who do nothing more than ‘mention a foreign target in a single, discrete communication.’ Intel officials also [began] storing and entering into a searchable database sensitive intelligence on U.S. citizens whose communications are accidentally or ‘incidentally’ captured during surveillance of foreign targets.” The groundwork was thus laid for future potential abuses, including surveilling and unmasking U.S. citizens who happened to be political opponents of the Obama administration.
Yes, the FBI Was Investigating the Trump Campaign When It Spied -- Well, well, well. The bipartisan Beltway establishment has apparently had its fill of this “Trump colluded with Russia” narrative — the same narrative the same establishment has lustily peddled for nearly two years. The Obama administration recklessly chose to deploy the government’s awesome counterintelligence powers to investigate — and, more to the point, to smear — its political opposition as a Kremlin confederate. Now that this ploy has blown up on the Justice Department and the FBI, these agencies — the ones that went out of their way, and outside their guidelines, to announce to the world that the Trump campaign was under investigation — want you to know the president and his campaign were not investigated at all, no siree.What could possibly have made you imagine such a thing? And so, to douse the controversy with cold water, dutifully stepping forward in fine bipartisan fettle are the Obama administration’s top intelligence official and two influential Capitol Hill Republicans who evidently pay little attention to major testimony before their own committees. Former National Intelligence director James Clapper was first to the scene of the blaze. Clapper concedes that, well, yes, the FBI did run an informant — “spy” is such an icky word — at Trump campaign officials; but you must understand that this was merely to investigate Russia. Cross his heart, it had nothing to do with the Trump campaign. No, no, no. Indeed, they only used an informant because — bet you didn’t know this — doing so is the most benign, least intrusive mode of conducting an investigation. In any event, I’ll leave it to the reader to imagine the Democrats’ response if, say, the Bush administration had run a covert intelligence operative against Obama 2008 campaign officials, including the campaign’s co-chairman. I’m sure David Axelrod, Chuck Schumer, the New York Times, and Rachel Maddow would chirp that “all is forgiven” once they heard Republicans punctiliously parse the nuances between investigating campaign officials versus the campaign proper; between “spies,” “informants,” and other government-directed covert operatives.
Amid ‘Russiagate’ Hysteria, What Are the Facts? - “Whom the gods would destroy, they first make mad.” That saying—often misattributed to Euripides—comes to mind most mornings when I pick up The New York Times and read the latest “Russiagate” headlines, which are frequently featured across two or three columns on the front page above the fold. This is an almost daily reminder of the hysteria that dominates our Congress and much of our media. Did the Times’ editors perform even the rudiments of due diligence before they climbed on their high horse in this long editorial, which excoriated ‘Russia’ (not individual Russians) for ‘interference’ in the election and demanded increased sanctions against Russia ‘to protect American democracy’? It had never occurred to me that our admittedly dysfunctional political system is so weak, undeveloped, or diseased that inept Internet trolls could damage it. The New York Times, of course, is not the only offender. Its editorial attitude has been duplicated or exaggerated by most other media outlets in the United States, electronic and print. Unless there is a mass shooting in progress, it can be hard to find a discussion of anything else on CNN. Increasingly, both in Congress and in our media, it has been accepted as a fact that “Russia” interfered in the 2016 election. So what are the facts?
- It is a fact that some Russians paid people to act as online trolls and bought advertisements on Facebook during and after the 2016 presidential campaign. Most of these were taken from elsewhere, and they comprised a tiny fraction of all the advertisements purchased on Facebook during this period. This continued after the election and included organizing a demonstration against President-elect Trump.
- It is a fact that e-mails in the memory of the Democratic National Committee’s computer were furnished to Wikileaks. The US intelligence agencies that issued the January 2017 report were confident that Russians hacked the e-mails and supplied them to Wikileaks, but offered no evidence to substantiate their claim. Even if one accepts that Russians were the perpetrators, however, the e-mails were genuine, as the US intelligence report certified. I have always thought that the truth was supposed to make us free, not degrade our democracy.
- It is a fact that the Russian government established a sophisticated television service (RT) that purveyed entertainment, news, and—yes—propaganda to foreign audiences, including those in the United States. Its audience is several magnitudes smaller than that of Fox News. Basically, its task is to picture Russia in a more favorable light than has been available in Western media. There has been no analysis of its effect, if any, on voting in the United States.
- It is a fact that many senior Russian officials (though not all, by any means) expressed a preference for Trump’s candidacy. After all, Secretary of State Hillary Clinton had compared President Putin to Hitler and had urged more active US military intervention abroad, while Trump had said it would be better to cooperate with Russia than to treat it as an enemy. It should not require the judgment of professional analysts to understand why many Russians would find Trump’s statements more congenial than Clinton’s.
WSJ Asks Why We Should Keep Listening To James Clapper's "Disinformation Campaign" - Former Director of National Intelligence James Clapper - a central figure in the "Russiagate" spy scandal, has earned quite the reputation for various misstatements, lies and even perjury. Clapper appeared before the Senate to discuss surveillance programs in the midst of a controversy over warrantless surveillance of the American public. He was asked directly, “Does the NSA collect any type of data at all on millions, or hundreds of millions of Americans?”There was no ambiguity or confusion and Clapper responded, “No, sir. … Not wittingly.” That was a lie and Clapper knew it when he said it. -John TurleySince the 2016 election, Clapper has landed a job as a paid CNN commentator while peddling a new book, Facts and Fears - all while trying to shift the narrative on the FBI spying on the Trump campaign and pushing unfounded Russian conspiracy theories.To that end, the Wall Street Journal's Holman W. Jenkins, Jr. asks: Why does a former intelligence chief make claims he can’t back up?James Clapper, President Obama’s director of national intelligence, gained a reputation among liberals as a liar for covering up the existence of secret data-collection programs.Since becoming a private citizen, he has claimed that President Trump is a Russian “asset” and that Vladimir Putin is his “case officer,” then when pressed said he was speaking “figuratively.” His latest assertion, in a book and interviews, that Mr. Putin elected Mr. Trump is based on non-reasoning that effectively puts defenders of U.S. democracy in a position of having to prove a negative. “It just exceeds logic and credulity that they didn’t affect the election,” he told PBS. Mr. Clapper not only exaggerates Russia’s efforts, he crucially overlooks the fact that it’s the net effect that matters. Allegations and insinuations of Russian meddling clearly cost Mr. Trump some sizeable number of votes. Hillary Clinton made good use of this mallet, as would be clearer now if she had also made good use of her other assets to contest those states where the election would actually be decided.
Comey Grilled As Feds "Seriously" Consider Charging McCabe In Criminal Referral - Federal investigators from the D.C. U.S. Attorney's office recently interviewed former FBI director James Comey as part of an ongoing probe into whether former FBI #2 Andrew McCabe broke the law when he lied to federal agents, reports the Washington Post. Investigators from the D.C. U.S. Attorney’s Office recently interviewed former FBI director James B. Comey as part of a probe into whether his deputy, Andrew McCabe, broke the law by lying to federal agents — an indication the office is seriously considering whether McCabe should be charged with a crime, a person familiar with the matter said. -Washington Post What makes the interview particularly interesting is that Comey and McCabe have given conflicting reports over the events leading up to McCabe's firing, with Comey calling his former deputy a liar in an April appearance on The View. Specifically, McCabe was fired for lying about authorizing an F.B.I. spokesman and attorney to tell Devlin Barrett of the Wall St. Journal - just days before the 2016 election, that the FBI had not put the brakes on a separate investigation into the Clinton Foundation, at a time in which McCabe was coming under fire for his wife taking a $467,500 campaign contribution from Clinton proxy pal, Terry McAuliffe. The WSJ article reads: New details show that senior law-enforcement officials repeatedly voiced skepticism of the strength of the evidence in a bureau investigation of the Clinton Foundation, sought to condense what was at times a sprawling cross-country effort, and, according to some people familiar with the matter, told agents to limit their pursuit of the case. The probe of the foundation began more than a year ago to determine whether financial crimes or influence peddling occurred related to the charity....Some investigators grew frustrated, viewing FBI leadership as uninterested in probing the charity, these people said. Others involved disagreed sharply, defending FBI bosses and saying Mr. McCabe in particular was caught between an increasingly acrimonious fight for control between the Justice Department and FBI agents pursuing the Clinton Foundation case. So McCabe was found to have leaked information to the WSJ in order to combat rumors that Clinton had indirectly bribed him to back off the Clinton Foundation investigation, and then lied about it four times to the DOJ and FBI, including twice under oath.
OMB Director Mulvaney Should Investigate Trump for Violating OMB Data Disclosure Policy - Today, consumer advocacy organization Allied Progress called on OMB Director Mick Mulvaney to investigate President Trump’s apparent violation of OMB data disclosure rules which specifically prohibit “employees of the Executive Branch” from commenting publicly on data until at least one hour after the official release time. Trump tweeted about this month’s jobs numbers before they were made public, a move that could have significant impact on the stock market and other aspects of the economy. The request comes one day after Mulvaney announced he would resume the Consumer Financial Protection Bureau’s (CFPB) data collection efforts, noting experts deemed CFPB systems “‘well-secured.'” When he froze such collection in December saying he took “data security very, very seriously,” many saw the move as an attack on the bureau’s ability to enforce laws protecting consumers from financial bad actors. Mulvaney even hired a hacker to try and find a way to criticize the CFPB’s data security. After showing such zeal for data security at the CFPB, will he have the courage to do the same with his boss in the White House?
How Two House Democrats Defended Helping the GOP Weaken Dodd-Frank Financial Regulations - Legislators from both parties came together this week to put the finishing touches on a sweeping measure to weaken bank regulations put in place to respond to the 2008 financial crisis.In a shock to some observers, 33 House Democrats and 17 Senate Democrats ultimately joined with nearly every Republican to send the bill to President Donald Trump’s desk. Only one GOP legislator, Rep. Walter Jones, R-N.C., voted against it. Sen. Heidi Heitkamp, D-N.D., a co-author of the bill, stood next to Trump at the signing ceremony on Thursday. The repeal bill was a major priority for industry. As The Intercept has reported, the bill loosens an array of regulations, including reporting requirements used to counter racial discrimination in lending practices. The bill also crucially shrank the amount of capital reserve banks must maintain and raised the threshold at which banks are required to comply with heightened risk-management regulations — all of it with the consequence of introducing more risk into the system.Though touted as a bill narrowly tailored to benefit small and community banks, it also includes a provision that could allow banks, such as Citigroup and JP Morgan, to add more debt-fueled risk to their balance sheet, a change advocated by Citigroup’s lobbyists.The House Democrats who backed the bill are broadly a coalition of New Democrats and Blue Dogs, who are self-consciously pro-business, and members of the Congressional Black Caucus, who have been the target of focused lobbying campaigns by Wall Street. The Intercept spoke to two of the New Democrats who voted in support of the bill, one of which previously worked at Goldman Sachs, while the other made his fortune launching two commercial lending start-ups.
Cheat sheet: How regulators plan to revamp the Volcker Rule — A proposal to revamp the Volcker Rule due to be released by regulators this week will aim to ease the industry's compliance burden while keeping the general framework of the proprietary trading ban in place, according to sources familiar with the matter.In what these sources call Volcker Rule 2.0, financial regulators will propose clarifications around what activity is allowed under the ban's liquidity management exception, as well as revisions to how certain trading activity is determined to be in compliance with the rule.The proposal will also seek to address concerns that the rule created a separate compliance regime running parallel to other requirements, these sources said.The sources said the proposal will address concerns about the so-called 60-day "rebuttable presumption," which some in the industry would like to see removed. The rule currently views any investment held for less than 60 days as prohibited, but banks can attempt to argue that a trade was exempted. The proposal will also address other industry complaints about compliance and recordkeeping requirements, the sources said.The changes to the Dodd-Frank Act trading ban — which was originally the idea of former Federal Reserve Board Chairman Paul Volcker — will be proposed Wednesday at an open meeting of the Fed board, and at a meeting the next day of the Federal Deposit Insurance Corp.'s board of directors."Our view is that the agencies will put forward a modest proposal that is relatively similar to what we would have seen if a Democrat won the White House," said Jaret Seiberg, an analyst at Cowen Washington Research Group, in a research note Tuesday morning. "This is not a radical change and the results for the biggest b anks may be less than the headlines would suggest. Our expectation is that the proposal will make modest changes designed to address some of the biggest objections from banks."
Volcker Rule gets a facelift: Here are 5 takeaways — Less than a week after President Trump signed a regulatory relief package into law, regulators officially took the next significant step Wednesday toward re-calibrating the post-crisis regime: revisions to the Volcker Rule. The Federal Reserve Board became the first agency to unveil proposed changes to the proprietary trading ban — named for former Fed Chairman Paul Volcker — including adjustments to the compliance process, how prohibited trades are defined and tailoring for institutions with different trading volumes, among other things. (The Federal Deposit Insurance Corp. is expected to approve the proposal Thursday.) "We have had almost five years of experience in applying the Volcker rule," said Fed Chairman Jerome Powell, referring to the 2013 regulation that implemented a provision of the Dodd-Frank Act. "The agencies responsible for implementing the rule see many opportunities to simplify and improve it in ways that will allow firms to conduct appropriate activities without undue burden, and without sacrificing safety and soundness." Here are five takeaways from the Fed's release of the proposal:
- Proprietary trading is still banned, but Volcker Rule compliance would get easier for certain institutions. Regulators proposed several changes to the compliance program within the Volcker Rule by streamlining certain standards to place greater emphasis on banks with the largest trading operations and more regulatory relief for those that engage in less trading.The proposal applies different compliance standards based on three different tiers of banks: “significant” for banks with at least $10 billion in trading assets; “moderate” for banks with $1 billion to $10 billion; and “limited” for banks with less than $1 billion in trading assets.
- Reactions to the proposal were wildly different. The initial responses to the proposal ran the spectrum from seeing the proposed changes as a recalibration of how banks comply with the Volcker Rule to seeing the proposal as an open invitation for banks to reengage in proprietary trading. “Even as banks make record profits, their former banker buddies turned regulators are doing them favors by rolling back a rule that protects taxpayers from another bailout,” said Sen. Elizabeth Warren, D-Mass., in a tweet. Sen. Jeff Merkley, D-Ore., called the proposal “a massive giveaway to the biggest banks.”
- Revised definition of “trading account” should please banks. As the Fed staff put it in a summary released prior to the board meeting, the proprietary trading ban in Dodd-Frank applies “to positions taken as principal for the trading account of a banking entity.”But how regulators define “trading account” to implement the statute has proven a challenge. Among the factors that can indicate a trading-account position is if there is “short-term intent,” which is reflected by a bank holding an instrument for 60 days or less. However, banks can try to make a case to regulators that just short-term trades are not banned. The industry has panned that so-called “60-day rebuttable presumption,” saying it cancels out trades that the Volcker Rule did not intend to ban.
- Banking agencies appear to be moving in lockstep on Volcker Rule changes. Other efforts to roll back post-crisis regulations have revealed divisions among some federal regulators, but that did not appear to be the case on Wednesday with proposed changes to the Volcker Rule. In April, the Fed and Office of the Comptroller of the Currency issued a proposal easing a big-bank capital measure known as the “enhanced supplementary leverage ratio.” But Brainard voted against the proposal, and the FDIC — which had helped write the original eSLR rule — withheld support for the changes. (Both Brainard and FDIC Chairman Martin Gruenberg were appointed by President Obama.)
- Foreign banks with a U.S. presence will find it easier to make non-U.S. trades. Regulators tweaked a few of the restrictions pertaining to foreign bank entities by allowing more exemptions for foreign banks to make propriety trades outside the United States. Currently, the Volcker Rule restricts such trading by a foreign bank if the person, affiliate or office arranging the trade is within the U.S., among other restrictions.
Fed eases “Volcker Rule” limits on bank speculation --The Federal Reserve Board, the principal US bank regulator, approved plans Wednesday to loosen restrictions on high-risk trading conducted by the major banks, after intensive pressure by Wall Street and the Trump administration.The Fed decision does not repeal the so-called Volcker Rule, named after the former Fed chairman, Paul Volcker, who helped devise it after the crash. But it significantly reduces the compliance burden for the biggest banks, while exempting many smaller banks entirely.Fed Chairman Jerome Powell declared Wednesday, “Our goal is to replace overly complex and inefficient requirements with a more streamlined set of requirements.” Four other bank regulatory institutions must approve the proposed changes, including the Federal Deposit Insurance Corporation (FDIC) and the Commodity Futures Trading Commission, and there will be a 60-day period for public comment before the new rules become final.Based on that timetable, it appears likely that by the time the tenth anniversary of the September 2008 crash rolls around, the banks will have been effectively released from even cosmetic restrictions on the kind of speculative trading that produced the biggest financial catastrophe in history.The supposed purpose of the Volcker Rule was to prevent banks from using ordinary deposits, guaranteed by the FDIC, to engage in speculative trading, particularly in highly leveraged markets like those for derivatives and other extremely complex financial instruments. In effect, the banks were making risky gambles to get quick superprofits, with the assurance that the taxpayers would pick up the tab if the bets went sour.The most important change approved Wednesday by the Fed shifts the burden of proof. Banks were previously required to show that each trade with FDIC-insured funds was in response to a customer demand or as a hedge against specific risks, rather th an “proprietary,” i.e., for speculative purposes. Now such trades will be presumed valid based on the banks establishing compliance programs tailored to the requirements of the Volcker Rule.
FDIC board gives green light to ease Volcker Rule — The Federal Deposit Insurance Corp. board unanimously approved a proposal Thursday to simplify and ease the Volcker Rule, which regulators agree has become overly complex. The FDIC board is among five agencies expected to sign off on the proposed changes to the proprietary trading ban imposed by the Dodd-Frank Act. The plan, which the Federal Reserve Board approved Wednesday, would tailor compliance programs for banks based on their trading volume and revise certain definitions to help banks determine what trades are banned. It would provide additional relief to banks with trading volume below $1 billion and foreign banks that trade outside the U.S. Although the changes would significantly alter the compliance process, regulators maintain that the type of risky trading originally banned under the rule first envisioned by former Fed Chairman Paul Volcker would still be banned. “The central goal from my standpoint is to preserve the core principles of the Volcker Rule as the agencies seek to provide greater clarity and simplicity to facilitate compliance,” outgoing FDIC Chairman Martin Gruenberg said during the board meeting. (His successor, Jelena McWilliams, was recently confirmed by the Senate and is expected to be sworn in soon.) “On that basis, I am prepared to support publication of the proposed rule in the Federal Register for public notice and comment,” Gruenberg said. In addition to the Fed and FDIC, the proposal is expected to be released for comment by the Office of the Comptroller of the Currency, Commodity Futures Trading Commission and Securities and Exchange Commission.
Volcker Rule 2.0 gives banks with limited trading a break — Federal regulators proposed significant tweaks to the Volcker Rule Wednesday that would tailor and simplify the proprietary trading ban, homing in on larger banks with risky trading desks and easing requirements for others. The proposal unveiled by the Federal Reserve Board reflects widespread agreement among banks and regulators that the 2013 regulation implementing the Volcker Rule was too complex. Yet the new plan, which other regulators are expected to sign off on later this week, would make revisions to the proprietary trading ban mandated by the 2010 Dodd-Frank Act, rather than drastically overhaul it. The proposed changes would include new definitions and categories to clarify what trades are permissible. For example, banks with consolidated gross trading assets and liabilities starting at $10 billion would be required to have a "comprehensive compliance program," while firms with “limited” trading activities of less than $1 billion would effectively be deemed in compliance with the rule. "This proposed rule will tailor the Volcker rule’s requirements by focusing the most comprehensive compliance regime on the firms that do the most trading," Fed Chair Jerome Powell said in a statement prepared for an open meeting where the board was expected to approve the proposal unanimously. "Firms that do more modest amounts of trading will face fewer requirements." Another significant proposed change would be to eliminate the so-called "60-day rebuttable presumption." The current rule prohibits trades of positions that a bank holds for 60 days or less, with the idea that such short-term holdings represent the kinds of activity the rule was intended to discourage.
No, regulators did not gut the Volcker Rule -- American Banker - Within minutes of the Federal Reserve Board releasing its long-awaited proposal to revise the Volcker Rule on Wednesday, the blowback from critics had already started. “Let’s call it like it is: This is a massive giveaway to the biggest banks,” said Sen. Jeff Merkley, D-Ore., a member of the Senate Banking Committee. “These are not small, technical changes. These are massive rewrites to make it easier for Wall Street banks to engage in the same types of risky bets that brought down our economy in 2008.”Merkley wasn’t the only one who saw it as a big change. In its coverage, The New York Times referred to the proposal as a “sweeping plan to soften the Volcker Rule” that would give big banks a “big reprieve” from the Dodd-Frank Act’s ban on proprietary trading. The liberal consumer advocacy group Allied Progress, meanwhile, said the plan would allow banks “to play casino again.” It’s difficult to square that portrayal of the proposal with the one offered by federal regulators, including those appointed by former President Obama, that the suggested changes are designed to make the rule easier to comply with, not easier to avoid. “The proposal will address some of the uncertainty and complexity that now make it difficult for firms to know how best to comply, and for supervisors to know that they are in compliance,” said Fed Chairman Jerome Powell. “Our goal is to replace overly complex and inefficient requirements with a more streamlined set of requirements.”So which portrayal is the right one? The available evidence suggests the Volcker proposal is more of a streamlining than a dramatic overhaul. A significant part of the plan would eliminate what’s called the “60-day rebuttable presumption.” Under current regulations, a trade of 60 days or less was banned unless a bank could prove to regulators it was not intended to be subject to the Volcker Rule. This proved a hassle for banks, which have long argued that proving a negative was overly difficult and stopped banks from engaging in market-making activities, which are expressly allowed under the Dodd-Frank Act.
Why Wall Street Traders Aren’t Rejoicing (Yet) Over Volcker Rule -- Wall Street has long derided the Volcker Rule, complaining it’s so complex that traders would need to be psychoanalyzed to comply. Now, banks are poised for a break, as authorities overhaul the fine print. Still it’s not exactly what traders wanted: A return to the golden era before 2008, when they could make big, bonus-boosting bets with their companies’ money. After the Federal Reserve and other agencies proposed changes Wednesday to the Volcker Rule, analysts and former regulators rolled out their predictions on the impact. It will probably make compliance cheaper and easier for many firms, especially the smallest. But the revised regime won’t significantly ease a ban on risky trading or expand the activities allowed -- at least for now. Regulators hinted that more changes may yet come.“It’s a recognition of how complicated and burdensome complying with the rule has been,” said Mike Alix, a former Fed official who’s now a partner at PricewaterhouseCoopers. The idea is to overhaul but not undermine the measure, he said. It’s “more of an attempt at clarification rather than relaxation.” The biggest win for Wall Street was eliminating part of the rule long ridiculed by bank leaders including JPMorgan Chase & Co. Chief Executive Jamie Dimon. In 2012, he singled out what’s known as the intent test -- a requirement that trades be done to help clients, not to bet the bank’s money on market moves. Every trader would need to be flanked by a lawyer and a psychologist to comply, Dimon quipped. The new proposal would instead start by focusing on whether the bank has labeled the security a trading asset on its balance sheet. Firms have long had to make such determinations for their books kept under U.S. Generally Accepted Accounting Principles. Yet that replacement would likely expand the rule’s reach to more securities. So to limit the impact, the new test would only apply to trading desks that accumulate more than $25 million in losses and profits in a three-month period. Big banks will still find themselves crossing that threshold. The main benefit is that it’s based on accounting standards banks are already using anyway, said Jai Massari, a partner at law firm Davis Polk & Wardwell LLP. “Is it a better test? Maybe,” she said. “The original version was too hard to do.
Reg relief bonus for community banks: More money for tech - Smaller banks were big winners from the regulatory relief bill signed into law by President Trump last month, with benefits such as easier mortgage underwriting requirements, simplified capital rules, an exemption from the Volcker Rule, extended time between exams and shorter call-report forms.Community banks could redirect funds previously allocated toward compliance into technology investment, industry observers say.“Any reduction in compliance-related activities should free up resources and budgets that can be redeployed to address more business and customer-related initiatives,” said Tom Kimmer, who leads the risk marketing and operations area at the analytics firm SAS. “Compliance activities and expenditures were seen by many as too onerous for many small banks, so any regulatory relief is welcome.” According to a study by the Federal Reserve Bank of St. Louis, banks with assets of less than $100 million reported total compliance costs were almost 9% of their noninterest expenses.
Could Democrat takeover of House rock the boat for banks? — Projections for the midterm elections raise the prospect of Democratic gains, particularly in the House. But would a flip of power in the lower chamber lead to real policy change for banks, or just a change in rhetoric?The GOP's clean sweep in the 2016 election was broadly favorable to banks, but midterms usually favor the opposition party. The political analysis newsletter Sabato's Crystal Ball, from Larry Sabato of the University of Virginia, said Thursday that the two parties have "equal odds" of taking the House majority. Others argue the Democrats are the favorites to win the House.Effects on banking policy of a House flip would likely stop short of regulatory toughening. Most analysts still project the GOP to hold on to the Senate, and there will still be a Republican in the White House come January. The recent package of provisions rolling back the Dodd-Frank Act will remain the law of the land. But a Democratic takeover in the House would upend the chamber's priorities, slowing down regulatory relief initiatives, putting more heat on Trump-appointed regulators who appear before the congressional committees, and giving Democratic leaders a bigger soapbox to criticize the industry and push for reforms that could expand regulatory burden. Here are four banking-policy effects of a potential party flip in the House:
Wells Fargo won't give timeline on end to regulatory troubles - Wells Fargo is facing pressure from shareholders to provide more information about when its regulatory woes are likely to subside, but the embattled bank is refusing to play along.“That whole ‘mission accomplished’ thing has failed for other people before,” Wells Chief Financial Officer John Shrewsberry said Wednesday at an investor conference in response to a question about whether the bank would be willing to establish a timetable. “I don’t think you’re going to hear those words. We’re just going to keep trying to get better all the time.”The $1.9 trillion-asset bank, which last month was fined $1 billion for mortgage and auto insurance abuses, remains under a microscope.Wells has disclosed that it is reviewing activities within its wealth management division in response to inquiries from federal agencies. The company’s foreign exchange business is similarly under internal review. Last year and early this year, some employees in the company’s commercial banking unit improperly altered customer information in an effort to meet a regulatory deadline, according to the Wall Street Journal.
Trading in Fannie, Freddie bonds is said to be probed by U.S. -- The federal government has opened a criminal investigation into whether traders manipulated prices in the $550 billion market for corporate bonds issued by Fannie Mae and Freddie Mac, according to people familiar with the matter.The probe, parts of which were described by four people familiar with it, shows that investigations by the Obama Justice Department into market manipulation by bank traders are continuing under President Donald Trump. The Obama administration secured billions of dollars in settlements and criminal charges tied to the rigging of currency markets and benchmark interest rates. The latest inquiry is in its early stages and focuses on whether traders at banks coordinated with one another in order to benefit the institutions they work for, said two of the people, who asked not to be named because the investigation is confidential. Investigators are looking at potential fraud and antitrust violations, four people said. The investigators are looking not into the mortgage securities issued by the two companies to finance home purchases but rather at the secondary market for Fannie's and Freddie's corporate bonds, two of the people said. Together, the mortgage-finance companies have outstanding corporate debt of about $548 billion, according to the Securities Industry and Financial Markets Association. Prosecutors from the Justice Department's antitrust division and criminal division are working on the investigation, according to two of the people. Antitrust lawyers focus on collusion to fix prices, while the criminal division is responsible for prosecuting fraud charges.
The financial scandal no one is talking about -- Nestled among the hedge-fund managers on Grosvenor Street in Mayfair, Number Twenty had recently been opened by accountancy firm KPMG. KPMG’s founders had made their names forging a worldwide profession charged with accounting for business. They had been the watchdogs of capitalism who had exposed its excesses. Their 21st-century successors, by contrast, had been found badly wanting. They had allowed a series of US subprime mortgage companies to fuel the financial crisis from which the world was still reeling.“What do they say about hubris and nemesis?” pondered the unconvinced insider who had taken me into the club. There was certainly hubris at Number Twenty. But by shaping the world in which they operate, the accountants have ensured that they are unlikely to face their own downfall. As the world stumbles from one crisis to the next, its economy precarious and its core financial markets inadequately reformed, it won’t be the accountants who pay the price of their failure to hold capitalism to account. It will once again be the millions who lose their jobs and their livelihoods. Such is the triumph of the bean counters. The demise of sound accounting became a critical cause of the early 21st-century financial crisis. Auditing limited companies, made mandatory in Britain around a hundred years earlier, was intended as a check on the so-called “principal/agent problem” inherent in the corporate form of business. As Adam Smith once pointed out, “managers of other people’s money” could not be trusted to be as prudent with it as they were with their own. When late-20th-century bankers began gambling with eye-watering amounts of other people’s money, good accounting became more important than ever. But the bean counters now had more commercial priorities and – with limited liability of their own – less fear for the consequences of failure. “Negligence and profusion,” as Smith foretold, duly ensued. After the fall of Lehman Brothers brought economies to their knees in 2008, it was apparent that Ernst & Young’s audits of that bank had been all but worthless. Similar failures on the other side of the Atlantic proved that balance sheets everywhere were full of dross signed off as gold.
Uneasy transition: Banks prepare for Libor’s demise --It will be another three years before the London interbank offered rate fades into history and is replaced by a new benchmark rate, but bankers are already expressing frustration with what promises to be an arduous transition. Libor, the rate that banks charge each other to borrow money, is slated to go by the wayside in 2021 and taking its place will be something called the Secured overnight financing rate, or SOFR. An industry committee overseen by the Federal Reserve that selected SOFR last summer did so with the derivatives market — by far the largest sector tied to Libor — in mind, but many industry observers are concerned that it could cause headaches for banks that primarily focus on traditional lending. That’s because SOFR is based on overnight repurchase agreements, so it doesn’t reflect longer-term credit risk. Libor, by contrast, is the rate reflects what banks pay to borrow from one another, so it always takes credit risk into account. The result is that the rates, at least right now, vary widely, and if that’s the case when SOFR takes effect in three years, banks could find themselves locked into loans that don’t match up with benchmark rates.
The Week in Public Finance: Governments Haven’t Had Rules for Revealing Their Private Debt — Until Now - A new rule is going into effect next month that many believe will shed light on a controversial spending area for state and local governments: how much they owe banks for private loans.The rule, issued by the Governmental Accounting Standards Board (GASB), lays out standards for reporting these loans in government financial reports. Unlike public debt -- which is issued through the municipal bond market and subject to regular disclosure requirements -- disclosures about direct loans from banks are not regulated. So, up until now, governments revealed as much -- or as little -- as they wanted about their private debt.The lack of continuity has been a source of growing frustration, particularly as governments’ private debt rolls have ballooned. Since 2009, banks have more than doubled their municipal holdings to $536 billion in securities and loans. Governments like the loans from banks because they come with lower costs and can be more convenient than going through the cumbersome public debt process. But observers worry that the terms of these loans aren't transparent enough, obscuring an important part of a government's financial health. The new rule requires governments to include in their annual reports a statement called GASB 88 that will include not just the amount of money borrowed directly from banks but any unused lines of credit, any public assets pledged as collateral and any terms laid out in the lending agreement that could trigger early payment or financial penalties.
May 2018: Unofficial Problem Bank list; Which Bank is the "Mystery" Problem Bank? -- Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for May 2018. Here are the monthly changes and a few comments from surferdude808: Update on the Unofficial Problem Bank List for May 2018. The list had a net decline of two insured institutions to 92 banks after three additions and five removals. After the net changes to the list and updating asset with 2018Q1 figures, aggregate assets declined during the month by $911 million to $18.0 billion. A year ago, the list held 140 institutions with assets of $34.2 billion. Actions were terminated against HomeStar Bank and Financial Services, Manteno, IL ($359 million); Freedom Bank of Oklahoma, Tulsa, OK ($156 million); and Superior Bank, Hazelwood, MO ($29 million). Finding their way off the list through merger were Indus American Bank, Edison, NJ ($231 million) and Wawel Bank, Wallington, NJ ($73 million). Additions this month were Maryland Financial Bank, Towson, MD ($66 million); Sunrise Bank Dakota, Onida, SD ($65 million); and The First National Bank of Sedan, Sedan, KS ($64 million). This week the FDIC released their official Problem Bank figures for the end of the first quarter of 2018, with their list holding 92 institutions with assets of $56.4 billion. At the end of the fourth quarter of 2017, the FDIC reported the 95 institutions with assets of $13.9 billion were on the official Problem Bank List. So if we understand the FDIC correctly, over the past 90 days, the official Problem Bank List has declined by three institutions but aggregate assets increased by a whopping $42.5 billion. Given that the FDIC does not disclose the contents of its official Problem Bank List, we are left to ponder what large-sized institution they added. Because of the small change in the number of banks on the list, our first guess is that a single institution with assets in the $40 billion to $46 billion range was added to the list. We have scoured all available information sources such as the enforcement action search engines of the Federal Reserve, FDIC, and OCC and SEC disclosures of publicly traded bank/bank holding companies without finding any recent safety & soundness actions issued against banks with asset sizes in the $40 billion to $46 billion range. There are six institutions with assets in this range, with five being controlled by a parent company whose stock is publicly traded. Obviously, receiving an enforcement action that should be issued to a bank that is on the Problem Bank List, is worthy of an 8-K disclosure. There is only one institution in that asset range, without an ultimate domestic parent, which would not have to disclose issuance of an enforcement action. We will continue to monitor the banking regulator websites and other information sources. Ideally, this mystery is solved by our next update.
Deutsche Bank’s U.S. Operations Deemed ‘Troubled’ by Fed -- The Federal Reserve has designated Deutsche Bank AG’s sprawling U.S. business in “troubled condition,” a rare censure for a major financial institution that contributed to constraints on its operations, according to people familiar with the matter. The Fed’s downgrade, which took place about a year ago, is secret and hasn’t been previously made public. The “troubled condition” status—one of the lowest designations employed by the Fed—has influenced moves by the bank to reduce risk-taking in areas like trading and lending to customers. It also means the bank has had to clear decisions about hiring and firing senior U.S. managers with Fed overseers. Even reassigning job duties and making severance payments for certain employees require Fed approval, the people said.The punitive action by the Fed, the bank’s primary U.S. regulator, has rippled through Deutsche Bank’s relationships with other regulators, including the U.S. Federal Deposit Insurance Corp., which has pressured the lender to improve controls and oversight, people familiar with those relationships said.Deutsche Bank shares fell as much as 8% Thursday on Germany’s Xetra exchange, to €9.07. That was their lowest intraday price since September 2016, when they were trading at the lowest levels in decades. The shares closed down 7.2% in Frankfurt, at €9.16, their lowest close on the Xetra exchange, according to data going back to 1991. The cost to insure €10 million Deutsche Bank bonds for five years rose roughly 19% Thursday to about €190,000 annually, according to data from IHS Markit . That is up from €73,000 at the start of the year. The price of the bank’s dollar-denominated bonds due 2032 declined 1.7% Thursday to about 85 cents on the dollar, according to data from MarketAxess. They traded for 99 cents on the dollar at the start of the year. The U.S. system for rating banks is called “CAMELS,” which stands for capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. A bank’s top-line rating, from 1 to 5, takes into account all those categories. The best rating is “1.” Troubled banks are rated either “4” or “5.” Scores aren’t made public. A downgrade by the Fed has also landed the bank’s FDIC-insured subsidiary, Deutsche Bank Trust Company Americas, on the FDIC’s “Problem Banks” list of at-risk institutions, according to people familiar with the matter.
Deutsche Bank CoCo Bonds Plunge, Shares Hit Record Low, after US Entity Makes FDIC’s “Problem Bank List” -- Wolf Richter: Shares of Deutsche Bank fell 7.2% today in Frankfurt to €9.16, the lowest since they started trading on the Xetra exchange in 1992. And they’re down 71% from April 2015.This came after leaked double-whammy revelations the morning: One reported by the Financial Times, that the FDIC had put Deutsche Bank’s US operations on its infamous “Problem Bank List”; and the other one, reported by the Wall Street Journal, that the Fed, as main bank regulator, had walloped the bank last year with a “troubled condition” designation, one of the lowest rankings on its five-level scoring system. The FDIC keeps its “Problem Bank List” secret. It only discloses the number of banks on it and the amount of combined assets of these banks. A week ago, the FDIC reported that in Q1, combined assets on the “Problem Bank List” jumped by $42.5 billion to $56.4 billion (red bars, right scale), the first such surge since 2008, as I mused… Oops, It’s Starting, Says This Chart from the FDIC:That increase in assets of $42.5 billion on the “Problem Bank List” nearly matches the assets of Deutsche Bank’s principal subsidiary in the US, Deutsche Bank Trust Company Americas (DBTCA) of $42.1 billion as of March 31. And this has now been now confirmed by the sources: it was DBTCA that ended up on the “Problem Bank List.”The Fed’s downgrade a year ago of Deutsche Bank’s US operations to “troubled condition” was what apparently nudged the FDIC in Q1 to put the bank on its Problem Bank List. The Fed’s ranking of banks is also a secret – for a good reasons: When these things come out, shares plunge and investors lose what little confidence they have left, as we’re seeing today. This loss of trust can entail larger problems that then coagulate into a self-fulfilling prophesy that perhaps should have self-fulfilled itself years ago. In addition to the shares sinking to a new low, Deutsche Bank AG’s contingent convertible bonds, one of the instruments with which the German entity has increased its woefully drained Tier 1 capital after the Financial Crisis are now plunging again. The 6% CoCos dropped 3.6% today, to 90.12 cents on the euro. They’re now down 15% from the beginning of the year:
S&P Downgrades Deutsche Bank To BBB+ -- Adding insult to ruinous injury, just hours after Deutsche Bank stock crashed to all time lows after it was revealed that it had been put on the Fed's "secret" probation list one year ago, overnight S&P downgraded Deutsche Bank's credit rating by one notch to BBB+ from A-, just three away from junk, citing "significant execution risks in the delivery of the updated strategy amid a continued unhelpful market backdrop" adding that "relative to peers, Deutsche Bank will remain a negative outlier for some time."S&P had initiated the credit review on April 12, shortly after the Christian Sewing was appointed new CEO, replacing John Cryan, saying repeated leadership changes pose questions over its long-term direction, against a background of chronically low profitability. In its statement (see below), S&P said that "Deutsche Bank’s updated strategy envisages a deeper restructuring of the business model than we previously expected" and that while management is taking “tough actions to cut the cost base and refocus the business in order to address the bank's currently weak profitability" the bank "appears set for a period of sustained underperformance compared with peers, many of whom have now finished restructuring." To be sure, the bank's first sub-A rating will likely raise its cost of debt even further, adding to the pressure already suffered by its bonds in the recent selloff and increases the stakes for new CEO Christian Sewing, who replaced John Cryan in April with a mandate to accelerate the bank's restructuring while refocusing on Deutsche Bank’s European home European market. S&P had initiated its review after Sewing’s appointment, saying repeated leadership changes pose questions over its long-term direction, against a background of chronically low profitability.
Goldman Vice President Charged With Insider Trading Scheme -- Having avoiding the insider trading spotlight for years, this morning Goldman Sachs finally succumbed to the greatest of indignities, when one of its employee was busted with insider trading.Woojae "Steve" Jung, 37, a Goldman TMT Vice President who is a Korean citizen and resides in San Francisco, was charged with securities fraud for using inside information about the investment bank’s clients to make $140,000 in illicit profits on 12 deals mostly involving Goldman tech company clients, while using a co-conspirator in South Korea to execute the trades.Jung, who had worked at Goldman since 2012, was charged with one count of conspiracy and six counts of securities fraud, for running the scam from 2015 to 2017 according to the SEC lawsuit filed in Manhattan Southern today (case 18-cv-04811). While Goldman Sachs wasn't identified by name in the complaint (where it is instead simply listed as the "Investment Bank") Jung’s LinkedIn page says he’s worked at the bank since 2012 after graduating from Wharton Business School.
Effort to coax banks back into small-dollar lending likely to fall short - To take seriously Comptroller of the Currency Joseph Otting’s recent announcement encouraging banks to offer short-term, small-dollar loans to subprime borrowers as an alternative to payday lenders, one has to believe that he is unaware of both the Community Reinvestment Act of 1977 and the Federal Deposit Insurance Corp.’s small-dollar pilot program from a decade ago. In an industry based on taking deposits and making various types of loans, it seems absurd that a federal regulator resorts to “encouraging” banks to lend to their own depositors without regard to FICO score — rather than using existing laws and regulations at his disposal. The CRA mandates that banks serve the credit needs of communities where they source deposits. Although federal regulators enforce this mandate only sporadically and focus almost exclusively on mortgages, the intent of the original legislation is clear, and goes to the essence of banking — taking deposits and making loans — without discrimination. The FDIC’s two-year pilot program, launched in 2008, was intended “to illustrate how banks can profitably offer affordable small dollar loans as an alternative to high-cost credit products, such as payday loans and fee-based overdraft protection." Having researched the payday advance industry prior to her confirmation, FDIC Chair Sheila Bair suspected that the effort would be an uphill battle. “So many banks rely on bounce protection to cover customers’ overdrafts for fees ranging from $17 to $35 per overdraft that they don’t want to cannibalize profits by offering customers other low-cost options,” she said in 2005.
Facing up to bias in facial recognition | American Banker - Bankers may have to put pitfalls in facial recognition higher on their priority list, and the concerns are as much societal as technical.Last week the American Civil Liberties Union demanded that Amazon stop selling its Rekognition program to government agencies and police departments. The ACLU said the technology is flawed and that it is worried law enforcement agencies will use the system to track protesters and immigrants. “Face recognition is a biased technology,” the ACLU said. “It doesn’t make communities safer. It just powers even greater discriminatory surveillance and policing.”Recent studies have shown facial recognition systems tend to have higher error rates for women and minorities than white men. In one real-life example, a Chinese woman’s colleague was easily able to unlock her iPhone X with her face. Apple gave the customer a new phone, but the same thing happened again. Both women are Asian. Apple did not respond to a request for comment. Rizwan Khalfan, chief digital and payments officer at TD Bank, said such stories give him pause but do not totally discourage him.Apple’s Face ID “is not 100%. But how many authentication capabilities are 100%?” he said. “I can’t think of anything that’s 100%. There have been a few cases like that, and we keep a close eye on it.” Another example he noted was of a father and son in India with a similar profile who were able to spoof the Face ID.
Experian among latest to join Hyperledger project -- More than a dozen new members have joined Hyperledger, an open-source organization focused on blockchain technology. The 16 new members include consumer credit reporting agency Experian, Hyperledger said Wednesday. Hyperledger has added 67 new members this year and now has over 235. Launched in 2016 and hosted by the Linux Foundation, Hyperledger specializes in helping blockchain developers complete open-source projects. The company currently includes 10 business blockchain and distributed ledger technologies. “The accelerating growth we are seeing shows the widening footprint of enterprise blockchain and increasing recognition of a community-based approach to advancing the technology and business models,” Brian Behlendorf, executive director of Hyperledger, said in a press release. Other companies to join the Hyperledger network include BlackRidge Technology, Blockdaemon and Chengdu Chiwu Software Technologies. Deutsche Bank became a premier member of Hyperledger in May.
S&P 500 companies have returned $1 trillion to shareholders in tax-cut surge (Reuters) - S&P 500 companies have returned a record $1 trillion to shareholders over the past year, helped by a recent surge in dividends and stock buybacks following sweeping corporate tax cuts introduced by Republicans, a report on Friday showed. In the 12 months through March, S&P 500 companies paid out $428 billion in dividends and bought up $573 billion of their own shares, according to S&P Dow Jones Indices analyst Howard Silverblatt. That compares to combined dividends and buybacks worth $939 billion during the year through March 2017, Silverblatt said in a research note. Earnings per share of S&P 500 companies surged 26% in the March quarter, boosted by the Tax Cuts and Jobs Act passed by Republican lawmakers in December. Companies have been returning much of that profit windfall to shareholders via share buybacks and increased dividends at never before seen amounts, highlighted by Apple's record $23.5 billion worth of shares repurchased in the first quarter. S&P 500 companies have also ploughed some of the windfall from lower taxes into investments toward growth or becoming more efficient. First-quarter capital expenditures totalled at least $159 billion, up more than 21% from the year before, according to S&P Dow Jones Indices. The biggest overhaul of the U.S. tax code in over 30 years, the new law slashes the corporate income tax rate to 21% from 35%, and charges multinationals a one-time tax on profits held overseas.
Stock Market Borrowing at All Time High, Increasing Risk of Downdrafts - Yves Smith - I find it hard to get excited about stock market risks unless defaults on the borrowings can damage the banking/payments system, as they did in the Great Crash. This is one reason the China perma-bears have a point: even though the Chinese government has managed to do enough in the way of rescues and warnings to keep its large shadow banking system from going “boom,” the Chinese stock markets permit much higher level of borrowings than those in the West, which could make them the detonator for knock-on defaults.The US dot-com bubble featured a high level of margin borrowing, but because the US adopted rules so that margin accounts that get underwater are closed and liquidated pronto, limiting damage to the broker-dealer, a stock market panic in the US should not have the potential to produce a credit crisis.But if stock market bubble has been big enough, a stock market meltdown can hit the real economy, as we saw in the early 2000s recession. Recall that Greenspan, who saw the stock market as part of the Fed’s mission, dropped interest rates and kept them low for a then unprecedented nine quarters, breaking the central bank’s historical pattern of reducing rates only briefly. A second reason for seeing stock prices as potentially significant right now be is that the rally since Trump won the election is important to many of his voters. I have yet to see any polls probe this issue in particular, but in some focus groups, when Trump supporters are asked why they are back him, some give rise in their portfolios as the first reason for approving of him. They see him as having directly improved their net worth.1 With that long-winded introduction, this chart, from Brad Lamensdorf, a portfolio manager at Ranger Alternative Management, via Business Insider, in many ways speaks for itself:
Wall Street Banks Tank Yesterday as Contagion Threat Grows - Pam Martens - Big Wall Street bank stocks outpaced the decline in the markets yesterday by a big margin. That’s a serious problem but here’s a bigger problem: if you get your information from mainstream media, you have no idea this happened or what it portends for the U.S. economy. It’s also now clear why so many members of Congress claimed that nobody could have seen the 2008 financial crisis coming: mainstream media simply refused to heed and report on the many warnings. The same thing happened yesterday. The Standard and Poor’s 500 Index fell by 1.16 percent yesterday while big banks on Wall Street fell by three, four and five times that amount. Morgan Stanley fell by a whopping 5.75 percent, helping its decline along by announcing at a conference that its wealth management division has been experiencing a slowdown since March. JPMorgan Chase, which serially touts its “fortress balance sheet,” shed 4.27 percent. Citigroup and Bank of America were down 3.99 and 3.98 percent, respectively, while Goldman Sachs shed 3.40 percent. All of the banks traded on heavier than normal volume – another negative signal. The carnage in U.S. bank stocks followed turmoil in Italian bank stocks overnight and selloffs in broader European stock indices over Italy’s failure to form a coalition government and the prospect of a new fall election that may fuel more anti European Union sentiment. Adding to financial alarm bells was a further decline of 6.22 percent in the share price of Deutsche Bank, a major player on Wall Street. Since the start of this year, Deutsche’s stock has lost a stunning 41.5 percent of its value and the company has been forced to announce it is slashing thousands of jobs. In 2016 the International Monetary Fund (IMF) issued a report that singled out Deutsche Bank as a significant contributor to systemic risks globally. A graphic (see below) showed that contagion from Deutsche Bank would have outward spillover effects to each of the Wall Street banks that traded poorly yesterday: Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America and Goldman Sachs. The Federal Reserve, the primary regulator of these Wall Street bank holding companies, is not just missing in action in terms of stemming the potential for contagion like that which occurred in 2008, it’s actually making matters worse. Reuters reports that today the Fed will begin to propose rules to water down the Volcker Rule – the part of the Dodd-Frank financial reform legislation of 2010 that was meant to curtail Wall Street’s use of Federally insured deposits to make risky bets for the house. The rule provided so many loopholes that it has never been a serious threat to Wall Street.
Capital’s Share of Income Is Way Higher than You Think – Steve Roth - The shares of income going to “capital” and “labor” are vexed issues. How much is received for doing work, and how much is unearned “property income”— interest, dividends, etc.? For a long time, economists thought these relative shares stayed roughly unchanged over time. But since the 70s, and especially since 2000, the share going to owners of capital has been increasing, while labor’s share has gone down.People get income for doing stuff, and they get income for owning stuff. Increasingly the latter. And the ownership share of income goes to a small slice of households that own almost all the stuff. The labor and capital-share measures you commonly see start by measuring total labor compensation — wages, salaries, and benefits. That’s labor’s share, in dollars. Subtract labor share from GDP, and you get the share of GDP going to owners (to “capital”). Owners’ share isn’t measured, it’s just a residual: GDP minus labor compensation.There are some gray areas. What counts as “labor compensation”? But in the big accounting scheme of things, they’re pretty small. Bottom line: National accountants do impressive yeoman’s work here; “labor compensation” is a pretty solid empirical measure of what workers receive for working. And the remaining income is a good measure of what people receive for owning stuff. Revealingly, you won’t find an official U.S. release of this labor-share-of-production measure in dollars or even percent on the Fred data portal — just an index showing its change over time. If you care to go down this theoretical black rabbit hole, some papers here, here, here, and here.Avoiding all that, here’s a more straightforward question to start with: what percent of household income comes from doing stuff, versus owning stuff — roughly, how much goes to owners vs workers? Here it is based on “primary income” (from the Integrated Macroeconomic Accounts), a measure that seeks to depict households’ market income before taxes and transfers.The relative jump in this picture is bigger, from 25% to 30% — a 20% increase. But owners’ income share looks smaller. Here’s a typical measure of capital share, as a percent of GDP — here just 1 – labor share percentage. (Note that this not an official U.S. measure, from the BEA or BLS; it’s from University of Groningen researchers.
A return to bank-payday lender partnerships? Not on Otting’s watch The once-close relationships between banks and payday lenders that fell out of favor with Washington regulators more than a decade ago may not be poised for a comeback after all. Back in March, the Office of the Comptroller of the Currency announced the termination of a 2002 consent order with Ace Cash Express, an Irving, Texas-based payday loan chain, in a decision that both critics and supporters of payday lending saw as a reversal of the regulatory tide. The 16-year-old consent order had been viewed as a key step in then-Comptroller John D. Hawke Jr.’s push to end rent-a-bank partnerships, under which payday lenders used bank charters to avoid state interest rate caps. So the recent decision to terminate the Ace Cash Express consent order was widely interpreted as a potential step toward the revival of partnerships between banks and high-cost lenders. It came four months into the tenure of Comptroller Joseph Otting, and at a time when new leadership at the Consumer Financial Protection Bureau has taken a softer approach to payday lending. But last week the OCC threw cold water on the possibility that rent-a-charter partnerships will stage a revival. In a bulletin that encouraged banks to make small-dollar consumer loans without the involvement of payday lenders, the agency stated that it takes an unfavorable view of firms that partner with banks for the purpose of evading state interest rate rules. “We don’t believe,” Otting said during a call with reporters, “that an institution should effectively lend its charter out to a vendor.” The language in last week’s bulletin was meant to signal that a return to the rent-a-charter arrangements of the early 2000s would be unacceptable to the OCC, according to a source familiar with the thinking of the agency’s leaders. This source stated that the OCC’s position was informed by discussions with community groups and other policy experts.
Lawyer who helped top payday lenders prey on financially desperate is sentenced to 8 years in prison - The lawyer behind some of the nation’s top payday lenders was sentenced to eight years in federal prison Friday after more than a decade spent enabling men who prosecutors say preyed on the financially desperate to fuel a multibillion-dollar industry.Wheeler K. Neff, 69, of Wilmington, Del., devised the legal framework behind business tactics that enabled his clients to dodge government regulatory efforts for years. He forged relationships with American Indian tribes that many payday lenders used to hide their involvement in issuing low-dollar, high-interest loans outlawed in many states.But flanked in a Philadelphia courtroom Friday by a cadre of family members, neighbors, country club friends, and fellow church congregants, Neff insisted that he’d believed at the time that everything he was doing was legal.“I now realize how people can be crushed under the weight of payday loans,” he told U.S. District Judge Eduardo Robreno. “However, it was never my intention to harm anyone.”Yet Robreno balked at defense efforts to cast Neff as a man who merely followed the orders of his chief client and codefendant, Main Line payday lender Charles M. Hallinan.The judge described deals that Neff and Hallinan struck with their Native American partners as “unlawful, a sham, and a fraud.”
CFPB looking to hop on fintech sandbox bandwagon — The Consumer Financial Protection Bureau is developing a regulatory sandbox for fintech firms, with help from the Commodity Futures Trading Commission, acting CFPB Director Mick Mulvaney said Tuesday.Mulvaney provided little detail about the sandbox project, but said the bureau is looking at what some states have done and is working "very closely" with the CFTC. In his remarks, Mulvaney also addressed his previous comments about the CFPB complaint database.A sandbox, which provides relief from certain regulatory requirements in a space where fintech startups can test products and government authorities can offer guidance, would follow progress the United Kingdom has already made to provide startups with such a testing ground.“We are ... in the process of putting together, for lack of a better word ... a fintech sandbox,” Mulvaney said in a speech to the Women in Housing and Finance group. “We recognize that so often the case with new technology, there is a needle you have to thread,” he added later. “If you don’t give any regulation at all, it has the chance to go off the rails and completely burn itself out, which is where I was fearing bitcoin was going to a couple months ago if they haven’t already. And at the same time, if you overregulate, you sort of tamp down that creativity and you discourage the innovation.”
CFPB’s Mulvaney plots HMDA rollback, but it may not matter -- Large banks could stand to get similar relief from mortgage data reporting requirements that Congress just gave community banks, but that relief may not be all it's cracked up to be.On the one hand, acting Consumer Financial Protection Bureau Mick Mulvaney's comments that he wants to ease Home Mortgage Disclosure Act requirements imposed by his predecessor is welcome news. But on the other, more data helps lenders know how they stack up to the competition, and lenders may end up collecting the data anyway. The data also would have exposed lenders to far greater scrutiny of fair-lending violations."The problem without comparable data is a lender can't figure out how they compare to everybody else," said Leonard Ryan, president of QuestSoft Corp., a Laguna Hills, Calif., provider of mortgage software. Mulvaney told an industry group, "If Congress had wanted us to collect 23 or 26 or 30 or 100 [data fields], they would have told us collect 23 or 36 or 100." Bloomberg News The regulatory relief bill that President Trump just signed gave 85% of all banks relief from expanded HMDA data fields mandated by the Dodd-Frank Act. Congress enacted HMDA in 1975 to root out discrimination in mortgage lending. Dodd-Frank mandated 14 additional data fields for HMDA data collection, on top of the nine that already existed. The statute also gave the CFPB the discretion to add additional data fields, and former CFPB Director Richard Cordray used that authority to establish 25 additional data fields.But Mulvaney turned heads earlier this month in a speech to the National Association of Realtors when he signaled he plans to use the same authority to rescind all 25 data fields. Such a move would extend regulatory relief to a wider array of lenders than in the reg relief legislation signed by Trump.
Senate Democrats: Update CRA but don't undercut it — A group of 16 Democratic senators, led by Sen. Mark Warner of Virginia, are calling on banking regulators to expand the Community Reinvestment Act’s reach and to avoid proposals that undermine the law.The May 25 letter, addressed to the heads of the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., comes as the agencies consider ways to modernize the 40-year-old law. The senators cite the decline in minority homeownership rates, challenges minority-owned business face in getting approved for credit and changes in technology in arguing for “a strong CRA.” The Democratic lawmakers align themselves with several recommendations from a Treasury Department report published in April, but warn against others. “We hope that you take this opportunity to strengthen the CRA, broaden its applicability to more regions and institutions, and avoid proposals that could undermine the continuing effectiveness of the CRA,” wrote the senators, including Sherrod Brown, D-Ohio, ranking member on the Banking Committee, and Elizabeth Warren, D-Mass. In the letter they argue that bank regulators should better account for the role that digital banking plays in serving lower income customers, as suggested in Treasury's report.
Fannie Mae issues mortgage fraud alert for Southern California - Fannie Mae is warning mortgage lenders and servicers about possible fraud schemes in Los Angeles County involving "34 apparently fictitious employers being used on loan applications." Lenders should "exercise due diligence in reviewing the entire loan file" if one of the businesses named comes up in a loan application, according to a recent fraud alert Fannie posted online. The list of allegedly fictitious employers in Southern California is subject to change, according to Fannie Mae. Other "red flags" listed in the government-sponsored enterprise's fraud alert are loans originated between 2015 and 2018 through third-party origination channels, including mortgages sourced by brokers.Employment verification is becoming more automated in line with efforts to create a more digital mortgage process, but smaller employers in particular still may need to be verified manually.
Freddie Mac increases its 2018 mortgage origination forecast - Freddie Mac's economists took a more bullish outlook than others on the 2018 mortgage market, raising its forecast by $30 billion citing higher-than-projected refinance activity.In its May forecast, Freddie Mac projected $1.75 trillion of mortgage originations in 2018 versus $1.72 trillion in its April forecast. The upward revision for 2018 is because mortgage refinance lending was stronger than expected so far this year, a Freddie Mac spokesman said. Even with the increased expectations for 2018, volume this year should decline by 6% from 2017's $1.436 trillion. For 2019, it now foresees $1.744 trillion in originations, compared to its April forecast of $1.76 trillion, as higher interest rates will take a toll on the market. Previously, Fannie Mae reduced its 2018 forecast by $23 billion to $1.667 trillion, while the Mortgage Bankers Association increased its outlook by a scant $2 billion to $1.613 trillion. Fannie Mae also reduced its 2019 forecast, but the MBA's was unchanged from April. "While this spring's sudden rise in mortgage rates are taking up a good chunk of the conversation, it's the stubbornly low inventory levels in much of the country that are preventing sales from really taking off like they should be," said Freddie Mac Chief Economist Sam Khater.
MBA: Mortgage Applications Decrease in Latest Weekly Survey, Refi Index lowest since December 2000 - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 25, 2018. .. The Refinance Index decreased 5 percent from the previous week to its lowest level since December 2000. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 2 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) decreased to 4.77 percent from 4.78 percent, with points remaining unchanged at 0.50 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990. Refinance activity is at the lowest level since December 2000.
Mortgage application volume slips even as interest rates drop -- Mortgage applications decreased 2.9%, falling for the eighth consecutive week even as interest rates came down from their recent highs, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey for the week ending May 25 found that the refinance index reached its lowest level in 18 years, decreasing 5% from the previous week. The refinance share of application activity decreased to 35.3% from 35.7% from the previous week. "Rates slipped slightly over the week as concerns over U.S. trade policy and global growth sent some investors back to safer U.S. Treasuries," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Minutes from the most recent Federal Open Market Committee meeting also yielded a more dovish tone, which added to the downward pressure in rates. Our 30-year fixed mortgage rate decreased two basis points over the week to 4.84% as a result. Both purchase and refinance activity decreased despite the drop in rates, part of which was due to slowing activity before the Memorial Day holiday." The seasonally adjusted purchase index decreased 2% from one week earlier and the unadjusted purchase index decreased 3% compared with the previous week and was 2% higher than the same week one year ago. Adjustable-rate loan activity decreased to 6.7% from 6.8% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 9.9% from 10.3% from the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 2 basis points to 4.84%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 8 basis points to 4.73%.
Average mortgage rates drop for the first time in four weeks - Mortgage rates fell for the first time in four weeks, dropping 10 basis points as investors' concerns over a government crisis in Italy drove bond yields lower, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.56% for the week ending May 31, up from last week when it averaged 4.66%. A year ago at this time, the 30-year fixed-rate mortgage was 61 basis points lower, when it averaged 3.94%. "The decline was driven by recent trade and geopolitical issues, which led to a sudden decrease in long-term Treasury yields," Freddie Mac Chief Economist Sam Khater said in a press release. Meanwhile, confident American consumers shrugged off the market volatility, as purchase mortgage applications continued to trend higher from a year ago."
Home Prices Continue to Rise in March - With today's release of the March S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.53% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 6.7% for the last two-plus years. Today's S&P/Case-Shiller National Home Price Index (nominal) reached another new high.The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.53% from the previous month. The nonseasonally adjusted index was up 6.8% year-over-year. Here is an excerpt from the analysis in today's Standard & Poor's press release. “Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust. Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising. Compared to the price gains of the last boom in the early 2000s, things are calmer today. Gains in the National Index peaked at 14.5% in September 2005, more quickly than Seattle is rising now. “The home price increases continue with the National Index rising at 6.5% per year,” [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.
Case-Shiller: National House Price Index increased 6.5% year-over-year in March - S&P/Case-Shiller released the monthly Home Price Indices for March ("March" is a 3 month average of January, February and March prices).This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.From S&P: Home Prices Not Slowing Down According to S&P CoreLogic Case-Shiller Index The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.5% annual gain in March, the same as the previous month. The 10-City Composite annual increase came in at 6.5%, up from 6.4% in the previous month. The 20-City Composite posted a 6.8% year-over-year gain, no change from the previous month. Seattle, Las Vegas, and San Francisco continue to report the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 13.0% year-over-year price increase, followed by Las Vegas with a 12.4% increase and San Francisco with an 11.3% increase. Twelve of the 20 cities reported greater price increases in the year ending March 2018 versus the year ending February 2018. “Seattle continues to report the fastest rising prices at 13% per year, double the National Index pace. While Seattle has been the city with the largest gains for 19 months, the ranking among other cities varies. Las Vegas and San Francisco saw the second and third largest annual gains of 12.4% and 11.3%. A year ago, they ranked 10th and 16th. Any doubts that real, or inflation-adjusted, home prices are climbing rapidly are eliminated by considering Chicago; the city reported the lowest 12-month gain among all cities in the index of 2.8%, almost a percentage point ahead of the inflation rate. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Composite 10 index is off 1.1% from the peak, and up 0.4% in March (SA). The Composite 20 index is 1.8% above the bubble peak, and up 0.5% (SA) in March. The National index is 8.8% above the bubble peak (SA), and up 0.4% (SA) in March. The National index is up 47.1% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices. The Composite 10 SA is up 6.4% compared to March 2017. The Composite 20 SA is up 6.7% year-over-year. The National index SA is up 6.5% year-over-year. Note: According to the data, prices increased in 19 of 20 cities month-over-month seasonally adjusted.
Home Prices Continued to Rise in March – WSJ - Home-price gains showed no signs of slowing in March, putting continued pressure on buyers as mortgage rates have also recently risen to their highest levels in years. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 6.5% in March, identical to the year-over-year increase reported in February. The 10-city index gained 6.5% over the year, up slightly from 6.4% the prior month. The 20-city index gained 6.8%, unchanged from the previous month. Economists surveyed by The Wall Street Journal had expected home price growth to decelerate slightly in March, with the 20-city index gaining 6.7%. The biggest price gains remained concentrated in the West. Seattle saw a 13% annual gain in prices, while Las Vegas prices increased 12.4% and San Francisco saw an 11.3% increase. David Blitzer, managing director at S&P Dow Jones Indices, attributed the price gains to a lack of homes for sale. Housing inventory is near the lowest level in decades. “Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” he said. Mr. Blitzer noted, however, that the current gains remain more moderate than the last housing bubble, when nationally home price gains peaked at 14.5%—bigger than the current gains in Seattle. Home-price gains accelerated in 2017 compared with 2016. Nonetheless, economists expected the pace of price growth to slow this year, due to a new tax law that passed in late February that reduced the incentive for homeownership, as well as rising mortgage rates that make owning a home less affordable. The rate for a 30-year mortgage rose to 4.66% last week from 3.99% at the end of last year, according to mortgage company Freddie Mac . Mortgage rates rose in 15 of the 21 weeks of the year so far-the highest share since Freddie began tracking the data in 1972. Affordability challenges and the shortage of inventory are dampening home sales. Existing-home sales fell 2.5% in April from the prior month to a seasonally adjusted annual rate of 5.46 million, the National Association of Realtors said last Thursday. Compared with a year earlier, sales in April were down 1.4%—the second consecutive month sales declined on an annual basis. Month-over-month, the U.S. home-price index rose 0.8% in March before seasonal adjustment, while the 10-city and the 20-city index rose 0.9% and 1% respectively from February to March. After seasonal adjustment, the national index rose 0.4% month-over-month.
Real House Prices and Price-to-Rent Ratio in March -- In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 8.8% above the previous bubble peak. However, in real terms, the National index (SA) is still about 10.0% below the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is still 15.7% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now around 6%. In March, the index was up 6.5% YoY. Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). Case-Shiller and others report nominal house prices. As an example, if a house price was $200,000 in January 2000, the price would be close to $284,000 today adjusted for inflation (42%). That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through March) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA)and the Case-Shiller Composite 20 Index (SA) are both at new all times highs (above the bubble peak). The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to December 2004 levels, and the Composite 20 index is back to June 2004. In real terms, house prices are at 2004 levels.. This graph shows the price to rent ratio (January 2000 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to February 2004 levels, and the Composite 20 index is back to December 2003 levels.
NAR: Pending Home Sales Index Decreased 1.3% in April, Down 2.1% Year-over-year --From the NAR: Pending Home Sales Lose Steam in April, Decline 1.3 Percent After two straight months of modest increases, pending home sales dipped in April to their third-lowest level over the past year, according to the National Association of Realtors. All major regions saw no gain in contract activity last month.The Pending Home Sales Index, a forward-looking indicator based on contract signings,declined 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month’s decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month. The PHSI in the Northeast remained at 90.6 in April, and is 2.1 percent below a year ago. In the Midwest the index decreased 3.2 percent to 98.5 in April, and is 5.1 percent lower than April 2017. Pending home sales in the South declined 1.0 percent to an index of 127.3 in April, but is still 2.7 percent higher than last April. The index in the West inched backward 0.4 percent in April to 94.4, and is 4.6 percent below a year ago. This was well below expectations of a 0.7% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in May and June.
Housing Rebound Dies: Higher Rates Spark New, Existing, & Pending Home Sales Slump - After disappointment in new- and existing-home-sales, pending home sales in April tumbled 1.3% MoM (missing expectations of a 0.4% gain - and well below the lowest analysts estimate). Contract signings to purchase previously owned U.S. homes unexpectedly declined in April, underscoring the housing market’s challenge centered around a persistent inventory shortage, according to data released Thursday from the National Association of Realtors in Washington. Signings dropped in three of four regions, led by a 3.2 percent decline in the Midwest; fell 1 percent in the South and 0.4 percent in the West, while sales agreements were unchanged in the Northeast. Pending home sales index for West was lowest since June 2014. A limited number of for-sale properties is keeping prices elevated at a time when mortgage rates have climbed to an almost seven-year high. “The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels,” Lawrence Yun, NAR’s chief economist, said in a statement. At the same time, “demand for buying a home is very robust,” Yun said. “Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.” As a reminder, economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later And housing does not look like it's going to get a bounce anytime soon...
The Headwind Facing Housing - There are a large number of public and private services that measure the change in home prices. The algorithms behind these services, while complex, are primarily based on recent sale prices for comparative homes and adjusted for factors like location, property characteristics and the particulars of the house. While these pricing services are considered to be well represented measures of house prices, there is another important factor that is frequently overlooked despite the large role in plays in house prices. In August 2016, the 30-year fixed mortgage rate as reported by the Federal Reserve hit an all-time low of 3.44%. Since then it has risen to its current level of 4.50%. While a 1% increase may appear small, especially at this low level of rates, the rise has begun to adversely affect housing and mortgage activity. After rising 33% and 22% in 2015 and 2016 respectively, total mortgage originations were down -16% in 2017. Further increases in rates will likely begin to weigh on house prices and the broader economy. This article will help quantify the benefit that lower rates played in making houses more affordable over the past few decades. By doing this, we can appreciate how further increases in mortgage rates might adversely affect house prices. In 1981 mortgage rates peaked at 18.50%. Since that time they have declined steadily and now stands at a relatively paltry 4.50%. Over this 37-year period, individuals’ payments on mortgage loans also declined allowing buyers to get more for their money. Continually declining rates also allowed them to further reduce their payments through refinancing. Consider that in 1990 a $500,000 house, bought with a 10%, 30-year fixed rate mortgage, which was the going rate, would have required a monthly principal and interest payment of $4,388. Today a loan for the same amount at the 4.50% current rate is almost half the payment at $2,533. The sensitivity of mortgage payments to changes in mortgage rates is about 9%, meaning that each 1% increase or decrease in the mortgage rate results in a payment increase or decrease of 9%. From a home buyer’s perspective, this means that each 1% change in rates makes the house more or less affordable by about 9%. The graph shows that lower payments resulting from the decline in mortgage rates benefited buyers by approximately $325,000. Said differently, a homeowner can afford $325,000 more than would have otherwise been possible due to declining rates.
Rural America Has Jobs. Now it Just Needs Housing -- Fewer homes are being built per household than at almost any time in U.S. history, and it is even worse in rural communities. Developers in less populated areas can’t tap into the economies of scale available in urban centers, making materials and labor more expensive. Rural areas are also seeing their populations stagnate or decline as younger people opt for urban living, adding to the gamble involved in speculative building. “As a developer or builder, you have to think hard about whether the risk is worth the reward,” said K.C. Belitz, president of the Columbus Area Chamber of Commerce. “For a lot, it isn’t.” There were 71,000 single-family homes built in rural areas in 2016, representing about 10% of all new single-family homes, according to the National Association of Home Builders. The rural market share of single-family homes has been falling in recent years. It was 14% in 2010, the association of home builders found. The housing shortage in rural communities has become especially acute as unemployment hits record lows. The national unemployment rate in April was at 3.9%, while in Platte County, which includes Columbus, unemployment fell to 2.7% in March. There are around 990 job openings in Platte County, according to the state. A total of 65 homes are now available for sale with a median listing price of $209,550, according to realtor.com. “It’s a pretty simple equation,” said Lance George, director of research for the Housing Assistance Council, a group based in Washington, D.C. that works on affordable housing in rural communities. “The incomes in this country have not really matched housing prices so you continue to have this disconnect.”
Construction Spending increased 1.8% in April - Earlier today, the Census Bureau reported that overall construction spending decreased in April: Construction spending during April 2018 was estimated at a seasonally adjusted annual rate of $1,310.4 billion, 1.8 percent above the revised March estimate of $1,286.8 billion. The April figure is 7.6 percent (±1.5 percent) above the April 2017 estimate of $1,217.7 billion. Private spending increased and public spending decreased: Spending on private construction was at a seasonally adjusted annual rate of $1,014.3 billion, 2.8 percent above the revised March estimate of $986.6 billion. ... In April, the estimated seasonally adjusted annual rate of public construction spending was $296.1 billion, 1.3 percent below the revised March estimate of $300.1 billion.This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.Private residential spending has been increasing, but is still 21% below the bubble peak.Non-residential spending is 10% above the previous peak in January 2008 (nominal dollars).Public construction spending is now 8% below the peak in March 2009, and 14% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending.On a year-over-year basis, private residential construction spending is up 10%. Non-residential spending is up 5% year-over-year. Public spending is up 8% year-over-year. This was below the consensus forecast of a 0.8% increase for April. And spending for the previous two months was revised up slightly.
Hotels: Occupancy Rate decreases Year-over-Year, Close to Record Annual Pace -- From HotelNewsNow.com: STR: US hotel results for week ending 19 May -- The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 13-19 May 2018, according to data from STR. In comparison with the week of 14-20 May 2017, the industry recorded the following:
• Occupancy: -0.5% to 70.2%
• Average daily rate (ADR): +3.5% to US$132.36
• Revenue per available room (RevPAR): +3.0% to US$92.92
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
Personal Income increased 0.3% in April, Spending increased 0.6% --The BEA released the Personal Income and Outlays report for April: Personal income increased $49.5 billion (0.3 percent) in April according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $60.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $79.8 billion (0.6 percent).Real DPI increased 0.2 percent in April and Real PCE increased 0.4 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent. The April PCE price index increased 2.0 percent year-over-year and the April PCE price index, excluding food and energy, increased 1.8 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through April 2018 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change. The dashed red lines are the quarterly levels for real PCE. The increase in personal income was at expectations, and the increase in PCE was above expectations.
April 2018 Headline Personal Spending Improves: The headline data this month show good month-over-month growth in expenditures - with expenditures year-over-year growth remaining above income growth - with the savings rate remaining historically low (and declined this month). The savings rate declined and remains near 21st century lows. Consumer spending growth is higher than income growth year-over-year. The backward revisions this month were relatively small.
- The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend declined while consumption's growth rate is growing.
- Real Disposable Personal Income is up 1.9 % year-over-year (published 1.7 % last month and revised to 1.7 %), and real consumption expenditures is up 2.7 % year-over-year (published 2.4 % last month and revised to 2.4 %)
- The 1Q2018 GDP estimate indicated the economy was expanding at 2.2 % (quarter-over-quarter compounded). Expenditures are counted in GDP, and income is ignored as GDP measures the spending side of the economy. However, over periods of time - consumer income and expenditure grow at the same rate.
- The savings rate continues to be low historically, and declined to 2.8 % this month [last month it was published the savings rate was 3.1 % - and is now revised to 3.0 %].
US consumer spending accelerated to 5-month high in April (Reuters) - U.S. consumer spending increased more than expected in April, a further sign that economic growth was regaining momentum early in the second quarter, while inflation continued to rise steadily. The Commerce Department said on Thursday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.6 percent last month, the biggest gain in five months. Data for March was revised up to show spending rising 0.5 percent instead of the previously reported 0.4 percent increase. Economists polled by Reuters had forecast consumer spending advancing 0.4 percent. Spending was boosted by purchases of gasoline and other energy products. Nondurable goods purchases increased 0.9 percent. Outlays on services rose 0.5 percent, lifted by demand for household utilities. Prices continued to gradually rise. The personal consumption expenditures (PCE) price index excluding the volatile food and energy components increased 0.2 percent for the third straight month. That left the year-on-year increase in the so-called core PCE price index at 1.8 percent. The core PCE index is the Federal Reserve’s preferred inflation measure. The U.S. central bank has a 2 percent inflation target. Economists expect the annual core PCE price index will breach the Fed’s target in the coming months. The Fed is expected to raise interest rates next month. It increased borrowing costs in March and has forecast at least two more rate hikes for this year. The moderate inflation also helped support consumer spending last month. When adjusted for inflation, consumer spending rose 0.4 percent in April after increasing 0.5 percent in the prior month. That suggests an acceleration in consumer spending after it grew at a 1.0 percent annualized rate in the first quarter, the slowest pace in nearly five years.
Savings Rate Tumbles Back Near Record Lows As Americans Spend More Than They Make For 28th Month In A Row -- While US personal incomes grew, as expected, at 0.3% MoM, Americans resumed spending fare more than they make (increasing 0.6% MoM in April). For the 28th month in a row, YoY growth in spending has outpaced incomes, sending the savings rate back down to just 2.8, the lowest since the debt-funded holiday spending spree of December 2017, and just shy of record lows. Spending YoY is the highest since April 2017: Adjusted for inflation, real consumption rose 0.4%, double the median projection of 0.2%. The Commerce Department said spending for gasoline and other energy goods, as well as household utilities, were leading contributors to the monthly increase in real outlays. Real durable goods spending, rose 0.3% after a 1.9% increase in the prior month; nondurable goods advanced 0.4% for a second month. Outlays on services, adjusted for inflation, rose 0.4% after a 0.3% gain in prior month. On the income side:
- Private sector wages rose 4.9% YoY vs 5.0% in March
- Government wages accelerated to +2.6% YoY, vs 2.5% in March
And at the end of all this, spending more than you're making sent the savings rate back down near record lows. Meanwhile, looking at the inflation side of things, the PCE Deflator, or headline spending - the Fed's preferred inflation indicator - rose 2.0% Y/Y, in line with expectations, while core PCE rose 1.8%, a drop from last month's original 1.9% print which was however revised lower to 1.8%. Yet curiously, on a monthly basis core PCE rose 0.2%, or more than the 0.1% expected.
PCE Price Index: April Headline & Core -The BEA's Personal Income and Outlays report for April was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.22% month-over-month (MoM) and is up 1.97% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.16% MoM and 1.80% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made to figures for January through March. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016 with a decline in 2017 only to bounce back later in the year. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.The index data is shown to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted. For a long-term perspective, here are the same two metrics spanning five decades.
Moody's: All Of Retail Isn't Dying, But Brick-And-Mortar Probably Is -- We have continually reported on many of the sure-fire signs that brick-and-mortar retail, as a sector, is still feeling enormous pressure from online retail and is, for the most part, simply disintegrating. On top of a number of bankruptcies over the last year, including stores like Bon-Ton and Toys 'R' Us, retail department store space is also freeing up and landlords are having trouble finding tenants. A new report out by Moody‘s, however, seeks make the argument that it isn’t all of retail that’s dying, just mainly brick and mortar. It also makes the point that e-commerce is what's primarily holding up "retail" in general. The first point we'll take with a grain of salt, the second we can concede a little easier. The article, which calls the decline in brick and mortar retail a "relatively minor change in the economy" noted that many of the employment shifts happening as a result of declining jobs in brick-and-mortar retail have been made up by big players in ecommerce:In the aggregate, it’s true that employment has flatlined at brick-and-mortar retailers, which we define as NAICS codes 44 and 45 minus nonstore retailers. However, despite the weak recent growth, brick-and-mortar retail employment is still close to a historical high at 15.3 million, falling only 22,000 jobs below the peak reached in 2017.The historically high number of retail jobs overall does mask one negative trend: The growth of retail has not kept up with the rest of the economy. At the peak in the mid-1980s, retail made up 11.8% of overall employment. By 2017, it had fallen to 10.4%. So is this the much trumpeted death of retail? This is overblown for two reasons. The report notes that this only brings retail's share of the labor maket to the same levels it was at back in the 1970's. Somehow, the report uses this mined piece of data to come to the conclusion that the sector "isn't entering new territory" and that retail overall may not be in as bad of shape as everyone thinks it is. It continues: Second, it’s useful to place this into a broader context by comparing it to two other industries that illustrate what a major structural change in the economy actually looks like: the decline of manufacturing and the rise of healthcare. As a share of employment, retail looks relatively flat over the past 50 years compared with these industries, generally fluctuating between 10% and 12%. In contrast, automation and globalization have pushed the manufacturing share of employment from 25% in 1970 to less than 9% today. On the other side of the ledger, the growth of healthcare spending has pushed healthcare employment from 5% of jobs to 13%.
Consumer Confidence Increased in May --The latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 16. The headline number of 128.0 was an increase from the final reading of 125.6 for April, a downward revision from 128.7. Today's number was below the Investing.com consensus of 128.2.Here is an excerpt from the Conference Board press release.“Consumer confidence increased in May after a modest decline in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions increased to a 17-year high (March 2001, 167.5), suggesting that the level of economic growth in Q2 is likely to have improved from Q1. Consumers’ short-term expectations improved modestly, suggesting that the pace of growth over the coming months is not likely to gain any significant momentum. Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term.” The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
U.S. Light Vehicle Sales decrease to 16.9 million annual rate in May - Based on a preliminary estimate from AutoData, light vehicle sales were at a 16.9 million SAAR in May.That is up 1% year-over-year from April 2017, and down 1% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for May (red, light vehicle sales of 16.9 million SAAR from AutoData).This was below the consensus forecast for May. Note that the increase in sales at the end of 2017 was due to buying following the hurricanes. Sales will probably move sideways or decline in 2018 after setting new sales records in both 2015 and 2016. The second graph shows light vehicle sales since the BEA started keeping data in 1967.Note: dashed line is current estimated sales rate. This is the lowest sales rate since last August.
Unsafe At Any Speed Redux, Self-Driving Cars, and Legal Liability - A piece in today’s Ars Technica, Senators probe driverless car testing amid lax Trump oversight, highlights an effort by two Democratic Senators, Richard Blumenthal, and Edward Markey, to learn more about how companies test self-driving vehicles on public roads:In the last couple of years, companies like Uber, Waymo, and GM’s Cruise have been testing more and more self-driving vehicles on public roads. Yet important details about those tests have been kept secret.Two Democratic senators are determined to change that. Last Friday, they sent out letters to 26 car and technology companies seeking details about their testing activities—part of a broader investigation into the safety of driverless vehicles. [Jerri-Lynn here: the complete text of the letter sent to Uber can be found in the previous link. The companies the letter was sent to can be found in this Markey press release.] The Ars Technica piece notes that some of the requested information has already been provided to regulators in California– which regulates of self-driving vehicles somewhat more stringently than do other states, such as Arizona, for instance– where extensive testing is being done and where a self-driving vehicle killed a pedestrian in March. Other than state regulation, companies have largely been left to their own devices in constructing and implementing self-driving testing protocols, without federal oversight by the National Highway Traffic Safety Administration (NHTSA), the relevant federal regulatory authority. The agency released a preliminary reporton this accident last week.
ISM Manufacturing index increased to 58.7 in May -- The ISM manufacturing index indicated expansion in May. The PMI was at 58.7% in May, up from 57.3% in April. The employment index was at 56.3%, up from 54.2% last month, and the new orders index was at 63.7%, up from 61.2%. From the Institute for Supply Management: May 2018 Manufacturing ISM® Report On Business®: “The May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent. The New Orders Index registered 63.7 percent, an increase of 2.5 percentage points from the April reading of 61.2 percent. The Production Index registered 61.5 percent, a 4.3 percentage point increase compared to the April reading of 57.2 percent. The Employment Index registered 56.3 percent, an increase of 2.1 percentage points from the April reading of 54.2 percent. The Supplier Deliveries Index registered 62 percent, a 0.9 percentage point increase from the April reading of 61.1 percent. The Inventories Index registered 50.2 percent, a decrease of 2.7 percentage points from the April reading of 52.9 percent. The Prices Index registered 79.5 percent in May, a 0.2 percentage point increase from the April reading of 79.3 percent, indicating higher raw materials prices for the 27th consecutive month.Here is a long term graph of the ISM manufacturing index. This was slightly above expectations of 58.4%, and suggests manufacturing expanded at a faster pace in May than in April.
Markit Manufacturing PMI: Continued Growth in May -- The May US Manufacturing Purchasing Managers' Index conducted by Markit came in at 56.4, down fractionally from the 56.5 final April figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is an excerpt from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release: “The US manufacturing sector enjoyed another bumper month in May, though continues to run hot. “With sales growing faster than production, backlogs of work are accumulating at the fastest rate for nearly four years, which should support further production growth in coming months. Business expectations regarding future production in fact picked up again to one of the highest levels seen over the past three years, adding to signs that strong growth will persist through the summer months.” [Press Release] Here is a snapshot of the series since mid-2012.
US Manufacturing Dipped (Or Bounced) In May As Prices Paid Hits 7 Year Highs - US Manufacturing dipped in May, according to Markit's final PMI print, sliding from its preliminary print; but US Manufacturing bounced in May, according to ISM, as Prices Paid (highest in 7 years), New Orders, and Employment all jumped. Decide which one you like... ISM Prices Paid and New Orders diverged in the last few months but New Orders bounced in May... Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The US manufacturing sector enjoyed another bumper month in May, though continues to run hot.“The past two months have seen the strongest back-to-back improvements in order books since the fall of 2014, fueled by strengthening domestic demand. New orders have in fact now grown at a faster rate than output in each of the past five months, highlighting how producers have struggled to boost production to meet sales. In the words of one manufacturer, “we’re selling more than we can make”.“The upturn has stretched supply chains to the extent that May saw the greatest lengthening of delivery times in the near-ten year history of the survey. Producers are also finding it difficult to find suitable staff.“With sales growing faster than production, backlogs of work are accumulating at the fastest rate for nearly four years, which should support further production growth in coming months. Business expectations regarding future production in fact picked up again to one of the highest levels seen over the past three years, adding to signs that strong growth will persist through the summer months.”So everything is awesome - which is odd given the slump in actual 'hard' economic data...
Dallas Fed: "Texas Manufacturing Expansion Accelerates Notably" --From the Dallas Fed: Texas Manufacturing Expansion Accelerates Notably: Texas factory activity rose markedly in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 10 points to a 12-year high of 35.2, signaling further acceleration in output growth.Most other indexes of manufacturing activity also indicated a sharp acceleration in May. The capacity utilization index rose notably from 18.7 to 32.2, and the shipments index jumped 20 points to 39.5. Demand growth picked up as the growth rate of orders index increased eight points to 26.5. All three measures reached their highest readings since 2006. Meanwhile, the new orders index held steady at 27.7.Perceptions of broader business conditions were even more positive in May than in April. The general business activity index rose five points to 26.8, and the company outlook index rose four points to 28.0. These readings are far above their respective averages. Labor market measures suggested stronger growth in employment and notably longer work hours in May. The employment index pushed up six points to 23.4, its highest reading in six years. Twenty-nine percent of firms noted net hiring, compared with 5 percent that noted net layoffs. The hours worked index shot up nine points to 23.2. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
May Regional Fed Manufacturing Overview --Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia.Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for May is 21.4, up from the previous month's 20.3.
May Chicago PMI Highest in 5 Months -The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose in May to a value of 62.7 from 57.6 in April. Investing.com forecast 58.2. Here is an excerpt from the press release:“It had been a somewhat sluggish start to the year, perhaps unsurprising after the stellar end to 2017, but the MNI Chicago Business Barometer found a higher gear in May. Although broad based, the rise was largely thanks to a rebound in demand and back-to-back growth in output,” said Jamie Satchi, Economist at MNI Indicators.“The result was, however, assisted by the intensification of supply side constraints, with order backlogs surging and lead times on key materials up sharply,” he added. [Source] Let's take a look at the Chicago PMI since its inception.
Unemployment and the Trade Deficit: It Really Isn’t That Complicated - Dean Baker --For some reason there seems to be a big market in efforts to confuse the public about the relationship between unemployment and the trade deficit. Robert Samuelson gives us yet another example in his column today.“By now, it must be obvious that U.S. trade deficits are connected loosely, if at all, with the unemployment rate, which is now 3.9 percent — the lowest since 2000. Meanwhile, the U.S. trade deficit in 2017 was $566 billion.“The explanation for the apparent paradox is the dollar’s role as the major international currency, used to conduct trade and investment among many (non-U.S.) countries. The extra demand for dollars raises its exchange rate, making U.S. exports costlier and imports cheaper. The result is a structural U.S. trade deficit.”This one makes pretty much zero sense. First of all, pointing to the low unemployment rate coinciding with a large trade deficits as evidence there is no link between unemployment and a trade deficit makes as much sense as pointing to a very underweight person suffering from the late stage cancer as an argument against any link between being seriously overweight and bad health.This is not a serious argument. A trade deficit reduces demand in the economy. It means that some of our spending is creating demand in Europe or Mexico, rather than in the United States. Other things equal that means less demand in the United States and higher unemployment. We can offset this lost demand with additional demand in the United States. We can have large budget deficits, as we do now. And we can have bubbles as we did in the late 1990s with the stock bubble and in the last decade with the housing bubble. That is why we can have a large trade deficit and low unemployment. It really is not hard.
Weekly Initial Unemployment Claims decrease to 221,000 --The DOL reported:In the week ending May 26, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 13,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 222,250, an increase of 2,500 from the previous week's unrevised average of 219,750.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. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 222,250.
2018 May Job Cut Report: Cuts Hold Steady at 31,517 - Job cuts announced by U.S.-based employers fell 12.6 percent, from 36,081 in April to 31,517 in May, according to a report released Thursday by global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc. Last month’s job cuts were down 4.8 percent from the 33,092 announced in the same month last year. That is the lowest monthly total since October 2017, when 29,831 cuts were announced. “On average, job cuts are at their lowest in May and June. Companies typically make their staffing moves at the beginning of the year or in the fourth quarter,” said John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc. So far this year, employers have announced 207,977 job cuts, 6.2 percent more than the 195,895 announced through the first five months of 2017. Retail leads all sectors in job cuts this year, with 69,316, 4,946 of which occurred in May. Retailers have announced 24 percent more cuts than through the same period last year, when 55,910 cuts were announced. So far this year, Challenger has tracked 2,565 store closures. Health Care/Products companies announced the second highest number of job cuts in May, with 4,003, for a total of 21,453 this year. Companies in the Services sector announced 19,363 cuts, with 4,698 in May.
ADP: Private Employment increased 178,000 in May --From ADP: Private sector employment increased by 178,000 jobs from April to May according to the May 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 hot job market has cooled slightly as the labor market continues to tighten,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Healthcare and professional services remain a model of consistency and continue to serve as the main drivers of growth in the services sector and the broader labor market as well. Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is strong, but slowing, as businesses are unable to fill a record number of open positions. Wage growth is accelerating in response, most notably for young, new entrants and those changing jobs. Finding workers is increasingly becoming businesses number one problem.”This was slightly below the consensus forecast for 186,000 private sector jobs added in the ADP report. The BLS report for May will be released Friday, and the consensus is for 185,000 non-farm payroll jobs added in May.
A Closer Look at Yesterday's ADP Employment Report - In yesterday morning's ADP employment report we got the May estimate of 178K new nonfarm private employment jobs from ADP, an increase over April's revised 163K. 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 saw an uptick in late 2016 that has continued. 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 no complete bounceback since. 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. For a longer-term perspective on the Goods Producing and Service Providing employment, see our monthly analysis, Secular Trends in Employment: Goods Producing Versus Services Providing, which is based on data from the Department of Labor's monthly jobs report reaching back to 1939.
May Employment Report: 223,000 Jobs Added, 3.8% Unemployment Rate -- From the BLS: Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries, including retail trade, health care, and construction. ... The change in total nonfarm payroll employment for March was revised up from +135,000 to +155,000, and the change for April was revised down from +164,000 to +159,000. With these revisions, employment gains in March and April combined were 15,000 more than previously reported. ... In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.92. Over the year, average hourly earnings have increased by 71 cents, or 2.7 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 223 thousand in May (private payrolls increased 218 thousand). Payrolls for February and March were revised up by a combined 15 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In May the year-over-year change was 2.363 million jobs. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate decreased in May to 62.7%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio increased to 60.4% (black line).The fourth graph shows the unemployment rate. The unemployment rate declined in April to 3.8%. This was above the consensus expectations of 185,000 jobs, and the previous two months combined were revised up by 15,000. A strong report.
May Jobs Surge By 223,000 Smashing Expectations; Jobless Rate Hits Historic Low As Wages Beat - When we previewed the May payrolls last night we said that "after two consecutive and not immaterial misses, and 6 misses in the past 8 months, it's about time for a solid payrolls "beat", even if nobody cares anymore about the number of part-time waiter and bartender jobs created." Well, perhaps not surprisingly, when the BLS revealed the answer moments ago, it reported that in May the US economy created 223K jobs, smashing expectations of 190K, and indeed confirming that Trump "may have seen been on to something."The change in total nonfarm payroll employment for March was revised up from +135,000 to +155,000, and the change for April was revised down from +164,000 to +159,000. With these revisions, employment gains in March and April combined were 15,000 more than previously reported.At the same time, the US unemployment rate dropped again, sliding to 3.8%, matching the lowest print hit back in April 2000, and the lowest going back all the way to November 1969. In fact, unrounded the unemployment rate was 3.755%, suggesting we were 0.01% away from a 3.7% print. Looking at the labor force, the participation rate dropped a tad to 62.7% as a result of a labor force which was unchanged on the month, while the number of employed rose from 155,181 to 155,474. Meanwhile, the number of people not in the labor force hit a new all time high of 95.915 million. But Trump leak rumors aside, the most important number in today's report was the Average Hourly Earnings, which rose by 0.3% M/M, beating the 0.2% consensus, and up 2.7% Y/Y, also above the expected 2.6%, suggesting that wage gains may once again be on the table, and confirming that not only is a June rate hike guaranteed, but that there will be little to derail the Fed's tightening plans for a considerable period of time. The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in May. In manufacturing, the workweek decreased by 0.2 hour to 40.8 hours, and overtime edged down by 0.2 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours. Meanwhile, average weekly earnings also beat, rising by 3.0% in May, up from 2.9%, and in line with the highest weekly increases since the financial crisis. Some more details from the report:Total nonfarm payroll employment increased by 223,000 in May, compared with an average monthly gain of 191,000 over the prior 12 months. Over the month, employment continued to trend up in several industries, including retail trade, health care, and construction.In May, retail trade added 31,000 jobs, with gains occurring in general merchandise stores (+13,000) and in building material and garden supply stores (+6,000). Over the year, retail trade has added 125,000 jobs.Employment in health care rose by 29,000 in May, about in line with the average monthly gain over the prior 12 months. Ambulatory health care services added 18,000 jobs over the month, and employment in hospitals continued to trend up (+6,000). Employment in construction continued on an upward trend in May (+25,000) and has risen by 286,000 over the past 12 months. Within the industry, nonresidential specialty trade contractors added 15,000 jobs over the month.Employment in professional and technical services continued to trend up in May (+23,000) and has risen by 206,000 over the year.
May jobs report: excellent news on unemployment, underemployment, and wages - HEADLINES:
- +223,000 jobs added
- U3 unemployment rate fell -0.1% from 3.9% to 3.8%
- U6 underemployment rate fell -0.2% from 7.8% to 7.6%
- Not in Labor Force, but Want a Job Now: up 68,000 from 5.115 million to 5.183 million
- Part time for economic reasons: down -37,000 from 4.985 million to 4.948 million
- Employment/population ratio ages 25-54: unchanged at 79.2%
- Average Weekly Earnings for Production and Nonsupervisory Personnel: rose $.07 from $22.52 to $22.59, up +2.8% YoY. This is the highest nominal YoY gain for the entire expansion. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
- Manufacturing jobs rose 18,000 for an average of 22,000/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.
- March was revised upward by 20,000. April was revised downward by -5,000, for a net change of 15,000.
- the average manufacturing workweek declined -0.2 hours from 41.0 hours to 40.8 hours. This is one of the 10 components of the LEI.
- construction jobs increased by 25,000. YoY construction jobs are up 286,000.
- temporary jobs decreased by -7800.
- the number of people unemployed for 5 weeks or less decreased by -81,000 from 2,115,000 to 2,034,000. This is a new post-recession low.
- Overtime declined -0.2 hours from 3.7 hours to 3.5 hours.
- Professional and business employment (generally higher-paying jobs) increased by 23,000 and is up +206,000 YoY.
- the index of aggregate hours worked in the economy rose by 0.2%.
- the index of aggregate payrolls rose by 0.5%.
May Jobs Report – The Numbers – WSJ - U.S. employers added more jobs than expected in May, and the jobless rate fell to an 18-year low. Here are some of the key figures from Friday’s Labor Department report. The jobless rate in May dropped to 3.8%, matching April 2000 as the lowest reading since the 1960s. The unemployment rate had been 4.1% for six months before dipping to 3.9% in April, the first sub-4% unemployment rate since late 2000. A historically low unemployment rate and modest wage increases should keep Federal Reserve policy makers in line to raise the central bank’s benchmark interest rate at a meeting later this month. The U.S. economy added a robust 223,000 jobs in May, bucking many economists’ expectations that hiring should slow in a tightening labor market. May’s payrolls figure is much stronger than the 190,000 jobs economists surveyed by The Wall Street Journal had expected. Employment trended upward in industries including retail, health care and construction. Revised figures show payrolls were upwardly revised a net 15,000 in March and April.May’s 2.7% year-over-year increase in average hourly earnings remained modest considering a historically low unemployment rate. Wages haven’t increased at better than a 3% rate from a year earlier since the recession ended in 2009. On the month, earnings rose 8 cents in May. Workforce participation was 62.7% in May, down slightly from the 62.8% rate posted in April and continuing a fairly sideways trend for participation. The labor-force participation rate bottomed out in September 2015, after a 15-year decline, and has stabilized over the last couple of years. In May, the unemployment rate for workers 25 years and older with less than a high-school diploma was 5.4%, down from 6.2% a year earlier. The unemployment rate for those without a high-school diploma touched a 25-year record low late last year, and has held below 6% this year, a sharp drop from 8.5% in September 2016. Meanwhile, the unemployment rate for college grads has been stable at a low level. In May, college grads saw an unemployment rate of 2%.
May Jobs: Another solid month; Lowest black unemployment rate on record; Wage growth ticks up for mid-wage workers. -- Jared Bernstein - Payrolls rose 223,000 last month, beating expectations of 190,000, and the unemployment rate ticked down to 3.8 percent, its lowest level since April 2000, and before that, a level much more commonly seen in the 1960s. (At 3.75 percent, the jobless rate just missed falling two-tenths). [Before the release, President Trump tweeted that he was looking forward to the jobs numbers. Since certain top officials, including the president, see the report on Thursday night, his tweet telegraphed the positive report, a highly unusual occurrence.] The unemployment rate for African-Americans fell to 5.9 percent, an historical low point by a wide margin. Typically, the black unemployment rate is twice the white rate. But persistently tight labor markets are especially helpful for minority workers, as they make it more costly for employers to discriminate. In May, the black/white ratio was 1.7, still too high, but lower than average, underscoring the relative gains to less-advantaged workers. Given the noisiness of these monthly data, our patented jobs smoother looks at average monthly employment gains over 3, 6, and 12-month intervals. As shown below, the trend in payroll growth is running at around 180K-200K per month, a solid trend that, if it persists, is strong enough to continue pushing down the unemployment rate.Wage growth picked up slightly, up 2.7 percent overall and 2.8 percent for middle-wage workers. This too is a positive sign, as the tight labor market pushes up wage growth. The figures show yearly wage gains for all private sector workers and for the 82 percent that are blue-collar production workers and non-managers in services. The smooth trend in the first figure shows little by way of recent acceleration. Hourly wages were up 2.7 percent last month, a bit faster than the latest reading on consumer inflation of 2.4 percent.The other figure, however, for middle-wage workers, shows a bit of a trend increase, as wage growth has accelerated in recent months and was 2.8 percent in May. This is once again consistent with the tight labor market disproportionately helping the least advantaged. If it sticks, this “trend is our friend,” as is the solid payroll jobs’ trend. But is there anything out there that could whack it? The Fed could raise interest rates too quickly, but, barring a sharp acceleration in prices, which I judge to be unlikely, I believe they will be careful not to make this mistake. Trump’s trade war could, and probably will, escalate. That’s slightly worrisome, but remember, relative to other countries, the US is somewhat insulated to trade shocks as our imports as a share of GDP are only 15 percent, compared to at least twice that in Europe.
The May Jobs Report in 8 Charts - The U.S. unemployment rate ticked down to 3.8%, the lowest reading since April 2000, and employers added 223,000 jobs in May.Broader measures of unemployment and underemployment, including discouraged workers who have stopped job hunting, as well as part-time employees who would like full-time work, also moved down the past month. All four alternative measures of joblessness are at their lowest level since the recession.Wage growth picked up in May for both weekly and hourly wages. Both measures are near, but not quite at, their fastest pace in recent years.Over the past year, the number of jobs increased by 1.6%, a rising pace from a few months ago but slower than in 2015.The share of Americans either working or looking for work, known as the labor-force participation rate, fell slightly last month. The rate has trended downward over the past decade largely due to the retirement of the baby-boomer generation.Participation rates are much higher for Americans ages 25 to 54, when retirement or education do not keep many people out of the workforce. Even among these workers, however, participation rates have slipped slightly in recent months.The median duration of unemployment has been growing shorter over the past eight years. Still, the typical spell of unemployment lasts longer than during previous periods of such low unemployment in the mid-2000s and late 1990s.Unemployment rates have come down for workers of all education, with unemployment rates the lowest for those with a college education. Their unemployment rate fell to 2% last month. Unemployment rates have trended downward for men and women of all races and genders. Last month, the unemployment rate for black women fell below the unemployment rate for Hispanic women for the first time on record.
Unemployment Rate Falls to 18-Year Low; Solid Hiring in May —Americans traditionally left behind as jobs and wages grow—high-school dropouts, blacks and Latinos—are reaping the benefits of a tightening labor market, with an unemployment rate that hasn’t been lower in nearly half a century.The jobless rate in May ticked down to a seasonally adjusted 3.8%, the lowest since April 2000, the Labor Department said. The last time the rate was lower was in 1969.At the same time, U.S. employers added 223,000 jobs last month, extending the longest continuous job expansion on record to 92 months. Average hourly earnings edged up 2.7% from a year earlier—and raises were even stronger for rank-and-file than managers.“It’s pretty hard to argue that the labor market is anything but right in the sweet spot,” said Dan North, chief economist at business insurer Euler Hermes North America. “There is tremendous demand for labor right now.” And those gains are extending to all corners of the labor market. The unemployment rate for women, at 3.6% last month, was the lowest since 1953, when a far smaller share of women sought jobs. The jobless rate for workers older than 24 without a high-school diploma fell in May to 5.4%—near a record low. The jobless rates for blacks and Latinos are also near record lows.The pace of overall wage gains has been modest, despite expectations that a tighter labor market should produce larger paychecks. But wages for rank-and-file workers are improving. Nonsupervisor wages rose 2.8% in May from a year earlier, the best annual gain since mid-2009.In the first quarter of this year, median weekly earnings for Americans without a high-school diploma rose by 10% from a year earlier, separate Labor Department data showed. That compared with 0.5% annual growth for college graduates.“When employers run out of workers, that’s when people with the weakest bargaining positions get put in the driver’s seat and can negotiate for better pay and get themselves into roles,” said Andrew Chamberlain, chief economist at recruiting site Glassdoor.Strong hiring implies economic growth can accelerate this year, after increasing at a modest 2.2% annual pace in the first quarter. Forecasting firm Macroeconomic Advisers slightly raised its forecast for second-quarter output gains to a 4.1% rate after the jobs report. The employment report bolsters the view of Federal Reserve officials who favor more increases in short-term interest rates in order to keep the economy from overheating. The central bank is on track to next boost rates at its June 12-13 meeting. Inflation has firmed this year, and many officials believe falling unemployment will fuel faster wage and price increases. The historically low unemployment rate, however, may overstate the strength of the labor market, said Diane Swonk, chief economist at accounting and consulting firm Grant Thornton LLP. “This is not your father’s 3.8% unemployment rate,”
US Private-Sector Employment Growth Accelerated In May - Companies added more workers in the US in May, expanding payrolls by the most in three months, according to this morning’s employment report from the Bureau of Labor Statistics.Private-sector jobs jumped 218,000 last month, well up from April’s 162,000 advance. The firmer growth rate lifted the year-over-year change to 1.89% — a 16-month high. Meanwhile, the jobless rate ticked down 3.8% in May, an 18-year low.“This is the last shoe to drop in the labor market,” notes Torsten Slok, chief international economist at Deutsche Bank. “It’s just a matter of time before wages start going up more strongly, but there’s frustration that it hasn’t happened yet, even though unemployment is the lowest it has been in almost 18 years.”Today’s numbers show that average hourly earnings increased 0.3% last month, following a 0.1% gain in April. Today’s results translate into an annual increase in average hourly earnings of 2.7%, a four-month high.Today’s report suggests that labor-market growth is picking up speed following several years of deceleration. The year-over-year trend for private-sector employment, which ticked up to 1.89% last month, has been edging higher after bottoming out at 1.62% last September, which marked a trough after more than two years of sliding growth.“The US economy has this incredible head of steam,” in part due to the growth forces unleashed by last year’s tax cut, says Josh Wright, chief economist at software firm iCIMS.Today’s employment data certainly supports that analysis. At the very least, the number du jour reaffirms that macro risk for the US remains low and the outlook remains bright for the near-term. Perhaps, then, it’s fitting that this month marks the ninth anniversary of the current economic expansion, the second-longest on record, based on NBER data. It’s anyone’s guess what’s in store for the months ahead, but if today’s update is a guide the recovery may be strong enough to reach its tenth birthday and beyond, and set a new record for longevity in the process.
The US Added A Record 904,000 Full-Time Jobs Last Month - Shortly after Trump tweeted his controversial payrolls report preview, in which he hinted today's payrolls number would be a strong beat, saying "Looking forward to seeing the employment numbers at 8:30 this morning"... Looking forward to seeing the employment numbers at 8:30 this morning.— Donald J. Trump (@realDonaldTrump) June 1, 2018 ... and which prompted a solid bid in the US dollar ahead of the payrolls number... ... we got the May payrolls report which, indeed, was a beat, but not nearly as substantial as some, even hyperbolically, had expected: First 1MM+ number? https://t.co/TGb5UCXWk7 Or perhaps it was, because while looking at the headline Establishment Survey print showed a +223K jump in total jobs, looking at the Household Survey showed one stunning outlier print: in May the number of full-time jobs rose from 127.753 million to 128.657 million, a 904K increase in one month, offset by a 625 plunge in low-quality, part-time jobs. Putting this surge in full-time jobs in context, it was the biggest monthly increase this century, and also on record if one excludes a few data revision prints recorded in the 1990s. So when Trump said "Looking forward to seeing the employment numbers at 8:30 this morning", while the headline print did indeed beat, it was nothing to write home about, the surge in full-time jobs, offset by a plunge in part-time jobs, was certainly historic. Finally, going back to Trump's tweet, White House Economic Adviser Larry Kudlow said that President Trump did indeed know about the jobs numbers last night, "but his tweet earlier this morning wasn’t meant to send a signal." One wonder if the regulators will share that view.
Where The Jobs Were In May: Who's Hiring And Who Isn't - After years of monthly payroll reports padded with excessive minimum wage waiter, bartender, educator or retail worker jobs, today's May jobs report was not only impressive in its top-line beat (which Trump strongly hinted an hour ahead of the release) and which was the record 92nd straight month of US job growth, coupled with the strong wage growth, which at 2.7% came in higher than expectations, not to mention the record surge in full-time jobs, it also showed surprising strength in most components even if some negative surprises were also present.Of note: while last month's jobs report was truly impressive in terms of job gains by industry, with the highest paying adding the most workers, in May we saw a continuation of many of the trends observed last month:
- Continued strength in Goods Production: Mining (+5.5K), Construction (+25K) & Manufacturing (+18K).
- Trade & Transportation Rebounded: Wholesale (+4.2 after a big drop last month), Retail (+31.1K), and Truck Transportation (+6.6K).
Here the surprise was that just 6.6K trucking jobs were added, following complaints from the major trucking employers, all of whom have noted they can't find enough people to hire, which suggests there may be an upward revision next month.Some other highlights:
- Professional Services were especially strong, driven by White collar demand (Technical services +22.6K). The offset: Temp workers came in soft declining by 7.8K.
- Manufacturing also very strong at +18K: machinery added +5.8K jobs and fabricated metal products was up +2.4K
- Education rebounded from last month's weakness at +39K:
- Healthcare was steady: +31.73K: Employment rose in ambulatory health care services (+17,900) and hospitals (+6,200).
- Leisure & Hospitality another strong month: +21K
- Mining +4K with most of the gain coming from support activities for mining (+3,100).
Record 95.9 Million Americans Are No Longer In The Labor Force - In what was otherwise a solid jobs report - one which Donald Trump may or may not have leaked in advance - in which the establishment survey reported that a higher than expected 223K jobs were added at a time when numbers below 200K are expected for an economy that is allegedly without slack, the biggest surprise was not in the Establishment survey, but the household, where the unemployment rate tumbled once more, sliding to a new 18 year low of 3.8%, even as the participation rate declined once again, as a result of a stagnant labor force, which was virtually unchanged (161.527MM in April to 161.539MM in May, even as the total civilian non-inst population rose by 182K to 257.454LMM). What was perhaps more interesting, however, is that for all the talk that the slack in the labor force is set to decline, precisely the opposite is taking place, because in May, the number of people not in the labor force increased by another 170K, rising to 95.915 million, a new all time high. Adding to this the 6.1 million currently unemployed Americans, there are 102 million Americans who are either unemployed or out of the labor force (and it is also worth noting that of those employed 26.9 million are part-time workers). In other words, contrary to prevailing economist groupthink, there is a lot of slack in the economy, and if as the latest Beige Book revealed, employers are now hiring drug addicts and felons to make up for the shortage of qualified candidates, a long time will be pass before wages see significant gains.
Comments on May Employment Report - Bill Mcbride -(graphs) The headline jobs number at 223,000 for May was above consensus expectations of 185 thousand, and the previously two months were revised up by a combined 15 thousand. Overall this was a strong report. Earlier: May Employment Report: 223,000 Jobs Added, 3.8% Unemployment RateIn May, the year-over-year employment change was 2.363 million jobs. This is solid year-over-year growth. Wage growth was about as expected in May. From the BLS:"In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.92. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent." This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.7% YoY in May. Wage growth had been trending up, although growth has been moving more sideways recently. Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. mIn the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.The 25 to 54 participation rate decreased in May to 81.8%, and the 25 to 54 employment population ratio was unchanged at 79.2%.The participation rate had been trending down for this group since the late '90s, however, with more younger workers (and fewer 50+ age workers), the prime participation rate might move up some more. The number of persons working part time for economic reasons has been generally trending down, and the number decreased in May. 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 decreased to 7.6% in May. This is the lowest level for U-6 since 2001. This graph shows the number of workers unemployed for 27 weeks or more.According to the BLS, there are 1.189 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.293 million in April. This is the lowest level since June 2007.
Rep. Ro Khanna to Introduce Compromise “Jobs for All” Bill -- Ro Khanna, the Silicon Valley member of Congress who has been pushing the boundaries of progressive policy in the House, is wading into the debate over a federal job guarantee with a new draft bill. The bill would provide public, private, and nonprofit employers a subsidy to hire temporary employees for up to 18 months at a time, with opportunities to extend the placement for another year, according to a copy of the bill, titled Promising Jobs for All, which Khanna, D-Calif., shared with The Intercept. Khanna’s use of the private sector is a departure from other plans that have been advanced of late. “Maybe it’s working for government or working for a union that’s doing drywalling or painting for a company,” Khanna told me of the possible guaranteed occupations. “It could be working for a local retailer or child care company.” Both in the proposal itself and in an interview with The Intercept, Khanna referenced Franklin D. Roosevelt’s Economic Bill of Rights, the first point of which outlines the “right to a useful and remunerative job in the industries or shops or farms or mines of the Nation.” But despite Khanna’s reference to the iconography of the New Deal, his bill is decidedly more moderate than a high-profile effort by a handful of progressive economists that has been gaining steam lately. Khanna’s plan, by contrast, includes a range of new caveats, time limits, restrictions, and income thresholds — in some ways mirroring the kind of public-private compromise that appears in the dizzying complexity of the Affordable Care Act. Some in beltway policymaking circles have raised concerns about how difficult it could prove to implement such a program. The right argues that a job guarantee would fuel government excess and cronyism, helping the country creep ever-closer toward socialism. Some on the left see lionizing the value of work as a moral hazard, while tech-utopians see it as a threat to their preferred vision: a universal basic income, which would provide a salary for everybody regardless of whether they worked.
Harley-Davidson workers say plant closure after tax cut is like being stuck in a bad dream — Harley-Davidson workers across the U.S. are reeling after a new report revealed a plant closure and layoffs were planned as the company expected to reap huge financial benefits from the federal corporate tax cut. The Milwaukee-based motorcycle manufacturer benefited from the tax cuts enacted Jan. 1, announced cuts of 350 jobs across the company in late January and on Feb. 5 approved a half-cent dividend increase and buyback of up to 15 million shares. “We did everything Harley-Davidson asked us to do,” welder Tim Primeaux said in an NBC News interview that aired Wednesday. “To have it all blow up in your face is kind of disappointing.” Primeaux has worked at Harley-Davidson’s plant in Kansas City, Missouri, for 17 years. When Harley-Davidson announced in January that it would slash 800 jobs upon closing the Kansas City plant by fall 2019, Primeaux said he and other workers were in a state of “shock and awe.” “It was like I was in a bad dream, just stuck in it,” Primeaux told the network. In May 2017, Harley-Davidson had announced it was adding 118 workers at its Kansas City plant to consolidate Softail cruiser motorcycles and laying off the same number of workers at its Springettsbury Township facility near York, Pa. Now with the Kansas City closure, 450 full-time, casual and contractor positions will be added at in Pennsylvania, yielding a loss of 350 jobs overall. Days after it announced the plant closure, the company announced the dividend increase that would cost the company about $846,000 and the stock buyback plan that was another expense of $696 million at the time, both to benefit shareholders. That came on the heels of the company’s corporate tax cut from 35 percent to 21 percent and its previous announcement last year that a new motorcycle assembly plant in Thailand would open in late 2018.
To Avoid Raising Wages, Firms Are Now Hiring Felons And Drug Addicts: Beige Book -- Last month, we summarized the April Beige Book by saying that a month after the March inflationary panic, the one thing, perhaps the only thing, that was fascinating companies was the threat of trade wars. In fact, we said that the "quick and dirty summary" for the April Beige Book, when economic activity continued to expand "at a modest to moderate pace across the 12 Federal Reserve Districts", would, in a word literally, be "tariffs" mFast forward to today when fears of trade wars appear to have moderated (no pun intended) and there were only 22 instances of the "word" tariff in the just released, May Beige Book. The Beige Book also found that in a few districts, wage increases and rising material costs, steel, aluminum, oil, oil derivatives, lumber, and cement, were becoming more common.In good news for benign inflation, "some Districts also noted that their retail contacts were more able to pass along price increases to their customers than in the recent past" which means that broader inflation trends are taking form, potentially the result of broader economic growth. But the most interesting anecdotes once again were relegated to jobs and wages. According to the Beige Book, companies continued to report difficulty finding workers to fill vacancies across skill levels. What is odd, is that according to the Fed, "many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages." In the aggregate, however, wage increases remained modest in most Districts. Contacts in some Districts expected similar employment and wage gains in the coming months.So instead of paying their workers more, some firms have come up with a radical solution: hiring criminals and drug addicts.One such example came from the St. Louis Fed which had the following anecdote: "Contacts in Missouri and Arkansas also reported difficulties filling skilled technical and engineering positions. Some local employers have begun relaxing drug-testing standards and reducing restrictions on hiring convicted felons in order to alleviate labor shortages."
The more valuable your work is to society, the less you’ll be paid for it - David Graeber - One of the most frequently heard complaints from supporters of the Occupy Wall Street movement—particularly the ones working too much to spend much time in the camps, but who could only show up for marches or to express support on the Web—ran along the lines of: “I wanted to do something useful with my life; work that had a positive effect on other people or, at the very least, wasn’t hurting anyone. But the way this economy works, if you spend your working life caring for others, you’ll end up so underpaid and so deeply in debt you won’t be able to care for your own family.” There was a deep and abiding sense of rage at the injustice of such arrangements. I began to refer to it, mostly to myself, as the “revolt of the caring classes.” At the same time, occupiers in Manhattan’s Zuccotti Park regularly reported conversations with young Wall Street traders who’d drop by and say things to the effect of: “Look, I know you guys are right; I’m not contributing anything positive to the world, the system is corrupt, and I’m probably part of the problem. I’d quit tomorrow if you could show me how to live in New York on a less-than-six-figure salary.” I spoke to people who gave testimonies echoing similar dilemmas: Annie, who noted how many women taking care of preschoolers were ultimately forced to quit and find office jobs to pay the rent, and Hannibal, the medical researcher, who summed up his experience in the medical field with the formula “the amount of money I can charge for doing the work I do is almost perfectly inversely correlated with how useful it is.” imagine if a certain class of people were to simply vanish. If we all woke up one morning and discovered that not only nurses, garbage collectors, and mechanics, but for that matter, bus drivers, grocery store workers, firefighters, or short-order chefs had been whisked away into another dimension, the results would be equally catastrophic. If elementary school teachers were to vanish, most schoolchildren would likely celebrate for a day or two, but the long-term effects would be if anything even more devastating.
These U.S. Workers Are Being Paid Like It’s the 1980s - Thanks to a web of loopholes and limits, the federal government has been green-lighting hourly pay of just $7.25 for some construction workers laboring on taxpayer-funded projects, despite decades-old laws that promise them the “prevailing wage.” Over the past year, the U.S. Department of Labor has formally given approval for contractors to pay $7.25 for specific government-funded projects in six Texas counties, according to letters reviewed by Bloomberg. Those counties are among dozens around the nation where the government-calculated prevailing wage listed for certain work—such as by some carpenters in North Carolina, bulldozer operators in Kansas and cement masons in Nebraska—is just the minimum wage. That’s in part because, according to publicly available data from the Labor Department’s Wage and Hour Division, the agency is relying on wage survey data in more than 50 jurisdictions that’s from the 1980s or earlier. Experts said that’s a far cry from what Congress intended when, starting with the Depression-era Davis Bacon Act, it passed a series of laws meant to ensure that private companies contracted for government-backed projects pay their workers at least in the vicinity of what others get for the same work in the same geographic area. In an emailed statement, the Labor Department didn’t address whether the decades-old data is a problem. “The Wage and Hour Division carefully plans where to survey on an annual basis to ensure that prevailing wage rates reflect the reality of construction pay practices in a locality. The division identifies potential survey areas based on a number of criteria, including where available data on active construction projects in an area reveal changes in local pay practices such that a survey is necessary,” the department said. Because government contracts are often required to go to the “lowest responsible bidder,” supporters say prevailing wage rules prevent a “race to the bottom” in which exploitative companies who pay workers less outbid safer, higher-quality firms, and in turn drive down industry standards to pocket more taxpayer dollars. Opponents of prevailing wage rules counter that they’re intrusive mandates that waste money, inflating construction costs in order to help unionized firms beat non-union competitors.
Forget about broad-based pay hikes, executives say Axios -- Very few Americans have enjoyed steadily rising pay beyond inflation over the last couple of decades, a shift from prior years in which the working and middle classes enjoyed broad-based wage gains as the economy expanded. Now, executives of big U.S. companies suggest that the days of most people getting a pay raise are over, and that they also plan to reduce their work forces further. : This was rare, candid and bracing talk from executives atop corporate America, made at a conference Thursday at the Dallas Fed. The message is that Americans should stop waiting for across-the-board pay hikes coinciding with higher corporate profit; to cash in, workers will need to shift to higher-skilled jobs that command more income. Troy Taylor, CEO of the Coke franchise for Florida, said he is currently adding employees with the idea of later reducing the staff over time "as we invest in automation." Those being hired: technically-skilled people. "It's highly technical just being a driver," he said.
- The moderator asked the panel whether there would be broad-based wage gains again. "It's just not going to happen," Taylor said. The gains would go mostly to technically-skilled employees, he said. As for a general raise? "Absolutely not in my business," he said.
- John Stephens, chief financial officer at AT&T, said 20% of the company's employees are call-center workers. He said he doesn't need that many. In addition, he added, "I don't need that many guys to install coaxial cables."
Because of the changes coming, AT&T is pushing employees to take nano-degree programs to prepare them for other jobs — either at AT&T or elsewhere.
New Fed data paint a vivid picture of two Americas | TheHill: We often look to sociologists, politicians or pundits to tell us where we stand as a nation. Yet, far more incisive is the Federal Reserve’s “Report on the Economic Well-Being of U.S. Households in 2017” published this week. Data are powerful storytellers. The data tell a story of two Americas barely cohabiting within the same borders. One America is comprised of the people who are benefiting from a growing U.S. gross domestic product and having the lowest unemployment rate in 14 years. This survey, now in its fifth year, had some uplifting information: 74 percent of adults responded that they were "ok financially" and living comfortably. This is 10 percentage points higher than five years ago. The majority of survey respondents stated that they are "satisfied with the wages and benefits from their current job and are optimistic about their future job opportunities." Additionally, 95 percent of Americans have a bank account and hence are in a position to try to obtain credit if they needed it. Yet, the data also tell a worrisome story about a vast swath of Americans being left behind in this country’s second-largest economic expansion in its history. These Americans’ plight should worry not only those affected, but also all of us as a nation whether we are legislators, central bankers, regulators or an ordinary resident. Their plight, especially if it worsens, will have an effect on what legislative actions and policies will be needed to improve the living standards for everyone in this nation. Even setting moral considerations aside, leaving these people behind will impact our competitiveness in decades to come. The job landscape has changed dramatically in the last five years, as evidenced by the fact that 30 percent of American adults are now in the gig economy. This may seem great in terms of allowing Americans more control of their leisure time. The reality is that most people in the gig economy have to work much harder to have enough money to live, and they have to be able to cope with the risk and emotional strain of not having a stable, earnings stream.
Harvard study: Black defendants get longer sentences from GOP-appointed judges | TheHill: A new study from Harvard Law School professors finds that black defendants receive longer sentences from Republican-appointed judges than from Democratic-appointed ones. Professors Alma Cohen and Crystal Yang analyzed data on more than 500,000 defendants, with data revealing that under a GOP-appointed judge, a black defendant receives sentences that are, on average, three months longer than from a Democratic-appointed judge. The study also found that those same judges gave shorter sentences to women by an average of two months compared to “similar males.”“These differences cannot be explained by other judge characteristics and grow substantially larger when judges are granted more discretion,” the study found. The professors analyzed more than 15 years worth of federal data on the sentencing practices of about 1,400 federal judges. The new data supports previous research that shows black men serve longer prison sentences than white men for similar crimes and also provides new details on the effect of a judge’s political affiliation on sentencing. The authors of the study noted that the data does not explain why the disparities exist. “We caution that our results cannot speak to whether the sentences imposed by Republican- or Democratic-appointed judges are warranted or ‘right,’ ” they wrote.
Golden State Killer Suspect Arrest Opens Floodgates for Law Enforcement Use of DNA Websites -- Steve Horn - The use of DNA-based genealogy websites to track down the “Golden State Killer” suspect, Joseph DeAngelo, appears to have inspired police departments nationwide. It’s a move that has irked privacy advocates and criminal justice system reformers.DeAngelo, a former police officer and alleged serial killer in the 1970s and 1980s, was arrested April 25 at his home in Sacramento County, California. He has been charged with murdering 12 people in California. He also is a suspect in dozens of rapes and over 100 burglaries.Law enforcement officials stated they utilized the open-source family DNA website GEDmatch.com, creating a genetic profile under a fake name that helped lead them to DeAngelo. Most criminal law experts say those who hand over their DNA to websites like GEDmatch have no expectation of privacy under the Fourth Amendment. But whether that same legal logic applies to their extended relatives, though, will remain an open question as the Golden State Killer’s case weaves its way through the courts. Currently, DeAngelo is being held in the Sacramento County Jail without bail. A judge may soon order law enforcement to unseal more documents pertaining to the circumstances that led to the arrest, according to oral arguments at a May 30 court hearing. Those may illuminate the techniques they used. To assist their search, law enforcement created an account on GEDmatch, hoping to make a familial DNA match. As first reported by The Mercury News, DeAngelo was eventually identified because a distant relative created a DNA profile on GEDmatch with similarities to DeAngelo’s, and investigators used that information to build family trees. “The case sheds light on a little known fact: Even if we’ve never spit into a test tube, some of our genetic information may be public — and accessible to law enforcement. That’s because whenever one of our relatives — even distant, distant kin — submits their DNA to a public site hoping to find far-flung relations, some of our data is shared as well,” explained The Mercury News of the broader implications of the use of the DNA website by law enforcement.
A 64-year-old put his life savings in his carry-on. U.S. Customs took it without charging him with a crime. -- A 64-year-old Cleveland man is suing U.S. Customs and Border Protection after agents strip-searched him at an airport in October and took more than $58,000 in cash from him without charging him with any crime, according to a federal lawsuit filed this week in Ohio. Customs agents seized the money through a process known as civil asset forfeiture, a law enforcement technique that allows authorities to take cash and property from people who are never convicted or even charged with a crime. The practice is widespread at the federal level. In 2017, federal authorities seized more than $2 billion in assets from people, a net loss similar in size to annual losses from residential burglaries in the United States. Customs says it suspects that the petitioner in the case, Rustem Kazazi, was involved in smuggling, drug trafficking or money laundering. Kazazi denies those allegations and says that the agency is violating federal law by keeping his money without filing any formal complaint against him. Kazazi is a retired officer with the Albanian police who relocated with his family to the United States in 2005 after receiving visas through the State Department's lottery program. They became U.S. citizens in 2010. After several years away, Kazazi planned a trip to Albania last fall to visit relatives, make repairs on a family property and potentially purchase a vacation home. He took $58,100 in U.S. currency with him, the product of 12 years of savings by Kazazi, his wife, Lejla, and his son Erald, who is finishing a chemical engineering degree at Cleveland State University, according to the lawsuit. The family lives in Parma Heights, a suburb of Cleveland. In an interview translated by his son, Kazazi said safety concerns prompted him to take cash on his trip, rather than wire the funds to a local bank. “The crime [in Albania] is much worse than it is here,” he said. “Other people that have made large withdrawals [from Albanian banks] have had people intercept them and take their money. The exchange rates and fees are [also] excessive.”
Video of police punching a young mother in the head during an arrest goes viral - Emily Weinman was enjoying a day out at the beach with her young daughter in New Jersey when police confronted her on suspicion of underage drinking and violently restrained her, punching her in the head several times.Video of Weinman’s arrest has since gone viral, with one tweet by Twitter user Alexis Hewitt, who witnessed the incident, receiving more than 40,000 retweets and more than 4,000 responses. Weinman also posted video of the incident to her Facebook page, but the post has since been removed or made private. The 20-year-old Philadelphia woman says she, her daughter’s father, and a friend were at the beach in Wildwood, New Jersey on Saturday for Memorial Day weekend. She said she brought alcohol with her even though she was underage. According to The New York Post and NJ.com, which first reported story, Weinman wrote in the original Facebook post that she “was questioned and passed a breath-test administered by the cops,” and was walking away to make a phone call when she asked them “don’t they have something better to do[?]”It was at that point, the young mother claimed, that one of the Wildwood Police officers told her, “I was gonna let you go but now I’ll write you up.” Weinman refused to give the officer her name and said she began backing away “cautiously,” but “tripped and fell,” after which “the cop tackled me to the ground and smashed my head into the sand” in front of her 18-month-old child. “At that point I blacked out and fought any way possible trying to get up and push him off me,” she wrote.In the video, the Wildwood officers can be seen wrestling Weinman to the ground as someone yells “stop resisting.” A child can be heard crying in the background. One officer is then seen punching Weinman in the head several times before pulling her into what appears to be a chokehold with his right arm crooked around her neck.
Florida court awards $0.04 to family of man killed by cop inside his own garage - A family in Florida is seeking justice after a jury awarded them a total of 4 cents in compensation for the death of their father, killed in his own garage by police officers who arrived on a noise complaint. Gregory Hill Jr., 30, was fatally shot in January 2014 by St. Lucie County Sheriff’s Office Deputy Christopher Newman who, along with his partner Edward Lopez, responded to a complaint about a man listening to loud music.“After Newman knocked on the doors, the garage door opened revealing Hill within the comfort of his own garage and home,” the lawsuit claimed. “Upon information and belief, Deputy Lopez indicated loudly that Hill had a gun and then the garage door closed. Despite the door being closed, Newman fired his handgun approximately four times and killed Hill.” Two of the bullets struck the father of three in the abdomen, while another pierced his head. A SWAT team that was called to the scene discovered the deceased with an unloaded 9mm handgun in his back pocket. Newman said he was forced to respond because the man was allegedly pointing a gun at him. Hill’s family, who filed the lawsuit in 2016, disputed that claim. Viola Bryant, Hill’s mother, argued that police violated her son’s Fourth Amendment right against unreasonable searches and seizures by using excessive force. The federal court jury deliberated for nearly 10 hours before declaring that Hill was 99 percent liable for the incident and the fatal injuries he received, because he was under “the influence of alcoholic beverages.” Last week, the court awarded Bryant $1 for funeral expenses and $1 to each of the children for the “loss of parental companionship, instruction, and guidance and... mental pain and suffering.” But because the jury decided St. Lucie County Sheriff Ken Mascara, in his official capacity, was somewhat negligent – but only 1 percent liable – the total of $4 was reduced to 4 cents.
US lost track of 1,500 immigrant children, but says it’s not ‘legally responsible’ The federal government has placed thousands of unaccompanied immigrant children in the homes of sponsors, but last year it couldn't account for nearly 1,500 of them. Steven Wagner, a top official with the Department of Health and Human Services, disclosed the number to a Senate subcommittee last month while discussing the state of the Office of Refugee Resettlement (ORR) that oversees the care of unaccompanied immigrant children. Wagner is the acting assistant secretary for the Administration for Children and Families, which is part of the Department of Health and Human Services. ORR is a program of the Administration for Children and Families. Wagner said during the last three months of 2017, the ORR lost track of nearly 1,500 immigrant children it had placed in the homes of sponsors. Wagner's statement has attracted more attention amid reports that immigrant children are being separated from their parents at the US border. Wagner said the Department of Homeland Security referred more than 40,000 immigrant children to the ORR during the 2017 fiscal year. Between October and December 2017, Wagner told the subcommittee, the ORR reached out to 7,635 unaccompanied children to check on them. But the ORR "was unable to determine with certainty the whereabouts of 1,475 children," Wagner testified. An additional 28 had run away. That's more than 19% of the children that were placed by the ORR. But Wagner said HHS is not responsible for the children."I understand that it has been HHS's long-standing interpretation of the law that ORR is not legally responsible for children after they are released from ORR care," Wagner said.
Study: Hotter Classrooms Make it Harder for Students to Learn - Students' ability to learn is undermined when their classrooms are too hot, new research says, a finding that could help explain persistent gaps in performance between students in poorer regions and countries without consistent access to air conditioning and those in wealthier areas. An analysis published by the National Bureau of Economic Research comparing student test scores with average temperatures suggests that when classrooms get too hot it prevents students from learning as well as they would in more comfortable temperatures, with lasting impacts on students' future success and their ability to contribute economically. It also found that adequate investment in school infrastructure – namely air conditioning – can mitigate the negative effects of hot weather.Researchers compared daily historical weather data collected by a network of thousands of weather stations across the United States operated by the National Oceanic and Atmospheric Administration with the PSAT scores of 10 million students who took the test at least twice between 2001 and 2014. Although repeat test-taking typically results in increased test scores, test scores for affected students actually went down when they took the test following a warmer year. On average, a school year that was hotter by 1 degree Fahrenheit correlated to a loss of 1 percent of a year's learning, the researchers found, calculating that each additional school day with temperatures in the 90s meant one-sixth of 1 percent of a year's learning, while days over 100 degrees had an effect that was 50 percent larger. Moreover, the effect was as much as three times more damaging for black or Hispanic students compared to white students. Researchers accounted for the disparity by noting that white students are significantly more likely to live in cooler climates and attend schools with air conditioning in most or all of their classrooms.
Local Mom Starts Petition Against School Shooting Game - When Stephanie Robinett, a mom in Seattle, first heard about Active Shooter, a video game being released via online marketplace Steam next month, she was appalled. In the game, the player can choose to either be a member of a S.W.A.T. team or the titular active shooter. "Depending on the role," the game's description reads, "your objective might be to protect and extract or hunt and destroy." The game advertises several features, including "Realistic First Person Controller," "Variety of real life weapons," "Impressive A.I.," "Destruction physics," and, "Real Life situations," one of which is a school. In demos, you can see the shooter picking off students, teachers, and law enforcement. It's gruesome, and the timing, to Robinett, could not have been worse.Robinett started a petition asking Valve, the Bellevue company that owns Steam, not to release the game. "The company is taking the stand that this game is legal because of free speech and everything else that tech billionaires hide behind when they are doing something the public knows is absolutely, morally corrupt but legally fine—but we cannot stand for this," the petition reads. "How can anyone sleep at night knowing that they are profiting from turning deadly school shootings into entertainment?"Emma Gonzalez, a survivor of the school shooting in Parkland, Florida, tweeted a link to the petition, which now has over 93,000 signatures. Valve Corp shut down this shovelware immediately please https://t.co/rjCfBTHfIr — Emma González (@Emma4Change) May 29, 2018 Tasteless as this game may be, studies have consistently shown that playing video games doesn't actually make people more violent. And this doesn't just play out in studies; it plays out across the globe as well. Take Japan: According to the New York Times, over half (60 percent) of the population there played video games in 2016 but there were almost no deaths by gun. Why? Because guns are banned in Japan. In the U.S., where guns are easier to procure than abortions, there are over 33,000 gun deaths per year.
The Best Explanation for Our Spate of Mass Shootings Is the Least Comforting - On another terrible day, I hate to introduce even more pessimism, but when we discuss mass shootings, one of the first questions we ask is the simplest and also the hardest to answer. Why? Why does this keep happening? Those who advocate for gun control have an immediate answer — the prevalence of guns in the United States. Yet guns have been part of the fabric of American life for the entire history of our republic. Mass shootings — especially the most deadly mass shootings — are a far more recent phenomenon. Writing in 2015, Malcolm Gladwell wrote what I think is still the best explanation for modern American mass shootings, and it’s easily the least comforting. At the risk of oversimplifying a complex argument, essentially he argues that each mass shooting lowers the threshold for the next. He argues, we are in the midst of a slow-motion “riot” of mass shootings, with the Columbine shooting in many ways the key triggering event. Relying on the work of Stanford sociologist Mark Granovetter, Gladwell notes that it’s a mistake to look at each incident independently: […] Gladwell then argues that Columbine changed the thresholds. The first seven of the “major” modern school-shooting incidents were “disconnected and idiosyncratic.” Then came Columbine. The sociologist Ralph Larkin argues that Harris and Klebold laid down the “cultural script” for the next generation of shooters. They had a Web site. They made home movies starring themselves as hit men. They wrote lengthy manifestos. They recorded their “basement tapes.” Their motivations were spelled out with grandiose specificity: Harris said he wanted to “kick-start a revolution.” Larkin looked at the twelve major school shootings in the United States in the eight years after Columbine, and he found that in eight of those subsequent cases the shooters made explicit reference to Harris and Klebold. Of the eleven school shootings outside the United States between 1999 and 2007, Larkin says six were plainly versions of Columbine; of the eleven cases of thwarted shootings in the same period, Larkin says all were Columbine-inspired.
The Surprisingly Complex Reasons Why Teenagers Stopped Taking Summer Jobs - In the summer of 1978, 60 percent of teens were working or looking for work. Last summer, just 35 percent were. Why did American teens stop trying to get summer jobs? One typical answer is: They’re just kids, and kids are getting lazier. One can rule out that hypothesis pretty quickly. The number of teens in the workforce has collapsed since 2000, as the graph below shows. But the share of NEETs—young people who are “Neither in Education, Employment, or Training”—has been extraordinarily steady. In fact, it has not budged more than 0.1 percentage point since the late 1990s. Just 7 percent of American teens are NEETs, which is lower than France and about the same as the mean of all advanced economies in the OECD. The supposed laziness of American teenagers is unchanging and, literally, average.A better answer is that teenagers aren’t spending more time on the couch, but rather spending more time in the classroom. Education is to blame, rather than indolence. Teens are remaining in high school longer, going to college more often, and taking more summer classes. The percent of recent high-school graduates enrolled in college—both two-year and four-year—has grown by 25 percentage points. That is almost exactly the decline in the teenage labor-force participation rate.With tougher high-school requirements and greater pressure to go to college, summer classes are the new summer job. The percent of 16-to-19-year-olds enrolled in summer school has tripled in the last 20 years, according to the Bureau of Labor Statistics. The rise may be directly related to the fact that parents and high schools are encouraging students to take on more classwork,according to Ben Steverman, a Bloomberg reporter who covers teen employment. He finds that the percentage of high-school grads completing at least four years of English, three years of science, math, and social science, and two years of foreign language has sextupled since the early 1980s.
Missouri Student Banned From Graduation After Putting School Up For Sale On Craigslist - The ACLU has an interesting free speech case in Missouri where Kylan Scheele, 18, was banned from his graduation by the Truman High School in Independence, Missouri. The high school appeared a bit ticked after Scheele post a Craigslist ad to sell the school for $12,725. The ACLU contends that the ban violates Scheele’s first amendment rights. Scheele admitted to the prank and it is hard to believe that anyone could have considered the sale to be a legitimate offer. Despite the obvious prank, the school called in the police to investigate the threat . . . from an offer to sale the school at a discounted rate (apparently a common terrorist tactic). This is the statement from a Independence School District: Out of an abundance of caution, administrators and police investigated and determined there was not a credible threat. A student who makes a real or implied threat, whether it is deemed credible or not, will face discipline. Due to the heightened concern nationally with school violence, we have extra police officers for the remainder of the school year and will have additional officers at graduations for all of our high schools. Some would call it “an abundance of caution” and some would call it a lack of a sense of humor. Nevertheless, a court ruled for the school district in barring him from graduation. The list goes on and on where arrests are the first rather than last resort — leaving pranksters with criminal records.
Louisiana teachers support strike for wage increase - A poll of almost 4,000 Louisiana teachers, published on May 21 by the Louisiana Federation of Teachers (LFT), showed that more than 60 percent support a statewide walkout. The vote is yet another expression of growing opposition to low pay and underfunded schools among teachers in the United States and internationally.The poll was conducted between April 10 and May 7 by the LFT, the state affiliate of the American Federation of Teachers (AFT). More than 80 percent of teachers also said they were in favor of increasing taxes on business to fund pay raises for educators. Louisiana teachers’ pay is ranked among the lowest in the nation.According to the Southern Regional Education Board’s most recent figures from 2016, the average salary in the state was $9,000 below the national average. Almost 80 percent of teachers surveyed said they had considered leaving the profession because of the low pay. The number of students in the state graduating with teaching accreditation has fallen by 18 percent since 2011.Teachers, bus drivers, and other school personnel in East Baton Rouge, in the state’s capital, rallied in front of the school board office on May 17 to demand pay increases. Alexandra Clark, a local school psychologist, told the WAFB news station, “It’s a shame that we haven’t had a raise in 10 years. I’ve had several side jobs over the last few months. I’ve bartended on the side. I’ve sold insurance on the side.”Far fewer teachers who participated in the LFT survey said they would support other local district-wide actions, which are promoted by the unions to demoralize and isolate workers. These included a local walkout (48 percent) or a demonstration at a schoolboard meeting (47 percent). While there is overwhelming support among teachers for a struggle, the unions—AFT and the National Education Association—are determined to prevent any strike from occurring or developing outside of their control. LFT President Larry Carter issued a warning to legislators on May 21 that the union may not be able to prevent a walkout, stating that if the legislature does not increase school funding then teachers “may actually step up and take action sooner than we can predict.”
Documents reveal the vast influence of Koch brothers in US universities and public schools -- Last month, the George Mason University protest group “UnKoch My Campus” released documents to the public through a Freedom of Information Act request detailing how the Charles Koch Foundation and the Federalist Society, groups dedicated to the promotion of ultra-conservative “free market” public policy and ideas, maintain control over the appointment of law school and economics professors at the college, a public university in northern Virginia, as part of a nationwide campaign to promote ultra-right politics. The ideological activities of Charles and David Koch, with a combined net worth of $96.6 billion, extend to universities, colleges and even high schools. Taking advantage of the deficits caused by the decades-long bipartisan assault on public funding for both K-12 and university education, groups like the Koch brothers, the Walton Family Foundation and the Gates Foundation use their grotesque wealth, squeezed from the working class, in an attempt to inculcate young people with libertarian and other right-wing, pro-capitalist ideologies. In 2016, George Mason University (GMU) received the largest donation in its history, a $30 million gift to its law school. $10 million came from the Koch Foundation and $20 million from the BH Fund, whose president is Leonard Leo, executive vice president of the Federalist Society. The BH Fund’s secretary and treasurer is Jonathan Bunch, vice president and director of external relations at the Federalist Society, a right-wing organization that lobbies for the appointment of ultra-right judges. Leo played an instrumental role in getting Federalist Society member and far-right Justice Neil Gorsuch a seat on the US Supreme Court in early 2017, suggesting nominees to the Trump administration and meeting personally with the president. Numerous emails between the Federalist Society’s Leo and GMU law school dean Henry Butler show that the society played a role in hiring new professors. In October 2015, for example, Leo emailed Butler about a potential adjunct professor. A few minutes later, Butler replied, “We’re on it.” Other hiring suggestions from Leo came in May 2016 and November 2016.
The Real College 'Scam' - Today, all Americans are told, "Go to college!" President Obama said, "College graduation has never been more valuable." But as John Stossel writes for Townhall.com, economist Bryan Caplan says that most people shouldn't go. "How many thousands of hours did you spend in classes studying subjects that you never thought about again?" he asks.Lots, in my case. At Princeton, I learned to live with strangers, play cards and chase women, but I slept through boring lectures, which were most of them.At least tuition was only $2,000. Now it's almost $50,000."People usually just want to talk about the tuition, which is a big deal, but there's also all the years that people spend in school when they could have been doing something else," points out Caplan in my new YouTube video."If you just take a look at the faces of students, it's obvious that they're bored," he says. "People are there primarily in order to get a good job."That sounds like a good reason to go to college. But Caplan, in his new book, "The Case Against Education," argues that there's little connection between what we absorb in college and our ability to do a job."It's totally true that when people get fancier degrees their income generally goes up," concedes Caplan, but "the reason why this is happening is not that college pours tons of job skills into you. The reason is ... a diploma is a signaling device."It tells employers that you were smart enough to get through college. But when most everyone goes to college, says Caplan, "You just raise the bar. Imagine you're at a concert, and you want to see better. Stand up and of course you'll see better. But if everyone stands up, you just block each other's views." That's why today, he says, high-end waiters are expected to have college degrees. "You aren't saying: you, individual, don't go to college," I interjected. "You're saying we as a country are suckers to subsidize it." "Exactly," replied Caplan. "Just because it is lucrative for an individual doesn't mean it's a good idea for a country." Caplan says if students really want to learn, they can do it without incurring tuition debt.
As an Oxycontin ‘junkie’ at Yale, I saw how my addiction helped fund the university - I’m a junkie – recovered now for 14 years, but a junkie just the same. A high-school dropout and chronic runaway, I spent my later teenage years shooting black tar heroin and smuggling drugs across the Mexican border – mostly ketamine and OxyContin, the latter of which I also shot. Back then I was a loser, a washout, a petty narcotrafficker, a statistical blip in the opioid epidemic.But today I’m also a doctor (of the illegitimate variety, mind you). Clean at 19, I spent my later twenties at Yale University earning a PhD, which I completed last spring. There I was a scholar, a student, a teacher,a valued member of an exclusive intellectual community.Being a junkie in the Ivy League doesn’t guarantee success, but it does guarantee perspective. I learned a lot about America’s upper crust, and I saw much that my colleagues never could. But only last week, during a visit to my alma mater, did I begin to understand the role that Yale played in my own addiction.. Spring having arrived, I visited Yale, which wears the season well. I wandered the campus before entering Dwight Chapel, which stands in the heart of Old Campus and hosts a small morning AA meeting. I used to attend that meeting quite regularly, I remember two things: we were opioid addicts, and we were invisible to the Yale community – ignored, really, like unwelcome pests. And it was then, sitting alone in that musty chapel, when it hit me: to my left stood the Skull and Bones crypt , the secret windowless clubhouse for the country’s most exclusive private society, whose founder’s extended family had become the largest American merchants in the Indo-Chinese opium trade. And beyond the crypt stood Yale’s medical campus, which has received major gifts from the Sackler family, whose wealth comes largely from owning Purdue Pharma, the maker of Oxycontin. Purdue Pharma criminally misbranded that drug to make it appear harmless. The company pleaded guilty in 2007 and agreed to pay around $600m in fines.
Conservative Stanford professor conspired to conduct 'opposition research' on student: report – TheHill - A conservative Stanford University professor coordinated with a group of Republican student activists to conduct "opposition research" against a progressive activist and undergraduate student, according to a report by the Stanford Daily. The report, based on leaked emails between the professor — British political commentator Niall Ferguson — and Stanford students John Rice-Cameron and Max Minshull, shows that the three teamed up to get information on a student they viewed as a threat to an on-campus program called Cardinal Conversations. Cardinal Conversations, run by the right-leaning Hoover Institution, aims to bring conservative speakers to the campus. Ferguson resigned from his position as a faculty adviser on the program's steering committee after the emails were revealed to the university. According to the emails, Ferguson, Minshull and Rice-Cameron — the son of former Obama White House national security adviser Susan Rice — sought to obtain opposition research on Stanford student Michael Ocon. “Some opposition research on Mr. O might also be worthwhile,” Ferguson wrote in one email, referring to Ocon. Ocon had previously run for a student government position in the Associated Students of Stanford University, and is an active student on campus. The Stanford Daily reports that Fergeson, Rice-Cameron and Minshull thought Ocon was too far left and could be among students who challenge speakers invited to Stanford by Cardinal Conversations. “Slowly, we will continue to crush the Left’s will to resist, as they will crack under pressure,” Rice-Cameron wrote in one email. Ferguson wrote in another note, “now we turn to the more subtle game of grinding them down on the committee,” adding that “the price of liberty is eternal vigilance.”
Student loan debt and the cost of college are out of control and climbing | TheHill: The benefits of higher education are on the minds of nearly 2 million college-bound high school students graduating this spring. To make matters worse, federal student loan rates will rise 13.5 percent this summer. The long-awaited and urgently needed reform of our nation’s higher education system will have to wait at least another year.Advancing reforms to help make higher education more affordable were touted as a leading priority for the 115th Congress and the 2016 Republican Party Platform. Yet, the House has yet to pass its Higher Education Act, (Prosper Act). Just a few days ago Sen. Lamar Alexander (R-Tenn.), Chairman of the Senate’s Health, Education, Labor and Pensions Committee, told the New York Times education conference, “the Senate will not produce promised higher education legislation this year,” adding, “the Democrats won’t do it, they want to wait until next year to see if they’re in better shape politically.” Sadly, these two events are not among the many gifts Republicans were expecting to receive after the Obama administration’s “graduation.” Federal student loan debt and the cost of college education are out of control and climbing at an unsustainable trajectory. The primary reason for this is three-fold: unfettered access to federal student loans; a plethora of overly-generous loan forgiveness and multiple repayment plans which encourages over-borrowing and frees schools from the responsibility to charge prices that actually match the market value of the degrees they offer; and the fact that nearly half of undergraduates take at least six years to earn their degrees. To underscore the meaning of this third cause, four years ago the average cost of just one additional year at a four-year public university was nearly $64,000 in tuition, fees, books, living expenses and lost wages.
There Are 101 Americans With Over $1 Million In Student Loans - Astronomically high college tuition facilitated by a bottomless ocean of student loans has saddled Americans with a record $1.48 trillion in non-dischargeable debt - an amount which has more than doubled since the 2009 lows. As we reported in January, nearly 40% of student loans taken out in 2004 are projected to default by 2023 according to the Brookings institute. While in March we noted that debt-laden millennials were set back an average of $140,000 vs. their parents - a problem compounded by the fact that students aren't just borrowing money for tuition; their student loans cover rent, food and other bills, leaving them with massive interest payments and in many cases, little prospect of getting ahead - much less saving for retirement. While millions of Americans are drowning in student loans - 101 people have the ultimate albatross around their necks; student loan balances exceeding $1 million, according to the Wall St. Journal. Five years ago, there were just 14 people with loans that large. Utah orthodontist Mike Meru, 37, is one of them. After graduating from Brigham Young University with no debt and a new marriage, Meru borrowed $601,506 debt to attend USC's orthodontics program - while his new wife Melissa finding work as a USC administrative assistant to save on tuition. After a few years, his student loan had swelled to $1,060,94. Mr. Meru said the dental school’s financial-aid director, Sergio Estavillo, estimated that the basic four-year program would require $400,000 to $450,000 in student debt, including interest. Mr. Estavillo said he didn’t recall the conversation but had no reason to doubt its accuracy. –WSJ And despite Meru's $225,000 salary in 2017 which leaves him with roughly $13,333 per month after taxes, he makes monthly payments of $1,590 by taking advantage of a government-sponsored debt repayment program. Without the program which still leaves his debt growing at $130 a day, Meru's monthly payments would be $10,541.91 according to an email from his loan servicer. At this rate, Meru's loan balance will exceed $2 million in 20 years.
Graduate students are borrowing insane amounts from taxpayers – AEI - The Wall Street Journal recently reported on a dental school graduate who has more than a million dollars outstanding on his federal student loans. While student borrowers with seven figures in debt are still rare, six-figure borrowers are growing ever more common. That’s bad news for taxpayers, who will end up forgiving a large portion of that debt.A new data release from the National Center for Education Statistics illustrates just how high graduate student borrowing has soared in recent years. The share of graduate students who owe more than $100,000 to the federal government upon completing their degrees more than doubled between 2008 and 2016, from 6% to 15%. Six-figure borrowing is especially concentrated among those with the most advanced degrees. More than half of students graduating with first-professional degrees (which include law and medical degrees) owe more than $100,000 to taxpayers, up from less than a third in 2008. Among graduates with PhDs and other doctoral degrees, more than a quarter owe $100,000 or more to the federal government. The rate of heavy borrowing among doctoral students has more than doubled since 2008. Even 10% of master’s degree recipients have six figures outstanding upon graduation, a threefold increase from 2008. The returns to an advanced degree are typically quite lucrative, particularly for students entering the medical and legal professions, and sometimes warrant heavy borrowing. But it is unlikely that earnings for these occupations have increased enough in the short period since 2008 to justify the surge in rates of six-figure borrowing. Rather, graduate students are borrowing more (read: graduate schools are charging more) because taxpayers are probably going to pay for it.
Trump administration to hand student debt collection to loan servicers, ending use of collectors - WaPo - The Education Department plans to stop using private debt collectors to handle overdue student loans, a practice that had drawn scorn from activists who said the companies stop at nothing in pursuit of tardy loans. The decision emerged this week in a legal filing, in which attorneys for the department implored the U.S. Court of Federal Claims to dismiss a lawsuit filed by collection agencies vying for a federal contract. The attorneys say the case is no longer relevant because the Education Department is revamping the collection and resolution of overdue student debt. Instead of having private collection agencies solely dedicated to recouping past-due education loans, the department will add those duties to the responsibilities of companies that service loans. Those companies will try to help borrowers who fall behind on their payments before they end up in default. The strategy is part of a broader overhaul of the federal student loan program, a project dubbed the Next Generation Financial Services Environment, or NextGen. While the Federal Student Aid office implements its new approach, the 13 private debt-collection companies already under contract will absorb new accounts until the transition is completed. The department has yet to set a completion date. “Federal Student Aid’s need for private collection agency services as a function separate from the work provided by the enhanced servicer(s) will diminish rapidly in the coming months and ultimately become nonexistent,” the attorneys said in the court filing. The private collection agencies involved in the case could not immediately be reached for comment.
Senior advocates say new draft guide to Medicare distorts facts. Here’s what you need to know PBS - Medicare & You is the government’s seminal guide to all things Medicare, and is a primary resource used by consumers in each year’s annual enrollment season beginning Oct. 15. As such, it is or should be the gold standard of reliable information for more than 65 million people already enrolled in Medicare and the millions of people who newly enroll each year.After reviewing the draft, three groups said it contained false statements that appear designed to convince people that private Medicare Advantage plans are superior.According to three leading senior advocacy groups, however, the 2019 draft version of Medicare & You has unfairly tilted the playing field. After reviewing the draft, the three groups – the Center for Medicare Advocacy, Justice in Aging, and the Medicare Rights Center – said it contained false statements that appear designed to convince people that private Medicare Advantage (MA) insurance plans are superior to original Medicare. “Medicare & You is the core Medicare communication to beneficiaries,” the groups said in a joint letter to Seema Verma, head of the Centers for Medicare & Medicaid Services (CMS). “It is critical that the information in the Handbook be fairly and accurately presented. Beneficiaries making important choices about their coverage need to be able to rely on the Handbook for unbiased information that they can trust. However, when comparing Original Medicare and Medicare Advantage, the 2019 draft Handbook does not meet this standard, distorting and mischaracterizing the facts in serious ways.” A spokesperson for CMS provided what I can only construe as a non-responsive response. It said, in part, “CMS is committed to empowering seniors and people with disabilities to make informed choices related to their Medicare coverage. We continue to look for better ways to explain to consumers the options they have under the Medicare program. Through feedback and consumer testing, we continue to modify and improve the content to help consumers make informed health care decisions.” So what should you know? Here are some highlights of the original Medicare and MA plans and how the new handbook frames them:
Mapping The Tsunami Of Suicides Across America --Suicide is a very complicated public health issue, influenced by demographic characteristics, socioeconomic factors, as well as health- and crime-related factors. Since the Great Financial Crisis (GFC), a tsunami of suicides has swept across America, making it the tenth leading cause of death, and in 2015, accounted for more than 44,000 deaths. Understanding the geographic patterns of suicide can better inform the nation that something is not quite right. Although government researchers have presented state-level trends in suicide rates, data at the county-level has been widely overlooked. The ‘County-Level Trends in Suicide Rates in the U.S., 2005–2015‘ report, issued by a team of researchers from the Centers for Disease Control and Prevention (CDC) used county-level changes in suicide rates to examine geographic trends and identify urban-rural patterns in these type of deaths from 2005 to 2015.Nationwide increase in suicide rates at the county level from 2005 to 2015 The animation above, created by The Washington Post from figures in the report, shows a never before seen explosion in suicide rates at the county level during the period. Researchers said suicide rates increased by more than 10 percent from 2005 to 2015 for 99 percent of the counties across the nation, with a shocking 87 percent of counties registering increases of more than 20 percent.“The highest [suicide] rates across the period were seen in parts of Alaska, Arizona, northern California, Colorado, Idaho, Montana, New Mexico, Nevada, North and South Dakota, Oregon, and Wyoming,” the report discovered. By contrast, the regions with the lowest suicide rates were consistently seen across southern California, Connecticut, Massachusetts, New York, Rhode Island, New Jersey, along the Mississippi River, western Texas, and along the eastern coast of North and South Carolina.
The record-low birthrate offers yet another sign that millennials are economically screwed - The birthrate in the United States is thelowest it’s been in 30 years, we recently learned, and the decline is spreading across age cohorts. In the past, the explanation for this was straightforward: As women gained greater access to educational and workplace opportunities, along with more accessible and effective contraceptives, some of them delayed having children. And in part, that explanation still holds — especially when it comes to the plummeting birthrate among teenagers, a good thing by all accounts. Were this the extent of the story, and the data, a low birthrate wouldn’t constitute much of a concern. But a closer look reveals two issues — one ethical, one economic. The ethical concern is that the number of women who want children but aren’t having them is growing. As Lyman Stone wrote in the New York Times, “the gap between the number of children that women say they want to have (2.7) and the number of children they will probably actually have (1.8) has risen to the highest level in 40 years.” Rather than a “natural” reflection of a changing society, this is a political problem that needs to be addressed. Just as women should have the choice not to have children — in the substantive sense of being free of the insidious coercion of the market as well as of legal barriers — so too should they be free to raise a family. But as these numbers show, many women do not have such a choice. That brings us to the economics. There are many reasons besides economic incentives to put off having children, as Vox’s Julia Belluz points out, but sociologists and economists agree that the economy plays a role. One study even found fertility rates to be a “leading economic indicator” — predicting downturns (and upticks) in advance — while another found the sharp decline in fertility rates to be “closely linked to the souring of the economy” that began around 2008.
Death Of American Exceptionalism - China Overtakes America In "Healthy Life Expectancy" - For the first time ever, China has overtaken America in healthy life expectancy at birth, according to a new report. “Healthy life expectancy” is defined by years lived in good health or without significant illness. The report, from the World Health Organization (WHO), reveals Chinese newborns could experince 68.7-years of healthy life ahead of them, compared to just 68.5-years for American babies. While the margin between healthy life for both countries is minuscule, the crossover represents the understanding that America is in decline. Though Americans born in 2018 can still expect a longer life — 78.5-years to be exact, compared to China’s 76.4-years; however, the last ten years of an American’s life is usually plagued with significant health-related problems.“The lost years of good health that are a factor in calculating healthy life expectancy at birth are lower for China, Japan, Korea and some other high-income Asian countries than for high income ‘Western’ countries,” said WHO spokeswoman Alison Clements-Hunt.The data also shows that America is one of the only five countries, along with Afghanistan, Georgia, Grenadines, Saint Vincent, and Somalia, where healthy life expectancy at birth is reversing. Since 2005, the outlook for Singaporean babies has never been better, who can live free of significant health-related issues until 76.2-years, followed by Japan, Spain, and Switzerland. In overall global life expectancy rankings, America places 40th among all other countries, while China ranks 37th.
A trip to the ER with your phone may mean injury lawyer ads for weeks - With digital traps in hospitals, there’s no need for personal injury lawyers to chase ambulances these days.Law firms are using geofencing in hospital emergency rooms to target advertisements to patients’ mobile devices as they seek medical care, according to Philadelphia public radio station WHYY. Geofencing can essentially create a digital perimeter around certain locations and target location-aware devices within the borders of those locations. Patients who unwittingly jump that digital fence may see targeted ads for more than a month, and on multiple devices, the outlet notes.While the reality may seem like a creepy nuisance to some, privacy experts are raising alarms."Private medical information should not be exploited in this way," Massachusetts Attorney General Maura Healey told WHYY. "Especially when it's gathered secretly without a consumer's knowledge—without knowledge or consent."Last year, Healey’s office barred a digital firm from using geofencing in healthcare settings in the state after the firm was hired by a Christian pregnancy counseling and adoption agency to use digital perimeters to target ads to anyone who entered reproductive health facilities, including Planned Parenthood clinics. The goal was to make sure “abortion-minded women” saw certain ads on their mobile devices as they sat in waiting rooms. The ads had text such as “Pregnancy Help” or “You Have Choices,” which, if clicked, would direct them to information about abortion alternatives.Healey equated the move to digital harassment and successfully claimed that it violated the state’s consumer protection act.
Trump signs 'right to try' drug bill | TheHill: President Trump signed a bill Wednesday allowing terminally ill patients access to experimental medical treatments not yet approved by the Food and Drug Administration (FDA). Dubbed "right to try," the law's passage was a major priority of Trump and Vice President Pence, as well as congressional Republicans. "Thousands of terminally ill Americans will finally have hope, and the fighting chance, and I think it's going to better than a chance, that they will be cured, they will be helped, and be able to be with their families for a long time, or maybe just for a longer time," Trump said at a bill signing ceremony at the White House, surrounded by terminally ill patients and their families. Trump thanked lawmakers sitting in the audience who sponsored the bill, including Sen. Joe Donnelly, a vulnerable Democrat up for reelection in Indiana. Despite calling Donnelly a "really incredible swamp person" earlier this month, Trump thanked the senator for his work on the bill. Sen. Joe Manchin (W.Va.), another vulnerable Democrat up for reelection, was the only other Democratic co-sponsor on the bill, but did not attend the ceremony because he is in West Virginia this week, his office said. Congress is on recess this week for Memorial Day. Most Democrats and public health groups oppose the bill, arguing that it could put patients in danger.
Drug company sales rep admits bribing N.J. doctors to prescribe addictive painkillers - A former sales representative for a major drug manufacturer has admitted to charges she helped fuel the opioid addiction crisis by bribing doctors to prescribe a potent painkiller, authorities said.Michelle Breitenbach, who worked for the pharmaceutical company Insys Therapeutics, Inc., pleaded guilty Wednesday to a second-degree charge of conspiracy to commit commercial bribery, according to the state Division of Criminal Justice, which brought the charges. Breitenbach's guilty plea comes after state authorities filed a civil lawsuit against her former employer, accusing Insys of "evil" practices that pushed doctors to prescribe its painkiller Subsys for conditions it was never intended to treat. The civil case is ongoing. Attorney General Gurbir Grewal said Wednesday that a "primary cause of the devastating opioid epidemic gripping the country has been overprescribing of prescription opioids, driven by the greed of manufacturers."State authorities say the company gave kickbacks to doctors in the form of phony "speaker's fees" that really served as payments for "off-label" prescriptions that gave patients the painkillers for purposes not approved by the federal Food and Drug Administration. An NJ Advance Media investigation published last year found many doctors across the state received lucrative payments from drug companies. From 2013 to 2015, doctors in New Jersey were paid at least $1.67 million by pharmaceutical companies marketing various forms of of the synthetic opioid fentanyl, including Insys.
A bombshell report says that Purdue Pharma knew OxyContin was being abused within the first few years after it launched -- The US is currently in the throes of an opioid crisis.There were more than 42,000 deaths attributed to opioids in 2016, and 40% of all opioid overdose deaths involve prescription opioids.One of those prescription opioids, OxyContin, was first introduced to the market in 1996. In the few years following its launch, OxyContin-maker Purdue Pharma received numerous reports and tips that the drug had been circulating in the underground scene and was being widely abused, according to a New York Times investigation.Purdue Pharma denied knowing anything about the abuse until the early 2000s, but a confidential Justice Department report showed that the drugmaker was notified by several researchers and knew about the abuse shortly after OxyContin hit the market, the Times story said. Despite the warnings and complaints, the company concealed such knowledge and continued to market the drug as less appealing to drug abusers and less addictive than normal opioids, according to the Times story."Suggesting activities that last occurred more than 16 years ago, for which the company accepted responsibility, helped contribute to today's complex and multi-faceted opioid crisis is deeply flawed," said Purdue representative Robert Josephson in an email statement to Business Insider. "The bulk of opioid prescriptions are not, and have never been for OxyContin, which represents less than 2% of current opioid prescriptions. As government reports state, today's increase of fatal opioid-related overdoses is being driven by abuse of heroin and illicit fentanyl." According to the Centers for Disease Control and Prevention, the "economic burden" of prescription opioid misuse alone in the United States is $78.5 billion a year. The National Institute on Drug Abuse says that the value accounts for costs of healthcare, lost productivity, addiction treatment, and criminal justice involvement.
Women retain and carry living DNA from every man with whom they’ve made love with -- Women retain and carry living DNA from every man with whom they have sexual intercourse, according to a new study by the University of Seattle and the Fred Hutchinson Cancer Research Center. The study, which discovered the startling information by accident, was originally trying to determine if women who have been pregnant with a son might be more predisposed to certain neurological diseases that occur more frequently in males.But as the scientists picked apart the female brain, the study began to veer wildly off course. As it turns out, the female brain is even more mysterious than we previously thought. The study found that female brains often harbor “male microchimerism“, or in other words, the presence of male DNA that originated from another individual, and are genetically distinct from the cells that make up the rest of the woman. According to the study: “63% of the females (37 of 59) tested harbored male microchimerism in the brain. Male microchimerism was present in multiple brain regions.” This has very important ramifications for women. Every male you absorb spermatazoa from becomes a living part of you for life. The women autopsied in this study were elderly. Some had been carrying the living male DNA inside them for well over 50 years.Sperm is alive. It is living cells. When it is injected into you it swims and swims until it crashes headlong into a wall, and then it attaches and burrows into your flesh. If it’s in your mouth it swims and climbs into your nasal passages, inner ear, and behind your eyes. Then it digs in. It enters your blood stream and collects in your brain and spine.Like something out of a scifi movie, it becomes a part of you and you can’t get rid of it. We are only now beginning to understand the full power and ramifications of sexual intercourse.
Hepatitis A is usually not a problem to recover from. But in Michigan, 27 people died since this outbreak began — Michigan is in the throes of thelargest hepatitis A outbreak in the USA, a flareup that began in August 2016 and has killed 27 people, state health officials say. The hepatitis A virus, which attacks the liver, is highly contagious. Just ask Christopher Larime ,46, of Grosse Pointe Park, The father of three said he ate in March at the Buffalo Wild Wings across the road from his office. It's the same restaurant where a food worker later was found to have hepatitis A. Though he only suspects the source of his infection, Larime now is one of 837 people who have been sickened with the virus in the state. Last month, Indiana's Department of Health issued a travel alert warning Hoosiers planning to visit Michigan to get vaccinated before they come. The virus can be spread through food or water contaminated with the feces of an infected person, close contact or sex with a person who has hepatitis A or touching a surface contaminated by the virus and then touching your mouth. It causes liver inflammation — and liver failure in extreme cases.It's also easily preventable through vaccination and hand washing. As of Wednesday before Memorial Day, the hardest hit areas are Macomb County, north of Detroit, with 220 cases; Detroit itself with 170; elsewhere in Wayne County, where Detroit is located, with 144; and Oakland County, to the west of Macomb County where Pontiac is located, with 114 cases, according to the Michigan Department of Health & Human Services. Part of the problem: As many as 35 restaurant workers in the Detroit area were found to have the virus and may have spread it unknowingly to diners. The virus is contagious weeks before a person begins to exhibit symptoms, which makes it extremely challenging for public health officials to manage.
Bid to thwart second wave of Nipah - Efforts to thwart the advance of a second wave of Nipah virus infection are on in Kerala even as one more death was reported from Kozhikode district on Thursday. This is the third death in two days, taking the total death toll in the State to 17. Rasin, 25, son of Bhaskaran of Kottoor grama panchayat in the district, succumbed to the infection at the Government Medical College Hospital (MCH). R.L. Saritha, Director, Health Services, told the media that he was admitted to the hospital on May 26. He was on the contact list of persons who were suspected to have contracted infection from those who died earlier. Rasin is believed to have got the infection from Ismail when both of them were undergoing treatment at the Balussery taluk hospital.Ismail was later referred to the MCH, where he died due to Nipah infection on May 20. However, the authorities are yet to figure out the source of infection of Akhil, who died on Wednesday. Dr. Saritha said that Rasin did not have any contact with the family members of V. Moosa of Chengaroth, near Perambra, who are considered to be the first source of infection. As he contracted it from a second source, the department has now begun activities considering this as a second wave of infection, she pointed out.More people were getting added to the contact list, which now has 1,407 people in it. Details of the fever deaths and fever cases that were reported in Kozhikode and Malappuram districts in early May and a couple of weeks before that were being collected from government hospitals and private hospitals. All the probable deaths would be examined and all those related to them would be kept under watch to widen the contact list. Any one exhibiting symptoms could approach the 24x7 helpline set up at the government guest house at 0495-2381000. Ambulance services had been provided to take the suspected patients to the hospital. Meanwhile, Dr. Saritha said the two infected persons admitted to the MCH were responding to the treatment and the condition of one of them had improved. The human monoclonal anti-body being procured from Australia would reach here soon, she said.
Five people die in US romaine lettuce E. coli outbreak - BBC - Five people have now died in a major E. coli outbreak in the US involving romaine lettuce, with 197 cases reported across 35 states. The Centers for Disease Control and Prevention (CDC) said 25 more people had been affected since its last report on 16 May. Two of the victims were from Minnesota, with the other three from Arkansas, California and New York. It is the largest US outbreak of E. coli since 200 people fell ill in 2006. According to the latest statement from the CDC, many of the people affected fell ill two to three weeks ago, when the contaminated lettuce was still on shop shelves. Romaine lettuce from the Yuma growing region in Arizona is thought to be the source of the latest outbreak, although the Food and Drug Administration says no single grower, distributor or region can account for the spread. An investigation is ongoing. The CDC said that some of the affected people had not eaten lettuce, but had contact with others who had fallen ill.When eaten, it can cause diarrhoea, vomiting and even kidney failure in severe cases. Of the infected people, 89 have been hospitalised, and 26 have developed a kidney failure type known as hemolytic uremic syndrome.Canada's Public Health Agency has also recorded six cases of E. coli "with a similar genetic fingerprint" to the US infections. The E. coli outbreak began in April and has spread across the US. California and Pennsylvania are recording the most cases.
Effects of E.coli Outbreak in Lettuce Ripple Through U.S. Food-Supply Chain - WSJ - A deadly E.coli outbreak tied to romaine lettuce has shaken consumers’ faith in the nation’s favorite salad green, resulting in millions of dollars in losses for growers, retailers and restaurants.More than six weeks into the outbreak, prices for romaine, historically the most-sold salad green, have dropped by more than half. Grocers nationwide have been clearing it from shelves in hundreds of stores. Several restaurants that served romaine are facing lawsuits from customers, and wholesalers have had to quickly round up kale and mesclun for restaurants that struck it from their menus. Federal health officials now say tainted romaine is gone from the marketplace. But for weeks it urged consumers to throw away any romaine lettuce left in their homes and to avoid eating or buying it unless they were certain it wasn’t grown in the desert region of Yuma, Ariz. Officials have traced the problem to Yuma, but they haven’t been able to pinpoint the exact source of much of the lettuce that has been tied to 172 illnesses and one death. The U.S. Food and Drug Administration says the last shipments of romaine from Yuma were harvested on April 16, and the harvest season there is over—making it unlikely that romaine from Yuma is still available in stores, restaurants or people’s homes. “It’s [cost] thousands and thousands of dollars; it could even run into the millions,” said Howard Popoola, Kroger Co.’s vice president of corporate food technology and regulatory compliance, referring to costs at the largest U.S. supermarket chain. Taylor Fresh Foods, a major salad producer known as Taylor Farms, has abandoned hundreds of acres of lettuce in the Yuma region since then, plowing under ripe produce or leaving it to rot. “Trucks all across the country were dumping romaine,” said Drew McDonald, vice president of quality and food safety at the Salinas, Calif.-based company. “The loss of all that product was significant for us because of our size,” he said, adding that the company in April scrambled to shift production north to its central California farms to supply retailers and restaurants seeking to replenish stocks.
Antibiotics in Meat Could Be Damaging Our Guts - NYT -- Are pig, cattle and poultry farmers misusing antibiotics, allowing too much of the drug to get into our food? It has long been common knowledge in farming that antibiotics can help cause animals to grow fatter faster. Time is money, particularly in the food industry, and for many years ranchers used antibiotics not just for treating diseases but also for promoting growth so that animals would be ready for the slaughterhouse sooner. (Mr. Lewis says his grass-fed steers require 27 months to get to market without antibiotics, more than twice as long as it takes cows pumped full of antibiotics.) In early 2017, the Food and Drug Administration enacted rules banning the use of human antibiotics purely for growth promotion in animals and requiring ranchers to get a prescription from a veterinarian for antibiotics that once could be purchased over the counter. .A. rules have a “giant loophole” that allows farmers to continue to use antibiotics to prevent diseases even if animals aren’t showing symptoms. “You don’t even need a sick animal in the herd to use antibiotics in the feed and water as long as the justification is ‘disease prevention’ not ‘growth promotion,’ ” Avinash Kar, a senior attorney at the Natural Resources Defense Council, told me. Veterinarians working for certain feedlots — industrial-style farms where chickens, pigs and cattle are fattened — seem more than happy to continue writing prescriptions for antibiotics that end up in livestock feed. “They’ve got their veterinarians on retainer,” Mike Callicrate, a cattle rancher in Kansas and Colorado, told me. “They tell them what they want, and the veterinarian darn well provides what they want.”
Regulation: A Gut Check - How do we get the word out that our underlying conception of how regulations should be designed and enforced needs to change? The New York Times has an ominous article about the overuse of antibiotics by the livestock industry and its risks for animal health and ours. Flooding our digestive system with these drugs damages the gut microbiome we depend on for nutrition and waste processing, and it promotes the evolution of resistant strains of bacteria. The upshot, according to this piece, is that 23,000 Americans die of antibiotic resistance each year, and it adds: A growing body of scientific research also shows that the antibiotics we take as medicine can disrupt our so-called gut microbiome, the bacteria that live happily in our stomach and intestines and that are the key to our ability to properly digest food and process fats. This disruption has been linked to the rise of noncommunicable diseases such as obesity, juvenile diabetes, asthma and allergies. Some researchers also believe that alterations in the gut microbiome have led to an increase in the incidence of autism, Alzheimer’s and Parkinson’s disease. Ranchers lace their feed with antibiotics to speed up animal growth because it’s profitable. Regulation came to the rescue, sort of, in 2017 with the issuance of a rule by the Food and Drug Administration that requires livestock owners to get veterinary approval for administering antibiotics, with the criterion that the purpose has to be prevention of disease and not growth acceleration. That sounds like it should have been a solution, right? You don’t want to ban antibiotics altogether because sometimes there’s a valid reason for using them, so you require professionals to certify that only “good” uses are taking place. The problem, as the article points out, is that it isn’t clear how much progress, if any, has been made in reducing the routine use of antibiotics in livestock feed. Ranchers are under pressure to continue pumping up growth, and veterinarians are under pressure to give the ranchers what they demand. An industry—any industry, including livestock—is an ecosystem, not a machine, with lots of unwritten rules and relationships, incentives, and local exigencies. You can specify how it’s supposed to work, but it may not work that way.
Mussels in Washington's Puget Sound test positive for opioids, other drugs -- Shellfish in the Puget Sound, an inlet of the Pacific Ocean along the northwest coast of Washington, tested positive for the prescription opioid oxycodone. But that wasn't all, according to Washington Department of Fish and Wildlife biologist Jennifer Lanksbury. In the midst of a national opioid crisis, the opioid may be the most attention-grabbing contaminant found, but it could be the least worrisome. The mussels also contained four kinds of synthetic surfactants -- the chemicals found in detergents and cleaning products -- seven kinds of antibiotics, five types of antidepressants, more than one antidiabetic drug and one chemotherapy agent. Surfactants, in particular, are "known to have estrogenic effect on organisms, so they affect the hormone system of some animals in an estrogenic way, such as feminizing male fish and making female fish reproductive before they're ready," Lanksbury explained.Scientists have not studied whether mussels are harmed by oxycodone. However, the presence of this drug in the mollusk speaks to the high number of people in the urban areas surrounding the Puget Sound who take this medication, said Lanksbury. "A lot of the pharmaceuticals are probably coming out of our wastewater treatment plants. They receive the water that comes from our toilets and our houses and our hospitals, and so these drugs, we're taking them, and then we're excreting them in our urine so it gets to the wastewater treatment plant in that way," Lanksbury said. "Some people, unfortunately, flush their drugs down the toilet, and that's a huge source of these pharmaceuticals.""The doses of oxycodone that we found in mussels are like 100 to 500 times lower than you would need for an adult male therapeutic dose," she said. "So you would have to eat 150 pounds of mussels from these contaminated areas to even get a small dose. But just the fact that it's present tells us it is getting into our waters, at least in urban areas."
Common Antimicrobial in Toothpaste and Household Products Linked to Inflammation and Cancer -- The antimicrobial chemical triclosan is in thousands of products that we use daily: hand soaps, toothpastes, body wash, kitchenware and even some toys. Work in our lab suggests that this compound may have widespread health risks, including aggravating inflammation in the gut and promoting the development of colon cancer by altering the gut microbiota , the community of microbes found in our intestines.Our results, as far as we know, are the first to demonstrate that triclosan can promote the colonic inflammation and associated colon cancer in mice. This study suggests that health authorities must reassess regulation of triclosan for its effect on human health. That's key because it is impossible to avoid contact with this chemical.Triclosan is one of the most widely used antimicrobials and is incorporated in more than 2,000 consumer products. Millions of pounds of the chemical are used in the U.S. each year. The National Health and Nutrition Examination Survey showed that triclosan was detected in about 75 percent of the urine samples of individuals tested in the U.S. and that it is among the top 10 pollutants found in U.S. rivers . Our lab at the University of Massachusetts Amherst collaborated with scientists from 13 universities to explore the effects of triclosan on inflammation in the colon. We first tested triclosan in normal, healthy mice and found that the chemical caused low-grade inflammation. In our next round of experiments we induced gut inflammation in mice using chemicals and then fed them food containing a low dose of triclosan for three weeks. We also did the same thing with mice that were genetically engineered to spontaneously develop inflammatory bowel disease, which affects some three million Americans , and with mice in which we chemically induced colon cancer. After feeding the mice triclosan at concentrations reported in human blood plasma, the colon inflammation in the mice worsened. The chemical also accelerated the development of colitis—inflammation that leads to rectal bleeding, diarrhea, abdominal pain, abdominal spasms in humans—and the growth of tumors.
Dangerous Chemicals From E-Waste Found in Black Plastics From Toys to Drink Stirrers -- Recycling is often touted as a universal environmental good, but a new study from the University of Plymouth found that improper recycling of electronic waste means that dangerous chemicals are finding their way into black plastics used in consumer goods, with potentially negative consequences for human health and marine life .The study, published in Environment International , found bromine and lead in some of 600 consumer black plastic products tested, ranging from cocktail stirrers to children's toys."There are environmental and health impacts arising from the production and use of plastics in general, but black plastics pose greater risks and hazards," study author Dr. Andrew Turner said in a University of Plymouth press release .Those risks come because, while black plastics make up 15 percent of domestic plastic waste, they are difficult to recycle effectively. Because of this, plastic casings from recycled electronics are used to manufacture new black plastic products. The chemicals used as flame retardants or pigments for the electronic goods then make their way into consumer goods that use black plastic. "Black plastic may be aesthetically pleasing, but this study confirms that the recycling of plastic from electronic waste is introducing harmful chemicals into consumer products. That is something the public would obviously not expect, or wish, to see and there has previously been very little research exploring this," Turner said.
Widely used PVC plastic chemical spurs obesity, diabetes - Mice exposed in the womb to a chemical used in PVC plastic, door and window frames, blinds, water pipes, and medical devices were more likely to suffer from prediabetes and obesity, according to a study released this week. The chemical also increased fat accumulation in human stem cells. The research suggests that the widely used chemical— organotin dibutyltin (DBT)—could be spurring obesity and diabetes and scientists say we should monitor people's exposure since we know so little about the compound. "We don't really know how exposed we are [to DBT]," lead author of the new study, Raquel Chamorro-García told EHN. García is a postdoctoral researcher at University of California Irvine's Department of Developmental and Cell Biology. "But it's in so many materials in our houses and we believe most people are exposed and the chemical could be impacting our current diabetes problem," she added. There have been dramatic increases in both obesity and diabetes rates over the past few decades. About 38 percent of adults in the US—and about 17 percent of children—are now considered obese. More than 30 million people in the US now suffer from diabetes—if you include prediabetes that number jumps to more than 100 million people.
Lawsuit Against EPA Seeks Protection From Dangerous Pesticide Malathion - Conservation and public health groups sued the Trump administration and U.S. Environmental Protection Agency ( EPA ) chief Scott Pruitt on Wednesday for failing to protect endangered wildlife and the environment from the dangerous pesticide malathion.The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that the EPA and the U.S. Fish and Wildlife Service have failed to complete the legally required steps to fully assess and limit the dangers of the neurotoxin.Malathion is linked to developmental disorders in children and has been found by the World Health Organization to be " probably carcinogenic to humans ." Last year EPA scientists determined that the pesticide, manufactured by Dow Chemical, poses widespread risks to protected plants and animals . "It's deplorable that the Trump administration is putting human health and endangered wildlife at risk to please Dow," said Jonathan Evans, environmental health legal director at the Center for Biological Diversity . "Trump and Pruitt aren't above the law and they have to take reasonable steps to limit the harms of this dangerous pesticide."
Is Your Pet Exposed to Glyphosate? New Study to Offer Tests and Investigate Risks -- We know that humans increasingly test positive for residues of glyphosate , the active ingredient in Monsanto's Roundup weedkiller. For example, in tests conducted by a University of California San Francisco lab, 93 percent of the participants tested positive for glyphosate residues.In the European Union, when 48 members of Parliament volunteered for glyphosate testing, every one of them tested positive.In October 2017, Time magazine reported on a study involving 50 Californians who were tested between 1993-1996 and again between 2014-2016. Scientists found that not only did the number of people who tested positive for glyphosate residues increase, but so did the amounts of the residues detected.Humans are exposed to glyphosate via the food they eat, the air they breathe, the water they drink and the lawns, gardens, parks and other environments they frequent. If humans are contaminated with glyphosate, it stands to reason that their pets are, too.In fact, a recent pilot study shows that animals are likely to have even higher levels—up to 50 percent higher—of glyphosate in their bodies. "In a pilot study, we noticed that dogs' glyphosate levels were, on average, 50 times higher than people's," said Dr. John Fagan, chief scientist at HRI Labs and former researcher at the National Institutes of Health. "Recent biomedical research suggests harm to health at these levels, and even lower," he added. To follow up on the pilot study, HRI Labs has launched a citizen science research project whereby the lab will work with pet owners to determine why animals have such a high exposure to glyphosate.
'Merger From Hell' Wins Approval From Trump DOJ - Green groups and opponents of the powerful corporate interests that dominate the global food system expressed dismay on Tuesday after the U.S. Department of Justice announced tentative approval of a merger between the U.S.-based agro-chemical company Monsanto and the German pharmaceutical giant Bayer.Dubbed the "merger from hell" by critics, Trump's DOJ reportedly mediated and approved a deal in which the two companies agreed to shed portions of their businesses as a way to alleviate monopoly concerns."The settlement," reported Bloomberg, "came together after Justice Department antitrust officials pressed for significant divestitures to remedy the competition problems from combining the two companies. The companies have received antitrust approval from most jurisdictions around the world. Bayer has said it's confident the deal will close by the June 14 deadline."Though predicted, the news was met with vocal displeasure by environmental groups and those opposed to a food system driven by consolidated corporate power, industrial-scale farming, and for-profit greed: "This toxic mega-merger is another Trump Administration handout to an industry that's poisoning people and the planet," declared Tiffany Finck-Haynes, senior food futures campaigner with Friends of the Earth, in response to the announcement. "The Department of Justice is prioritizing corporate profits instead of listening to the 1 million Americans who spoke out against the merger. DOJ also failed to listen to more than 93 percent of polled farmers who are concerned about the merger."
39 Arrested in Effort to Save Chickens From 'Horrific Cruelty' at Industrial Egg Farm - Thirty-nine people were arrested in California on Tuesday after approximately 500 animal rights activists organized by the Direct Action Everywhere (DxE) network staged a non-violent vigil and attempted a rescue operation at an industrial egg facility in the town of Petaluma. Marching outside the farm entrance carrying flowers and denouncing the "horrific cruelty" they say takes place within the facility, the group was confronted by local police who barred them from entering and later arrested those who tried. The group cited this video footage as evidence that Sunrise Farms—one of the region's largest egg farms and which provides eggs to Amazon-owned Whole Foods grocery chain—is keeping the birds in cruel and unhealthy confinement. "Americans do not want to see animals exploited in our food system," former Northwestern law professor and DxE co-founder Wayne Hsiung said. "But when we have gone to authorities or corporations like Amazon with absolutely horrific footage of cruelty, no action has been taken." Along with Hsuing—already facing the potential of decades in prison for previous investigations and similar rescue operations—dozens of other activists were arrested by local law enforcement after, according to the group, they attempted to enter the farm and access one of the industrial chicken sheds to document conditions and demand the transfer of sick or mistreated birds to the city animal shelter.
Residents raise a stink over pig farms in North Carolina —The linchpin of 500 legal complaints against Chinese-owned pork giant Smithfield Foods Inc. headed to federal court Tuesday, part of a historic challenge to North Carolina’s $2.9 billion hog industry. A Raleigh-based jury will determine whether a 4,700-hog farm run by a Smithfield contractor, with open pools of manure, emits enough odor and sprayed liquid waste to be considered a nuisance to a neighboring couple. Lawyers representing Beulaville residents Elvis and Vonnie Williams said in court filings that Smithfield is “a large enterprise with the ability to reduce and end the nuisance.” They said the smell has hurt the couple’s “ability to enjoy family gatherings, barbecues, outdoor chores, playing with children outside, and doing yardwork.” “When I’m in the house, when I come outside and I smell the foul odor, it makes me, at times, sneeze, cough, vomit, watery red eyes,” Mr. Williams said in a 2016 deposition. Smithfield, a Smithfield, Va., unit of Chinese pork producer WH Group Ltd., said its farm complies with local, state and federal environmental regulations. Chief Executive Ken Sullivan said it is wrong to penalize owners for things like noise and smell, which go hand in hand with running a farm. “Today, it’s hog farms. What about chicken farms? The turkey guys? Grain farmers?” Mr. Sullivan said in an interview. “We’ve got to decide as a society how food is produced.”
The Silence of the Bugs - NYT - Fifty-six years after Rachel Carson’s “Silent Spring” warned of bird die-offs from pesticides, a new biocrisis may be emerging. A study published last fall documented a 76 percent decline in the total seasonal biomass of flying insects netted at 63 locations in Germany over the last three decades. Losses in midsummer, when these insects are most numerous, exceeded 80 percent. This alarming discovery, made by mostly amateur naturalists who make up the volunteer-run Entomological Society Krefeld, raised an obvious question: Was this happening elsewhere? Unfortunately, that question is hard to answer because of another problem: a global decline of field naturalists who study these phenomena. Are we in the midst of a global insect Armageddon that most of us have failed to notice? Here’s another data point: A decades-long decline in plant-pollinating hawk moths has been reported in the Northeast, but its causes and consequences are uncertain because we know so little about the ecology of these insects. In days past, compiling such information would have made a respectable life’s work for a Linnaeus, Humboldt or Darwin. Now such creatures are often ignored because studying them seems unlikely to generate publications, headlines or grants that provide academics with tenure and prestige. This leaves us with little more than anecdotal evidence to work with. A recent story in The Telegraph noted that automobile windscreens in Britain are no longer heavily caked with splattered insects. It reminded me of the tiny wings, legs and antennas that used to smear the front of my car after midsummer drives during the 1970s. Nowadays, a drive through northern New York, where I live, yields barely a blemish. Is it because cars are more streamlined? Not likely. Last July, I examined parked vehicles in Saranac Lake and found little or no bug debris, even on license plates or the blunt fronts of vans. What’s behind the decline? Probably not climate change, according to the researchers in the German study who also monitored local weather during the survey. What about collisions with vehicles? Despite my experience and the dashboard observations in Britain, one study published in 2015 estimated that hundreds of billions of insects are being killed in North America by cars and trucks every year. The study’s authors called for additional research to determine whether what they found is “contributing to the substantial declines of pollinating insects occurring on a global scale, thus putting the ecological functioning of natural areas and agricultural productivity in jeopardy.”
New effort to minimize impact of lead poisoning in Flint -- At an annual meeting of doctors at Hurley Medical Center in Flint, Michigan, a resolution was reportedly adopted declaring that henceforth Hurley doctors would collectively stop using the term “lead poisoned,” instead would use “lead-exposed” when referring to the water crisis in the city. This was announced on the Hurley Medical Center Facebook page and reported by local media.According to the post on Facebook, “As advocates for their patients they collectively resolved for a more proper communication so as to reduce the further stigmatization of a generation of children growing up in the City of Flint.”Dr. Mona Hanna-Attisha was not in attendance at the meeting. The next day, she expressed her opposition to the resolution: “FYI, I completely disagree with this resolution (which I understand did NOT pass) and with these ongoing and misguided efforts to minimize the crisis.” She also was cited in the local media, “Our water was poisoned. That is scientifically proven.” Hanna-Attisha is the Hurley pediatrician who conducted the September 2015 study of the spike in Flint children’s blood-lead levels during the state-mandated water source switch to corrosive Flint River water. Her findings eventually forced the governor to return the city to its original water source.The doctors’ meeting took place on Wednesday, May 16 and was reported in the press on May 18. Dr. Hernan Gomez from the University of Michigan, Flint presented a report based on a paper published in the June Journal of Pediatrics. This paper, titled, “Blood Lead Levels of Children in Flint, Michigan: 2006-2016,” claimed among other things, that “…changes in GM BLLs [geometric mean blood lead levels] in young children in Flint, Michigan, during the Flint River water exposure did not meet the level of an environmental emergency.”
Your Recycling Gets Recycled, Right? Maybe, or Maybe Not - Oregon is serious about recycling. Its residents are accustomed to dutifully separating milk cartons, yogurt containers, cereal boxes and kombucha bottles from their trash to divert them from the landfill. But this year, because of a far-reaching rule change in China, some of the recyclables are ending up in the local dump anyway.In recent months, in fact, thousands of tons of material left curbside for recycling in dozens of American cities and towns — including several in Oregon — have gone to landfills.In the past, the municipalities would have shipped much of their used paper, plastics and other scrap materials to China for processing. But as part of a broad antipollution campaign, China announced last summer that it no longer wanted to import “foreign garbage.” Since Jan. 1 it has banned imports of various types of plastic and paper, and tightened standards for materials it does accept.While some waste managers already send their recyclable materials to be processed domestically, or are shipping more to other countries, others have been unable to find a substitute for the Chinese market. “All of a sudden, material being collected on the street doesn’t have a place to go,” said Pete Keller, vice president of recycling and sustainability at Republic Services, one of the largest waste managers in the country.China’s stricter requirements also mean that loads of recycling are more likely to be considered contaminated if they contain materials that are not recyclable. That has compounded a problem that waste managers call wishful or aspirational recycling: people setting aside items for recycling because they believe or hope they are recyclable, even when they aren’t.
“Guardians of the Amazon” seize illegal loggers to protect uncontacted tribe (videos) Members of an Amazon tribe patrolling their rainforest reserve to protect uncontacted relatives from illegal loggers have seized a notorious logging gang, burned their truck, and expelled them from the jungle. The Guardians of the Amazon are from the Guajajara tribe: “We patrol, we find the loggers, we destroy their equipment and we send them away. We’ve stopped many loggers. It’s working.”The area they are defending, Arariboia, is in the most threatened region in the entire Amazon. It is home to an uncontacted group of Awá Indians, a tribe well known for their affinity with animals and understanding of the forest, who face total annihilation if they come into contact with the loggers.The Guardians have recently found abandoned Awá shelters close to where the loggers operate. Although the area should be protected under Brazilian law, the lack of enforcement by the Brazilian government and the extreme danger posed to the uncontacted Awá has forced the Guardians to take matters into their own hands. They now fear violent retaliation. Three of the Guardians were murdered by loggers in 2016, and they have experienced arson attacks and regular death threats. The Guardians sent footage of the burning truck loaded with illegally cut timber to Survival International, along with the message: “Please show the world the reality we face. We know it’s risky and we have enemies but now’s no time for hiding. We want you to release this to the world so we can continue to protect our forest.” Survival International has written urgently to the Brazilian government calling for the immediate and long term protection of both the Guardians themselves and of the area they fight to protect. Survival are also asking members of the public to send emails in support of the Guardians to government ministers via this page on their website.
Japan Kills More Than 120 Pregnant Whales – video- More than 120 pregnant female minke whales were killed this year in the Antarctic Ocean as part of Japan's controversial " scientific whaling " program.The numbers were revealed in a newly released report presented earlier this month at the International Whaling Commission (IWC) Scientific Committee meeting in Bled, Slovenia.According to the report, Japanese whaling vessels returned to port from the annual hunt with 333 Antarctic minke whales, of which 181 were females. Of those, 122 or 67 percent were pregnant. The whalers also took 61 immature males and 53 immature females. The Japanese government plans to hunt about 4,000 whales over the next decade despite the IWC's 1986 moratorium on commercial hunting. The country launched its scientific whaling program in 1987 as a loophole to the moratorium and insists that the marine mammals are killed in the name of research. However, Reuters noted that Japan's ultimate goal is the resumption of commercial whaling. The government insists that most whale species are not endangered and that eating whale is part of its culture, even though most Japanese people no longer eat it. The Australian chapter of Humane Society International expressed outrage over the new figures and called on the Australian government to intervene. "The killing of 122 pregnant whales is a shocking statistic and sad indictment on the cruelty of Japan's whale hunt," said Alexia Wellbelove, senior program manager at Humane Society International, in a statement. "It is further demonstration, if needed, of the truly gruesome and unnecessary nature of whaling operations, especially when non-lethal surveys have been shown to be sufficient for scientific needs."
Climate change 'will make rice less nutritious' - Rice will become less nutritious as carbon dioxide levels in the atmosphere rise, potentially jeopardising the health of the billions of people who rely on the crop as their main source of food, new research suggests. Scientists have found that exposing rice to the levels of carbon dioxide that are expected in the atmosphere before the end of the century results in the grain containing lower levels of protein, iron and zinc, as well as reduced levels of a number of B vitamins. Writing in the journal Science Advances, researchers report how they explored the impact of increasing carbon dioxide levels on rice by conducting experiments on 18 different types of the crop at sites in China and Japan between 2010 and 2014. The rice was grown in paddy fields, with large octagonal ring-structures installed above the crops. These rings were either supplied with carbon dioxide, or not. The concentration of carbon dioxide the plants were exposed to was monitored at the centre of each ring, and the rice produced by each crop was collected and analysed. The results reveal that crops that were exposed to higher levels of carbon dioxide were on average less nutritious, regardless of the country they were grown in, containing about 10% less protein, 8% less iron and 5% less zinc than rice grown under current levels of carbon dioxide. What’s more, levels of vitamins B1, B2, B5 and B9 also fell, with the latter dropping on average by more than 30%. By contrast, levels of vitamin E rose. Ziska said these differences might be linked to whether the various vitamins and nutrients contain nitrogen, with those that do typically seeing a drop in levels as carbon dioxide rises and those without seeing a rise.
Millions could avoid deadly fever if world limits warming (Thomson Reuters Foundation) - More than three million cases of dengue fever, the world’s fastest-spreading tropical disease, could be avoided annually if global warming is capped at 1.5C, said a study that purports to be the first to show the health benefits of a cooler planet. The mosquito-borne viral infection causes flu-like symptoms and can be fatal if it develops into severe hemorrhagic form. The annual number of cases has increased 30-fold in the last 50 years, says the World Health Organization (WHO). Using computer models, researchers from the University of East Anglia in Britain found that capping warming at 2 degrees Celsius (3.6 Fahrenheit) could cut annual dengue cases in Latin America and the Caribbean by up to 2.8 million by the end of the century. A further half a million cases could be prevented if the rise in global temperatures is kept down to 1.5C, the report said, with parts of South America most likely to benefit. “There is growing concern about the potential impacts of climate change on human health,” said lead author Felipe Colón-González. “This is the first study to show that reductions in warming from 2C to 1.5C could have important health benefits.” Since the year 2000, climate change has caused severe harm to human health by stoking more heatwaves, the spread of some mosquito-borne diseases and under-nutrition as crops fail, according to a Lancet report last October. Current national pledges to curb emissions put the world on track for a warming of about 3C above pre-industrial times, far above the goal of “well below” 2C set at a 2015 summit in Paris. The WHO has previously estimated there could be 250,000 extra deaths a year between 2030 and 2050 because of climate change. “Understanding and quantifying the impacts of warming on human health is crucial for public health preparedness and response,”
Humans are causing massive changes in the location of water around the world, NASA says - A 14-year NASA mission has confirmed that a massive redistribution of freshwater is occurring across Earth, with middle-latitude belts drying and the tropics and higher latitudes gaining water supplies. The results, which are probably a combination of the effects of climate change, vast human withdrawals of groundwater and simple natural changes, could have profound consequences if they continue, pointing to a situation in which some highly populous regions could struggle to find enough water in the future. “The fact that we can see this very strong fingerprint of human activities on the global water redistribution, should be a cause for alarm,” The results emerge from the 2002-2016 GRACE mission, which is short for Gravity Recovery and Climate Experiment, supplemented with additional data sources. The GRACE mission, which recently ended but will soon be replaced by a “Follow-On” endeavor, consisted of twin satellites in orbit that detected the tug of Earth’s gravity below them — and monitored mass changes based on slight differences in measurements by the two satellites.Among the massive features on Earth, water and ice are the ones that change most regularly. Thus, the GRACE data has been used to detect the vast losses of ice in Greenland, Antarctica and Alaska, as well as changes in ocean currents and the scale of the California drought. The new research, led by NASA’s Matthew Rodell, pulls together these and other findings to identify 34 global regions that gained or lost more than 32 billion tons of water between 2002 and 2016. As the study notes, 32 billion tons is about the amount of water contained in Lake Mead, which is in Nevada and Arizona. So all 34 areas saw very large changes.The resulting map of the findings shows an overall pattern, in which ice sheets and glaciers lose by far the most mass at the poles, but at the same time, middle latitudes show multiple areas of growing dryness even as higher latitudes and the tropical belt tend to see increases in water.
Wicked Weather: Midwest Jumps From Coldest April To Hottest May On Record -- “After an incredibly chilly April, May rebounded significantly, featuring record heat late in the month across the Midwest and while not official yet, May could go down as the warmest May on record nationally thanks to this late-month heat surge.A plethora or heat records were broken this past weekend, including Minneapolis, MN soaring to 100°F. This broke the record daily record for May 28 and reaching 100°F for only the second time in recorded history. This intense heat has since abated, but more above normal temperatures are expected into early June across a majority of the Plains and Midwest,” explained Ed Vallee, head meteorologist at Vallee Weather Consulting. “April featured record-breaking cold, particularly across the Upper Midwest, compared to normal. May has rebounded significantly with record heat this past weekend in the Midwest, and above normal temperatures across a majority of the country,” Vallee added. According to the weather desk of Radiant Solutions, “Memorial Day weekend felt more like the peak of summer for many in the Central US.” Here are some peak highs from earlier this week:
- Chicago set record highs of 97 and 95 degrees Sunday and Monday, only the second time it has endured back-to-back 95 degree days in May on record.
- Milwaukee and Toledo established record highs for May of 95 degrees (Sunday) and 98 degrees (Monday), respectively.
- Omaha and Green Bay, Wis., set record highs on four straight days Friday to Monday.
- Des Moines set record highs on three straight days Saturday to Monday, including its earliest 99-degree reading on record Sunday.
- Muskegon, Mich., hit 96 degrees Tuesday, a monthly record.
- Memorial Day weekend felt more like the peak of summer for many in the Central US! Here's the peak highs of the last three days and some of the most notable stats: pic.twitter.com/1iIljMrJZX
- Jonathan Erdman, a Weather Channel Meteorologist, said over 1,900 daily heat records were tied or broken across the United States in late May.
A building El Niño in 2018 signals more extreme weather for 2019 -- In case you couldn’t get enough extreme weather, the next 12 months or so could bring even more scorching temps, punishing droughts, and unstoppable wildfires. It’s still early, but odds are quickly rising that another El Niño — the periodic warming of the tropical Pacific Ocean — could be forming. The latest official outlook from NOAA and Columbia University gives better-than-even odds of El Niño materializing by the end of this year, which could lead to a cascade of dangerous weather around the globe in 2019. That’s a troubling development, especially when people worldwide are still suffering from the last El Niño, which ended two years ago. These early warnings come with a caveat: Predictions of El Niño at this time of year are notoriously fickle. If one comes, it’s impossible to know how strong it would be. When it’s active, El Niño is often a catch-all that’s blamed for all sorts of wild weather, so it’s worth a quick science-based refresher of what we’re talking about here: El Niño has amazingly far-reaching effects, spurring droughts in Africa and typhoons swirling toward China and Japan. It’s a normal, natural ocean phenomenon, but there’s emerging evidence that climate change is spurring more extreme El Niño-related events. On average though, El Niño boosts global temperatures and redistributes weather patterns worldwide in a pretty predictable way. In fact, the Red Cross is starting to use its predictability to prevent humanitarian weather catastrophes before they happen. All told, the the U.N. estimates the 2016 El Niño directly affected nearly 100 million people worldwide, not to mention causing permanent damage to the world’s coral reefs, a surge in carbon dioxide emissions from a global outbreak of forest fires, and the warmest year in recorded history.
Climate change may lead to bigger atmospheric rivers -- A new NASA-led study shows that climate change is likely to intensify extreme weather events known as atmospheric rivers across most of the globe by the end of this century, while slightly reducing their number.The new study projects atmospheric rivers will be significantly longer and wider than the ones we observe today, leading to more frequent atmospheric river conditions in affected areas."The results project that in a scenario where greenhouse gas emissions continue at the current rate, there will be about 10 percent fewer atmospheric rivers globally by the end of the 21st century," said the study's lead author, Duane Waliser, of NASA's Jet Propulsion Laboratory in Pasadena, California. "However, because the findings project that the atmospheric rivers will be, on average, about 25 percent wider and longer, the global frequency of atmospheric river conditions — like heavy rain and strong winds — will actually increase by about 50 percent."The results also show that the frequency of the most intense atmospheric river storms is projected to nearly double.Atmospheric rivers are long, narrow jets of air that carry huge amounts of water vapor from the tropics to Earth's continents and polar regions. These "rivers in the sky" typically range from 250 to 375 miles (400 to 600 kilometers) wide and carry as much water — in the form of water vapor — as about 25 Mississippi Rivers. When an atmospheric river makes landfall, particularly against mountainous terrain (such as the Sierra Nevada and the Andes), it releases much of that water vapor in the form of rain or snow. These storm systems are common — on average, there are about 11 present on Earth at any time. In many areas of the globe, they bring much-needed precipitation and are an important contribution to annual freshwater supplies. However, stronger atmospheric rivers — especially those that stall at landfall or that produce rain on top of snowpack — can cause disastrous flooding.
Video Shows Flash Flood Wiping Out Historic City In Maryland - For the second time in two years, the main street in historic Ellicott City, Maryland, has been rocked by a massive flash flood due to heavy rains that quickly rolled into the area late Sunday afternoon. CBS Baltimore reports that the city, which is still recovering from a devastating flood from July 2016, has seen its commercial district completely submerged underwater. The National Weather Service (NWS) issued a flash flood emergency for Ellicott City in Howard County at 4:40 p.m. “This is an EXTREMELY DANGEROUS AND POTENTIALLY CATASTROPHIC situation and you must move to HIGHER GROUND IMMEDIATELY AND STAY AWAY FROM ANYWHERE WHERE WATER IS MOVING,” the National Weather Service tweeted at 5:35 pm. Howard County Fire and EMS tweeted around 5 pm: “If you are trapped in a building on Main Street – climb to the second floor of the building and Shelter in Place. Rescuers will come for you | Please DO NOT call 911 as long as you are in a safe space.”There are reports of numerous water rescues.Ellicott City's Main Street is suffering flooding on the scale of the July 30, 2016 storm. Please avoid the area. Our emergency operations center is open and we are responding to the emergency.— Howard County Gov't (@HoCoGov) May 27, 2018Libby Solomon, a field reporter for The Baltimore Sun, captured dramatic footage showing the flash flood ripping through the commercial district of the town — filled with mostly small business.In case it’s not clear yet, stay away from Main Street. Please. pic.twitter.com/FO1HFpYqMo— Libby Solomon (@libsolomon) May 27, 2018Jeremy Harris, a field reporter for KUTV2 News, received an exclusive video of the flash flood tearing apart the main street.It’s happening all over again. Main Street in @EllicottCity with devastating flooding. @CairnsKcairns @FOXBaltimore @wbaltv11 @wjz video courtesy my sister Kali Harris. (Explicit language) #EllicottCity #Maryland pic.twitter.com/IuwBRyPRzW— Jeremy Harris (@JeremyHarrisTV) May 27, 2018 Ellicott City, which is barely situated above sea level, is experiencing another ‘1-in-1,000’ year flood event, on the same level as it saw in 2016.
Florida Cities Are Most at Risk From Climate Change, Report Says -- Miami Beach and Sarasota carry high investment-grade credit ratings and are popular travel destinations. They’re also two of the most exposed U.S cities to climate change in the country, according to a new analysis by advisory firm Four Twenty Seven. The Berkeley, California-based firm has developed an index surveying 761 cities’ and 3,143 counties’ exposure to sea level rise, water stress, heat stress, cyclones and extreme rainfall based on analysis of changes between current and future conditions. It found that communities in Florida are the most susceptible to climate change risks, with Miami Beach being the most exposed city and Manatee County being the most-exposed county. Communities in the Southeast and Midwest were ranked as being most vulnerable to heat stress. The data will help investors, ratings companies and local governments better evaluate the issue, said Frank Freitas, chief development officer at Four Twenty Seven. “We’re hoping that municipalities and investors can engage in conversations that see market support for initiatives that foster resilience going forward, just like we’ve seen investors engage with companies in equity markets on ESG and climate risk,” Freitas said. The $3.9 trillion municipal-bond market has been slow to take climate change risks seriously, said Nicholas Erickson, assistant vice president of portfolio management at Sage Advisory Services. But the hurricanes that battered Florida, Texas and Puerto Rico last year show how significant weather-related events could be for local economies, he said. Investors have pushed credit-ratings companies to give them more of a warning about environmental risks. Moody’s Investors Service and S&P Global Ratings say they incorporate environmental risks in their ratings through their analysis of factors such as leaders’ preparedness for weather events. Even so, rating methodologies for states, local governments and utilities don’t "explicitly" address climate change as a credit risk, Moody’s said in a report last year.
Tropical Cyclone Mekunu Making Historic Category 3 Landfall Near Salalah, Oman With Life-Threatening Flooding, Destructive Winds, Storm Surge -- Tropical Cyclone Mekunu made an historic landfall in southwest Oman, unleashing its fury on the city of Salalah the likes of which haven't been seen in decades in that part of the Arabian Peninsula. Torrential rain and high winds lashed western Oman and eastern Yemen as the center of Mekunu drew near, then moved ashore. Salalah, the third-largest city in Oman with a population of more than 300,000, picked up 278.2 millimeters (10.95 inches) of rain in just 24 hours ending around 10:30 a.m. on May 26, according to Oman's Public Authority for Civil Aviation (PACA).This was over double the city's average yearly rainfall of about five inches in just 24 hours. In addition, Salalah reported 617 millimeters (24.29 inches) of rainfall in just four days, which is an incredible amount of rainfall in a short period of time. Low-lying areas became inundated with water, and wadis, the normally dry valley, ravines or channels, overflowed in Dhofar Governorate. Some roads in Salalah remained flooded the following day, according to the Times of Oman. Storm surge flooding of low-lying coastal areas was expected just ahead of and during the arrival of the center ashore. Wave heights of 8 to 12 meters (26 to 39 feet) were expected off the coasts of Dhofar and Al-Wusta Governorates, according to PACA. At least 40 people were reported missing after two ships capsized in the storm and three vehicles washed away, according to the Associated Press. The Yemen government has already declared Socotra a disaster zone. Although the Arabian Peninsula is affected by a tropical cyclone every one to two years, a tropical cyclone landfall at the equivalent strength of a hurricane is rare in western Oman or eastern Yemen. The last tropical cyclone with a hurricane-equivalent intensity to track near southwestern Oman's Dhofar Governorate was in May 1959, according to NOAA's historical database; there is no record of a landfall stronger than Category 1 in this part of Oman in NOAA's database.
New estimates put real death toll from Hurricane María in Puerto Rico near 5,000 - A new Harvard University study published Tuesday in the New England Journal of Medicineestimates that the real death toll from Hurricane María in Puerto Rico could be over 4,600 people. This estimate is 70 times the official government count of 64 recognized deaths, the absurdly low number upheld by officials in San Juan and the Trump administration.The leading cause of death according to the study was from disruptions to medical services. This finding was consistent across all categories irrespective of the remoteness of the location, with 31 percent of households reporting a medical issue. The study found that “the most frequently reported problems were an inability to access medications (14.4 percent of households) and the need for respiratory equipment requiring electricity (9.5 percent), but many households also reported problems with closed medical facilities (8.6 percent) or absent doctors (6.1 percent). In the most remote category, 8.8 percent of households reported that they had been unable to reach 911 services by telephone.” In the end researchers calculated that 4,645 more people died in the final months of 2017 than in the same time frame a year prior, an increase of 62 percent. The study concluded, “the official death count of 64 is a substantial underestimate of the true burden of mortality after Hurricane Maria.” As harrowing as the results of the study are, the researchers note that their estimate is likely too conservative. They explain that “subsequent adjustments for survivor bias and household-size distributions increase this estimate to more than 5,000.” The statistical data from the report provides important scientific backing to what everyone on the island and around the world already knows: that the true scale of fatalities is far beyond the number claimed by government officials. It also underscores the fact that the Trump administration and both the Republicans and Democrats have been engaged in a cover-up to justify their criminal response to the ongoing public health catastrophe.
Hurricane Maria's death toll was 70 times higher than Puerto Rican officials have reported, study says - Officials in Puerto Rico say that 64 people lost their lives after Hurricane Maria slammed into the island in September. A new report says that estimate is off — by about 4,600.If the analysis is correct, it means that for every hurricane-related death that's currently on the books, another 70 fatalities in the U.S. territory have gone uncounted. "Our results indicate that the official death count of 64 is a substantial underestimate of the true burden of mortality after Hurricane Maria," researchers concluded in a study published Tuesday in the New England Journal of Medicine.This isn't the first time people have questioned the official estimate of the number of deaths that ensued after the then-Category 4 hurricane made landfall on Puerto Rico on Sept. 20, 2017. The study authors noted that several "independent investigations" have put the true number "in excess of 1,000." One of them was by Alexis Raul Santos, a demographer at Pennsylvania State University, and independent researcher Jeffrey Howard. In November, they concluded that Puerto Rico had experienced an excess of roughly 1,100 deaths in the wake of Hurricane Maria.The new study adds to "the growing consensus that the deaths have been undercounted," Santos said. With sustained winds of up to 155 mph and heavy rains that caused catastrophic flooding, there were many ways for Hurricane Maria to kill, explained the team led by Nishant Kishore of the Harvard T.H. Chan School of Public Health. During the storm itself, residents might be hit by flying debris or swept away in flash floods. In the aftermath, deaths could be attributed to lingering safety problems, illnesses brought on by unsanitary conditions or the "loss of necessary medical services," the authors wrote.
How Puerto Rico’s Death Toll Was Ignored, and Could Have Been Avoided - (Real News Network, video & transcript) Yves here. This is the second part of a two-segment interview on a Harvard study into the death toll in Puerto Rico in the aftermath of Hurricane Maria. The first part, Puerto Rico’s Uncounted Dead: Study Says Hurricane Maria Toll Far Higher Than Official Count, is also worth viewing, but this one gave more of a feel for the breakdown of emergency and hospital services. The first part gave more detail on the impact of privatization on critical supplies like oxygen and medications. Both accounts are dramatic, and not in a good way.
FEMA spent $75 million to dock a half-empty cruise ship off Puerto Rico for 4 months - The company behind Carnival cruises got more money from the federal government in connection with hurricanes that leveled much of Puerto Rico than the amount given to Puerto Ricans to rebuild their homes over the first four months of relief efforts. When the Federal Emergency Management Agency (FEMA) needs to house support staffers providing relief to storm-torn islands, it seeks floating shelter for them to avoid exacerbating crowding on land. But in its rush to secure private-sector boat housing for relief workers, FEMA funneled $75 million to the Panama-based cruise line on a contract that billed the government more than twice as much per head as the company charges paying customers, contracts obtained by Miami-based radio station WLRN show.FEMA paid Carnival $75 million to rent the vessel Fascination from mid-October to early February. At that point, FEMA had disbursed less than $70 million in direct rebuilding funds to survivors of the storms on Puerto Rico, the station reports. “Only later in March — about a month and a half after the Carnival agreement expired — did FEMA dollars disbursed to residents catch up with the contract,” WLRN wrote. The ugly optics of the Carnival boondoggle are exacerbated by news that FEMA used less than half of the onboard housing capacity it paid the company to secure. It is not the first time the agency has spent millions of dollars on half-empty cruise ships docked alongside still-devastated communities primarily home to people of color. After Hurricane Katrina, then-President George W. Bush’s FEMA head Michael Brown signed off on a $236 million contract with Carnival for a trio of ships that were never more than half full. The Carnival scheme is only the latest example of what Naomi Klein calls “disaster capitalism” in the wake of the storms that rocked the massive U.S. island 3.4 million Americans call home. The leaders of the island’s electrical utility initially inked a $300 million deal with Whitefish Energy to repair storm damage to the grid there, before pulling out after reporters noted that the firm has close ties to President Donald Trump’s donors and Interior Secretary Ryan Zinke.
Puerto Rico grid ‘teetering’ despite $3.8 billion repair job (AP) — After months of darkness and stifling heat, Noe Pagan was overjoyed when power-line workers arrived to restore electricity to his home deep in the lush green mountains of western Puerto Rico. But to his dismay, instead of raising a power pole toppled by Hurricane Maria, the federal contractors bolted the new 220-volt line to the narrow trunk of a breadfruit tree — a safety code violation virtually guaranteed to leave Pagan and his neighbors blacked out in a future hurricane. After an eight-month, $3.8 billion federal effort to try to end the longest blackout in United States history, officials say Puerto Rico's public electrical authority, the nation's largest, is almost certain to collapse again when the next hurricane hits this island of 3.3 million people. "It's a highly fragile and vulnerable system that really could suffer worse damage than it suffered with Maria in the face of another natural catastrophe," Another weather disaster is increasingly likely as warmer seas turbocharge the strongest hurricanes into even more powerful and wetter storms. Federal forecasters say there's a 75 percent likelihood that the 2018 Atlantic hurricane season, which begins Friday, will produce between five and nine hurricanes. And there's a 70 percent chance that as many as four of those could be major Category 3, 4, or 5 hurricanes, with winds of 111 mph (179 kph) or higher. "It's inevitable that Puerto Rico will get hit again," Despite the billions plowed into the grid since Maria hit on Sept. 20, 2017, Puerto Rican officials warn that it could take far less than a Category 4 storm like Maria to cause a blackout like the one that persists today, with some 11,820 homes and businesses still without power.
‘People just give up’: Low-income hurricane victims slam federal relief programs — Nine months after Hurricane Harvey dumped more than 50 inches of rain on the Gulf Coast, Kashmere Gardens has not recovered. Nearly every street of the 10,000-person neighborhood has homes that are gutted. Empty window panes reveal sparse interiors without walls, doors or carpets. Doors hang ajar and mold consumes living rooms and kitchens. Signs dot the lawns, promising homeowners that they can quickly sell out and avoid the messy process of rebuilding. One family lives in a tent in their driveway where mangy dogs circle around, shedding fur and leaving a rotten stench hanging in the air. Inside their wrecked home, two 4-year-old children sleep just feet away from open electric wires. The challenges in Kashmere Gardens — where two-thirds of the residents are black and the median income is $23,000 per year — are not the result of any one policy or agency. They’re the consequence of a complicated, bureaucratic disaster-response system built up over decades that experts nearly universally agree is failing to provide critical support to low-income, minority communities when catastrophe strikes.“People just give up,” said Keith Downey, president of a local organization called Kashmere Gardens Super Neighborhood, which has been helping local residents recover. A POLITICO investigation found that numerous low-income families were denied funding from the Federal Emergency Management Agency because much of Kashmere Gardens was in a flood zone, and homeowners were thus required to carry flood insurance — a law that many of them were unaware of. Other families, struggling with language issues and inexperienced with the federal bureaucracy, simply couldn’t cope with a system that even FEMA officials agree is too complicated. Still others fell victim to shoddy contractors who took their money and failed to make repairs.
Lava From Kilauea Volcano Reaches Well at Geothermal Power Plant --Lava from Hawaii’s erupting Kilauea volcano has reached the Puna Geothermal Venture plant, covering a well and threatening another. At the same time, fast-moving lava flows are now threatening nearby communities, prompting new evacuations.“Lava flow from Fissures 7 and 21 crossed into PGV [Puna Geothermal Venture] property overnight and has now covered one well that was successfully plugged,” declared the Hawaii Civil Defense Agency in a statement released on Sunday, May 27 at 6:00 pm local time. “That well, along with a second well 100 feet [30 meters] away, are stable and secured, and are being monitored. Also due to preventative measures, neither well is expected to release any hydrogen sulfide.” 
Those preventive measures included a complete shutdown of the geothermal plant, the capping of all 11 wells, and the removal of some 60,000 gallons of flammable liquid. Those precautions aside, this is the first time in history—as far as we know—that lava has ever engulfed a geothermal power plant, so it’s all uncharted territory. There’s fear that a rupture of the wells could set off an explosion, releasing hydrogen sulfide and other dangerous gasses into the environment. As of this posting, the lava flows on the PGV grounds have stopped moving. Residents have been worrying about such a scenario since the plant went online nearly three decades ago. Over the years, PGV owners have faced lawsuits questioning its decision to place the plant so close to one of the world’s most active volcanoes, as Reuters reports. Meanwhile, sections of the nearby Leilani Estates community had to be evacuated owing to fast-moving lava from Fissure 7, one of 24 cracks that have opened up since the eruptions began on May 3.
Hawaii volcano: Lava takes 71 homes - The number of homes swallowed by lava flowing from fissures spawned by Hawaii's Kilauea volcano has jumped to 71, authorities said Tuesday.About 20 homes burned down in the past two days, Civil Defense Administrator Talmadge Magno told reporters in the Big Island city of Hilo.Magno said lava also crossed a highway not far from a geothermal energy conversion plant. The road and the plant are closed. All the injection wells at the plant have been plugged to prevent any leakage of hazardous gases, Emergency Management spokesman Tom Travis said.Danger from the volcano has now reached Guam, the US territory 4,000 miles away.Volcanic haze from Kilauea, where fallout from a massive eruption keeps threatening residents, has stretched across the Pacific and threatens residents of the Mariana Islands. "Residents with respiratory health problems should stay indoors and avoid being outdoors when haze is seen," Guam's homeland security office said. "Mariners and pilots should be aware of lower visibilities caused by this haze." Meanwhile, back on Hawaii's Big Island, Pahoa residents were told Tuesday to be on the lookout for Pele's hair -- sharp, thin strands of volcanic glass fibers."Avoid touching it or getting it in your eyes," the Hawaii County Civil Defense Agency said. "It can cause injury to eyes and lungs if breathed in."Pahoa residents reported Pele's hair falling Monday night, CNN affiliate Hawaii News Now reported.Pele is the Hawaiian goddess of fire. Authorities also were scrambling to warn residents about fast-moving lava that threatens to engulf more homes in the Leilani Estates community. Officials are asking residents to get out now to avoid getting trapped by flaming molten rock, Hawaii County Civil Defense said Monday night.The lava is bubbling from a particularly violent fissure -- or volcanic crack in the Earth's surface -- called Fissure 8. Fissure 8 is now "very active," with two fountains of lava reaching more than 200 feet at times, the US Geological Survey said.
Hottest, Fastest Lava Yet Prompts Further Evacuations in Hawaii - Residents of two Big Island communities have been advised to evacuate, as fast-moving magma from the Kilauea volcano threatens the few remaining escape routes. “Heed evacuation orders,” warned Hawaii’s mayor, “or you’re on your own.”For the residents of Hawaii’s Lower Puna community, Mount Kilauea is proving to be an unrelenting foe. Since the eruptions began on May 3, at least 22 fissures have opened up, spewing lava across 2,000 acres of land. Around 75 homes have been destroyed, including 20 over the last several days. Over 2,500 people have had to evacuate, and more than 300 people are currently staying in emergency shelters.At the Pahoa Community Center, officials are now bracing for a new wave of volcano refugees. At 6:00 pm local time yesterday, Hawaii’s Civil Defense Agency issued the following advisory:Hawaiian Volcano Observatory reports that lava from several fissures continues to move through Leilani Estates, Lanipuna Gardens and towards the Kapoho area. Residents of Kapoho Beach Lots and Vacationland are advised to evacuate due to the possibility of lava cutting off access to Beach Road near Four Corners. One lava flow is approximately 2 ½ miles from Four Corners and a second is about a half-a-mile from Highway 137, north of Ahalanui County Park. The mayor of Hawaii County, Harry Kim, chimed in, saying those who refuse to heed the evacuation warnings will be “on their own.” He also issued a second emergency proclamation in response to the ongoing eruption in the Lower Puna area.
New evacuations ordered on Hawaii's Big Island as lava flows from volcano threaten roads, destroy homes --A new round of mandatory evacuations in the Big Island neighborhood hardest hit by lava eruptions and flows was set to go into effect Friday as authorities warned that anyone who stays behind could be held liable for rescue costs if they get trapped and call for help.The latest order covers a large section of the Leilani Estates neighborhood, where at least 40 homes have been destroyed. The lava also has burned at least 400 power poles, Hawaii Electric Light Co. reported, cutting power to most of the area.Scientists say the lava leaking from the Kilauea volcano is fountaining up to 250 feet in the air and flowing at much higher-than-normal temperatures. It's also approaching a major intersection of two roads used to access the area, potentially blocking both planned escape routes. Contractors are bulldozing an alternative escape routethrough the adjacent Hawaii Volcanoes National Park.“Persons remaining in the mandatory evacuation area … do so at their own risk with the knowledge that emergency responders may not respond,” Mayor Harry Kim ordered late Thursday. “Persons in violation of this order are subject to arrest and will be liable for any costs associated with rescue operations in the mandatory evacuation area. Refusing to evacuate may put you, your family and first responders in danger.”The new evacuation order takes effect shortly after noon local time Friday (6 p.m. ET). Authorities ordered the neighborhood evacuated May 3, but after the initial closure, residents were allowed to visit homes during the daylight hours.
What Is Kilauea’s Impact on the Climate? - Kilauea’s spectacular explosions won’t set off earthquakes on America’s West Coast. They won’t cause a tsunami, either. They won’t trigger a bigger, more catastrophic eruption like the one of Mount Pinatubo, in the Philippines, in 1991. “Not gonna happen,” Maarten de Moor, a volcanologist, said. And even though Kilauea is emitting lots of carbon dioxide, it won’t worsen global warming to any meaningful degree. “That one,” he said, “is just not based on any facts at all.” Each of these myths about Kilauea have spread on the internet in one form or another since the volcano began spewing lava on May 3. They’ve been largely debunked thanks to scientists like de Moor, who monitors volcanic emissions for the Deep Carbon Observatory and the Volcanological and Seismological Observatory of Costa Rica. The Associated Press, for example, corrected its May 13 story that wrongly stated that Kilauea was part of the “Ring of Fire,” a belt of severe seismic activity that surrounds the Pacific Ocean. The popular-science publications Earther and National Geographic have also published extensive articles refuting most of these claims. But one of these myths has been especially persistent. “I would say they are all equally egregious, because in all cases we have scientific data and observations that refutes them,” said volcanologist Simon Carn, as associate professor at Michigan Tech. “However, the climate change myth is most persistent as it comes up after every significant eruption.” Carn was among the first to draw attention to an NBC News video, “What the Mount Kilauea eruptions mean for climate change,” featuring just one scientist: Peter Ward, a volcanologist who has long argued that global warming is caused by ozone depletion. In the NBC piece, Ward said that basaltic volcanoes—black-rock volcanoes with low silica content—like Kilauea “can contribute to significant changes in the climate” through large emissions of chlorine and bromine. Ward described these elements as chlorofluorocarbons, which deplete ozone. Ward and the narrator then asserted that ozone depletion causes global warming. Carn said on Twitter that NBC should be “ashamed” of publishing the piece without consulting other scientists. “It is B.S. of the highest order,” he wrote.
Where in the United States is nature most likely to kill you? - The United States is an enormous country, spanning mountains, deserts, forests, prairie, tundra, and more. This varied terrain is also home to many natural hazards spawned by air, water, fire, and forces beneath the Earth’s surface. Some of these threats are dramatic; the United States and its territories have the greatest number of active volcanoes of any country except Indonesia, as well as the most tornadoes. Other hazards, like heat waves, are less flashy but can still kill you. Different regions of the country face very different hazards. But which part of the United States is the most dangerous? It turns out there’s no simple answer, although the south does have a particularly generous share of hazards. The weather and geology of the United States allow for many natural perils and disasters. Earthquakes, volcanoes, blizzards, tornados, intense storms, wildfires, landslides, avalanches, sinkholes, flooding, droughts, heat waves, and more are all on the table. Here’s how the country’s natural menaces differ by geography.
China's carbon emissions set for fastest growth in 7 years - China’s carbon emissions are on track to rise at their fastest pace in more than seven years during 2018, casting further doubt on the ability of the Paris climate change agreement to curb dangerous greenhouse gas increases, according to a Greenpeace analysis based on Beijing’s own data. Carbon emissions in the country, the world’s largest emitter of greenhouse gases, rose 4 per cent in the first quarter of this year, according to calculations by the environmental group based on Chinese government statistics covering coal, cement, oil and gas. If that pace continues it would be the fastest increase since 2011. The latest finding comes as climate researchers express concern over rising emissions in China, which accounts for more than a quarter of global carbon dioxide output. Global emissions were flat from 2014-16 but began rising again in 2017 as the Chinese economy recovered and as emission grew in the EU and the rest of Asia. Scientists are concerned the trend in China will continue this year. “China is fundamentally critical for what happened to global emissions,” said Niklas Höhne, a partner at the New Climate Institute and one of the scientists who contributes to Intergovernmental Panel on Climate Change reports. “The outlook for 2018 is actually bad,” he said, pointing to Chinese planning data that indicated the country’s consumption of coal, oil and gas would grow this year. “One major goal of the Paris agreement is that global emissions peak as soon as possible, and China is the one that determines in the end whether global emissions will peak soon or not. That is why all eyes are on China.”
World Needs to Set Rules for Geoengineering Experiments, Experts Say -- Interest in governing experiments to alter Earth’s climate is growing as scientists increasingly look at geoengineering to slow global warming. From cooling the atmosphere with special aerosols to sucking carbon dioxide out of the air, scientists have proposed a number of technologies that could potentially alter the climate system and reverse temperature increases. For now, they’re mostly theoretical. But with scientific interest quickly growing, and some high-profile experiments planned in the near future, some experts say the possibility of large-scale geoengineering projects is no longer a fantasy. Because of their potential global impact—and the risks if something should go wrong—world leaders may be long overdue for a talk about how the international community should regulate geoengineering.Some organizations are trying to get the ball rolling immediately. Yesterday, the Carnegie Climate Geoengineering Governance Initiative (C2G2)—a project of the Carnegie Council for Ethics in International Affairs—presented a briefing to the U.N. Environment Programme’s Committee of Permanent Representatives. It outlined the need for international agreements on geoengineering technology. Then, this morning, the group hosted an extra workshop exploring different ways that geoengineering projects might be governed, and the factors that should be taken into account when considering them.
Emails Show EPA's Cozy Alliance With Major Climate Denial Group - Newly released emails show that the U.S. Environmental Protection Agency ( EPA ) under Scott Pruitt has routinely been in contact with one of the most prominent climate denier groups, the AP reported this weekend.The emails, obtained under a Freedom of Information Act request by the Environmental Defense Fund and the Southern Environmental Law Center , show that John Konkus, a deputy public affairs official, routinely reached out to senior staffers at the Heartland Institute to collaborate on denier invitee lists for a proposed public hearing on climate science last May. Konkus and EPA spokeswoman Liz Bowman also regularly commiserated with Heartland officials on negative press coverage of the agency, and collaborated on ways to amplify positive messages. Then-Heartland president Joseph Bast celebrated the retirement of New York Times climate reporter Justin Gillis in an email shared with EPA staffers last fall, writing that he is "still waiting for Chris Mooney and Juliet Eilperin at the WaPo and Seth Borenstein at AP to flame out."As reported by the Associated Press : "The emails underscore how Pruitt and senior agency officials have sought to surround themselves with people who share their vision of curbing environmental regulation and enforcement, leading to complaints from environmentalists that he is ignoring the conclusions of the majority of scientists in and out of his agency especially when it comes to climate -changing carbon emissions."
NASA full of 'fear and anxiety' since Trump took office, ex-employee says - Nasa’s output of climate change information aimed at the public has dwindled under the Trump administration, with a former employee claiming “fear and anxiety” within the agency has led to an online retreat from the issue.Laura Tenenbaum, a former science communicator for Nasa, said she was warned off using the term “global warming” on social media and restricted in speaking to the media due to her focus on climate change.“Nasa’s talking point is that it’s business as usual, but that’s not true,” said Tenenbaum, who departed Nasa in October after a decade at the space agency. “They have stopped promoting or emphasizing climate science communication, they have minimized it. People inside the agency are concerned Trump will cut climate science funding. There is a fear and anxiety there and the outcome has been chaos.”Tenenbaum said that around a month after Trump’s inauguration last year an “arduous review process” was put in place over every blog post, Facebook post and tweet that she put out from Nasa’s Jet Propulsion Laboratory in California.“I was told verbally by media relations it was because with Trump as president, climate change is now a sensitive subject,” she said. “There was confusion about what to do now we have a president who doesn’t believe in climate change. Everyone was scrambling. It was chaos.” Planned blogposts on coal plants being turned into solar plants, “reasons to be positive about Nasa” and an interview with Gavin Schmidt, a senior Nasa climate scientist, were all either halted or scrapped due to interference from career staff nervous about provoking the new administration, according to Tenenbaum. Figures show there has been a notable decline in Nasa’s output of climate information since the election of the Trump administration.
Netherlands Works to Overturn Landmark Urgenda Climate Ruling -- A landmark climate case in the Netherlands, the first to rule that a government has a constitutional duty to protect its citizens from the impacts of climate change, is heading back to court on Monday for a hearing on the Dutch government’s appeal.The Dutch court’s ruling in Urgenda Foundation v. The State of Netherlands in 2015 ordered the government to take more aggressive action to cut carbon emissions. It inspired similar lawsuits around the world from activist groups and citizens trying to compel governments to act more decisively on the climate crisis.The lawsuit was filed by the Urgenda Foundation and 886 citizens in 2013, seeking to hold the government accountable for its promises to aggressively cut emissions at a time when the country was falling behind in reaching its renewable energy goals. “The case completely changed the political debate on climate policy. Now it is the top topic in Dutch politics,” said Dennis van Berkel, legal counsel of Urgenda Foundation in Amsterdam. “The case created an enormous amount of hope around the world for people who lost faith in the political process.”
Germany Faces Gigawatt-Scale Loss of Onshore Wind Power - Under Germany’s Renewable Energy Act (EEG), which took effect in 2000, renewable energy sources, including onshore wind turbines, secured priority grid access and guaranteed above-market payment for each kilowatt-hour delivered to the grid. In 2020, the first of those feed-in tariff contracts expire. The Institute for Integrated Production Hannover (IPH) estimates that 2.4 gigawatts of installed onshore wind capacity will lose eligibility for guaranteed payments each year. In 2020, up to 4,500 turbines could come down because they will have been rendered uneconomical without the guaranteed payments. Asked about the chances Germany will see gigawatt-scale onshore wind capacity go offline after 2020 and not be replaced, Andrea Scassola, Europe wind market analyst at MAKE Consulting, said they’re “high, given the ownership structure, which is typically very fragmented across a broad range of individuals (farmers, cooperatives, etc.).”
After a decade of dithering, the US east coast went all in on offshore wind power this week - Three northeastern US states this week signed up for a cumulative 1,200 megawatts (MW) of offshore wind power, and hinted at even more ambitious goals in the future. It’s been a long time coming.The US east coast’s premier project, Cape Wind, finally died in 2017 after a decade of protests from residents who objected to obstructed views and risks to wildlife (including the Kennedy political dynasty and billionaire William Koch). The three commitments made this week take up the mantle from that failed project. On May 23, Massachusetts’s awarded its first offshore-wind contract to Vineyard Wind for a 800 MW, 100-turbine farm to be built further offshore then previous projects were planned for, in order to avoid local opposition. It will fulfill the first half of a legal commitment, made in a 2016 energy law, by the state to purchase 1,600 megawatts of offshore wind.Massachusetts’s neighbor Rhode Island followed suit, contracting its own 400 MW, 50-turbine project with Deepwater Wind, the company behind the 30-MW Block Island Wind Project, the US’s first offshore wind farm, completed in 2016. That will help Rhode Island reach its goal of increasing the state’s renewable-energy capacity 10-fold (to 1,000 MW) by 2020. Both wind farms will be built in the Wind Energy Area, 164,750 acres of federal waters between Block Island and Martha’s Vineyard designated for wind development.Finally, New Jersey passed a new law that set a 3,500 MW offshore-wind goal for the state. The state had already begun to embrace offshore wind since the new governor Phil Murphy ordered state agencies in January to procure 1,100 MW of offshore wind. All together, the Union of Concerned Scientists estimates the new contracted wind farms will offset emission equivalent to removing about 270,000 cars from the road while powering more than 600,000 households.
A review of underwater compressed air storage - Compressed air energy storage (CAES) is one of the few storage options that this blog has not looked into, and here I review how this technology might contribute to an all-renewables world. A brief review of land-based CAES storage indicates limited potential (only two plants with a total capacity of 400MW/4GWh – one of which is 40 years old – are presently in commercial operation, and both require “in-ground natural gas combustion” to work). A new approach that involves storing compressed air in balloons or concrete spheres on the sea bed reportedly offers superior potential, but on closer inspection we find that this technology is costly and far from simple, that the potential is probably not as high as claimed and that large-scale commercialization, if it ever happens, is still years away. My attention was first drawn to the question of underwater energy storage by an article in which the Fraunhofer Institute made the following claim: The Fraunhofer Institute for Wind Energy and Energy Systems Engineering envisions spheres with inner diameters of 30m, placed 700m (or about 2,300 ft) underwater. Assuming the spheres would be fitted with existing 5 MW turbines that could function at that depth, the researchers estimate that each sphere would offer 20 MWh of storage with four hours discharge time. I had always assumed that a 30m diameter sphere, which holds 14,000 cu m of air (at standard temperature and pressure) at a depth of 700m below the sea surface, would have the same storage potential as 14,000 cu m of sea water in a reservoir 700m above sea level, i.e. about 20MWh, and calculations confirm that this is indeed the case. But air is compressible while water is not, with heat being generated during compression and lost during decompression, and how to handle these heat gains and losses complicates an underwater compressed-air storage operation. A more detailed explanation of the complexities involved is provided in this 2016 paper by Pimm and Garvey of the University of Nottingham. Additional information is also available from Wikipedia.
Global electric car sales up over 50 per cent in 2017: IEA -Electric car sales around the world rose by 54 per cent in 2017, taking global stock across the three-million threshold, the International Energy Agency said in a report Wednesday.In China, the world's biggest market for electric vehicles, sales also grew by about half -- but their market share remained small at 2.2 per cent.In Norway electric vehicles have by far the world's highest market share, but even there it is still only 6.4 per cent, according to the IEA. Nonetheless, the Paris-based agency was optimistic about the sector's prospects."Supportive policies and cost reductions are likely to lead to significant growth in the market uptake of (electric vehicles) in the outlook period to 2030," the report said.Should policymakers honour their current commitments to the environment, "the number of electric light-duty vehicles on the road (would reach) 125 million by 2030," it added.And should policy ambitions develop further, that number could become as high as 220 million in 2030, it said.But the IEA said that in order for the cars of the future to overtake their petrol and diesel-powered competitors, governments will have to take the lead. "The main markets by volume (China) and sales share (Norway) have the strongest policy push," the IEA said.
Electric vehicles will grow from 3 million to 125 million by 2030, International Energy Agency forecasts - There will be enough electric cars on the road for roughly every person in Japan — the world's 11th most populous country — in just more than two decades, according to the International Energy Agency (IEA). Electric vehicle (EV) ownership will balloon to about 125 million by 2030, spurred by policies that encourage drivers, fleets and municipalities to purchase clean-running cars, the policy advisor to energy-consuming nations forecast on Wednesday. That marks a big jump from 2017, when the IEA estimated there were 3.1 million electric vehicles in use, up 54 percent from the previous year.IEA's outlook still leaves plenty of room for fossil fuel-powered vehicles. Forecasts put the world's total car count at roughly 2 billion somewhere in the 2035 to 2040 window.However, the IEA also sees a pathway to 220 million electric vehicles by 2030, provided the world takes a more aggressive approach to fighting climate change and cutting emissions than currently planned.While battery costs are falling, the IEA acknowledges that government policy remains critical to making EVs attractive to drivers, spurring investment and helping carmakers achieve economies of scale."The uptake of electric vehicles is still largely driven by the policy environment," the IEA said in the report. "The 10 leading countries in electric vehicle adoption all have a range of policies in place to promote the uptake of electric cars."Policies in place today will make China and Europe the biggest adopters, in the IEA's view. In China, credits and subsidies will help EVs grow to account for more than a quarter of the car market by 2030. Meanwhile, tightening emissions standards and high fuel taxes in Europe will boost the vehicles to 23 percent of the market. As for the United States, the IEA sees electric vehicle deployment growing at two speeds. While it sees "rapid market penetration" in places like California and other states with zero emissions plans, relatively low taxes on fuels and the Trump administration's intentions to scale back vehicle emissions standards could hold back growth.
EPA's internal advisory board recommends investigating science behind auto emission rollback | TheHill: The Environmental Protection Agency's (EPA) Science Advisory Board (SAB) is recommending a review of the agency's decision to roll back a prominent Obama-era policy on auto emissions. The independent group made up of researchers and scientists wrote in a May 18 memorandum first obtained by Bloomberg that the department's justification for changing the rule should be reviewed. as should a number of other EPA policy rollbacks. EPA announced in April that it will be changing the current federal standards for auto emissions, saying that levels determined under Obama are too stringent and unachievable, a move hailed by the fossil fuel industry and certain automakers but heavily criticized by environmentalists. "The SAB should consider this action for review with regard to the adequacy of the supporting science," advisory group members wrote in the memo. The board noted that their recommendations would be taken into consideration by EPA as it determines the new emissions standards. Questions the group posed to EPA included asking what the repercussions to deploying the new fuel standard may be and how they could best be mitigated, and what the current barriers to consumer acceptance of "redesigned or advanced technology vehicles" are and how those could be overcome. Additionally, the SAB would like to look into the agency's change in emissions requirements for certain older tractor-trailers known as glider vehicles. EPA in November announced that it was seeking to remove so-called glider trucks from a major regulation written in 2016 that restricted emissions from heavy-duty trucks. Glider trucks are newly-built truck bodies in which manufacturers install old engines that are not subject to stringent emissions regulations.
EPA's Own Science Advisers to Rebuke Agency Over Auto Rollback - Some of the EPA’s science advisers say the agency is ignoring its own research in moving to relax vehicle emission requirements, a signature element of the Trump administration’s campaign to roll back environmental regulations. A working group of the Science Advisory Board has recommended reviewing the EPA’s justifications for the several planned rollbacks, including the agency’s conclusion that Obama-era auto efficiency requirements must be changed because they are too stringent. The group wants the full, 44-member board to scrutinize the science behind the decision to reassess the standards, a move supported by automakers that put the EPA on a collision course with California and its pollution mandates. The board could vote to take up the issue Thursday. “If the SAB takes this on and does their job fairly, it’s not a trivial event,” said Chet France, a former director of assessment and standards at the EPA’s Office of Transportation and Air Quality. The Science Advisory Board is a panel of outside researchers and experts who review the quality of the technical information the EPA relies on, gives advice on broad scientific matters and examines agency research programs. It has sought similar rule reviews before -- eight times from Fall 2012 through Fall 2016. But this time, the SAB working group has singled out five major actions planned under President Donald Trump it wants the board to examine, and the panel adopted unusually pointed language to highlight problems with the EPA’s handling of the issues. The EPA didn’t identify or account for the potential effect on greenhouse gas emissions, climate change and public health and safety when it reopened the review, the working group said in a memo. “These would seem to be logical and necessary areas for scientific and technical assessment.
Trump Regulators and California on Collision Course on Rolling Back Fuel Efficiency Standards -- Jerri-lynn Scofield - The National Highway Traffic Safety Administration (NHTSA) yesterday sent a proposal to the Office of Management and Budget (OMB) yesterday to roll back fuel efficiency standards due to come into effect after 2021. As reported by the The Washington Post: The OMB did not release the contents of the document but is expected to publish it by the end of June, prompting a 60-day public-comment period. The draft of the overhauled standard, as reported last month, would eliminate automakers’ obligation to boost fuel efficiency after 2021 and would set up a clash with California by challenging its ability to set its own stricter standards, a power granted to the state by the [1970 Clean Air Act]. Mary D. Nichols, head of the California Air Resources Board, met in Washington with officials from the Transportation Department and the Environmental Protection Agency [EPA] in an effort to alter the Trump administration’s position. The EPA and Transportation issued a news release afterward calling the conversations “productive” and saying that they were “fully supportive of an open dialogue that proceeds in an expedited manner.” The Trump administration has fixated on rolling back the its predecessor's legacy– and no more so than in the area of climate change. As in so many areas– e.g. Obamacare, Iran nuclear deal, there is far less to these signature climate change policies, than was touted (see this previous Real News Network interview cross post, Road to Trump’s Climate Change Hell Paved by Obama and Clinton and Obama Again Sounds Climate Change Alarm But Continues To Support Fossil Fuel Industry). But no one would deny the Trump climate change policy is a disaster– taken by itself, or even in comparison to previous inadequate policies (as discussed further here: in a nutshell, “the Trump administration is ground zero for a certain brand of climate denialism and is especially close to the fossil fuels industry.” California on May 1 filed a lawsuit in the U.S. Court of Appeals for the District of Columbia seeking to thwart the latest Trump regulatory efforts to scupper the new fuel efficiency standards. Forbes reported California was joined by sixteen other states, New York, Illinois, Oregon, Washington, Massachusetts, Iowa, Virginia, Minnesota, New Jersey, Pennsylvania, Delaware, Connecticut, Rhode Island, Vermont, Maine and Maryland: As litigation proceeds, however, the NYT reports that the standards conflict could hurt automakers, who will likely be forced to bifurcate their product offerings, to comply on the one hand with the higher California standards (which twelve other states would also follow), compared to whatever revised standards the Trump administration ultimately enacts.
US scraps rule requiring states to measure tailpipe gases (Reuters) - The U.S. Transportation Department is repealing a rule, finalized in the closing days of the Obama administration as part of the fight against global warming, requiring states to track greenhouse gas emissions from vehicles on the nation’s highways. In a notice posted Wednesday in the Federal Register, the Federal Highway Administration, which is part of the Transportation Department, said it was repealing the rule. The repeal becomes effective at the end of June. A coalition of states in 2017, including California, Massachusetts, Iowa and Washington, had sued to force the Trump administration to continue to enforce the rule, which they agreed to do, pending a formal process to rescind it. The administration said it was reversing the Obama rule because it “imposed costs with no predictable level of benefits.” The Natural Resources Defense Council had said the rule was a “common-sense tool to curb carbon pollution from transportation.” The group said the administration should work with “planners nationwide to clean up the air, protect our health and provide smarter transportation options for Americans such as more public transit, bikeways and pedestrian walkways.” Under the Obama rule, roughly 400 state transportation departments and metropolitan planning organizations were required to track the annual number of tons of carbon dioxide emitted from on-road vehicles traveling on the national highway system and assess traffic congestion — with initial reports due by October 2018. The move was aimed at states considering greenhouse gas emissions as it used federal funds for highway improvements.
Bitcoin backlash as ‘miners’ suck up electricity, stress power grids in Central Washington -- Public hearings for rural electric utilities are rarely sellout events. But the crowd that showed up in Wenatchee two weeks ago for a hearing about Bitcoin mining in Chelan County was so large that utility staff had to open a second room with a video feed for the overflow.The turnout wasn’t surprising. Chelan County, along with neighboring Douglas and Grant counties, has been at the center of the U.S. Bitcoin boom since 2012, when the region’s ultracheap hydropower began attracting cryptocurrency “miners.”These entrepreneurs earn Bitcoin by solving increasingly complicated mathematical problems established by the shadowy creators of the digital currency. The process, which the industry calls mining, involves trillions of computer calculations and sucks up huge amounts of power.As a result, an area famous for apples, wheat and conservative politics has been transformed into a kind of cyber-boomtown, with Bitcoin mining operations that range from large-scale, state-of-the-art warehouses to repurposed cargo containers to backyard sheds. By the end of this year, according to some estimates, the Mid-Columbia Basin could account for as much as 30 percent of the global output of new Bitcoin and large shares of other digital currencies, such as Litecoin and Ethereum. But as in any boomtown, success has come at a cost. As the cryptocurrency industry morphs into larger, more energy-intensive operations, the Basin’s three public utilities districts (PUDs) are reassessing how they deal with it, and whether they can — or should even try to — keep up.
How Many Deaths Does It Cost To Power The World? - When flipping a switch at home, one usually does not think of how many people it kills by leaving the light on longer than necessary. Nevertheless, as Statista's Patrick Wagner notes, as with almost everything in our industrialized world, not much comes without the cost of human life. Most means of energy production come with a considerably high amount of environmental pollution as a by-product and even allegedly clean and safe energy sources, like wind and water plants, still carry the risk of killing people through malfunction and accidents while setting them up. You will find more infographics at StatistaAs this estimation shows, energy costs some 500,000 lives per year. The cleanest source of energy might surprise you: nuclear power is currently the safest option we have – well, at least if we cut out the fact that the active waste will accompany us for the next few centuries.
Latin American land owners are fighting to keep power lines out - Gilson Denardin always hated the towering transmission lines crisscrossing his farm in northeastern Brazil. So when he caught wind of plans to put up two more sets of wires, he decided to put up a fight. Denardin is leading a local movement to force power companies to pay farmers more for their trouble, and he’s not alone in raising a stink. At the end of the last century, before the commodities boom brought a wave of development to Latin America, opposition to the blight of new electricity infrastructure was rare. People just wanted the energy. Now that 100 percent of the region’s biggest economies have access to power, the “Not in my backyard” movement—or Nimby’ism—that has long been the norm from Europe to the U.S. is creeping in here, too. More and more, land owners from the countryside of Brazil to resort towns in Mexico are protesting further development of energy infrastructure. Separated by thousands of miles, their complaints are usually the same: power plants and transmission lines disturb the skyline, reduce the value of properties and make it harder to harvest land. “Brazil is a country under construction—it’s not like in Europe,” said Mario Miranda, president of the association of power transmission companies. “For our GDP to grow 1 percentage point, our power generation must grow 20 percent.” That’s the major impetus behind major government efforts to bolster both energy output and transmission lines. Brazil last year auctioned off the rights to build 12,400 kilometers (7,700 miles) of cables and is planning two more sales this year. Mexico, which only opened up its energy and electricity markets to private investment in 2014, has plans to boost wind-generation capacity on the Yucatan Peninsula, a favorite destination for tourists, by 15-fold through 2020. And Argentina is also ramping up renewable-energy production with 10 gigawatts of new wind farms—equal to about 10 nuclear power plants—by 2025.
Electric power sector consumption of fossil fuels at lowest level since 1994 - Fossil fuel consumption in the electric power sector declined to 22.5 quadrillion British thermal units (quads) in 2017, the lowest level since 1994. The declining trend in fossil fuel consumption by the power sector has been driven by a decrease in the use of coal and petroleum with a slightly offsetting increase in the use of natural gas. Changes in the fuel mix and improvements in electricity generating technology have also led the power sector to produce electricity while consuming fewer fossil fuels. In 2017, coal consumption by the electric power sector reached its lowest level since 1982, and petroleum consumption in the power sector was the lowest on record, based on data since 1949. Recent natural gas consumption in the power sector has generally been increasing, but 2017 consumption was slightly lower than the record-high 2016 level. In energy-equivalent terms, more coal was consumed in the power sector than natural gas in 2017, at 12.7 quads and 9.5 quads, respectively. However, in terms of electricity generation, natural gas-fired power plants in the electric power sector produced more electricity than coal-fired plants, at 31% and 30% of the U.S. total, respectively, in 2017. Natural gas-fired units tend to be more energy efficient, requiring less energy content to produce a unit of electricity. As recently as 2000, natural gas-fired power plants were on average about as efficient as coal-fired plants. Since then, new natural gas-fired power plants have tended to use combined-cycle generators, which are more efficient because the waste heat from the gas turbine is routed to a nearby steam turbine that generates additional power. Combined-cycle units now make up most of the natural gas-fired electricity generation capacity. By the end of 2018, natural gas combined-cycle units may surpass conventional coal-fired power plants to become the most prevalent technology for generating electricity in the United States. As the natural gas-fired generation fleet has grown and become more efficient, the generation-weighted average efficiency of fossil fuel-fired electricity generation has improved. In 1994, fossil fuel power plants required 10,400 British thermal units (Btu) of primary energy to produce each kilowatthour (kWh); by 2017 that rate had fallen to 9,400 Btu/kWh.
Agency: Natural gas could soon surpass coal as U.S. electricity generator- By the end of 2018, natural gas could surpass coal to become the most prevalent technology for generating electricity in the United States, according to the U.S. Energy Information Administration . The agency said fossil fuel consumption in the electric power sector declined in 2017 to its the lowest level since 1994. “The declining trend in fossil fuel consumption by the power sector has been driven by a decrease in the use of coal and petroleum, with a slightly offsetting increase in the use of natural gas,” the EIA said. In 2017, coal consumption by the electric power sector reached its lowest level since 1982, and petroleum consumption was the lowest on record, based on data since 1949, the EIA said. Recent natural gas consumption in the power sector has generally been increasing. In terms of electricity generation, natural gas-fired power plants produced more electricity than coal-fired plants, at 31 percent and 30 percent of the U.S. total, respectively, in 2017, the EIA said. Natural gas-fired units tend to be more energy efficient, requiring less energy content to produce a unit of electricity. As recently as 2000, natural gas-fired power plants were on average about as efficient as coal-fired plants. Since then, new natural gas-fired power plants have tended to use combined-cycle generators, which are more efficient because the waste heat from the gas turbine is routed to a nearby steam turbine that generates additional power, according to the EIA.
Are Fossil Fuel Divestment Campaigns Working? A Conversation With Economist Robert Pollin -Is fossil fuels divestment an effective strategy in tackling climate change? A newly released study by the Political Economy Research Institute (PERI) at the University of Massachusetts at Amherst suggests that this strategy is not sufficient on its own in affecting the global battle against climate change and that new approaches are needed. Robert Pollin, a distinguished professor of economics at the University of Massachusetts, Amherst, co-director of PERI and co-author of the study spoke to C.J. Polychroniou about the limits of the movement to divest from fossil fuels and the need for fresh approaches and a more holistic type of action for combatting climate change.
Groups Sue Utility Company for Leaking Coal Ash Into National Scenic River - Illinois environmental groups filed a lawsuit Wednesday alleging that a utility company is violating the Clean Water Act by letting coal ash leak into a protected river.The groups allege that Texas-based Dynegy Inc. is tempting a dangerous spill by not dealing with unlined pits of coal ash at the shuttered Vermilion Power Station, which sits along a tributary of the Vermilion River. "Over the years the utilities have used the floodplain as essentially a dumping ground," activist Lan Richart told the Chicago Tribune. "Now it's been shown to be polluting both the groundwater and the river."As reported by the Chicago Tribune :"With the Trump and Rauner administrations rolling back enforcement of national and state environmental laws, advocates are urging a federal court to step in and order Dynegy to take more aggressive action. Environmental groups fear that steady erosion of the riverbank could trigger a catastrophic spill, similar to disasters at coal plants in Tennessee and North Carolina where ash impoundments ruptured and caused millions of dollars in damage. 'Dynegy left a toxic mess on the banks of one of Illinois' most beautiful rivers and has done nothing to stop the dangerous, illegal pollution from fouling waters enjoyed by countless families who kayak, tube, canoe and even swim in the river,' said Jenny Cassel, an attorney with Earthjustice , one of the nonprofit groups behind alawsuit filed Wednesday that accuses Dynegy of violating the federal Clean Water Act." Chicago Tribune , AP
Big coal is using this small Oklahoma town as a toxic waste dump —On the edge of Bokoshe, population less than 500, sits a hill about 60 feet high, covered partly with soil. From a distance, it could be a natural part of eastern Oklahoma’s rolling hills. But this mound isn’t like the others: It’s made of toxic fly ash, a coal byproduct from electricity production, generated by power company AES. The fly ash fills in an unlined, abandoned strip mine at a site also used to dump wastewater from fracking. When it rains, the waste runs into nearby lakes and tributaries of the Arkansas River. According to Physicians for Social Responsibility, fly ash contains a range of heavy metals, from arsenic to lead to mercury, some of which are linked to cancer. Residents of Bokoshe have been trying to stop the pollution for years, only to meet with denial at the corporate and state levels. No one in power, it seems, will admit it’s a problem. Tim Tanksley, 73, a Vietnam vet born and raised in Bokoshe, and his neighbors call their representatives, file complaints with the Oklahoma Department of Environmental Quality (ODEQ) and have appeared on state PBS affiliate OETA. Tanksley drives our group out to the pit entrance, passing two empty fly-ash trucks leaving the site. He points out houses as we pass. “That lady has a lymphoma,” he says, then points to the next house and lists more cancers. When we get to the fly ash hill, he shows how the runoff goes into a lake where cattle drink. The ranchers sell the cattle at market anyway: “When we go to the sale barn, we don’t say, ‘Hey people, these cows have been eating grass covered in fly ash,’” says Tanksley. “We’re not gonna kill ourselves.” AES has been operating the coal-powered Shady Point Generation Plant near Bokoshe since 1992, but it farms out the removal of the fly ash coal waste to “Making Money Having Fun LLC,” a commercial disposal company.
Indiana county to pay for removal of toxic coal ash (AP) — A southern Indiana county that set aside 15,000 tons of coal ash for road projects must pay $50,000 to clean up ash contaminated with heavy metals and chemicals.The Courier Journal reports that coal ash must be cleaned up at Floyd County's Georgetown work yards and at a Harrison County farm. Floyd County was told to get rid of a coal ash stockpile because black residue washed off the pile and into a creek during rains, said former highway superintendent Ron Quakenbush. Federal regulators imposed stricter safety rules in recent years for ash ponds at coal-fired power plants and at landfills, which must be lined to accept the waste. Regulators recommend that communities use rock salt to melt roads covered in ice or snow. The farm has about 4,500 tons of ash. Excavation would involve digging 4 feet deep in a 22,000-square-foot area and could cost up to $20,000. Officials aren't certain about the cost of the Georgetown excavation, which would remove 15,000 tons over 151,000 square feet, said Don Lopp, Floyd's director of operations. The removal will be funded with money from the sale of surplus highway equipment, Lopp said. This year's sale raised $90,000, which typically would be set aside for highway expenses.
Industries Try to Strip Power from Ohio River's Water Quality Commission -- More than two dozen coal-fired power plants that line the Ohio River stand to get a break from regional oversight that has helped to dramatically improve water quality in the river, the drinking water source for 5 million people. Electric utilities and other industries are pressing a regional commission to end its role in restricting the dumping of toxic wastewater into the river, arguing there's too much bureaucracy already. Instead, they want the commission to stick to research, and leave anything related to regulation to individual states. At the same time, the Trump administration has put on hold the U.S. Environmental Protection Agency's first Clean Water Act rules in a generation to curb toxic wastewater discharges from power plants while the agency reconsiders them. The eight-state regional commission, known as ORSANCO, has a long history of setting water standards for hazardous chemicals and heavy metals from coal-burning and other industries, often at more stringent levels than state or federal standards. But decades of progress toward cleaning up one of America's hardest-working rivers could be slowed if a proposal that follows the industries' request to reduce ORSANCO's authority is approved by the commission, environmental advocates warn. That progress has allowed riverside cities like Cincinnati and Louisville to rediscover their waterfronts for recreation and tourism—even as significant pollution concerns remain. Climate change advocates also worry that relaxing clean water rules on electric utilities could delay the retirements of coal plants, among the most pernicious sources of carbon dioxide emissions that cause global warming. The commission received hundreds of public comments earlier this year on the proposal and has scheduled a preliminary vote on June 7. A majority of commissioners support the plan. A yes vote would move the proposal forward for public webinars and further public comment before a final vote.
China considers more US coal imports to cut deficit - China is considering a plan to buy more American coal as part of an effort to narrow its trade deficit with the U.S., according to people with knowledge of the matter.Chinese officials are currently looking at boosting purchases from West Virginia in particular, said the people, who asked not to be identified because they’re not authorized to speak publicly. They didn’t say whether Beijing is looking at buying more supplies from other states. A final decision hasn’t been made, they said. The country’s top economic planner, the National Development and Reform Commission, referred questions to the National Energy Administration; officials there didn’t reply to an email seeking comment.
Trump Administration Plans Costly Taxpayer Bailout of Unprofitable Energy Industries -- The Trump administration is planning to bail out unprofitable coal and nuclear plants by mandating grid operators buy electricity from them in the name of national security, Bloomberg reported late Thursday. A draft Department of Energy memo circulated before a National Security Council meeting Friday proposes invoking rarely-used emergency authorities under the Defense Production Act and Federal Power Act to force grid operators to purchase power from struggling plants. Per the memo, the move is meant as a "stop-gap measure" while the administration conducts a two-year study on "grid security challenges" facing the country. The proposal is the latest overture by the Trump administration as it struggles to make good on a campaign promise to help the coal and nuclear industry—as well as some of the president's biggest donors . As reported by Bloomberg : "While administration officials are still deciding on their final strategy—and may yet decide against aggressive action—the memo represents the Energy Department's latest, most fully developed plan to intervene on behalf of coal and nuclear power plants, pitched to the president's top security advisers. Opponents of the new plan contend bailouts are a solution in search of a problem. They argue there are many ways to back up the grid that won't cost ratepayers billions of dollars. A coalition of natural gas and renewable power advocates told [Energy Secretary Rick] Perry that 'power plant retirements are a normal, healthy feature of electricity markets,' and therefore there is no emergency that would justify Energy Department action."
Illinois can subsidize nuclear power if it wants: US FERC brief (Reuters) - U.S. energy regulators said federal rules do not preempt Illinois’ program to provide money to nuclear reactors that provide carbon-free energy to help prevent the units from shutting early, according to a filing with a federal appeals court. The U.S. Department of Justice and Federal Energy Regulatory Commission (FERC) made their comments in a brief on Tuesday in an appeal of a case brought by power generators opposed to Illinois’ Zero Emission Credit (ZEC) program. Several nuclear reactors in the United States are in danger of shutting for economic reasons because cheap and abundant natural gas from shale formations and subsidies paid to renewable energy projects have reduced power prices to their lowest levels on record in several parts of the country. Illinois adopted the ZEC program in 2016 to keep some nuclear power plants in service to help meet the state’s greenhouse gas reduction goals after Illinois power company Exelon Corp said it would shut its Clinton and Quad Cities nuclear plants because they were losing money. In most states, the bulk of carbon-free energy comes from nuclear power plants. Power generators, like NRG Energy Inc and Vistra Energy Inc, challenged the Illinois law in federal court, arguing it favors nuclear power over other energy resources, like gas, and boosts consumers’ costs, among other things. That legal challenge continues in the U.S. Court of Appeals for the Seventh Circuit.
Another Nuclear Bailout? - Last week, New Jersey joined the list of states seemingly eager to bail out politically well-connected nuclear power plant operators. Governor Phil Murphy signed a bill that would grant subsidies of up to $300 million per year to the owners of the Salem and Hope Creek nuclear power stations, two plants in southern New Jersey approaching the end of their useful lives. PSEG Nuclear, an affiliate of the state’s largest utility, owns 100% of Hope Creek and 57% of Salem. It made clear that it would not put any new investment into these large, aging power stations without a subsidy, threatening a full closure within a brief period. As pulp fiction aficionados, we love a good hostage situation. In this case the “hostages” are several thousand utility employees and presumably voters. The potential adverse economic impact of a power plant closures is regionally significant. State and local governments have become dependent on property and related taxes levied on these facilities. Not surprisingly for this genre the hostages, so to speak, have relatives. The state legislature’s bill would add a surcharge on electric utility customer bills. This would amount to about $40 per year for a typical residential customer, adding a not inconsiderable 3% to the average electric bill in the state. A ransom is also typical in these dramas. The study also claimed that the two power stations provided direct and indirect employment of between 1,400 and 4,400 jobs – a significant number in the South Jersey region. No state official or politician wants to see unemployment rise. But presumably the bulk of a highly skilled workforce could find gainful employment elsewhere. And whatever power producing facility replaces the nuclear stations would have to employ workers as well although perhaps not in the same place. But what of the actual subsidy? It saves power-plant jobs at a cost of $214,000 per employee per year – if we assume that the direct jobs are the real ones, and $52,000 per year for both direct and indirect jobs. Need we point out that many consumers paying higher electric bill do not earn anything like those figures? However, there are other issues here, a backstory if you will. At this point our story shifts dramatically and becomes a love affair between the utility industry and ostensibly free markets.
Utica Shale Academy graduates 22 - The Utica Shale Academy graduated 22 of its newest alumni during it commencement ceremony on Thursday. Seniors from the main site at Southern Local High School and the satellite location at Columbiana High School joined family, friends and school leaders for the event at Salineville. USA Director Eric Sampson welcomed the crowd to the fourth annual exercise and thanked officials at both schools for partnering with academy and benefiting the students. “I would like to thank each and every one of you for being here this evening as we celebrate this one brief moment in time that, for these graduates, has been many years in the making,” Sampson said. “Tonight is a celebration of accomplishments of the individuals that sit here before us. Graduates, each of you have traveled a path that has brought you to this destination. Some of those paths may have been very similar, and some probably couldn’t be more different. But each of those paths brought you to this point in time to celebrate the accomplishments of the last 13 years of your journey in education. We are proud of you and we wish you nothing but great things going into the future.” Keynote speaker for the evening was Amanda Greathouse, operator of Safety Pro Training and Consulting of Lisbon. Greathouse encouraged the graduates to leave their comfort zones and take advantage of opportunities before them. She noted her own initial anxieties about taking her knowledge into schools and working with students but said it has been a rewarding experience.“It was very exciting and I was so glad that I did that,” she said. “I’m very proud of all of you. Over the past couple of years we’ve gotten to know each other and I?m grateful for you attentiveness, patience and eagerness to learn.”She added that while it was easy to be caught up in being comfortable, people should take advantage of opportunities because they can be very exciting. Greathouse added that the grads should also have a plan of where they want to be in the future.Sampson and Utica Shale Academy Board President Dr. Charles Joyce then presented diplomas to graduates Hailey Brock, Alexis Campbell, Chase Cook, Zackery Cox, James Downie, Joshua Hanshaw, Alante Jones, Kaitlyn Jones, Joseph Matheson, Dylan Mercer, Hanna Oates, Kevin Reaves, Zachary Robinson-Hunley, Nicholas Scott, Logan Snay and Kristy Soos. At the conclusion, Soos presented her peers as the latest graduating class.
Top of the List: Ohio's largest oil and gas producers from fracking wells - This year’s list of the most productive Ohio oil and gas producers ranks operators by amount of natural gas produced from Ohio horizontal shale wells in 2017. The five largest natural gas producers are included in the attached gallery. Subscribers can see the online list by clicking the link below. Information also includes horizontal shale oil production, drilling permits issued in 2017 and top counties for producing wells. Most Productive Oil and Gas Producers Ranked by Total 2017 horizontal shale gas production, MCF Rank Operator Name Total 2017 Horizontal Shale Gas Production, MCF
- 1 Gulfport Energy Corp. 380.18 million
- 2 Ascent Resources Utica LLC 309.34 million
- 3 Chesapeake Exploration LLC 278.09 million
- 4 Rice Drilling D LLC 5
- 5 Antero Resources Corp.
View This List. (paywalled) All data used in the list comes from the Ohio Department of Natural Resources Division of Oil and Gas Resources Management.
EIA: Longer wells, higher productivity increase Utica gas output and rig count fluctuation -- In April 2018, natural gas production from the Utica formation, located primarily in Ohio, averaged 5.8 Bcfd, or about 7% of total U.S. dry natural gas production. Utica natural gas production has increased relatively steadily since 2011, and in 2017, natural gas production from the Utica formation reached a new annual high of 4.9 Bcfd, 23% higher than 2016 levels. Despite steadily increasing production, Utica’s rig count and prices in the region have fluctuated. From 2011–2014, as Dominion South and other nearby hub prices remained higher than $2.75/MMBtu, the average yearly rig count kept rising, reaching an average of 43 rigs in 2014. However, by 2016, the rig count fell to 14 rigs, and prices declined to $1.50/MMBtu. New pipeline projects added takeaway capacity from the region in 2017 and both rigs and prices rose, though they remain lower than previous levels.Utica’s natural gas production increase has been supported by higher per-well production from new wells. Similar to production activity in other regions, such as the Marcellus and the Haynesville, drilling operators have increased the lateral length of horizontal wells. From 2011 to 2017, the average length of laterals increased from 4,649 ft to 8,628 ft, according to DrillingInfo. As production has grown, well productivity has also risen. EIA uses three-month cumulative production as a proxy for initial productivity (IP) rates because the number of days in production for any given month is not available. In Utica, the first three-month cumulative production per well increased from about 146 MMcf in 2011 to 824 MMcf in 2017. Moving forward, productivity gains are expected to continue as lateral lengths increase and optimization of spacing between wells improves well recovery.
Soil testing under way at site of possible Ohio cracker - It remains unclear whether an ethane cracker plant will be built in eastern Ohio, but small bits of news continue to emerge about the project proposed by PTT Global Chemical America, Kallanish Energy reports. A final investment decision on the $10 billion project is expected by the end of 2018.Crews were conducting soil tests recently at the site of FirstEnergy's former R.E. Burger coal-fired power plant on the Ohio River at Dilles Bottom, in Ohio’s Belmont County. The power plant has been razed. In early May, the company paid $17.5 million to acquire a property southwest of the old power plant. The purchase gives PTT roughly 500 contiguous acres. Earlier this year, PTT approved an agreement with a subsidiary of Daelim Industrial Co. Ltd., a leading Korean construction and chemical company, to conduct a feasibility study and to secure funding for the petrochemical complex.The plant also grew a little in size and cost. The plant would be capable of producing ethylene and its derivative at a rate of 1.5 million metric tons per year.The cost of the project has jumped, from roughly $6 billion, to $10 billion, according to Ohio Gov. John Kasich, spoken at a press conference when the PTT-Daelim deal was announced. PTT Global Chemical America is a subsidiary of PTT Global Chemical, Thailand’s largest integrated petrochemical company.
US OKs start of more ETP Rover natgas pipeline segments in Ohio (Reuters) - U.S. federal energy regulators on Thursday approved Energy Transfer Partners LP’s (ETP) (ETP.N) request to commence service on a couple more segments of its Rover natural gas pipeline in Ohio. The U.S. Federal Energy Regulatory Commission (FERC) authorized ETP to start service on the Supply Connector in Ohio and parts of Mainline B, which is a 42-inch (107-cm) pipe that runs alongside the 42-inch Mainline A pipe from southeast Ohio to northwest Ohio. FERC, however, said it was still considering ETP’s request to start service on other pipeline segments, including the Burgettstown Lateral from Pennsylvania to Ohio and the Majorsville Lateral from West Virginia to Ohio. FERC said it granted the authorization to start service on the Supply Header and Mainline B on the expectation that “rehabilitation and restoration of the affected areas are generally proceeding satisfactorily.” At this time, final restoration of the Supply Header and Mainline B is over 90 percent complete, FERC said, noting that ETP has estimated it will complete full restoration by July 24. ETP said on Wednesday that placing all of the requested segments into service would have unlocked about 0.85 billion cubic feet per day (bcfd) of capacity that is not currently available to the market, which the company said could help offset the nation’s current storage deficit before next winter. The $4.2 billion Rover project is the biggest gas pipeline project under construction in the United States. It is designed to carry up to 3.25 bcfd of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Gulf Coast and Ontario in Canada. ETP has said it wanted to put the entire Rover project into service by June 1.
FERC approve Rover Pipeline’s full Mainline B pipeline -- Energy Transfer Partners, L.P. announced yesterday that Rover Pipeline, LLC received approval from the Federal Energy Regulatory Commission (FERC) to commence service of the Supply Connector B and full Mainline B pipeline segments. This latest approval allows for 100% of Rover’s mainline capacity, 3.25 billion ft3/d of natural gas, to be placed into service. Starting 1 June, service to the Market Zone North Segment of the pipeline, with deliveries into the Union Gas Dawn Storage Hub in Ontario, Canada, will begin by way of the Vector Pipeline Connection in Michigan. Rover transports natural gas from the Marcellus and Utica Shale production areas to markets across the US, as well as into the Union Gas Dawn Storage Hub for redistribution back into the US or into the Canadian market.
Study: Using Oil and Gas Wastewater on Dirt Roads is Radium Health Hazard - -- In more than a dozen states, it is legal to use the wastewater from the oil and gas industry to tamp down dust on the millions of miles of America’s dirt roads. The option is attractive to local governments, since it is cheap and effective.A new study by scientists at Penn State contends that it is also harmful to the environment, and hazardous to Americans, because it is putting radium in the water and air.The paper, published in the American Chemical Society journal Environmental Science and Technology, finds that many metals from the process leach into local water sources over time. Radium, in particular, leaches off the road and what remains could get kicked up in dust, and inhaled, the scientists report.The amount of radioactivity released through the road treatment process exceeds that from spills and wastewater treatment plants combined, the scientists find.“Spreading O&G wastewater on roads can harm aquatic life and pose health risks to humans,” according to the researchers.The survey of wastewater involved local conditions in 14 townships in northwestern Pennsylvania.The scientists assessed the actual wastewaters in the towns’ tanks and employed a Thermo Scientific mass spectrophotometer to look for barium, copper, iron and an assortment of other inorganic substances. Then, they separated out the organic compounds by concentrating aliquots, and conducting observations using comprehensive two-dimensional gas chromatography coupled to a time-of-flight mass spectrometer, according to the paper. The leaching process was assessed by looking at what ran off the road, and what was left behind. The radium was found using gamma spectroscopy, and experiments in the lab simulated spreading and runoff events. The determination was that radium from the unpaved roads is a danger to the people and animals in Pennsylvania.
Study finds health threats from oil and gas wastewater spread on roads - Spreading oil and gas wastewater has been a common and cheap way for municipalities to suppress dust on unpaved roads in parts of Pennsylvania for years. But a new study found the practice — which the state recently ended — could threaten environmental and public health by leaching metals, salts, and radioactive materials into surface or groundwater, nearby soil, and even the air. The study, from researchers at Penn State, found this water can contain contaminants like radium, a radioactive element and known carcinogen, “often many times above drinking water standards.” State law prohibits using brine from Marcellus shale gas wells. But for years, waste from shallow, conventional wells was allowed, even though it contains many of the same contaminants as that from deeper shale wells. The study found there were “no universal standards” for radioactivity or other components in wastewater used on roads, and that while Pennsylvania did test the brine for some contaminants, “radium concentrations were never reported” by the state. The Department of Environmental Protection, which for years allowed municipalities to treat their roads with brine, said last week it was ending the practice, after it was sued by a Warren County resident. Before the decision, over a dozen counties in Western Pennsylvania used oil and gas wastewater on roads, and at least 13 other states — including Ohio, Michigan, West Virginia and New York — allowed the practice, according to the Penn State study. But it was especially common in northwestern Pennsylvania. In 2016, municipalities spread more than 11 million gallons of brine on roads in Pennsylvania, 96 percent of it in northwest part of the state. That represented 6 percent of the Pennsylvania conventional oil and gas industry’s wastewater.
More attention being paid to Utica play in Pa., West Virginia - There is a “new” play that’s beginning to garner some serious interest in the Appalachian Basin, with one major basin player admitting it’s moving to a drilling program centered on this particular play.This play is stacked with the Mighty Marcellus in Pennsylvania and West Virginia, and thus, until now, has pretty much been an after thought in those two states.But the Utica Shale is going to break out in a big way as exploration takes place. Yes, that Utica Shale. Thought by many as an eastern Ohio play, geologic maps indicate the Utica is much bigger than the Marcellus, covering more area, more states, extending under Lakes Erie and Ontario, and into Canada.In fact, the thickest portion of the Utica in terms of pay is in Westmoreland County, in southwest Pennsylvania.“Since the Utica gets relatively deeper and drier moving east, it’s often referred to as ‘dry Utica’ in Pennsylvania and West Virginia,” according to Marissa Anderson, a senior energy analyst with BTU Analytics, in a recent blog. According to BTU data, from 2013 through 2017, 156 horizontal Utica wells were drilled and producing in Pennsylvania, led by Houston-based Hilcorp, one of the largest, privately-held independents in the U.S., which totaled 57. More than 8,200 unconventional wells are producing in Pennsylvania, according to Marcellus Shale Coalition president Dave Spigelmyer. One problem with the Utica in Pennsylvania and West Virginia, at least until now, has been the fact the play is deeper in the ground, which means greater expense. EQT, which tapped the monstrous Scotts Run Utica well in Greene County in southwest Pennsylvania, suspended its deep Utica testing program in middle of 2017 to focus on the Marcellus. Scotts Run’s 24-hour deliverability test of 72.9 million cubic feet per day (MMcf/d), with an average flowing wellhead pressure of 8,641 pounds per square inch, according to Anderson. “Lately though, discussion of the dry Utica is making an appearance in producer earnings, particularly with the ‘stacked pay’ potential it provides,”
Fracking is Destructive but Defenders Continue the Hype - Hoppy Kercheval’s May 16 opinion piece, “Evidence against fracking lacking,” is remarkable for several reasons.First, he writes about a subject, hydraulic fracturing, citing a single piece of research, coming to the conclusion it “demonstrates that the hysteria over fracking is unwarranted.”Not so fast Mr. Kercheval! There is now a literature of more than 600 articles published in scientific journals. Such peer-reviewed research is difficult, expensive, and time consuming to complete.Six years ago, before the body of literature developed, a single article with such conclusions might have been acceptable as a first try, but that is hardly the case now.The articles now published are divided, by my estimation 80 percent saying investigators found harms or substances that could cause harm as a result of fracking. That doesn’t provide a tight cinch, but it certainly doesn’t justify Mr. Kercheval’s facile conclusion.Second, referring to the concerns of rural people who have observed adverse effect in their children, their seniors and themselves as “hysteria” is roundly and soundly depreciating. It is much like racism or depreciation of foreign people or minority religion.The countryside is not inhabited by mindless souls who function with the sensibilities of ghouls. These are real people who take their children to physicians who treat various medical issues that may include respiratory problems, birth defects, blood disorders, cancer and nervous system impacts from questionable causes. When the disease occurs concurrently with drilling and production and nothing else new has happened, it doesn’t seem unreasonable to suspect fracking. Not much else does happen in the country side involving a thousand or more truckloads of chemicals and water per well, injected underground at as much as 15,000 pounds per square inch, along with surface disturbance of several acres for well sites, access roads and pipelines.
One of four injured in Doddridge County explosion dies -One of the four people flown to the hospital after an oil tank exploded in Doddridge County has died, according to the Occupational Safety and Health Administration. Barry Lattea, 51, was removing oil tanks on White Hair Lane in West Union Friday morning about 10 a.m. when one of the tanks caught fire and exploded, said Blake McEnany, assistant area director for the OSHA’s Charleston office. Four people were flown to the hospital for their injuries, and Lattea later died at Mercy Hospital in Pittsburgh. Lattea died of thermal and inhalation injuries, McEnany said. He didn’t comment on the status of the other three people who were injured. Lattea worked for Hydrocarbon Well Service, a Buckhannon-based oil and gas company, McEnany said. The other three people were employed by Waste Management, he said.
Public comments on pipeline plans may be slipping through cracks at FERC, audit says - The federal process for approving new natural gas pipelines is veiled from the public, does a poor job of tracking their views, and may not be considering their concerns when weighing new projects, according to a new auditor's report.Environmental and pipeline safety advocates say the U.S. Department of Energy's Office of Inspector General's findings about the Federal Energy Regulatory Commission (FERC) are alarming, if not surprising."It's frankly quite troubling, but at the same time, this is not news to those folks who have been impacted by proposed pipelines and those folks who try to be involved and navigate FERC's system," Montina Cole, a senior energy advocate with the Natural Resources Defense Council (NRDC).The report found that FERC lacked a consistent process for tracking public comments on proposed pipeline projects, suggesting that all comments might not be reviewed."In the absence of a consistent methodology, we did not verify to what degree comments received by FERC were considered, aggregated, and reflected in the environmental documents or final orders for the certificate applications during our review," the report concluded. "The lack of a consistent methodology could increase the risk that FERC may not address significant and impactful public comments in the environmental document or final order.""If people's comments are not being reviewed at all, that is highly problematic and completely unacceptable," Cole said. "There are high stakes here; people's lives, their livelihoods, property and certainly the environmental on which we all depend." The findings of the inspector general's May 24 report mirror those of a 2017 report commissioned by NRDC. That report concluded that the Commission needed to better take into account public comments, especially from stakeholders with limited resources.
FERC's approval of Mountain Valley Pipeline invalid, groups argue - The environmental project manager who has been signing off on Mountain Valley Pipeline construction doesn’t have the authority to do so, lawyers for a citizen group are arguing in the Fourth Circuit Court of Appeals.The project manager for the Federal Energy Regulatory Commission, Paul Friedman, has been granting approval to continue with construction on the MVP, a 300-mile-long natural gas pipeline that will span from West Virginia to Virginia. But he doesn’t have authority to approve construction because he isn’t a division head or comparable FERC official, says Bold Alliance, a citizen group.Bold Alliance asked FERC to rehear the notices to proceed that Friedman signed between January and February, but FERC denied the rehearing on May 4. Now, the group is asking the circuit court for a rehearing of the case, plus a stay of construction. Friedman’s approvals are “unlawful because as a low ranking project manager, Friedman has not been delegated authority under the Commission’s regulations to act on requests to proceed with construction,” Carolyn Elefant, a lawyer for Bold Alliance, wrote in the motion for stay pending review of commission staff notices to proceed. FERC is listed as a respondent in the filings filed earlier this month. A spokeswoman for FERC would not comment on the pending litigation. Just because FERC ratified the first few notices doesn’t mean Friedman can continue approving construction, Bold Alliance argues. “The problem is that these grants of notices to proceed are a moving target because Mountain Valley Pipeline has filed about 23 requests for notices to proceed and Friedman grants them every week or so,” Elefant said. “Because Friedman is not a ‘designee’ to whom the Director could delegate authority, the letter orders granting MVP’s request to commence construction are null and void and MVP should not be allowed to proceed,” she wrote in the motion for stay.
Nationwide Permits to Mountain Valley Pipeline Out-of-Place — Today, lawyers for a coalition of environmental advocates including Appalachian Voices filed a motion for stay, asking the United States Court of Appeals for the Fourth Circuit to put an immediate stop to the construction across waterways of the fracked-gas Mountain Valley Pipeline (MVP). Because MVP’s own documents show it cannot meet the conditions required under its “nationwide 404 permit,” the streamlined permit issued by the Army Corps of Engineers is illegal.Today’s filing comes less than a month after West Virginia regulators cited MVP for failing to control erosion and just days after several inches of mud ran off MVP construction sites and blocked a road in Franklin County, Virginia.Under section 404 of the Clean Water Act, the Corps is charged with issuing a permit for the pipeline’s stream crossings that allows the project’s builders to trench through the bottom of those streams, including the Greenbrier, Elk, and Gauley rivers, and fill the crossings with dirt during construction of the pipeline. The permit issued to MVP by the Corps is commonly known as a “nationwide permit 12,” which takes a one-size-fits-all approach and is generally viewed as fairly limited in scope to be used for projects much smaller than ones the magnitude of the MVP, a 300-mile-long, 42-inch pipeline requiring a 125-foot right-of-way construction zone that would cross streams, rivers and other waters in West Virginia and Virginia more than 1,000 times.One condition of the nationwide permit is that if even one water crossing in a project is ineligible for the permit, it cannot be used for any of them. Another condition is that MVP cannot take more than 72 hours to complete construction across a stream or river. Since MVP has said the 72-hour limit would not give them enough time to complete construction across four important rivers, they cannot use the permit for any of the other water crossings along the pipeline’s route.
U.S. Army pulls Mountain Valley natgas pipeline permit in West Virginia - The U.S. Army Corp of Engineers pulled a permit last week for EQT Midstream Partners LP’s Mountain Valley natural gas pipeline from West Virginia to Virginia that could delay the $3.5 billion project’s expected late 2018 in-service date. * “This is a big one,” Katie Bays, energy analyst at Height Capital Markets in Washington, DC, said in a report on Monday, noting “The loss of the (Nationwide Permit) is not easy to reconcile and could delay the project.” * The permit, known as Nationwide Permit (NWP) 12, authorizes Mountain Valley to discharge dredged and fill materials into several rivers, including the Gauley, Greenbrier and Elk, at 591 locations. * Officials at EQT Midstream were not immediately available for comment. * The Army Corps said in a filing made available on Thursday that it pulled the permit on May 22 to determine if it is at odds with West Virginia environmental rules. * The Sierra Club and others alleged violations of the West Virginia rules in an appeal to the Army Corps and a lawsuit that is currently before the U.S. Fourth Circuit Court of Appeals. * Even if the Army Corps reissues the permit, Bays at Height Capital Markets warned if Mountain Valley loses the Sierra Club lawsuit, it could delay the pipeline’s in-service date by a year and require re-routing around three rivers in West Virginia. The 303-mile (488-kilometer) pipeline is designed to deliver up to 2 billion cubic feet per day of gas from the Marcellus and Utica shale formations in Pennsylvania, West Virginia and Ohio to meet growing demand for the fuel for power generation and other uses in the U.S. Southeast and Mid-Atlantic. * The project is owned by units of EQT Midstream, NextEra Energy Inc, Consolidated Edison Inc, WGL Holdings Inc and RGC Resources Inc. EQT Midstream will operate the pipeline and owns a significant interest in the joint venture. The companies have said they expect to complete the project in the fourth quarter of 2018. * In April, the companies said they planned to spend about $350 million to $500 million to extend the pipe about 70 miles from Virginia into North Carolina by the fourth quarter of 2020.
Pipeline Bombshell: Even Dominion Energy Says Mountain Valley Pipeline Contractor Is Incompetent -- In recent weeks, Mountain Valley Pipeline (MVP) started tree clearing and ground preparation for its proposed 42-inch, 303-mile fracked natural gas pipeline running from West Virginia through Virginia. Almost immediately, reports emerged that MVP and its contractor, Precision Pipeline, LLC were wreaking havoc on Virginia’s water and land resources. Photos and video evidence clearly showed that Precision Pipeline, a Wisconsin company, had no idea how to deal with the springtime mountain rains that typify southwest Virginia, leading to landslides, mud on roads and sediment pollution in creeks and streams. And this massive construction project has only just begun. Activists are screaming “we told you so” because they have been saying for four years that the Mountain Valley Pipeline cannot be safely built in the mountainous regions of southwest Virginia. Local residents, with growing support from around the Commonwealth, have been arguing that construction of this pipeline alone would create permanent damage to the forests, creeks, streams, springs, and rivers on which hundreds of thousands of people depend for their drinking water. The evidence of Precision Pipeline’s incompetence in the initial stages of this project is mounting, as shown here, here, here, here, here, here, here, here, here and here. It turns out that someone else is saying we told you so: Dominion Resources. It turns out that Dominion’s wholly owned subsidiary, Dominion Transmission, Inc. (“DTI”) has been fighting Precision Pipeline in federal court for almost three years in a battle royale over a pipeline that Precision built for Dominion several years ago in western Pennsylvania and West Virginia. That fracked gas pipeline, which was part of Dominion’s larger Appalachian Gateway Project, was a relatively small 30 inches in diameter and “only” 55-miles long. Dominion points, in part, to a series of expert reports that it says document Precision’s incompetence in building the pipeline. In one of those reports, never before released but published here for the first time (see below), an engineering firm hired by Dominion details a long and terrifying account of Precision Pipeline’s incompetence when it comes to causing landslides during pipeline construction.Yes, landslides. Thirteen of them. In a 55-mile pipeline project.
Mudslide Pushes Landowners to Sue Mountain Valley Pipeline - The fight against the Mountain Valley Pipeline has gone from the trees to the courts, as six landowners filed suit against the pipeline in federal court Tuesday, claiming a mudslide near one of its construction sites damaged their property, WSLS 10 reported .The suit comes a week after the U.S. Army Corps of Engineers pulled the project's permit to empty dredged material into West Virginia rivers while it evaluates if the project violates West Virginia's environmental rules, potentially delaying the pipeline, Reuters reported .The controversial pipeline would carry fracked natural gas through 300 miles of West Virginia and Virginia. It has faced vocal opposition, motivating nine tree sitters to block its path since February.The landowners in Tuesday's suit, Wendell and Mary Flora, Glenn and Linda Firth, and Michael and France Hurt, live near a pipeline construction site in Franklin County, Virginia. Heavy rains May 15 caused a mudslide to override construction barriers at the pipeline work site on May 18 and block Cahas Mountain Road with 8 inches of mud.The landowners claim the runoff from the mudslide entered their properties and damaged streams. The suit says the company showed a "startling disregard" for the impacts of construction and asked the judge to stop work on the pipeline.
Why New Jersey is leading the resistance to Trump’s offshore drilling plan — The Trump administration’s bid to expand offshore drilling sounds like a sweet deal when the oil and gas industry sells it: more jobs, increased local revenue and possibly an energy surplus that could lower home heating costs.But Mayor John Moor’s opinion of the proposal to drill off the Atlantic Coast for the first time in decades is set: “I don’t think the risk is worth all the money in the world,” he said at City Hall, a few blocks from the popular beach boardwalk that is fueling his city’s economic turnaround.“You could stack billions atop of billions atop of billions and it’s just not worth the risk.”Moor’s unwavering view stretches the length of the 142-mile Jersey Shore, from northern municipalities such as Asbury Park to Cape May in the south. As Memorial Day and beach season approached, several mayors whose economies rely heavily on tourism said they are united in opposition to President Trump’s plan.New Jersey beaches were an embarrassment 30 years ago, but state officials have poured millions of dollars into efforts to recover from a pollution catastrophe. The shore is revitalized, a state treasure that residents, conservationists and politicians fiercely protect.Across the Atlantic Coast strip, mayors in nearly every city teamed with council members, conservationists, business leaders and residents to craft resolutions that denounced the proposal to widen federal offshore leasing to 90 percent of the outer continental shelf, an effort that began just days after Interior Secretary Ryan Zinke announced the plan in January.They helped put New Jersey at the forefront of resistance to Trump’s “energy dominance” agenda, crafting obstacles to the five-year lease proposal that at least one other state copied and another is considering.Last month, New Jersey became the first Atlantic state to adopt a legal barrier to offshore drilling. Lawmakers passed a bill, signed by Gov. Phil Murphy (D), that prohibits oil exploration in state waters, which extend three miles from shore.An amendment to the law went further, barring the construction of infrastructure such as a pipeline to deliver oil and natural gas from drilling platforms in federal waters that start where state waters end, a move that would head off the industry’s favored method of bringing energy resources to shore. New York quickly passed a similar law. And a Republican state senator in Delaware submitted a bill in mid-May that mirrors those of the state’s northern neighbors.
Spill exposes poor regulation consequences - “A really unfortunate series of circumstances,” was how Kevin Lien described a recent spill of ten million gallons of orange sludge from a sand mine processing facility. A bulldozer and its operator slid into a deep settling basin at the Hi-Crush mine and sand processing plant in Whitehall, Wisconsin. Mine workers, working with emergency responders, dug through an earthen berm and intentionally released the thick, orange sludge. The sludge ran into Poker Coulee, making its way downstream into the Trempealeau River. Eventually the material made its way to the Mississippi River. Mr. Lien is the Director of Land Management for Trempealeau County. He spent nearly the past decade at the epicenter of sand mining in Wisconsin. Using the regulatory powers of the county, he worked with county board members to develop protections for the environment, communities and public health. The county continues to monitor many mines. But the mine that discharged the orange sludge is out of his jurisdiction. “The county has no jurisdiction,” Mr. Lien told me. “And, the city is unregulated.” The county has no jurisdiction because the mine is in both the cities of Independence and Whitehall. Several years ago, the mine sought and received approval to annex into the two cities – some five miles apart – to avoid county regulation. Annexation was approved in late 2013 by the Whitehall and Independence City Councils. A lack of regulation allowed the mine to avoid expensive but necessary protections.
China is preparing to buy a lot more natural gas from the US -- It looks like China will make another bet on US natural gas, building new gas terminals at ports in four provinces. The facilities will accommodate the country’s increasing reliance on foreign gas.The CEO of Kunlun Energy said in its annual shareholders meeting that the company is conducting feasibility studies to build import terminals in four provinces. Kunlun is a subsidiary of China’s state-owned oil and gas company China National Petroleum Corporation (CNPC). Earlier this year, CNPC signed a 25-year contract with Cheniere Energy, a US-based liquified natural-gas producer. It was the first ever long-term contract to export liquefied natural gas from the US to China. China’s domestic production of natural gas can’t keep pace with the country’s needs. The nation’s effort to reduce air pollution and replace coal has led to a spike in natural gas use. Building new import terminals is an important step towards facilitating long-term energy-based trade partnerships. CNPC estimated that US exports of liquefied natural gas to China this year could be worth up to $6.7 billion dollars.
The Biggest Challenge For U.S. Oil Exports - As Saudi Arabia and Russia grapple with both the geopolitics and economics of continuing or stopping their one and a half year long oil production cut reached between OPEC and non-OPEC members in early 2017, U.S. oil exports are slowly making their way into Asia. American companies will export some 2.3 million barrels per day (bpd) of oil next month and over half of that (1.3 million bpd) will find their way to Asian markets, Reuters said, citing a key executive with an U.S. oil exporter. This follows a record 2.6 million bpd of oil that the U.S. exported just two weeks ago. Increased oil exports into Asia come as the price differential between global oil benchmark Brent crude and U.S. benchmark NYMEX-traded West Texas Intermediate widens. That price differential is currently around $9 per barrel, offering arbitrage opportunities for producers and huge savings for Asian refiners who buy U.S. crude oil. Moreover, the discount between the price of Brent crude and WTI produced in the Permian Basin widened to nearly $11 per barrel in April, marking the the largest monthly spread in almost four years. In April, Brent futures sold for an average $72 per barrel, while Permian crude sold for just $61 a barrel. As long as price differentials remain, U.S. oil exports will continue to chip away at both Saudi and Russian market share in Asia, the world’s largest oil consuming region, led by China, Japan, India, and South Korea. One problem for U.S. oil exporters, however, is that many Asian refineries are configured to process heavier crude blends and have to use lighter, sweeter U.S. oil to blend with other crude grades. For refiners that can process lighter U.S. crude the price differential is a boon and ensures that U.S. oil exports will continue to grab Asian market share. Yet, the U.S. also exports other grades like Mars and Southern Green Canyon which are medium sour grades as well as Bryan Mound Sour.
Amid Permian ramp up, U.N. cautions against fracking getting too big, too fast -- A new United Nations report cautioned nations and companies about embracing the fast-growing energy trend of hydraulic fracturing, better known as fracking, without considering the environmental risks involved.The U.N. Conference on Trade and Development report found that the meteoric rise of natural gas production has led to "major concerns" about contamination of both ground and surface water and an increase in seismic activity. The report conceded that the risks of significant fracking-related issues are slim, but warned that consequences could be dire. The report comes at a time when the U.S. has embraced natural gas as the single largest source of energy. About a quarter of the country's natural gas is produced in Texas, where the oil and gas sector is one of the state's largest employers. Fracking, used in concert with horizontal drilling, has revitalized the U.S. natural gas industry, and firms have taken to shale fields across the country to get in on the action. Now, natural gas accounts for the largest share of domestic energy generation, at above 30 percent, replacing coal.And it's cheap, making gas appealing to large-scale industrial operations and thus competitive in the energy marketplace. The average price for 2009-2017 is around half what it was from 2000-2008. In West Texas' Permian Basin, natural gas production is so significant that it's almost exceeding pipeline capacity. The U.S. Energy Information Administration estimated in a May 2018 report that on average, 10.3 billion cubic feet of natural gas is produced in the basin every day.
Fracking Industry Fights Allegations It Caused Earthquakes In Oklahoma --The fracking industry is defending itself against a class action lawsuit blaming it for earthquakes in Oklahoma. Class action attorneys are targeting a group of natural gas companies in an Oklahoma state court, having successfully argued that the case doesn't belong in federal court. Chesapeake Operating and Special Energy are two of the companies that recently filed their motions to dismiss in Logan County District Court. The plaintiffs are claiming the chemicals disposed of by the defendants during the fracking process have increased the risk of earthquakes in certain parts of the state. The chemicals allegedly included saltwater that was produced during oil and gas operations. They alleged there were nine earthquake clusters between 2014 and 2017. Chesapeake had previously filed a motion to dismiss when the lawsuit was in federal court Dec. 18, but the case was remanded to state court Dec. 28, so the company refiled. In its motion to dismiss, Chesapeake wrote that Oklahoma law requires the plaintiffs to demonstrate causation, which it believes they have failed to do. Chesapeake argues that the plaintiffs made vague and conclusory allegations but that there was no causal link between the alleged damages and the disposal wells.The plaintiffs failed to identify any particular earthquake clusters that purportedly caused damage to their or any other putative class member's home, according to the motion. Griggs isn't the only plaintiff to take on the fracking industry. A lawsuit by the Sierra Club and Public Justice attempted to use the Resource Conservation and Recovering Act in a way it had never been used before, but U.S. District Judge Stephen Friot dismissed the case in last year. The two groups had alleged fracking caused the amount of earthquakes in the state to skyrocket – from 167 in 2009 to 5,838 in 2015. But Friot dismissed the case under a doctrine that allows the court to pass on deciding an issue when a state court has greater expertise in the area.
24 Oil Wells in a School’s Backyard. How Close Is Too Close? - — A new oil rig will rise behind a middle school in this sprawling county in the coming months, its slender tower bearing an announcement: fracking is back.After a downturn that began in 2015, oil and gas production is booming again, and new projects are sprouting along American freeways and padding government budgets, cheered by state legislatures, the fossil fuel industry and the Trump administration. But this growth is also spurring a return of the turmoil that accompanied the last boom, pitting neighbor against neighbor and communities against companies in a fight over which projects should be allowed to pierce the land. In few places is that tension more evident than along Colorado’s Front Range, where a fracking boom is colliding with a population explosion. Drilling applications in the state have risen 70 percent in just a year, while the area north of Denver is expected to double in population by 2050.In Weld County — the center of the state’s oil and gas activity and home to more than 23,000 active wells — that tension has converged at a school called Bella Romero Academy. Just behind the school, workers are laying the foundation for a 24-well project that will pull oil and gas from the earth as students race across the playground.The project has the support of state regulators and the county commission. But it is opposed by the school board, the superintendent and many parents, some of whom say they support fossil fuel development but are alarmed by such a large operation so close to their school.Well heads will sit 828 feet from the edge of Bella Romero property.Exacerbating the conflict is a spate of deadly fires at industry sites in the county, as well as the company’s decision to place the wells near a school that is overwhelmingly black and Latino, after nixing a proposal near a mostly white school that drew protests from parents. “It’s like they said, ‘Put it where the Mexicans live, over there it’s O.K.’” said Yveth Haro, 42, whose son Elian, 10, is a student at Bella Romero. “Well I don’t think it’s O.K.”
Troubled Gas Firm Drops Request to Dodge Drilling Limits Near New Mexico's Methane Hot Spot - DeSmog (blog) - Today, one of New Mexico's largest oil and gas producers, Hilcorp Energy, dropped its recently filed request to increase the number of wells it can drill or frack in the San Juan Basin, already home to tens of thousands of gas wells. Hilcorp's proposal also would have shut the public out of the decision-making process by establishing an “administrative approval” process. Back in 2014, this corner of northern New Mexico made international headlines when NASA researchers discovered a persistent methane plume the size of Delaware. Two years later, they pinned one of the main sources of this methane “hot spot” to natural gas wells, pipelines, storage tanks, and processing plants in the San Juan Basin. A second peer-reviewed study last year confirmed those findings. On Friday, state regulators were scheduled to hear Hilcorp's request to amend the state's well spacing regulations, which would have allowed the company to drill more wells or target different formations than the rules currently allow. “The effect of that would be that rather than having a public hearing process where each of those items is heard, that entire process would be done away with and it would only require the local Oil Conservation Division official,” “His name is Charlie Perrin and the oil company could just walk in and say 'Charlie, we want to drill some wells or recomplete some wells and just sign right here.'” The state now produces more oil than California or Oklahoma and ranks as the nation's third largest oil-producing state after Texas and North Dakota, according to the New Mexico Oil and Gas Association. And, as NASA found, leaks here of methane, a powerful greenhouse gas, are unusually pronounced. In addition, in the rural Four Corners region where Utah, Colorado, New Mexico, and Arizona meet, smog levels reached so high last year that scientists warned the region is at risk of breaching national health standards. The central issue of Hilcorp's seemingly mundane request is enormously consequential, because it relates to one of the most clear-cut limits that drillers face: how densely they are allowed to drill their wells. Currently in New Mexico, as in many states, drillers have to follow well spacing rules, which cap the number of wells targeting a given rock formation per “unit,” typically 640 acres. That's a vital control because it's relatively simple for state officials to enforce, unlike many pollution controls which require periodic inspections or constant monitoring. Either the company is allowed to drill a new well or it isn't.
Bakken crude differentials soar on widening Brent-WTI spread - Bakken crude differentials for delivery in July rose sharply Wednesday to multi-month highs, flipping to a premium to the NYMEX WTI calendar-month average amid further widening Brent-WTI crude spreads, with Williston barrels rising to parity with Clearbrook for the first time. Bakken had a very active spot market, with differentials heard going up continually throughout the day. Sources cited the further widening Brent-WTI spread, which rose above $9/b during the day, as the primary driver of the rally, giving the incentive to ship Bakken barrels south to the US Gulf Coast. S&P Global Platts assessed the July-delivered crude spread at $9.52/b -- the highest in more than three years. Close to the oil wells in North Dakota, Williston-origin barrels for rail transport were heard traded as high as NYMEX WTI CMA plus 25 cents/b, a steep rise of $2.20/b from Tuesday's assessment. This was the highest differential since November 11, when it was assessed at NYMEX front-month WTI CMA plus 35 cents/b.Williston barrels for delivery on the Dakota Access Pipeline were heard traded as high as NYMEX WTI CMA plus 20 cents/b.Bakken crude in the Clearbrook, Minnesota, hub that supplies the Midwest market, meanwhile, was talked valued at a rare parity with Williston barrels, equivalent to a rise of $1.45/b day on day. This was the first time Williston barrels rose to parity with Clearbrook since S&P Global Platts started assessing the former in April 2014. Clearbrook barrels typically trade at a premium to Williston barrels to account for transportation costs westward, with the spread averaging at $1.14/b so far in June. But the recent slump in the Western Canadian crude market, which also supplies the Midwest hub, has limited the rise of Clearbrook crude.
Feds Receive First Application to Explore ANWR for Oil - The Interior Department's Bureau of Land Management office in Alaska received a plan to conduct extensive, 3-D seismic testing in search of oil on the coastal plain of the Arctic National Wildlife Refuge ( ANWR ) this winter. The plan—submitted by surveying services SAExploration, Inc. and its partners Arctic Slope Regional Corporation and the Kaktovik Inupiat Corporation—is the first step in opening up Alaska's pristine refuge for oil exploration and drilling, the Washington Post reported. Last year, Congress controversially lifted a four-decade ban on energy development in ANWR after pro-drilling Alaska Sen. Lisa Murkowski buried the provision into the GOP tax bill that passed in December.President Trump also claims he was the driving force behind the provision's inclusion. The companies have requested a permit to survey an area encompassing 2,602 square miles, or the entire "1002 area" of the 1.5-million-acre coastal plain, which has an estimated 12 billion barrels of recoverable crude. SAExploration said that "this partnership is dedicated to minimizing the effect of our operations on the environment." However, the Interior Department's Fish and Wildlife Service (FWS) said the plan is "not adequate," the Post revealed. FWS said the application showed "a lack of applicable details for proper agency review." The department complained that the companies' permit application did not include any studies about the impacts of the seismic work and equipment on wildlife, the tundra or the aquatic conditions in the area. "There is no documentation of environmental effects, whether positive or adverse," FWS said. According to the Post, the department's response shows no sign it will approve the request. The 1002 area is described by the Sierra Club as "the biological heart" of ANWR—home to polar bears, caribou, migratory birds and other species—as well as vital lands and wildlife for the subsistence way of life of the Gwich'in Nation .
US Interior sees Arctic National Wildlife Refuge lease sale as soon at July 2019: assistant secretary Balash -- A lease sale in the US Arctic National Wildlife Refuge could come as early as July 2019, according to a top Interior Department official. The "scoping" process for an environmental impact statement for ANWR is now underway and will be completed in June, Joe Balash, assistant interior secretary for lands and minerals, told reporters in a briefing. The draft EIS is expected in early 2019 followed by the final document in late April, Balash said. "We will hold the lease sale when the EIS is completed." Balash was in Alaska to attend scoping meetings held in several communities including in Anchorage on Wednesday. "We will definitely have a lease sale " because it is required by Congress in the Tax and Jobs Act of 2017, he said. "The law said 'we shall' have the sales. "The purpose of the EIS is to inform the public and federal agencies on the impacts," Balash said. "In the scoping, we are asking people for advice on what kinds of impacts we should look for." Interior is required to hold two lease sales of not less than 400,000 acres each in a 1.6 million-acre section of coastal plain in the refuge. One of the problems Interior is wrestling with is how to deal with a limit of 2,000 acres of surface disturbance for development of any discoveries, Balash said. The limit is also in the federal tax act that authorized the leasing. "We have to craft a way to deal with this in the lease sale " in how the limits on surface use will be allocated across tracts that will be offered, Balash said. "We have not yet determined a way to do it."
Is A Natural Gas Pipeline Between Alaska And China Realistic? - When Alaska’s governor Bill Walker headed with a trade delegation to China earlier this week, he must have hoped to bring back good news about an 800-mile gas pipeline project that would see the state’s gas reserves flow into an increasingly gas-hungry Chinese economy. However, the only news the delegation brought home was that Sinopec and Bank of China were still interested in the project. This declaration of interest is hardly worth a headline, but one outtake from the meeting with Sinopec’s president, as reported by Alaska’s Energy Desk Rashah McChesney, is worth mentioning. The president of China’s largest refiner said, "After some of the work we did, in terms of assessment and evaluation in technology, economics and in terms of the resources of Sinopec - I think there’s a lot more work for us to be done than originally imagined." The latter part of this remark should be a cause for concern for the project’s proponents as it is a clear sign that Sinopec will be taking a cautious approach to what could be a multibillion-dollar investment. To be more precise, the pipeline will cost an estimated US$45 billion. It would ship natural gas from Prudhoe Bay to the southern Alaska coast, in Nikiski, from where the now liquefied gas will be shipped to a booming Chinese gas market. Without it, the gas is as good as non-existent, because it cannot be brought to market without a pipeline. Given the size of the investment that would be needed to build the infrastructure, it’s no wonder that Governor Walker reached out to potential investors in the country that would benefit from the project. He inked a preliminary deal with Sinopec, China Investment Corp., and Bank of China last November. This, by the way, happened after the original companies behind the deal, including Exxon, BP, and ConocoPhillips, quit, worried about a surge in global LNG supplies that made the project “one of the least competitive” globally, according to Wood Mackenzie. But Alaska is not giving up. With falling oil production and revenues, tapping the U.S.’s huge Arctic gas reserves, which estimates peg at as much as 200 trillion cubic feet, makes perfect economic sense, provided that Chinese demand lives up to the promise and there isn’t too much competition, which is doubtful, what with all the megaprojects in Australia, and Russia joining the LNG game with its eyes set mainly on Asia.
Refi wave lurks for energy borrowers on back of higher oil prices - The rise in oil prices has come at an opportune time for oil and gas borrowers, which are facing US$400bn of maturing debt over the next 18 months and are preparing to engage in refinancing talks with lenders. There is approximately US$833.3bn of loans outstanding in the oil and gas sector, with about US$399.5bn scheduled to mature by the end of 2019 and US$138.4bn by the end of 2018, according to Thomson Reuters LPC data. As higher oil prices boost the credit quality of oil companies, issuers are likely to get more favorable terms when they negotiate refinancing terms. “There’s an awful lot of debt maturing by 2019 and 2020,” said Thomas Watters, managing director in the oil and gas ratings group at S&P Global. “Back between the years of 2012 and 2014, there was an irrational exuberance going on where oil prices were high and interest rates were low and there were a lot of deals getting done. A lot of high-yield credits came out first-time financing and they issued five- to seven-year papers. Higher oil prices will no doubt help them refinance.” The thriving oil market is supporting a steady recovery in the US oil and gas loans as the secondary prices have slowly climbed to a three-year high. The average bid of oil and gas loans has climbed 135bp so far this year to 97.33 in tandem with higher oil prices. About 80% of oil and gas loans are bid above 90 cents of the dollar, compared to 72% at the end of 2017 and only 32% in June 2016. There are signs that borrowers from the energy sector are already enjoying strong investor demand.
Flip This Well: How Fracking Company CEOs Get Rich While Losing Billions - DeSmog (blog) Last year the fracking company Halcón Resources announced a new strategy that was sold as the path to profits for the previously troubled shale oil and gas firm. The company had sold its stake in the Bakken oil fields in order to double down on the Permian shale in Texas. At the time, Reuters touted the deal as a “stunning turnaround” for CEO Floyd Wilson, and the good news immediately drove up the Halcón stock price by 35 percent.“The sale of our Williston Basin operated assets transforms Halcón into a single-basin company focused on the Delaware Basin where we have more than 41,000 net acres,” Wilson said in a statement. He was making his pitch and investors responded.However, the move was part of a familiar formula for those in the shale industry, which uses horizontal drilling and hydraulic fracturing (fracking) to release oil and gas from shale formations: Borrow lots of money, drill lots of fossil fuels at a loss, flip the company for a profit.As the Reuters article points out, Wilson’s ultimate goal is to create excitement about the potential of its Permian basin wells and then flip Halcón, just as he's flipped other shale firms: “Focusing on the Permian could help Wilson achieve his long-held dream of selling Halcón to the highest bidder.”Wilson made his name in the industry by doing just that three times before. He sold Hugoton Energy to fracking giant Chesapeake Energy for big profits, flipped the company 3TEC to Plains Exploration & Production and then sold his company Petrohawk to energy giant BHP. The latter sale was a big, and necessary, win for Wilson. As one analyst told Dealbook at the time, “Petrohawk tapped practically every source of capital that it could.” When you run out of people willing to lend you money, it is time to flip. Those deals made Wilson a respected oil man and instilled confidence that he would do the same with Halcón.
Trudeau "summons" rare cabinet meeting first thing tomorrow morning —The federal Liberal government is reportedly nearing an agreement that could see Ottawa buy the troubled Trans Mountain pipeline expansion from Kinder Morgan to ensure the controversial Alberta-B.C. project gets built.The deal, designed to kick-start construction that was suspended last month by Kinder Morgan’s jittery investors, could be announced as early as Tuesday morning, when Prime Minister Justin Trudeau has scheduled an urgent cabinet meeting. Prime Minister Justin Trudeau said again Monday that the Trans Mountain pipeline extension is “in the national interest.” New Democrat MP Guy Caron challenged the Liberal government’s plan to cover Kinder Morgan’s losses from delays caused by the B.C. government. Ottawa first offered to indemnify the expansion project but is now likely instead to buy it in full, Bloomberg reported Monday night, citing sources familiar with the talks who spoke on condition of anonymity. The federal government plans to sell the project — the existing line and its expansion — as soon as is reasonable once it’s guaranteed that it will be built, Bloomberg reported. A spokesperson for Finance Minister Bill Morneau told Bloomberg he wouldn’t comment on “speculation.”
Canada likely to "buy" full Trans Mountain Pipeline Project --Canada is likely to buy Kinder Morgan Canada Ltd.’s Trans Mountain oil pipeline and its controversial expansion project in a bid to ensure it gets built amid fierce opposition, according to a person familiar with the talks. Buying the pipeline outright has become increasingly likely and is now the most probable option for the Canadian government, the person said, speaking on condition of anonymity because the discussions are private. The deal, a value for which hasn’t been publicly reported, will be announced as soon as Tuesday when Prime Minister Justin Trudeau’s cabinet meets in Ottawa. A purchase would mark a stunning development for Trudeau’s government -- effectively nationalizing the country’s highest-profile infrastructure project until an operator can be found. The project has been beset by legal uncertainty and rising protests from environmental groups and the province of British Columbia. It will be a key test of Trudeau’s bid to balance the environment and the economy by backing the C$7.4 billion ($5.7 billion) pipeline expansion while pushing a national carbon price to reduce greenhouse gas emissions. Canada first offered earlier this month to indemnify the expansion project but is now likely to buy it, along with the existing pipeline that’s been in operation since 1953. The Canadian government plans to sell the project -- the existing line and its expansion -- as soon as is reasonable once it’s guaranteed that it will be built, the person said. It’s unclear if other Kinder Morgan assets will be included in any sale. In an emailed statement late Monday, the Calgary-based company said it didn’t intend to issue updates “unless and until these discussions have concluded or we’ve reached an agreement that satisfies our two objectives: clarity on the path forward, particularly with respect to the ability to construct through British Columbia, and ensuring adequate protection of our KML shareholders.” The Trans Mountain expansion would almost triple capacity to 890,000 barrels of oil on a line running from Alberta to a terminal near Vancouver. The 980-kilometer (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the U.S., which takes the vast majority of Canadian oil exports.
Canada set to purchase Kinder Morgan pipeline for $4.5 billion - The Canadian government is planning to buy the Trans Mountain oil pipeline from major energy corporation Kinder Morgan for $4.5 billion in an effort to secure its construction. The controversial project, which would triple the current capacity of the Trans Mountain pipeline and run from the tar sands of Alberta to the Pacific Coast, is a major priority for Ottawa. The pipeline has suffered delays due to opposition from indigenous communities and environmental groups. Alberta and British Columbia have also been at odds over the potential environmental risks of the project. With the Canadian government’s financial and political support, the project is more likely to move forward. The Trans Mountain pipeline expansion project would vastly increase Canada’s ability to export oil to Asia. Canada possesses the world’s third largest oil reserves, but 99 percent of its oil exports are sold in the U.S. While the government’s takeover of the project has reassured its backers that it will be built, with construction starting in August, it also raises the stakes for Ottawa. “It’s a chess move that allows the project to proceed and positions it as a national interest,” infrastructure expert Matti Siemiatycki told the Guardian. “[But] it’s also highly risky because now the government bears the risk.” The government intervention to save the project is based on the idea that investing in oil today will pay off in the future, something that is far from certain. “The pipeline expansion presumes there’s going to be a high demand for oil going forward for decades — but there’s significant risk that that may not prevail because of changing technologies and changing demand,” explained Siemiatycki.
Liberals to buy Trans Mountain pipeline for $4.5B to ensure expansion is built - CBC - The Liberal government will buy the Trans Mountain pipeline and related infrastructure for $4.5 billion, and could spend billions more to build the controversial expansion. Finance Minister Bill Morneau announced details of the agreement reached with Kinder Morgan at a news conference with Natural Resources Minister Jim Carr this morning, framing the short-term purchase agreement as financially sound and necessary to ensure a vital piece of energy infrastructure gets built. 'When it's in Canadians' advantage to know them...then of course that's going to be fully transparent,' says Bill Morneau. 8:23 "Make no mistake, this is an investment in Canada's future," Morneau said. Morneau said the project is in the national interest, and proceeding with it will preserve jobs, reassure investors and get resources to world markets. He said he couldn't state exactly what additional costs will be incurred by the Canadian public to build the expansion, but suggested a toll paid by oil companies could offset some costs and that there would be a financial return on the investment. Kinder Morgan had estimated the cost of building the expansion would be $7.4 billion, but Morneau insisted that the project will not have a fiscal impact, or "hit." The Conservatives' Shannon Stubbs and the NDP's Jenny Kwan discuss the government's pipeline purchase. 8:37 He said the government does not intend to be a long-term owner, and at the appropriate time, the government will work with investors to transfer the project and related assets to a new owner or owners. Investors such as Indigenous groups and pension funds have already expressed interest, he said.
Canada to Buy Controversial Tar Sands Pipeline -- The Canadian government plans to spend $4.5 billion Canadian dollars ($3.5 billion) to buy Kinder Morgan's existing Trans Mountain pipeline and its controversial expansion project that will triple the amount of tar sands transported from Alberta to the coast of British Columbia.The pipeline has been at the center of widespread protests by environmentalists and some Indigenous groups. The announcement was met with condemnation from 350.org organizers, who slammed Prime Minister Justin Trudeau and his government for "turning Canada into a fossil fuel company."Kinder Morgan halted all non-essential spending the pipeline project last month, citing continuing opposition in British Columbia. The company set a May 31 deadline to get assurances it can proceed with the project without delays.Bill Morneau, the federal finance minister, said in Ottawa Tuesday that the government's purchase will guarantee the summer construction season for workers and will ensure the project is built to completion."Our message today is simple—when we're faced with an exceptional situation that puts jobs at risk, that puts our international reputation on the line, our government's prepared to take action," he said.The agreement was approved by the Cabinet this morning and is subject to approval by Kinder Morgan shareholders. The purchase is expected to close this August, he said. Morneau said the government will eventually sell the expanded pipeline back to the private sector.
How Kinder Morgan won a billion-dollar bailout on Canada pipeline (Reuters) - U.S. energy firm Kinder Morgan’s C$4.5 billion sale of an oil pipeline to Canada’s government marked an extraordinary escape from months of fraught negotiations among warring camps of Canadian officials. But even before the bailout, the company had little to lose - despite the C$1.1 billion it has spent so far on a plan to add a second pipeline from Alberta’s oil sands to British Columbia’s coast, according to a Reuters review of the project’s bank financing and oil-shipping contracts with producers reserving space on the proposed line. The documents show Kinder Morgan cut creative deals with lenders and oil producers to shield itself from massive write-downs like the ones taken recently by rivals TransCanada Corp and Enbridge Inc in canceling controversial pipeline projects. The arrangements, which have not been previously reported, gave Kinder Morgan unique leverage in threatening last month to walk away from the project by May 31 unless Prime Minister Justin Trudeau’s government guaranteed a path to construction over the objections of British Columbia officials, environmentalists and some aboriginal bands. The company’s cautious financial planning and hard-ball politicking combined to create a no-lose bet on what might have been one of the oil industry’s riskiest plays, given the volatility of Canadian pipeline politics. The firm’s ultimatum made rescuing its Trans Mountain pipeline expansion a national emergency for Trudeau, thrusting the prime minister into a constitutional crisis over the limits of federal power and a political crisis in refereeing a feud between Alberta and British Columbia. Trudeau argued the project must go forward to alleviate a crude transportation bottleneck that costs Canadian oil producers C$15 billion annually in forgone export revenue. The expansion would nearly triple the flow of crude through Trans Mountain pipelines, to 890,000 barrels per day. Now, in a deal announced Tuesday, Canada will pay Kinder Morgan the C$1.1 billion it has spent and another C$3.4 billion for the existing pipeline and to compensate the firm for giving up the expansion’s potential profits.
The Oil Giant That Outsmarted Trudeau - In a desperate bid to keep its last remaining proposed oil pipeline alive, Canada has decided to buy Kinder Morgan’s Trans Mountain Pipeline system for an estimated C$4.5 billion.Canada will pay Kinder Morgan for the money that the company has already spent on the expansion project as well as for the existing Trans Mountain pipeline, which has a capacity of about 300,000 bpd.Trans Mountain runs from Alberta to British Columbia and the proposed expansion would be a twin line that would triple the system’s carrying capacity to 890,000 bpd. British Columbia has vowed to block the pipeline even though the federal government supports the project. BC’s opposition had nearly killed the project…and still might finish it off despite the gamble by the federal government to nationalize the pipeline system.As Reuters discovered, it appears that Canada has been taken for a ride by Kinder Morgan. The Texas-based pipeline company structured deals in such a way that it couldn’t lose, even if the project stalled. “Kinder Morgan cut creative deals with lenders and oil producers to shield itself from massive write-downs like the ones taken recently by rivals TransCanada Corp and Enbridge Inc in canceling controversial pipeline projects,” Reuters wrote.These deals included requiring oil producers to pay even if the project was blocked by regulatory holdups. Also, the 26 lenders that Kinder Morgan negotiated with agreed to exempt the pipeline company from penalties on loans if the project was delayed or obstructed because of political problems. All of that made Kinder Morgan more than willing to walk away, putting intense pressure on the Canadian government to resolve the dispute. Prime Minister Justin Trudeau first proposed to indemnify the project from risk, but ultimately decided to purchase it outright as the May 31 deadline neared.
Royal Bank of Scotland to stop financing new coal power and oil sands projects - The Royal Bank of Scotland (RBS) has announced new policies to support the transition to a low-carbon economy. As a result, it will now cease financing for all new coal-fired power plants and oil sands projects, along with any oil activities in the Arctic and new thermal coal mines.The move comes as the bank focusses more on funding renewable energy projects in Europe; it has previously announced a commitment to invest £10 billion in the sector over the next two years. It also follows a similar announcements from British banks, including HSBC, which ruled out funding coal and tar sands in April.
Damaging audit of fossil fuel fracking in northern BC surfaces after 4 years - CBC - An audit looking into the practices of gas drillers in northern British Columbia has only just come to light since it was conducted more than four years ago.The report, put together by biologist Dan Webster in April 2014, found that oil and gas companies near Fort Nelson were not consistently following provincial rules to protect declining boreal caribou herds in the area. The Oil and Gas Commission suppressed those findings, alleges the Canadian Centre for Policy Alternatives who recently received a copy of the report."This audit was submitted to the Oil and Gas Commission," said Ben Parfitt, a resource policy analyst with the CCPA."That was the last that anybody heard of it until we received a copy anonymously and started to look into the audit's findings." The report was not released to the public or to the Fort Nelson First Nation who had requested a copy. Parfitt said the audit found companies were "systematically" failing to abide by rules set in place by the provincial government in 2011, part of a recovery plan in response to the federal government officially listing boreal caribou as a threatened species in Canada. "They were building gas well pads that were far larger than the rules said they should be," Parfitt told Carolina de Ryk, the host of CBC's Daybreak North. "They were building long road corridors and pipeline corridors in straight lines that allowed wolves to very easily spot caribou — they did a number of things that violated the rules." The commission, a Crown corporation, said in an emailed statement there were concerns with the audit that prevented it being finalized in 2014.
Gas commission sits on results critical of caribou practices: Think-tank -- The B.C. Oil and Gas Commission knew in 2014 that gas drillers weren’t consistently following rules to protect threatened boreal caribou herds, but has held the audit report showing those results under wraps, the Canadian Centre for Policy Alternatives alleges.The audit, conducted by a wildlife biologist in April 2014, was a follow-up work in the province’s 2011 recovery plan for seven threatened caribou herds in B.C.’s far northeast. While biologist Dan Webster submitted his results to the commission, it was never released publicly, according to the CCPA. The advocacy group, however, received a copy of the audit report “in an unmarked brown envelope,” said researcher and policy analyst Ben Parfitt. Parfitt said the CCPA forwarded a copy of the report to the Fort Nelson First Nation, which had requested one but never received it. The CCPA released Parfitt’s briefing document May 28. “It’s no surprise, given the circumstances of the audit’s ‘release,’ that the suppressed document shows that, over and over again, companies broke the very modest rules to protect the caribou,” Parfitt wrote in a briefing document. What Webster found included well pads that were built larger than necessary, repeated failures to restore well sites and repeated failures to place visual blocks across roadways and pipeline corridors to protect caribou from their chief predator, the gray wolf. And Parfitt said the leaked report marks the third time in less than a year that the CCPA has gleaned information about concerns with industry operations through Freedom of Information requests or other means that the commission has withheld or delayed releasing.
Fracking report warns over tremors --Fracking on up to half of the land licensed by the Government for shale gas operations could trigger earthquakes, a seismologist has claimed. Former advisor to No 10, Professor Peter Styles, said hydraulic fracturing in former coal mining areas increases the probability of earthquakes on faults that have already been subject to movement through mining. As the Government announced plans to speed up fracking developments by fast-tracking private companies’ planning applications, Professor Styles has called for more rigorous checks to identify the dangers. In his new report, ‘Fracking and Historic Coal Mining: their relationship and should they coincide?’, he said there was a “serious earthquake risk” posed by fracking in former coalfields, because induced tremors would be “dramatically enhanced”. Although the Fylde has no mine workings, the Blackpool area was hit by two induced tremors in 2011 linked to Cuadrilla’s fracking operation at the now abandoned Preese Hall drill site. Prof Styles recommends a 850-metre buffer zone between fracking and any significant natural fractures or faults. There are faults beneath the Fylde.
Total liquid fuels inventories return to five-year averages in the United States and OECD - Global petroleum inventories declined through 2017 and the first quarter of 2018, marking the end of an extended period of oversupply in global petroleum markets that began before the Organization of the Petroleum Exporting Countries (OPEC) November 2016 agreement to cut production. OPEC plans to reconvene on June 22, and markets now appear more in balance, but uncertainty remains going forward. As a result of the November 2016 OPEC supply agreement, which took effect in January 2017, OPEC member countries agreed to reduce crude oil production by 1.2 million barrels per day (b/d) compared with October 2016 levels and to limit total OPEC production to 32.5 million b/d. In addition, Russia agreed to reduce its crude oil production. OPEC extended the agreement in November 2017, with the production cuts remaining in place until the end of 2018. Since the agreement took effect, global oil markets have tightened, which can be seen in the decline in crude oil and other liquids inventories following sustained increases in quarterly global liquid inventories from mid-2014 through most of 2016.Data on global petroleum inventory levels are not collected directly, but changes in global inventories are implied based on the difference between estimates of world production and world consumption. For the United States and for countries in the Organization for Economic Cooperation and Development (OECD), however, inventory estimates are available and can indicate what is happening globally. From January 2017 to April 2018, OECD inventories decreased by 234 million barrels. The United States accounted for more than half of that decline, as U.S. crude oil and other liquids inventories decreased by 162 million barrels over that period. By the end of April 2018, both OECD and U.S. inventory levels were lower than the averages for April 2013–April 2017.
U.S. record oil exports bite into Russia, OPEC market share in Asia (Reuters) - Record crude oil volumes exported from the United States will be heading to Asia in the next couple of months to take another piece of the market away from Russia and producers in the Organization of the Petroleum Exporting Countries (OPEC). The United States is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia, estimated a senior executive with a key U.S. oil exporters. Data from the Energy Information Administration shows U.S. oil exports peaked at 2.6 million bpd two weeks ago. [EIA/S] The record outbound volumes come as U.S. crude production hit all-time highs, depressing U.S. prices to discounts of more than $9 a barrel below Brent crude futures on Monday, the widest in more than three years and opening an arbitrage for excess supplies to other markets. WTCLc1-LCOc1 The difference in the key benchmarks was a chance for Asian refiners to reduce light crude imports from the Middle East and Russia after Brent and Gulf prices touched multi-year highs, traders in Asia said. “We’re diversifying a lot to other regions. If Saudi Aramco still doesn’t reduce prices next month and ADNOC (Abu Dhabi National Oil Company) follows, we will increase our U.S. crude purchases,” a Southeast Asian oil buyer said. CHINA BUYS AMERICAN In Asia, China - led by Sinopec (600028.SS), the region’s largest refiner - is the biggest lifter of U.S. crude. The company, after cutting Saudi imports, has bought a record 16 million barrels (533,000 bpd) of U.S. crude, to load in June, two sources with knowledge of the matter said. India and South Korea are the next biggest buyers in Asia, each lifting 6 million to 7 million barrels in June, sources tracking U.S. crude sales to Asia said. Indian Oil Corp (IOC.NS) bought 3 million barrels earlier this month via a tender, while Reliance Industries (RELI.NS) purchased up to 8 million barrels, the sources said,
Opec and Russia Best Not Poke the Shale Oil Bear - Here’s one under-reported factor that may explain Russian and Saudi Arabian willingness to turn their backs on almost 18 months of Opec oil supply cuts – the spread between Brent crude and West Texas Intermediate has reached its widest level in three years: The simple reason for this is that the shale oil boom has left crude sloshing around the U.S., resulting in a local oversupply. While Brent prices have risen some 14 percent over the past three months, WTI is up just 7.5 percent and Midland crude – the version of WTI priced in the booming Permian basin rather than the benchmark delivery point in Cushing, Oklahoma -- is down 4.8 percent. A shortage of pipeline capacity between Midland and Cushing, and then a further shortage of pipeline and port capacity to get U.S. crude onto a hungry global market.T The 713,000 barrel-a-day decline in Opec’s total supply between 2016 and last month can be accounted for almost entirely by the decline in Venezuelan output, which has fallen by about one-third – 718,000 barrels a day – over the period. A further shoe may be about to drop, though: Iran, which added 308,000 barrels over the same period, is facing the prospect of U.S. and global sanctions that could sharply trim its output. A reversal of the 487,000 barrel-a-day cut by Saudi Arabia and Russia would help plug that looming hole in production. There’s a further factor to consider, though, and it relates to what’s happening on the plains of Texas and Oklahoma. The latest period of supply restraint from Opec and Russia has in essence seen them give up market share to onshore North America. The 1.8 million barrels a day that they’ve taken off the market is almost entirely compensated for by the 1.53 million barrels a day of additional unconventional crude production from the U.S., not to mention 640,000 of additional daily barrels that have come out of Canada.
Russia And Turkey Reach Deal On "Southern Stream" Gas Pipeline, Infuriate Washington -- One and a half years after Russia and Turkey signed a deal to build the strategic "Turkish Stream" gas pipeline in October 2016, putting an end to a highly contentious period in Russia-Turkish relation which in late 2015 hit rock bottom after the NATO-member state shot down a Russian jet over Syria, on Saturday Russian state energy giant Gazprom and the Turkish government reached a deal on the construction of the land-based part of the Turkish Stream branch that will bring Russian gas to European consumers. According to Reuters, the two counterparts signed a protocol that would allow the construction, which was stalled by a legal rift over gas prices, to go forward. Gazprom and Turkey’s state-owned BOTAS agreed on the terms and conditions of the project, Gazprom said in a statement, adding that the deal “allows to move to practical steps for the implementation of the project.” The actual construction would be carried out by a joint venture called TurkAkim Gaz Tasima which will be owned by Gazprom and BOTAS in equal shares, Gazprom said.Earlier on Saturday, Turkish president Erdogan said that Gazprom and BOTAS resolved a long-running legal dispute over import prices in 2015-2016, and as a result Turkey would gain $1 billion as part of the gas-price settlement reached with Gazprom, in which Turkey and the Russian natgas giant agreed on a 10.25% price discount for gas supplied by Russia in 2015 and 2016."We agreed on a 10.25% reduction in the price of natural gas in 2015-2016,” Erdogan announced while speaking at a rally on Saturday. “We got our discount. We get about $ 1 billion worth of our rights before the election,” the Turkish President said, as cited by Anadolu Agency. Russia and Turkey officially agreed on the project, which consists of two branches, in October 2016. The first branch will deliver gas to Turkish consumers, while the second one will bring it to the countries in southern and south-western Europe. The European leg is expected to decrease Russia’s dependence on transit through Ukraine. Each of the lines has a maximum capacity of 15.75 billion cubic meters a year. The greenlighting of the Turkish Stream project is sure to infuriate the US which previously announced it was considering sanctions of European firms that would participate in the Nothern Stream Russian gas pipeline.
Russia Just Won Big In The European Gas War -- There’s been a lot of talk on both sides of the Atlantic about the U.S. pivot and efforts at locking in natural as market share in Europe. Much of this comes amid President Donald Trump’s so-called American energy independence push as well as both U.S. and several EU members thrust to wean Europe off of geopolitically charged Russian gas.In fact, Trump has pushed for U.S.-sourced LNG to become so much of the EU’s energy security that several European states, particularly Germany, have accused the president of playing energy geopolitics, cloaking American concern for European energy security under the guise and to the benefit of U.S. LNG producers.Now, however, Trump and U.S. LNG exporters will have an even harder time convincing key EU members to offset overreliance on Russian piped gas with U.S. LNG.Last week, Gazprom, the world’s largest gas producer, and the European Commission resolved a seven-year anti-trust dispute after the Russian state-controlled energy giant agreed to change its operations in central and Eastern Europe. Per terms of the deal that was reached on Thursday, Gazprom will be banned from imposing restrictions on how its customers in central and Eastern Europe use gas. Meanwhile, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia will no longer be banned from exporting gas to another country. These countries originally sought to remedy over pricing problems for Russian gas. Going forward, customers in Bulgaria, Estonia, Latvia, Lithuania and Poland have the right to demand a price in line with those in Germany and the Netherlands. The deal has teeth since these customers can take their complaints to an EU arbitration body if Gazprom fails to live up to terms of the new settlement.
The Battle For Energy Dominance In The Mediterranean -- The Eastern Mediterranean is easily one of the most important and hotly contested regions in the world due to several key factors: the Suez Canal is vital to international commerce, militaries of major powers are participating in the Syrian Civil War, and the region hosts two more unresolved conflicts in divided Cyprus and Israel/Palestine. However, recent major gas discoveries may have permanently altered the energy map of the region. If they play their cards right, Egypt, Israel, Lebanon, and Cyprus may soon go from energy importers to major exporters within a fortnight. Four of the six Eastern Mediterranean countries have seen their fortunes change overnight due to these two discoveries. Two countries, however, have been left out: Turkey and Syria. While Damascus remains distracted by its raging civil war, Ankara is desperate for a potential discovery. Turkey’s economy has grown steadily in recent time and its consumption has followed suit, doubling in the last decade to 55.2 bcm in 2017. Lacking any major energy deposits of its own, Ankara has been importing most of its gas from neighbouring countries - notably Russia, Azerbaijan, and Iran. While Turkey has missed out, Egypt has benefitted significantly from these most recent finds. Due to several significant discoveries in the past decades, Cairo had two liquefication terminals, with a capacity of 7.5 bcm, and export pipelines that could transport fuel to Israel and Jordan. However, the enormous growth in domestic consumption and the unexpected early depletion of several fields forced Egypt to stop exports altogether and start importing. The discovery of the mammoth Zohr gas field on the coast has been a gamechanger for Cairo. Egypt will, for the first time in years, not be importing expensive LNG in 2018 as production from the massive offshore field will be ramped up to meet domestic demand.
Africa’s Hidden Oil Hub Grows After Traders Make Millions -- For oil traders, there’s no place quite like Saldanha Bay. When prices slumped in 2014, trading houses generated outsize profits by storing millions of barrels of crude in the deep-water harbor north of Cape Town.Now storage facilities at the port -- where South Africa built vast concrete bunkers in the 1970s that helped insulate the apartheid regime from United Nations oil sanctions -- are expanding.Saldanha could have turned into a white elephant, but it held an unforeseen commercial potential. When a price structure known as contango emerged in the oil market, traders were able to lock in profits by storing crude for future delivery to buyers elsewhere. This happened in 2009 and again four years ago, when companies from Mercuria Energy Group Ltd. to Vitol Group used the site. While those opportunities have evaporated as oil rebounded, the strategic importance of the shipping route around the Cape of Good Hope has grown. “There’s nothing that really compares with Saldanha Bay,” said Joe Willis, a senior research analyst at Wood Mackenzie Ltd., who highlights its accessibility to supertankers plying an ocean highway that connects key markets in Asia, Europe and the Americas. “It’s quite unique in its own right.”After the release of Nelson Mandela and the end of sanctions, South Africa’s Strategic Fuel Fund gradually sold off its reserves and began to lease out Saldanha’s six concrete tanks -- which from satellite photos resemble a line of computer chips on a circuit board -- to trading companies. About 5.8 million barrels a day of crude moved around the Cape of Good Hope in 2016, and accounted for about 9 percent of all seaborne-traded oil the previous year, according to the U.S. Energy Information Administration.
Maduro Vows To Double Oil Production With Help From OPEC - Venezuelan President Nicolas Maduro has promised to start increasing the crisis-stricken country’s oil production during his second six-year term in office.AFP reports that during his inauguration speech, Maduro said he will seek the help of OPEC to double Venezuela’s oil production, which is currently at 70-year lows and much below its production quota under the OPEC cut agreement. Maduro said the current production rate—about 1.5 million bpd—would need to increase by 1 million barrels daily by the end of this year.Further in his speech, Maduro said that Venezuela will defeat the U.S. sanctions and its economy will reverse its course to a more positive one, admitting, however, that it will be a tough job because of the sanctions and the ruinous state of its oil industry. "I cannot deceive anyone, they are going to create serious difficulties for us, painful difficulties, that we will face gradually -- we will defeat them. Trump's sanctions will be nullified and defeated," Maduro said. Venezuela has been teetering on the brink of collapse for months now, and the thing that could push it over the edge would be further sanctions from the U.S, whether banning Venezuelan oil exports to Gulf Coast refineries or U.S. light crude exports to Venezuela, which it needs to mix its heavy crude with lighter grades to make it marketable.
Aramco awards Halliburton contract for unconventional gas services (Reuters) - Saudi Aramco said on Sunday it has awarded Halliburton a contract for unconventional gas stimulation services. The contract will “further improve the economics of Saudi Aramco’s unconventional resources programme”, Aramco said in a statement. “The new agreement will provide lump sum turnkey stimulation services which include major hydraulic fracturing and well intervention operations,” Aramco said. Saudi Aramco’s unconventional resources programme covers three areas of Saudi Arabia: North Arabia, South Ghawar and Jafurah/Rub’ al-Khali.
India says it will not follow US sanctions on Iran - India will keep trading with Iran and Venezuela despite the threat of fallout from US sanctions against the two countries, foreign minister Sushma Swaraj said on Monday. Asked at a news conference whether US action against Iran and Venezuela would damage India, Swaraj said the country would not make foreign policy "under pressure". Earlier this month, US President Donald Trump withdrew the United States from the Iran nuclear deal and ordered the reimposition of US sanctions suspended under the 2015 accord. Swaraj said New Delhi's position was independent of any other country. "India follows only UN sanctions, and not unilateral sanctions by any country," she said. India and Iran have long-standing political and economic ties, with Iran one of India's top oil suppliers. Bilateral trade between India and Iran amounted to $12.9bn in 2016-17. India imported $10.5bn worth of goods, mainly crude oil, and exported commodities worth $2.4bn during that same time period. India has other interests in Iran, in particular a commitment to build the port of Chabahar on the Gulf of Oman. Swaraj met Iranian foreign minister Mohammad Javad Zarif in New Delhi on Monday just weeks after the US's rejection of the nuclear accord. "Zarif briefed about the discussions that Iran has undertaken with parties to the Joint Comprehensive Plan of Action following the US decision to withdraw from the agreement," said an Indian government spokesperson in a statement, without elaborating further. India continued to trade with Iran throughout previous sanction periods, but was forced to cut oil imports as sanctions choked off banking channels and insurance cover for tankers.
Japan to consult US, seek easing of Iran oil import curbs: official - Japan will try to avoid any sudden reduction in its Iranian crude oil imports and may seek some form of exemption from the renewed US sanctions regime, an official at the country's ministry of economy, trade and industry, Daisuke Hirota, said Wednesday. On the sidelines of a conference in Azerbaijan, Hirota, who is principal deputy director at METI's oil and gas division, played down the prospect for Japan to reduce its imports of Iranian crude, something the Petroleum Association of Japan has said could happen from October. He noted Japan had an exemption from the US and EU-led sanctions regime earlier in the decade. "We continued to import about 170,000 b/d from Iran and now we continue to import from Iran at this level," he told S&P Global Platts. "We think to continue to get the exemption from the US to keep this amount of imports from Iran." "Japanese companies don't want to stop imports suddenly," he said, adding the US position needed clarifying. "The situation in the US government is drastically changing every day," he said. "Now we are collecting information and keep in touch with the US government." "We need to continue to keep imports, and to keep imports from Iran we need to get information and communication with the US government," he said. Iran's relatively low-cost crude accounts for around 5% of Japan's crude oil imports, and is valued by Japanese refiners partly because of its heavier quality, Hirota noted.
There’s No Getting Around Iranian Sanctions - “I personally think none of us will be able to get around it,” Vitol’s chief executive Ian Taylor said last week, commenting on the effects that renewed U.S. sanctions against Iran will have on the oil industry. The sanctions, to go into effect later in the year, have already started to bite. French Total, for one,announced earlier this month it will suspend all work on the South Pars gas field unless it receives a waiver from the U.S. Treasury Department—something rather unlikely to happen. The French company has a lot of business in the United States and cannot afford to lose its access to the U.S. financial system. So, unless the EU strikes back at Washington and somehow manages to snag a waiver for its largest oil company, Total will be pulling out of Iran.Other supermajors have not dared enter the country, so there will be no other pullouts of producers, but related industries will be affected, too, in the absence of a strong EU reaction to the sanctions. For example, Boeing and Airbus will both have their licenses for doing business in Iran revoked, Treasury Secretary Steven Mnuchin said, which will cost them some US$40 billion—the combined value of contracts that the two aircraft makers had won in Iran. Tanker owners are also taking the cautious approach. They are watching the situation closely, anticipating Europe’s move, but acknowledging that the reinstatement could have “significant ramifications” for the maritime transport industry, as per the International Group of PI & Clubs, which insures 90 percent of the global tanker fleet.Everyone is waiting for Europe to make its move even as European companies in Iran are beginning to prepare their exit from the country. Everyone remembers the previous sanctions, apparently, and they don’t want to be caught off guard. But the signals from Europe are for now positive for these companies, of which there are more than a hundred.Earlier this month, an adviser to French President Emmanuel Macron said that Europe’s response to the thread of U.S. sanctions on Iran will be “an important test of sovereignty.” Indeed, unlike the last time there were sanctions against Iran, the European Union did all it could to save the nuclear deal and has signaled it will continue to uphold it.
Iran, global maritime security and the US role in policing international waters -- Capitol Crude podcast - Iran threatened to shut down the Strait of Hormuz back in 2012. Now that the US is exiting the Iran nuclear deal, will the threat to shut downthe world’s busiest oil chokepoint return? On the latest episode of Capitol Crude, US Navy Admiral Jonathan Greenert, the Chief of Naval Operationsfrom 2011 to 2015, talks with Meghan Gordon and Brian Scheid about Iran, global maritime security and the US role in policing international waters. (Part 1 of 2.) Part 2: US Navy's fuel-innovation efforts may never get serious without $100/b oil
China and Russia Push Into Iran, Exploiting Europe’s Caution - —Chinese and Russian state-backed companies are maneuvering to profit from European firms leaving Iran, threatening the Trump administration’s bid to raise economic pressure on Tehran. Their efforts show how Iran’s business landscape has shifted since the Trump administration withdrew from the nuclear pact, which lifted crippling sanctions on Iran in exchange for curbs on its nuclear program, following 17 months of rising pressure. Secretary of State Mike Pompeo has threatened the “strongest set of sanctions in history” if Iran doesn’t rein in its military activities across the Middle East and stop testing long-range missiles. European executives who tried to make inroads in Iran since the Obama administration struck the nuclear deal in 2015 are now concerned Beijing and Moscow will seize an insurmountable advantage in a large, growing market. “What would be not good neither for the U.S., nor for Europe, is if that at the end only Russia and China can do business in Iran,” said Patrick Pouyanné, chief executive of French energy company Total SA, in a speech in Washington after the policy shift this month. China Petroleum & Chemical Corp., or Sinopec, a giant Chinese-state oil company, sent a delegation to Tehran this month to complete a $3 billion deal to further develop a giant Iranian oil field that Royal Dutch Shell PLC was negotiating for until it decided in March the sanctions risk was too great, say Iranian and Western oil executives. That deal, to develop the Yadavaran oil field, would be potentially the biggest foreign investment in a decade. China National Petroleum Corp., another state-owned giant, has an option for the $1 billion investment pledged by Total for a natural-gas development in Iran that the French company is considering leaving because of U.S. sanctions, CNPC and Iran officials say. CNPC is Total’s partner in the project. Chinese companies have also joined with Iranian peers to renovate railways, build metro lines and manufacture cars. Cheap clothing, cookware, consumer electronics and sunflower seeds imported from China have become popular in Tehran’s street markets.Russia has viewed Iran more cautiously as a business partner, but its companies have worked to build ties there. Russia is selling oil-drilling equipment to Iranian energy companies that don’t have access to Western technology.
China May Get World’s Largest Gas Field Because of U.S. Sanctions Against Iran - Iran has threatened to give petroleum giant Total’s stake in the South Pars gas fields to China if the French company could not secure protection from U.S. nuclear-related sanctions. Total signed a $4.8 billion contract to develop phase 11 of the South Pars—by far the world’s largest natural gas field—last July, after the 2015 nuclear deal struck between the U.S., Iran and five other world powers saw a rolling back of sanctions against Iran in exchange for it cutting nuclear production. Trump’s May 8 withdrawal from the nuclear accord, however, has put this investment at risk and Iranian Petroleum Minister Bijan Zanganeh said the state-owned China National Petroleum Corporation (CNPC), which already claims 30 percent of the project, could take the French supercompany’s 50.1 percent stake. “Total has 60 days to negotiate with the U.S. administration while the French government can also use these 60 days to negotiate with the U.S. administration so that Total can stay in Iran,” Zanganeh said in a statement, according to The Financial Times. “If the U.S. administration does not agree with Total staying in Iran, China will replace this company,” he added.
Iran seeks OPEC support against U.S. sanctions (Reuters) - Iran has asked OPEC to support it against new U.S. sanctions and signalled it is not yet in agreement with Saudi Arabia’s views on the possible need to increase global oil supplies, creating potential problems for OPEC at its meeting next month. Iran, the arch-rival of Saudi Arabia, has a history of being difficult at OPEC meetings including in 2015 when the country refused to sign up to OPEC policies, saying it needed to raise output due to the easing of sanctions following Tehran’s accord with major world powers. U.S. President Donald Trump earlier this month pulled out of that nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member. Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia and Iraq. “I would like to ... seek OPEC’s support in accordance with Article 2 of the OPEC Statute, which emphasises safeguarding the interests of member countries individually and collectively,” Iranian Oil Minister Bijan Zanganeh said in a letter seen by Reuters. Zanganeh also suggested in the letter that Iran was not in agreement with some OPEC ministers’ recent comments on the oil market. He said some OPEC ministers “have implicitly or unwittingly spoken for the organization, expressing views that might be perceived as the official position of the OPEC.” The energy ministers of Saudi Arabia and Russia said last week they were prepared to ease output cuts to calm consumer worries about supply. Raising output would bring an end to about 18 months of strict supply curbs amid concerns that oil price have risen too far. Oil price have hit their highest since late 2014, rising above $80.50 a barrel this month, but have since eased.
Oil and gas geopolitics: no shelter from the storm - Pepe Escobar - Russia and Saudi Arabia are in deep debate on whether to raise OPEC and non-OPEC oil production by 1 million barrels a day to offset the drastic plunge in Venezuela’s production plus possible shortfalls when new US sanctions on Iran kick in in November.The problem is that even a production raise would not be enough, according to Credit Suisse; only 500,000 barrels a day would be added to the global market. Oil has spiked as high as $80 a barrel – unheard of since 2014. A production spike could certainly halt the trend. At the same time, key supply players would rather keep crude futures at $70-$80 a barrel. But the price could even hit $100 before the end of the year, depending on the impact that US sanctions have.Persian Gulf traders told Asia Times the current oil price would be “much higher today if the Gulf States played their usual role at OPEC and cut back production” – to 10% or 15% or 20% of OPEC supply. According to an Abu Dhabi trader, “present OPEC cutbacks only target 1.8 million barrels a day, which is ridiculous, and indicates that the US is still pressuring to hold down the price.”A Saudi-Russia deal could certainly turn the tables.And then there’s the further issue of depleting OPEC supplies. There’s a consensus among traders that, “the depletion that has to be replaced is about 8% of total supply, which comes out to approximately 8 million barrels a day per year. Most of this has been made up by pre-2014 drilling but in the next four years will fall short very considerably as drilling has collapsed 50%.”So, uncertainty seems to be the rule. To add to this, Societe Generale has forecast that US sanctions might remove as much as 500,000 barrels a day of Iranian crude from the global market. And that leads us to the real big story for the foreseeable future, as Asia Times cross-referenced analyses from Persian Gulf traders with diplomats in the European Union; beyond technical issues, the point is how oil and energy markets are hostage to geopolitical pressure.
Russia has potential for oil output hike within months (Reuters) - Russia would be able to raise its oil output back to pre-cut levels within months if there is a decision to unwind the price-protection deal with OPEC and other producers, a Russian energy ministry official said. Moscow agreed to cut Russian output by 300,000 barrels per day (bpd) from a 30-year high of 11.247 million bpd in October 2016 as part of a deal to tighten the market and lift prices from less than $30 a barrel, their lowest in more than a decade. This global deal is valid until the end of 2018 and is due to be reviewed by the Organization of the Petroleum Exporting Countries and non-OPEC countries in June 22-23 in Vienna. Russia and OPEC leader Saudi Arabia have talked of a gradual increase in output as the goal of removing excessive oil stockpiles has been achieved and the market is broadly balanced after producers last year began withholding 1.8 million barrels per day (bpd) to tighten the market and prop up prices. “Speaking about potential in the short run, growth potential (in Russia) is at least 300,000 bpd, which were cut voluntarily by the companies as part of the OPEC agreement,” Pavel Sorokon, a Russian Deputy Energy Minister, told Reuters in an interview. “Within a few months we surely will be able to restore that level if such a decision is taken,” Sorokin added. Russian Energy Minister Alexander Novak, said on Saturday that returning to the oil production levels of October 2016 is one of the options for the future of the deal.
Rosneft could add 100,000 b/d in just a few days if oil output cut deal lifted: analysts Aton - Russia's largest crude oil producer, Rosneft, is in a position to add 100,000 b/d to production in a few days if the conditions of the OPEC/non-OPEC production cut deal are eased, analysts at Aton said in a research note released following meetings with Rosneft officials. Rosneft has 100,000-150,000 b/d of spare capacity and is currently carrying out tests to see how quickly this could be brought back to market in the event of changes to the deal agreed by the OPEC/non-OPEC alliance, Aton said Friday, citing Rosneft First Vice-President Eric Liron. In tests carried out over three days, the company boosted output by 57,000 b/d on day one, 70,000 b/d on day two, and expected 80,000-85,000 b/d on day three, Aton said. Rosneft did not provide immediate comment on the recent testing, but last month said it could fully recover the 100,000 b/d it cut in line with the agreement within two months if the terms were lifted. Rosneft accounts for just under 40% of Russian output, and Liron said it had adopted a different approach to other Russian producers in implementing the cut. "Mr. Liron outlined that his company differed from other Russian oil majors in its approach to cutting production in that unlike most companies that chose to cut brownfield output, Rosneft reduced output at its mature greenfields, while continuing investments into their respective development," Aton said. Russia has a cut quota of 300,000 b/d, which has roughly been spread proportionally across producers. Overall, the 24-country alliance committed to cut 1.8 million b/d. There are signs though that the terms of the deal could be changed when they formally meet in Vienna later this month.
Late to teapot party, ExxonMobil breaks with tradition in wooing China's oil market (Reuters) - ExxonMobil Corp’s global oil marketing team stormed into China this week hoping to elbow aside rivals and gain access to the nation’s “teapot” refining market, executives told Reuters. The push by Exxon, the world’s biggest oil and gas company by market value, to court the independent refiners, known as teapots, illustrates the clout they are exerting on the global oil market since winning crude import licenses from the government in 2015. The refiners are big foreign crude buyers in a country that is now the world’s largest oil importer. To make up for a late arrival, Exxon this week sent a dozen traders and marketers, including global crude marketing manager Thomas Martenak, to an oil trade show in Dongying, a hub for the independent refiners in the eastern province of Shandong. The team included crude oil traders, products marketers and finance staff from Houston, Singapore, Thailand and Shanghai. At a booth at the center of Dongying’s downtown exhibit hall, staff handed out gift bags containing backpacks emblazoned with the ExxonMobil logo, flanked by stands from Malaysia’s Petroliam Nasional and France’s Total and about 20 local refiners. On Monday evening, Exxon’s team wined and dined prospective customers and traders at a dinner attended by around 200 guests, according to multiple people who attended. Goodie bags at the party contained flasks for travel use, they said. The marketing blitz is a departure from Exxon’s traditional methods of peddling their crude such as one-on-one meetings. “I have never seen ExxonMobil ever do this kind of thing in my whole career,”
Crude Capitulation Continues: WTI Hits 6-Week Lows After Russia, Saudi Comments -- WTI Crude futures plunged in early Asia trading - touching a $65 handle for the first time in over a month - after Saudi Arabia and Russia proposed easing output curbs. As Bloomberg notes, oil earlier this month rose to the highest level in more than three years after President Donald Trump’s decision to reimpose sanctions on Iran and plunging Venezuelan output fueled supply concerns. With OPEC and allies achieving a key goal of eliminating the global surplus despite record production in the U.S., traders now are weighing whether Saudi Arabia and Russia will go ahead with their plan to revive output without reaching consensus with allies. The group are set to meet in June to decide its next steps. The drop was accompanied by relatively heavy volume suggesting some capitulation from the extreme long crude speculative positioning. July WTI futures volume already tops 70,000 contracts -- more than 420% of the 10-day average for this time of day -- a feat even more impressive given that it's a public holiday in both London and New York. “The latest signal from OPEC and Russia cooled down expectations for the group’s cuts, which have been a major factor boosting crude price since late last year,” Satoru Yoshida, a commodity analyst at Rakuten Securities Inc., said by phone from Tokyo. “If OPEC and allies decide at the June meeting to maintain their production cuts through December and ease anxiety among investors, crude prices may rebound.” What is perhaps even more impressive is the spread between Brent (geopolitical risk premia) and WTI (domestic 'over'-supply) is now well over $9 - the highest since March 201
Oil price slides to $75 after signs that oil nations may increase supply - Oil prices took a downward turn today with Brent crude slipping to $75 per barrel following signs of an increase in supply from the US, Saudi Arabia and Russia. Over the last month the price of oil came within a whisker of $80 per barrel due to political volatility and a supply dip, but fresh increases in production have seen the price of the black stuff start to slide. Top oil producer Saudi Arabia, which is a member of the Organisation for Petroleum Exporting Countries (Opec), and Russia said on Friday that they were planning to raise oil supply by 1m barrels per day. The influx of oil could begin to even out the market and address the record-high demand that has been growing over the last month. \ “Crude oil prices collapsed … after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second-half of the year to make up for losses elsewhere under the production agreement.” After the US announced its intention to re-impose sanctions on Iran following its withdrawal from the Iran nuclear deal, 2m barrels of Iranian oil went off the already tight market, pushing the price towards the $80 mark. Opec, which announced in 2017 that it would withhold oil to push up prices, did not fill the supply gap left by the missing Iranian barrels at the time of the sanctions. The Brent oil price fell by 1.4 per cent and was as of 2.11pm at $75.39 while the West Texas Intermediate (WTI) price was down to $66.75 which is a decrease of almost 1.7 per cent.
Oil prices tumble as hedge funds quit crude: Kemp (Reuters) - Hedge fund managers were busy reducing bullish positions in petroleum well before OPEC and its allies indicated in the middle of last week that they would consider relaxing output curbs. Hedge funds and other money managers reduced their net long position in the six major petroleum futures and options contracts in each of the five weeks to May 22 by a total of 108 million barrels. The reduction has been concentrated in crude, where net long positions in Brent and WTI were cut by 169 million barrels over those five weeks (https://tmsnrt.rs/2LBbW8 l). Liquidation was heaviest in Brent (-131 million barrels over six weeks) rather than NYMEX and ICE WTI (-51 million barrels over four weeks). It was partly offset by increased net length in fuels, especially U.S. gasoline (+34 million barrels), with smaller increases in U.S. heating oil (+26 million barrels) and European gasoil (+2 million barrels). Liquidation hit near-term Brent futures prices particularly hard, since most hedge fund positions are held in contracts just a few months from expiry, which has helped push near-term contract prices into contango. Portfolio managers cut their net long position in Brent by almost 50 million barrels in the week to May 22, the largest one-week reduction since before the rally started in June 2017. Hedge funds have continued to add bullish positions in fuels, especially gasoline, in a bet consumption will remain relatively strong. But the decision to pare positions in crude points to deeper unease about the sustainability of the rally in oil prices over the last 10 months. Hedge funds started to reduce their net long position in petroleum around the time U.S. President Donald Trump used Twitter on April 20 to blame OPEC for pushing up oil prices. For all the bullish commentary around oil prices in recent weeks, hedge fund managers have used rising prices to realise some profits rather than increase their positions.
OPEC Has Regained Its Grip On Oil Markets - Oil prices have fallen more than 6 percent since Thursday on news that OPEC could increase production. The next steps, however, are unclear. Is a deeper price correction in order? Or has the steam been let out of the market, pushing prices down to sustainable levels? Obviously, OPEC and Russia hold all the cards for the next few weeks. Despite all the ink spilled on the primacy of U.S. shale, the fact that oil prices crashed after news surfaced that OPEC and Russia are discussing adding some supply back onto the market demonstrates the cartel’s ongoing influence over global oil markets. U.S. shale is adding enormous new volumes of supply, but shale companies have nowhere near the power that OPEC has to force sudden and sharp price changes on the market. Oil prices fell more than 6 percent over two days since the news broke that OPEC and Russia could add as much as 800,000 bpd back onto the market in the second half of this year. While Saudi Arabia and Russia have reportedly agreed to increase production, even as they continue to negotiate over the specifics, reports suggest that there isn’t agreement from the rest of the OPEC/non-OPEC to go along. In fact, several producers are opposed to adding some production back into the market. “It might be a contentious meeting,” Ed Morse, head of commodities research at Citigroup Inc., told Bloomberg. Some opposition is not surprising since higher production levels would presumably come from Saudi Arabia and Russia, at the expense of other countries who are already producing as much as they possibly can.
Oil prices mixed on trade strains and production gains (UPI) -- Major crude oil benchmarks were spread by as much as 2 percent in early Tuesday trading as trade uncertainty balanced an expected increase in production. Russian Energy Minister Alexander Novak said last week that parties to an effort steered by the Organization of Petroleum Exporting Countries may pull back from over-compliance in the second half of the year. Participating players, of which Russia is the largest non-OPEC member, are doing more than they need to under the terms of an agreement arranged in late 2016 and may come back toward 100 percent. Speaking during the weekend, Novak said the price of oil might stay in a range between $65 per barrel and $75 per barrel for the year.The price for Brent crude oil, the global benchmark, closed at $80.09 on May 17, its highest level in four years, in response to U.S. President Donald Trump's decision to pull out of a multilateral Iranian nuclear agreement. Since then, Brent has lost about 5 percent.The situation was compounded last week on indications of a surge in U.S. exploration and production. More U.S. oil and more from OPEC producers would be reminiscent of a pre-2016 scenario when OPEC was defending a market share under threat from North American shale with robust output.The price for Brent was up 0.97 percent as of 9:15 a.m. EDT to $76.05 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.13 percent to $67.11 per barrel. WTI was pulled lower by the potential for an increase in U.S. oil production. Brent, meanwhile, was trending higher because of political risks in the European market.
Oil Slips After Saudi-Russian Revival Talk `Popped the Bubble’ -Crude fell for a fifth straight day as the market weighs the prospects of rising production from Saudi Arabia and Russia. Futures fell 1.7 percent in New York to their lowest level in six weeks. Saudi Arabia and Russia last week signaled they may restore some of the output they’ve curbed since late 2016 as they sought to drain a global glut. Now the market is awaiting a meeting of OPEC and its partners in Vienna set for late June to find out if those limits will remain. “Clearly, the commentary from Russia and Saudi Arabia popped the bubble,” said John Kilduff, a partner at Again Capital LLC in New York. “There’s some legitimate skepticism about whether or not they’ll follow through. There is going to be nervousness right up until next month’s meeting.” Talk of rising output from the world’s top two oil exporters wiped out this month’s rally in WTI and nearly erased Brent’s, which had been fueled by concerns that supplies from Iran and Venezuela will shrink. Yet, as questions swirl around the June meeting, OPEC and its allied producers concluded that the crude market re-balanced last month. West Texas Intermediate for July delivery dropped $1.15 to settle at $66.73 a barrel on the New York Mercantile Exchange. Futures’ fifth straight session of declines is the longest such stretch since February. There was no settlement Monday for WTI because of the U.S. Memorial Day holiday, and all trades will be booked Tuesday. WTI closed below a key technical level Tuesday, it’s 50-day moving average. This tends to be viewed as a bearish signal. Brent futures for July settlement rose 9 cents to end the session at $75.39 a barrel on the London-based ICE Futures Europe exchange after earlier falling as much as 1 percent. The global benchmark traded at a $8.66 premium to WTI for delivery the same month
Crude Oil Prices Settle Nearly 2% Lower as Traders Fret Rise in OPEC Output --WTI crude oil prices resumed their selloff Tuesday, settling nearly 2% lower as traders continued to fret the prospect of an increase in output from OPEC and Russia to offset a potential shortage in global supplies. On the New York Mercantile Exchange crude futures for July delivery fell 1.7% $66.73 a barrel, while on London's Intercontinental Exchange, Brent rose 0.28% to trade at $75.50 a barrel. WTI crude oil prices fell on reports Russia and OPEC could increase production by up to 1 million barrels per day, to combat a potential supply shortage in the wake of falling Venezuela output and pending U.S. sanctions on Iran that could cripple the Islamic Republic's oil exports. “The ongoing downwards correction is still mostly seen as a reaction to increased talk of possibly higher production by OPEC," said JBC Energy. "The mere chatter over this move has been sufficient to manage the market down by a full five dollars from last week's peak." The mixed day for oil prices saw the spread between Brent crude and WTI crude prices rise to its widest since March 2015 as the latter came under added pressure amid signs of continued expansion in U.S. shale output. The number of oil rigs operating in the US jumped by 15 to 859, its highest level since March 13, 2015, according to data from energy services firm Baker Hughes Friday. U.S. oil production stood at 10.73 million barrels per day, the Energy Information Administration said last week. Demand for crude futures has been waning in recent weeks as data for the week ended May 23 showed speculative net long positions fell to 633,400 from 644,400.
West African crude oil grades tumble amid stronger freight, cheap US barrels - The ever-widening differential between Brent and WTI, coupled with a sharp jump in freight costs over the last several weeks has put pressure on arbitrage opportunities for West African crude oil to Asia. The pressure has been most evident in medium and heavy sweet crude markets which have seen values for much of the Angolan July program lower than June as volume has struggled to clear to Asia with the same degree of alacrity as in recent months. In the Platts Market on Close assessment process Tuesday, two Unipec offers for Angolan cargoes loading in July -- a Plutonio cargo loading July 13-18 and a Girassol cargo loading July 3-7 -- were left outstanding at the close at Dated Brent minus $1.30/b and minus 25 cents/b, respectively. "I think that the market is still under pressure after the first round of buying," a crude trader said. "Dalia has moved pretty quickly. But, beyond that, the market has been pretty quiet...few cargoes have traded and nearly all of the deals that have been done are lower than they were last month." Dalia was above Dated Brent minus $2/b in European trading Tuesday, up from the sub-$2/b levels seen throughout much of the June trading cycle. Beyond Dalia, however, there has been increased evidence the market remained under pressure. Kissanje was most recently heard sold at Dated Brent minus $1.30/b. Only a handful of Angolan cargoes were taken as part of the first round of July trading cycle tenders to Asian refiners last week, market sources said, with many buyers taking large volumes of US crude instead.
Over-extended oil prices were primed for a fall: Kemp (Reuters) - Despite all the bullish commentary around oil prices in recent weeks, there was plenty of forewarning prices were primed for a setback. By the middle of April, hedge funds had accumulated a near-record net long position in crude and products futures and options equivalent to 1.4 billion barrels. Bullish long positions outnumbered bearish short positions by an unprecedented ratio of almost 14:1, according to regulatory and exchange data (https://tmsnrt.rs/2Jguo7W ). Front-month Brent futures prices continued to climb by another $8 per barrel over the next five weeks, with the focus on declining oil exports from Venezuela and new sanctions on Iran. But a closer look at the market revealed plenty of signs the rally might be running out of momentum and was becoming increasingly vulnerable to a correction. Hedge funds and other money managers were net sellers of petroleum futures and options in each of the five weeks between April 17 and May 22. Bullish long positions were trimmed by 52 million barrels while the number of bearish short positions rose by 57 million. The shift was even more pronounced in crude, where long positions were trimmed by 107 million barrels while shorts were boosted by 62 million. Front-month Brent futures slumped from backwardation into contango, in part because so many hedge fund positions are concentrated at the front-end of the futures curve. The physical Brent market too displayed increasing signs of weakness, with dated Brent prices falling into contango and reports of unsold cargoes. Weakness spread along the futures curve, with the six-month Brent calendar spread easing from a sharp backwardation of $3.50 per barrel on April 26 to just $1.49 on May 29.
June NYMEX natural gas futures up 1.1 cent to $2.950/MMBtu -- NYMEX June natural gas futures ticked higher overnight ahead of Tuesday's open and the contract's roll off the board at the close of business. At 6:45 am ET (1045 GMT) June futures were 1.1 cents higher at $2.950/MMBtu. Poised to take the lead, the July contract was 2.3 cents higher at $2.986/MMBtu. Tropical Storm Alberto is weakening over the southeast US, reducing threats to offshore natural gas production. But the arrival of summer weather looks to boost cooling demand and limit the amount of gas available to flow into still-diminished underground storage. Outlooks for both the 6-10 day and 8-14 day periods show above-average temperatures across the country, with average to below-average temperatures confined to portions of the East Coast and the West in the shorter-range view and to the Eastern Seaboard, a few areas of the Midwest and Montana in the extended period. Efforts to rebuild storage have started to slow, as the season's first triple-digit injection of 106 Bcf in the week ended May 11 was followed by a 91 Bcf addition in the most recent inventory report week ended May 18. Total working gas stocks are currently 1,629 Bcf, still 804 Bcf below the year-ago level and 499 Bcf below the five-year average of 2,128 Bcf.
June Natural Gas Falls Into Expiry as Cooler Temps Seen; Spot Prices Mixed | 2018-05-29 | Natural Gas Intelligence After rallying last week, natural gas futures sold off Tuesday ahead of the June contract’s expiration as forecasts were advertising somewhat cooler trends by the second week of June. In the spot market, declines throughout much of the Midwest and Gulf Coast countered gains in the Northeast and in the West, and the NGI National Spot Gas Average finished even at $2.50. The June contract rolled off the board 6.4 cents lower at $2.875 Tuesday after trading as high as $2.968 and as low as $2.838. July settled at $2.903, down 6.0 cents on the day. After a bullish run coming into Tuesday’s session, including a nearly 10-cent rally a week earlier, “the market was probably positioned for a little bit of profit-taking,” according to Powerhouse Vice President David Thompson. “We’d gotten above the $2.80 level that had been resistance for a couple months...so it was in a position where a sell-off might happen,” he told NGI. Bespoke Weather Services said Tuesday its outlook had shifted from “slightly bearish to neutral with a slight bearish bias as we saw the high confidence move of the week already occur, with the July contract briefly touching $3 over the holiday before reversing into our $2.87-2.90 support level. “Prices attempted to break even lower” late on Tuesday morning “before afternoon model guidance increased some of the heat risks in the long-range that have been decreased over the last few days,” Bespoke said. “The trends that were shown on model guidance were believable enough to shift our sentiment a touch, as the main uncertainty moving forward is whether cool weather will be able to displace more significant heat across Texas and much of the South.”
Natural Gas Looks Good On The Charts - Over recent years, the supply and demand fundamentals for natural gas have matured and changed. On the supply side, massive reserves of the energy commodity in the Marcellus and Utica shale regions of the U.S. have added quadrillions of cubic feet of natural gas to the nation's reserves. On the demand side, environmental concerns have caused coal's role in power-generation to decline and natural gas usage to rise. Additionally, technological advances in hydraulic fracking reduced the production cost. In the years that followed, a new energy-friendly administration in Washington DC erased some of the myriads of regulations further reducing the cost of output. On the technological front, the liquification of the energy commodity created yet another demand vertical as the commodity that could only travel via pipeline can now move by ocean vessel to points of consumption around the world where the price is at higher levels. This winter, inventories fell to their lowest level in three years. The withdrawal season began one week early and lasted almost one month longer than in previous years. We are only at the beginning of the 2018 injection season, and stockpiles remain significantly below where they were last year at this time and below the five-year average. Last week, the EIA reported that stocks rose for the third week since the end of the prolonged winter season. On Thursday, May 24 the Energy Information Administration told the market that 91 billion cubic feet of natural gas flowed into storage for the week ending on May 18. As the chart highlights, stockpiles stand at 1.629 trillion cubic feet as of May 18 which is 33% below last year's level and 23.4% below the five-year average for this time of the year. While the market expected an increase in stocks around the level reported by the EIA, the price of natural gas futures moved to the upside after the release of the data.
NYMEX July gas drifts on mixed fundamentals, down fractionally at $2.901/MMBtu - NYMEX July natural gas futures were near unchanged in overnight US trading on mixed fundamentals. At 6:40 am EDT (1040 GMT) the contract was 0.2 cents lower at $2.901/MMBtu. There are concerns in the market over storage deficits carrying over into the summer cooling season, but these are offset by mixed weather outlooks, which should limit cooling demand, and an impending boost to production implied by the recent rise in the rig count. The latest Energy Information Administration for the week ended May 18 showed US inventories of 1.629 Tcf, 804 Bcf lower year on year and 499 Bcf below the five-year average. Forecasts of mild weather over key consuming regions despite heat elsewhere in the US, however, look likely to keep a lid on cooling demand. This would allow stocks to rebuild at a healthy pace in the coming weeks.
OPEC Overcompliance Has Created A Problem - Crude oil inventories in the Organization for Economic Co-operation and Development have fallen below their five-year average level, a high-ranking OPEC official told S&P Platts this week. They are now 20 million barrels below that average, the source said, thanks to OPEC’s over-compliance with the production cuts. The news comes amid reports quoting Russia’s and Saudi Arabia’s energy ministers as saying they are negotiating a ramp-up of production ahead of the end-2018 deadline. The reports began emerging after Brent hit US$80 per barrel and India’s Petroleum Minister Dharmendra Pradhan called Saudi Arabia’s Khalid al-Falih to reiterate his government’s insistence on “stable and moderate” oil prices. Was a phone call all it took for Al-Falih to make a U-turn in his statements regarding oil prices and start assuring the market that there is sufficient supply and there is no reason why Brent should trade above US$80? Probably not, although India is among Saudi Arabia’s largest clients, and its demand for oil is growing at the fastest pace in the world. OPEC has been monitoring OECD inventories closely, and not just because its target in the cuts was the OECD inventory five-year average. There was talk a few months ago that this five-year average may not be the best measure of global oil supply. That talk was prompted by data suggesting the inventories were not falling as fast as OPEC had hoped, but with Venezuela’s production in a free fall, things settled and prices took off. Now, after it became clear that Moscow and Riyadh are talking about a possible increase of 1 million bpd, oil prices lost all they had gained since the beginning of the month within a week. Perhaps the time has come for some urgently needed bullish oil news, such as the clearing of the glut. After all, before Al-Falih had assured India there will be enough oil, there were reports about Saudi officials admitting the Kingdom is targeting US$80 a barrel or higher to boost Aramco’s valuation. While the OECD inventory target has been met, US$80 is seeming increasingly unlikely, despite some figures, including Goldman Sachs, continuing to be bullish on oil. As Russia’s Alexander Novak told Bloomberg on the sidelines of the St. Petersburg Economic Forum, no decision on increasing production has been made yet. It will be made in June, when OPEC+ meets to discuss the matter further.
Why have the Saudis suddenly slammed the brakes on the global oil price rally? | Edmonton Journal: The world’s largest oil exporter just made quite a policy swerve. Within six weeks, Saudi Arabia has gone from advocating higher prices to trying to stop the rally at US$80 a barrel. The U-turn scrambled the outlook for oil markets, hit the share prices of oil majors and shale producers and set up a diplomatic wrangle with other members of the Organization of Petroleum Exporting Countries. See: Oil just shed $3 a barrel as Saudi and Russia plan U-turn on output What changed? The supply threats posed by the re-imposition of U.S. sanctions on Iran oil exports earlier this month and the quickening collapse of Venezuela’s energy industry are both part of the answer, but they’re secondary to Donald Trump. On April 20, the president took to Twitter to lambaste the cartel’s push for higher prices. “Looks like OPEC is at it again,” he tweeted. “Oil prices are artificially Very High!” Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted! — Donald J. Trump (@realDonaldTrump) April 20, 2018Trump’s intervention gave typically strident voice to a concern held more widely in the U.S. and other consuming countries: oil’s rally from less than US$30 in early 2016 to more than US$80 this month risked becoming a threat to global economic growth. On Friday, Saudi Oil Minister Khalid Al-Falih responded, saying his country shared the “anxiety” of his customers. He then announced a shift in policy that all but gave a green light for a market sell-off, saying OPEC and its allies were “likely” to boost output in the second half of the year.
WTI/RBOB Pop-Then-Drop After Bigger Than Expected Crude Build - Dollar weakness and some OPEC jawboning helped WTI/RBOB rebound today after a week of pain into the API print, but after a bigger than expected crude build, WTI and RBOB spiked higher (thank you algos) before sliding lower...“The question about production cuts is the hammer that really drove the market lower,” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. “Unless we get signs that more oil is going to come onto the market than initially figured, we’ll probably stabilize here.” API:
- Crude +1.001mm (+450k exp)
- Cushing -132k
- Gasoline -1.682mm
- Distillates +1.466mm - biggest build since Feb
After last week's surprisingly large crude build expectations were for another - albeit smaller - build this week, but in fact API reported a bigger than expected (and unseasonal) crude build... Notably distillates saw their biggest weekly build since Feb... WTI/RBOB rallied into today's API print then the machines went crazy - instantly spiking higher before tumbling back lower on the bigger than expected build
Oil prices rally, with U.S. crude notching the first gain in 6 sessions - Oil rallied Wednesday, with U.S. prices notching their first gain in six sessions on the back of reports that the OPEC will keep crude production curbs in place until at least the end of the year. Prices in recent sessions had declined on concerns that the Organization of the Petroleum Exporting Countries and non-OPEC members led by Russia would decide to lift output to help make up for any loss production from Venezuela and Iran. July West Texas Intermediate crude rose $1.48, or 2.2%, to settle at $68.21 a barrel on the New York Mercantile Exchange, after marking its lowest close in the previous session since April 17, according to FactSet data. WTI had posted declines in the last five consecutive sessions, the longest such streak of losses since the six-session fall ended Feb. 9. July Brent, which expires at Thursday’s settlement, tacked on $2.11, or 2.8%, to end at $77.50 a barrel on ICE Futures Europe. OPEC and its nonmember allies plan to continue their agreement to curb output until the end of 2018, according to a report from Reuters, citing a gulf source familiar with the thinking of Saudi Arabia, OPEC’s swing producer. The oil producers, however, were ready to make gradual adjustments in the event of any supply shortage.Oil prices came under heavy selling pressure last week, after touching 3 ½-year highs, following media reports that major crude producers OPEC and Russia were discussing plans to lift production. Reports last week said producers were considering the possibility of pumping as much as 1 million more barrels of oil a day. A production increase would be the first since a curb on global output, due to expire at the end of 2018, began in 2017. That curb has helped sop up a glut of oil that took prices down from their 2014 peak
Art Berman: Think Oil Is Getting Expensive? You Ain't Seen Nothing Yet. – with Chirs Martenson, podcast - After issuing clear warnings on this program that sub-$50 oil prices were going to be short-lived, oil expert and geological consultant Art Berman returns to the podcast this week to explain why today's $70 oil prices will go higher -- likely much higher -- and start materially constricting world economic growth. Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of the global demand curve. And at the same time, we're extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch -- it's not a matter of if, but when:The price of oil has gone up 30%+ percent just here in the last year alone. There are some very good reasons for that.In the United States, we've been drawing down our reserves, our inventory and the amount of oil we have in storage, consistently since February of 2017. We're going into the 15th month of drawing from storage each week because we're not producing enough to meet the need. To those paying attention: the United States is right now producing more oil than it ever has in its history. We are a million barrels a day higher than the peak in 1970 -- the one that King Hubbert got in trouble for warning about. We're higher by 50,000 or so barrels per month of production. Yet, here we are, still sucking oil out of storage. What does that tell you? There is only one way to interpret that: We are using more than we are producing. Never ever lose sight of the fact that the United States imports a ton of oil. I mean we are importing, on average, 7 million barrels of crude oil a day. I mean that is more than many continents use a day. Why are we importing all that when we are also producing 11 million barrels a day? We are nowhere near energy self-sufficiency, nor do I think we will ever get there. We're in deep trouble. Click the play button below to listen to Chris' interview with Art Berman (60m:06s).
Crude Oil Prices Settle 1.7% Lower as U.S. Output Expansion Continues -- WTI crude oil prices settled more than 2% lower despite a massive draw in U.S. crude supplies as domestic output continued to expand. On the New York Mercantile Exchange crude futures for July delivery fell 1.7% to settle at $67.04 a barrel, while on London's Intercontinental Exchange, Brent fell 0.03% to trade at $77.70 a barrel. Inventories of U.S. crude fell by 3.620 million barrels for the week ended May 25, confounding expectations for a draw of just 0.400 million barrels, according to data from the Energy Information Administration (EIA). The drop in crude supplies came as crude imports plunge by 528,000 barrels per day last week. The massive draw in crude supplies was offset somewhat by rising product inventories as both gasoline and distillate stockpiles increased. Gasoline inventories – one of the products that crude is refined into – rose by 0.534million barrels, missing expectations for a fall of 0.946 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – rose by 0.634 million barrels, missing expectations for a draw of 1.129 million barrels. U.S. oil output continued its expansion rising 215,000 barrels per day to 10.47 million barrels per day in March, according to preliminary EIA data. The slump in crude oil prices comes a day after snapping a seven-day losing streak following a report that OPEC and its allies would stick to the global production-cut agreement, raising expectations that oil markets would continue to rebalance.
WTI/RBOB Jump After Surprise Crude Draw -- WTI rolled over (but RBOB rallied) this morning ahead of the EIA data which showed the biggest (surprise) crude draw since March but the biggest (surprise) build in distilates since Feb. US crude production rose once again to a new record high.Bloomberg Intelligence's Energy Analyst Fernando Valle noted that the summer driving season will provide its customary demand jolt for crude, yet a counterweight will be the unexpected might of production in the U.S. while price differentials are wider across regions. Exports offer a relief valve amid wide discounts, which should also instigate greater utilization on views of constructive crack spreads. Crude oil differentials blowing out to more than $9 a barrel and domestic production estimated above 10.7 million barrels a day set the tone.U.S. crack spreads are on a high despite economic and political headwinds in Europe and Latin America threatening economic activity. Tight gasoline inventories and strong demand have pushed cover back down to the lowest since 2014, while supply disruptions, even if not as dramatic as last year's hurricane season, could lead to a blowout in margins. DOE:
- Crude -3.62mm (+450k exp) - biggest draw since March
- Cushing -556k
- Gasoline +534k
- Distillates +634k - biggest build since Feb
EIA data showed almost the exact opposite to API with a big crude draw and notable builds in products...
Analysis: US crude oil stock draw fails to lead NYMEX crude higher -- Energy Information Administration data Thursday showing a larger-than-expected draw in US crude oil stocks was unable to lift NYMEX crude into positive territory, with traders focused on climbing domestic production. NYMEX July crude pared declines immediately after the release of EIA data, but fell a few cents short of flipping into the black. In the afternoon, the contract was $1.05 lower at $67.16/b. Moreover, NYMEX July crude's discount to ICE July Brent was above $10/b Thursday, the biggest gap between front-month contracts since March 2015. Liquidity was thin on the July Brent contract, which expires after Thursday's settle, but the spread for August contracts also was blowing out. The ICE Brent/WTI spread for August contracts was $11.06/b Thursday afternoon, out from $9.64/b Wednesday. Geopolitical risks have been supportive for ICE Brent, while NYMEX crude has been weighed down by climbing US production, particularly around the Permian Basin, located in West Texas and New Mexico. That issue has come to the fore, with the futures market increasingly aware of the pipeline constraints between the Permian Basin and Cushing, Oklahoma, and the US Gulf Coast. US production has been steadily rising since around October 2016, when it averaged roughly 8.4 million b/d, EIA weekly estimates show. Output topped 10 million b/d earlier this year and last week stood at 10.769 million b/d. Yet NYMEX crude was able to ride a bullish wave that began in September and culminated this month with the front-month contract above $70/b, its highest level since late 2014.
Explaining The Double Digit WTI Discount - Global oil benchmarks are suddenly heading in different directions, upending what have consistently been close linkages between prices in various parts of the world. To be sure, oil prices have declined everywhere over the past week on news that OPEC and Russia might agree to lift production levels. But regional differences are wreaking havoc on the oil market, dragging down some benchmark contracts more than others. Western Canada Select (WCS), for instance, consistently trades at a discount to WTI, but the spread has widened recently. On May 23, WCS traded $17 per barrel lower than WTI, which is, to be sure, a very large discount. However, WCS has plunged this week, and by May 31 the Canadian heavy oil benchmark was trading at $41 per barrel, or $25 below WTI. Pipelines are full and the bottleneck in Alberta is weighing on the Canadian benchmark. This has pushed Prime Minister Justin Trudeau to extreme lengths to get the Trans Mountain pipeline expansion built. But, the ceiling on midstream capacity is expected to persist, perhaps for several more years. Pipeline problems are not unique to Canada. The Permian basin has continued to grow oil production, but the region’s pipeline network is not adding capacity fast enough. The most recent data suggests that the pipelines from West Texas to the Gulf Coast are full and Permian producers are scrambling to find takeaway capacity by rail or even by truck, which, needless to say, is expensive and inefficient, forcing producers to accept steep discounts for their oil. For the last few weeks, Midland WTI has traded at a double-digit discount relative to WTI in Houston or Cushing. No new pipeline capacity is imminent, and in fact, the shortfall could grow over the next year. While the Midland discount is around $10 per barrel now, futures for November 2018 has Midland trading at a $17-per-barrel discount, a reflection of the fact that the pipeline bottleneck will only grow worse over the course of this year. WTI, for its part, is trading at a multi-year low relative to Brent. As of May 31, WTI was down below $67 per barrel during midday trading, dropping to an $11-per-barrel discount relative to Brent. Again the blowout in the spread is the result of surging shale production at a time when supply is restricted elsewhere in the world. Brent, meanwhile, has lost ground relative to the Dubai benchmark. This is the result of tighter supplies in the Middle East, which has pushed up prices. Not only is OPEC keeping supply off of the market, reducing flows, but the scrapping of the Iran nuclear deal has also raised fears of supply outages from the Middle East. The discount for Dubai relative to Brent has shrunk to less than $3 per barrel, the lowest spread in months.
Natural Gas And The Delayed Effect - After a prolonged withdrawal season which only concluded at the end of April, natural gas is flowing into storage again, and production is at a record level. Over recent sessions, the price of July NYMEX natural gas futures did something they had not done since the heart of the winter season at the end of January. This week, July futures hit the $3 per MMBtu level. The season of peak demand ended with a late-season cold spell that pushed inventories to the lowest level since 2014. However, as the gas began flowing back and stockpiles are rising in preparation for the winter of 2018/2019, the price of the energy commodity has moved from $2.722 on May 7 to a new and higher high this week at $3.00 per MMBtu on the nearby July futures contract.Inventories have been below last year's level and the five-year average for many months, but it is only now starting to feel like the supply-side fundamentals of the market are causing the price to move. . The withdrawal season began one week earlier than usual, dragged on until the final days of April and stockpiles of natural gas in storage fell to the lowest level in years. However, except for a rally to highs of $3.661 per MMBtu at the very end of January, the energy commodity spent most of its time below the $3 level. From the week of February 5 through the week of May 14, the range in nearby natural gas futures that trade on the NYMEX division of the CME traded in a range between $2.53 and $2.87 per MMBtu. When it comes to the energy commodity with a long history of explosions and implosions in price, the 34-cent range amounts to a period of volatility hibernation. The realization of quadrillions of cubic feet of the energy commodity in reserves in the Marcellus and Utica shale regions of the United States and upcoming injection season weighed on prices even as snows and cold weather conditions gripped the northeastern and midwestern U.S. deep into the month of April.
Weekly Natural Gas Storage Report: Supportive Weather But Prices Should Go Lower --EIA reported a storage build of 96 Bcf for the week ending May 25. This compares to the +100 Bcf we projected and consensus average of +102 Bcf. The +96 Bcf also was 1 Bcf lower than the five-year average of +97 Bcf, but 15 Bcf higher than last year's. Headed into this storage report, a Reuters survey of traders and analysts pegged the average at 102 Bcf with a range of 88 to 107 Bcf. We expected +100 Bcf and were 2 Bcf below the consensus. We were off by 4 Bcf on this storage report. Following the better than expected EIA natural gas storage report, natural gas prices jumped higher with July contracts testing a high of $2.988/MMBtu before moving back down. In our morning update to subscribers, we alerted everyone that we were taking another long DGAZ position.Despite this storage report being better than expected, we pointed out three reasons that prompted prices to move higher:
- Weather models turned bullish overnight.
- Short squeeze.
- Better than expected storage report.
Over the last 24 hours, the weather models turned from showing bearish weather for the second week of June to bullish weather. And here's a more visual look at the changes in the ECMWF-EPS: As you can see, the 2m temperature anomaly chart for the 11-15 day range turned from showing a bearish (colder than normal) to a bullish outlook (warmer than normal).But we think prices are headed lower... for now And even with the weather outlook turning bullish, we still think prices are headed lower... for now. One explanation of why that's the case is that despite the bullish weather forecast, natural gas storage injections are expected to come in at or above the five-year average over the next four reports. In addition, we have started to see the market loosen once again with Lower 48 production recovering. And this is on the back of lower LNG exports, which have reduced demand by ~1 Bcf/d. EIA reported a better than expected storage report and prices have responded. But despite a bullish weather outlook and better than expected report, we think prices are headed lower on the back of loosening fundamentals. Once CDDs come in line with the historical averages, the market balance will loosen materially due to recovering production.We initiated a new long DGAZ position today as a result.
U.S. oil output jumps to record 10.47 million barrels per day in March - (Reuters) - U.S. crude oil production jumped 215,000 barrels per day (bpd) to 10.47 million bpd in March, the highest on record, the Energy Information Administration (EIA) said in a monthly report on Thursday. Production in Texas rose by 4 percent to almost 4.2 million bpd, a record high based on the data going back to 2005. The Permian basin, which stretches across West Texas and eastern New Mexico, is the largest U.S. oilfield. Output from North Dakota held around 1.2 million bpd, while output in the federal Gulf of Mexico declined 1.1 percent to 1.7 million bpd. The agency also revised February oil production down by 5,000 bpd to 10.26 million bpd. U.S. natural gas production in the lower 48 states rose to an all-time high of 88.8 billion cubic feet per day (bcfd) in March, up from the prior record of 87.7 bcfd in February, according to EIA’s 914 production report. Output in Texas, the nation’s largest gas producer, increased 1.3 percent in March to 22.7 bcfd, the most since April 2016. In Pennsylvania, the second biggest gas producing state, production dipped to 16.4 bcfd in March, down 0.6 percent from February’s record high of 16.5 bcfd. That compares with output of 14.8 bcfd in March 2017.
WTI Unravels As Brent Holds Steady - Oil prices were a mixed bag this week, with Brent holding steady but WTI declining on higher U.S. output. The spread between the two benchmarks is rare, and reflects uncertainty and confusion in the oil market, as well as regional differences in supply and demand. President Trump resumed this trade war this week, slapping steel and aluminum tariffs on Canada, Mexico and the EU and industrial tariffs on China. The decision comes after offering exemptions to U.S. trading partners in recent months, and comments from the Treasury Secretary just last week that the trade war would be “put on hold.” The about-face has spooked financial markets. As for oil, a trade war threatens to undermine demand, although the magnitude of the slowdown is hard to predict. WTI dropped to a more than $10-per-barrel discount to Brent this week, the widest spread in three years. The pipeline bottlenecks in the Permian are starting to bite. “This was inevitable. There was way too much production growth for infrastructure to handle,” Vikas Dwivedi, global oil and gas strategist at Macquarie, told Reuters. Meanwhile, the uncertainty surrounding the OPEC deal, plus geopolitical risk, has Brent looking for direction. “The market doesn’t know where the price of oil is going to be and probably doesn’t know where it should be, and so it’s open to some major price fluctuations,” Richard Hastings, an independent analyst, told Reuters. U.S. exports of crude are rising, while Brent-linked cargoes in the Atlantic Basin are struggling to find buyers. While WTI is trading at a steep discount to Brent, things are worse in the Permian. Oil in Midland is trading more than $20 per barrel below Brent. “This is probably just the start with more downside to come for the local Permian crude price in order to halt the ongoing booming production growth as there is nowhere to store the local surplus production and limited means to get it to market,” . Schieldrop predicts that U.S. shale will only grow by 1 million barrels per day over the coming year, or 0.5 mb/d less than previously expected.
Demand for Asia Pacific crude hit by competitive US arbitrage barrels --Ample availability of competitively priced arbitrage barrels from the Atlantic Basin has dented Asia Pacific's demand for July loading regional crude grades, traders said this week. A slew of Malaysian and Vietnamese crude grades were heard offered into the spot market following subdued demand from baseload buyers who have turned to alternative crude from outside the region, they said. Malaysian crude grades such as Tembikai, Bentara, Penara Blend, Kidurong, Cendor, Labuan and Kimanis have been offered in the spot market for July loading, according to the traders. "They are too many cargoes offered in the market [currently]," a North Asian crude trader said. "Some Malaysian grades [are being] pushed out as [key buyers in] Thailand are taking arbitrage cargoes," the trader added. In its recent tender seeking crude for July-August delivery, Thailand's PTT was heard to have purchased US' Bakken crude, Nigeria's Agbami crude, as well as other crude grades from within the Asia Pacific region such as Cooper Basin and Champion. "A lot of US crude are coming. A lot of [Asia Pacific] buyers are taking [these such as] CPC [and] PTT," a Southeast Asian crude trader said. Taiwan's CPC was heard to have bought four VLCCs, equivalent to 8 million barrels, of WTI Midland crude in its tender for July cargoes, traders said.
US Oil Rig Count Sees Slight Increase Amid Record Production -- US drillers added 1 rig to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs increasing by 2 and gas rigs dipping by 1. The oil and gas rig count now stands at 1,060—up 144 from this time last year. The Cana Woodford basin saw the biggest increase in the number of rigs, at 3; The Permian lost one.Meanwhile, neighboring Canada gained 18 oil and gas rigs for the week. Oil benchmarks were trading down on Friday, skittish after Saudi Arabia and Russia committed to ramping up production to as much as 1 million barrels per day before the production cut deal ends at the end of this year, should it become a necessary step to meet demand with Venezuela’s falling production and Iran’s possible production or export shortfalls in the wake of US sanctions against it. Oil prices took another blow with Rosneft unexpectedly increasing production by 70,000 bpd, to prepare for OPEC and NOPEC possibly relaxing the production quotas.The markets dissatisfaction with that maneuver was apparent in afternoon trading. At 12:21pm EST, WTI had slipped $0.43 (-0.64%) to $66.61, with Brent falling $0.94 (-1.21%) to $76.62. Brent crude is trading at nearly the same level as this time last week, but the WTI benchmark is trading almost $2 lower than last week levels. The premium for Brent over WTI is now significant, and near three-year highs. US oil production is also pressing down on oil prices, and for the week ending May 25, reaching 10.769 million bpd—the fourteenth build in as many weeks. US production continues to climb at a time when OPEC is beholden to a supply cut deal that looks to remove 1.8 million bpd from the once-saturated market. At the time the deal was announced, the United States was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end. At 25 minutes after the hour, WTI was trading down 0.81% at $66.50, with Brent trading down 0.52% at $77.16.
Oil Retreats On Stronger Dollar, US Crude Discount Wider - (Reuters) - Oil prices retreated on Friday after the dollar rose on better-than-expected U.S. employment data, which pressured greenback-denominated commodities, including crude. U.S. West Texas Intermediate (WTI) crude futures fell $1.23 a barrel to settle at $65.81 a barrel. For the week, WTI was on track to drop about 3 percent, adding to last week's near 5 percent decline. Global benchmark Brent fell 77 cents to $76.79 a barrel. It was set for a 0.4 percent gain for the week. WTI's discount to Brent
Qatar bans goods from UAE, Saudi as embargo anniversary approaches - (Reuters) - Qatar said it was banning products originating from the United Arab Emirates, Saudi Arabia, Egypt and Bahrain, almost a year after those states imposed an embargo on Doha, accusing it of supporting terrorism. Products originating from the blockading states, which as a result of the blockade cannot pass the Gulf Cooperation Council Customs Territory, have to undergo proper import inspections and customs procedures,” a government statement said late on Saturday. “To protect the safety of consumers in the State of Qatar and to combat improper trafficking of goods, the government issued a directive to find new suppliers of the variety of goods impacted.” The national Al Watan newspaper quoted a circular from the Ministry of Economy and Commerce telling traders and shops to stop dealing in products imported from the four countries. It said inspectors would monitor compliance with the policy. The four states cut diplomatic and transport ties last June. Qatar, which had many of its imports trans-shipped from the UAE and received the bulk of its fresh food across the Saudi border, denied the accusations against it. Imports into Qatar plunged about 40 percent from a year earlier in the initial weeks of the boycott, but they have since mostly returned to normal as Doha has found new sources of products in countries such as Turkey, and developed new shipping routes through places such as Oman. Qatar has also launched a drive to produce more things locally, including foods. Since last June, some foods and other products from the embargo states have continued to find their way into Qatar through third countries. A spokesman for Qatar’s government declined to give details but said any imports coming to the country must go through proper import inspections. He was not immediately able to give the value of the goods affected by the new measures, and whether the ban would cover all products trans-shipped through the embargo states in addition to goods produced there.
Germany falls under the sanction steamroller - from Saudi Arabia - The reason is the incorrect political course of the country. Now, Berlin, on its own skin, “feels” what it means to violate the will of the United States and … Saudi Arabia. Crown Prince of the Kingdom of Saudi Arabia, Mohammed bin Salman Al Saud, has forbidden all state institutions of the country to purchase equipment and products from a number of German corporations.Such concerns as Siemens, Bayer, Boehringer (which have multi-billion contracts with the Ministry of Health of the Kingdom), as well as the automobile concern Daimler, which was to supply hundreds of buses for the city lines of Riyadh and Jeddah, fall under the KSA sanctions. The reason, apparently, is not economic, but political. Berlin incorrectly chose a course on the issue of “Middle East settlement.” It is not difficult to figure it out. Germany, was first of the Western countries to reveal the essence of the provocation of Syrian militants in the Duma. It was the German correspondents who were the first from Western European countries to visit the scene, conduct an investigation and tell that there was no chemical attack, and that Donald Trump and his allies in the region (including Saudi Arabia) are liars. As a consequence, no German aircraft took part in the so-called “retaliation strike” in Syria. In addition, the kingdom can not forgive Angela Merkel for Germany’s view of the Iranian nuclear program. It is the position of Germany, which, in the opinion of the Saudis, with Russian advocacy in the West on Middle East questions, has become, in the opinion of the Saudis, decisive in the actual failure of attempts to strangle Tehran with new sanctions, which Donald Trump announced three weeks ago and which were so joyfully welcomed in Tel Aviv and Riyadh.
Iran diary: bracing for all-out economic war - A group of us – including American friends, whose visas were approved at the highest levels of the Iranian government – have gathered in Mashhad for the New Horizon Conference of independent thinkers. Right after a storm, I’m in a van on the way to the spectacular Imam Reza shrine with Alexander Dugin, which the usual suspects love to describe as “the world’s most dangerous philosopher,” or Putin’s Rasputin. Persia traditionally has been a land of serious intellectual discussion. At the conference, after a lunch break, a few of us decide to start our own geopolitical debate, no cameras rolling, no microphones on. Dugin expands on what multipolarity could be; no universality; pluriversal; a realm of pluralistic anthropology; all poles sovereign. We discuss the pitfalls of Eurasian identity, Islamic identity, sub-poles, India, Europe and Africa. A few minutes later Iranian scholar Blake Archer Williams – his nom de plume – is delving into “The sacred community of Shi’ite Islam and its covenantal dispensation.” I enter a room in a hawza – an Islamic seminary. In my previous travels I have visited hawzas in Qom, but never a female-only school. This one harbors 2,275 active students from all over Alborz province up to PhD level. They study philosophy, psychology, economics and politics. After graduation, some will go abroad, to teach in Islamic and non-Islamic nations. Our Q&A is exhilarating. Many of my interlocutors are already teachers, and most will become scholars. Their questions are sharp; some are extremely well informed. There’s so much eagerness to know detail after detail about life in the West. The next day I visit the Islamic Azad University; more than four million alumni, 1.4 million current students, 29,000 faculty members, 472 campuses and research centers and 617 affiliated high schools. The Karaj campus is the second in importance in Iran. This is an extraordinary experience. The hillside campus may not be a UCLA, but puts to shame many prestigious universities across Europe. Not to mention the annual tuition fees; only US$1,000 on average. Sanctions? What sanctions? Most of the equipment may yield from the 1980s, but they have everything they need.
Blowing Up The Iran Deal Brings Eurasia Closer To Integration - The annulment of the Iran nuclear deal framework could not be fended off by the visits or entreaties of Merkel, Macron or May. Donald Trump has refused to renew the agreement formally known as the Joint Comprehensive Plan of Action (JCPOA), removing the United States from the deal. In reality, it changes little for Washington, as the US never really removed any sanctions against Iran in 2015, and mutual trust has never risen above minimal levels. The American move, which was never surprising, arises from four fundamental factors, namely: the link (especially vis-à-vis electoral financing) between the Trump administration and the Israeli government of Netanyahu; the agreement between Mohammad bin Salman (MbS) and Donald Trump to acquire hundreds of billions of dollars worth of arms as well as investments in the United States; directly targeting European allies like Germany, France and England; and, finally, the wish to please the anti-Iranian hawks Trump surrounded himself with in his administration. Israeli Prime Minister Netanyahu and Saudi Prince Mohammad bin Salman are united against Iran and are now publicly cementing their alliance that has hitherto been shrouded in secrecy. The political rapprochement between Saudi Arabia and Israel has been constant over the last 12 months, converging over anti-Iranian interests. Trump’s anti-Iran tilt enjoys support from the Netanyahu and bin Salman clans, representing a 180-degree change in US policy direction away from the one forged through the nuclear agreements reached by the previous administration. Saudi money and Israel’s political support (and neoconservative pressure within the United States) are factors important to the Trump administration, particularly as it is besieged by domestic politics and has to deal with the Mueller investigation that buzzes annoyingly around the president of the United States. Trump’s need to surround himself with the likes of Pompeo, Haspel and Bolton betrays an acquiescing desire to appease the deep state rather than fight it. Whatever fight might have been present in Donald Trump upon assuming his office has given way to a fruitful collaboration with the deep state. Donald Trump seems to have concluded that it is better to negotiate and find agreements with the deep state than to try, as he promised during his election campaign, to drain the swamp.
The Syria connection to Iran, Afghanistan and China - Saadallah Zarei, dean of the Institute of Strategic Studies Andishe Sazan-e Noor in Tehran, happens to be not only one of Iran’s top strategic analysts but also a key brain behind the Islamic Revolutionary Guard Corps’ Qods Force commander Gen. Qasem Soleimani – the ultimate bête noire outside the Beltway. So US strategists could do worse than paying attention to Zarei. While the US “owns 37 fixed military bases and almost 70 movable bases in the Middle East”, Zarei said, “We do not observe specific and exact strategies.” Zarei also notes that “America does not have a specific policy about the democracies of Turkey and Iran. There is not any specific strategy about democracy in Iraq and Lebanon too. America talks about democracy as an American value and tries to generalize it, but in this region, we see that the best friends of the US are countries where there is no election in their political systems.” The bottom line, according to Zarei, is that “the US strategy is not coherent in the Middle East. I think this is the main reason for the failure of American policies in this region.” But, for the Trump administration – in sync with Israel and Saudi Arabia – it’s all black and white; all forces under Iranian command have to leave Syria (and that would include Fatemiyoun). That’s not going to happen; the virtual total collapse of what is loosely defined in the Beltway as “moderate rebels” – al-Qaeda in Syria included – yielded a power vacuum duly occupied by Damascus. And Damascus still needs all these forces to extinguish Salafi-jihadism for good. Iran exerts influence throughout an arc from Afghanistan to Iraq, Syria and Lebanon. As Zarei analyzed: “The Islamic Republic of Iran has a specific strategy in the region. We have specific principles, friends, and capabilities. In addition, we have a coherent understanding of our enemy and we know where should we stand in the next 20 years. Therefore, we try to use our capabilities carefully and manage the job gradually.” This has nothing to do with a threatening “Shi’ite crescent”, as suggested by Jordan’s King Abdullah way back in 2004. It’s been essentially a slow-motion Iranian countercoup against the US non-strategy across Southwest Asia since “Shock and Awe” in 2003 – as Zarei identified it.
In the Middle East, Putin has a lot to thank Trump for right now -- Vladimir Putin will have paid very close attention to the location of the Syrian artillery battery where four Russian soldiers lost their lives at the weekend. The desert around Deir ez-Zour remains a dangerous place – politically as well as physically – in which the Americans and Russians play an extremely risky game of war. Putin still suspects the Americans helped the artillery guidance of a mortar battery which killed the commander of the Russian Far East 5th Army in Deir ez-Zour, lieutenant general Valery Asapov, less than a year ago. Was the mortar fired by pro-American Kurdish fighters? Or by Isis? The Russians say that Isis mobile attackers stormed the Syrian artillery position this weekend at night – the Islamists’ normal routine, streaming out of the desert wadis in suicide trucks and motorcycles – even though the little Syrian forts, hillocks of sand and cement strewn across the vast sand plateaus, are supposed to be invulnerable. Twelve months ago, Putin’s top artillery technicians were searching through the rubble of eastern Aleppo to draw up painstaking maps of the fall of shot – the exact bomb crater and blast effects of air-dropped Russian munitions. I met one of their teams. Its reports were circulated, of course, to Russian military intelligence. But they first go directly to the Kremlin. Putin reads them. He is a micro-manager. There will be no Brezhnev-style Afghanistan disasters in Syria – or so the Russians pray – no slovenly retreats across the Amu Darya by political generals, no Kremlin lethargy. Russian officers speak good Arabic (and quite good English) – products of the Moscow School of Foreign Languages – and, like the Syrian army, their officers go to the front lines. That’s why Asapov was killed. Putin decided to pursue his Chechen and Russian jihadi enemies all the way to Syria – and kill them all. He saved his ally, Bashar al-Assad. But at the very same time – give or take a warning or two and one downed Russian jet courtesy of a later-to-repent Erdogan – he remained a trusted friend of Israel, Iran, Turkey, Egypt, Lebanon, Saudi Arabia and so on. Refusing to join his insane counterpart in Washington in a sectarian war between Sunnis and Shias, Putin deploys the one phrase which unites every dictator, prime minister, mafiosi autocrat, king, president, mass-murdering tyrant, public relations hack or fawning editor: the “war on terror”. I reckon Putin and Trump use this circumlocution about the same number of times. It’s a cracker for the masses, and it doesn’t matter if it’s uttered by a cynic in the Kremlin or a guy in the White House who is completely bananas.
Assad raises prospect of U.S. clash in Syria, hits back at Trump (Reuters) - The United States should learn the lesson of Iraq and leave Syria, President Bashar al-Assad said in an interview, responding to U.S. President Donald Trump’s description of him as an animal by saying “what you say is what you are”. In the interview with RT, the Russian state’s international broadcaster, Assad raised the prospect of conflict with U.S. forces if they do not leave Syria. He vowed to recover territory where American troops have deployed, either through negotiations with Washington’s Syrian allies or by force. Assad, who is backed by Russia and Iran, appears militarily unassailable in the war that has killed an estimated half a million people, uprooted around 6 million people in the country, and driven another 5 million abroad as refugees. After recovering swathes of territory, Assad now controls the biggest part of Syria. But tracts remain outside his control at the borders with Iraq, Jordan and Turkey. That includes large parts of the north and east where U.S. special forces deployed during the fight against Islamic State, supporting the Kurdish-dominated Syrian Democratic Forces (SDF). Assad said the government had “started now opening doors for negotiations” with the SDF, whose main component, the Kurdish YPG, has mostly avoided conflict with Damascus in the war. “This is the first option. If not, we’re going to resort to ... liberating those areas by force. We don’t have any other options, with the Americans or without the Americans,” he said. “The Americans should leave, somehow they’re going to leave. “They came to Iraq with no legal basis, and look what happened to them. They have to learn the lesson. Iraq is no exception, and Syria is no exception. People will not accept foreigners in this region anymore,” he said.
Iran And Israel In Unprecedented Indirect Talks Over Syria: Report After continuing escalation in Syria last week in which Syria accused both the US and Israel of conducting two separate airstrikes on pro-government forces, there are new reports of unprecedented indirect talks being held between Iran and Israel. And related unconfirmed reports suggest the Syrian government may have asked Iranian forces to withdraw their presence from key bases previously targeted in Israeli airstrikes. Though neither side has yet to confirm the events first reported in Saudi media and subsequently picked up in some Israeli media outlets (and are likely not going to), it could constitute the closest the two longtime Middle East enemies have come to engaging in diplomatic dealings over the crisis in Syria. The Saudi-owned news site Elaph first revealed that the indirect Iran-Israel talks took place this weekend at a hotel in Amman. Elaph has lately become known for gaining a surprising level of access to Israeli officials, giving it a reputation as a news source Israel uses to communicate its message across the Arab world. Middle East Eye summarizes the Arabic language story as follows:Iran reportedly pledged to stay out of fighting in southwest Syria between Syrian forces and rebel groups while Israel said it will not intervene in battles near the Israeli-occupied Golan Heights or the Israel-Jordan border so long as Hezbollah and Iranian-backed militias are not involved.For the negotiations, Iran's ambassador to Jordan, Mostafa Moslehzadeh, stayed in a hotel room with Iranian security personnel next door to a room of senior Israeli security officials, including the deputy head of Mossad, Elaph reported. Jordanian officials served as mediator, shuttling messages between the two rooms, according to the report.
Israel begins work on sea barrier to tighten Gaza Strip blockade - Israel has begun building an underwater barrier to the north of the Gaza Strip, which will bolster the Israeli siege of the Palestinian enclave. The building of the $833m barrier began on Zikim beach, at the northern Gaza fence with Israel, and the construction is expected to be completed this year. Israel's defence minister, Avigdor Lieberman, said on Twitter that the barrier was "one of a kind". Today we began building a sea barrier one of kind in the world will block any possibility of entering Israel by sea. This further prevents Hamas, which is now losing another strategic asset after investing huge sums in its development. Will keep protecting Israel's citizens with power and sophistication. — אביגדור ליברמן (@AvigdorLiberman) May 27, 2018 The barrier will consist of three layers, according to Haaretz: the first below the water, the second made of stone and the third made of barbed wire. An additional fence will surround the barrier. Lieberman said the barrier would "block any possibility of entering Israel by sea. This further prevents Hamas, which is now losing another strategic asset after investing huge sums in its development."Israel decided to build the barrier during the 2014 war, when four members of Hamas's navy unit managed to enter Israel by sea and were killed by the Israeli army. An inland underground barrier is also being built around the Gaza border. It will include a concrete wall fitted with sensors dozens of metres below ground and standing six metres above ground.
Gaza’s Hamas rulers say cease-fire reached with Israel (AP) — Gaza's Hamas rulers said Wednesday they had agreed to a cease-fire with Israel to end the largest flare-up of violence between the two sides since a 2014 war. Khalil al-Hayya, a senior Hamas official, said Egyptian mediators intervened "after the resistance succeeded in warding off the aggression." He said militant groups in Gaza will commit to the cease-fire as long as Israel does. Israeli Cabinet minister Arieh Deri told Israel's Army Radio that he expected calm to be restored. "If it will be quiet, we will respond with quiet. We've given Hamas a chance to prove that we can return to routine ... If they release the reins there will be a very painful strike," he said. "There is a good chance that the routine will be restored after the blow the army unleashed on them." The Israeli military struck dozens of militant sites in Gaza overnight as rocket fire continued toward southern Israeli communities into early Wednesday morning, setting off air raid sirens in the area throughout the night. The military said it hit drone storage facilities, military compounds, and rocket and munition workshops across the Gaza Strip. The overnight Hamas rocket fire reached the city of Netivot for the first time since the 2014 war. A home was struck, but no one was wounded. Prime Minister Benjamin Netanyahu said Israel gave Palestinian militant groups in Gaza "the strongest blow dealt to them in years," and warned against renewed rocket fire.
Malaysia's Mahathir's Reforms Could Put Saudi, UAE On The Spot - Newly elected Malaysian Prime Minister Mohammed Mahathir is adopting policies that could reshape the Southeast nation’s relations with powerful Gulf states. A series of anti-corruption measures as well as statements by Mr. Mahathir and his defense minister, Mohamad (Mat) Sabu, since this month’s upset in elections that ousted Prime Minister Najib Razak from office, are sparking concern in both Saudi Arabia and the United Arab Emirates.Mr. Mahathir, who has cautioned in recent years against widespread anti-Shiite sectarianism in Malaysia, has questioned together with Mr. Sabu Malaysia’s counterterrorism cooperation with Saudi Arabia.Mr. Mahathir has also reinvigorated anti-corruption investigations of Mr. Razak, whom Qatari media have described as “Saudi-backed.”Mr. Razak is suspected of having syphoned off billions of dollars from state-owned strategic development fund 1Malaysia Development Berhad (1MDB). The fund as well as Saudi and UAE entities allegedly connected to the affair are under investigation in at least six countries, including the United States, Switzerland and Singapore.Apparently anticipating a possible change in relations, political scientist Abdulkhaleq Abdulla, whose views are often seen as reflecting UAE government thinking, disparaged Mr. Mahathir and the Malaysian vote days after the results were announced.Mr. Abdullah focused on Mr. Mahathir’s age. At 92, Mr. Mahathir is the world’s oldest elected leader.Mr Abdulla also harped on the fact that Mr. Mahathir had been Mr. Razak’s mentor before defecting to the opposition and forging an alliance with Anwar Ibrahim, Mr. Mahathir’s former deputy prime minister and an Islamist believed to be close to the Muslim Brotherhood, whom he helped put behind bars.UAE Crown Prince Mohammed bin Zayed is known for his intense opposition to political Islam, including the Brotherhood.
US Navy Warships Sail Near Beijing's Weaponized Islands In South China Sea - Two U.S. officials, speaking on the condition of anonymity to Reuters, said powerful U.S. Navy warships have sailed near the disputed islands in the South Sea claimed by China, in a move expected to infuriate Beijing as new reports indicate the US-North Korea summit maybe back on the table for June 12.Reuters’ sources said this weekend’s naval operation had been planned month ago, and missions to sail warships around Beijing’s weaponized islands in the South China Sea have become more routine. Washington’s motive behind the operation is said to counter Beijing’s efforts to restrict freedom of navigation in critical shipping lanes around the islands.The U.S. Navy’s operation comes at a time when the Pentagon withdrew an invitation for People’s Liberation Army Navy (PLAN) to take part in a multinational naval drill in the Pacific this summer, which has put military trust between both countries at a low heading into the second half of the year.The sources said the USS Higgins (DDG-76), a United States Navy Arleigh Burke-class destroyer (flight II) and the USS Antietam (CG-54), a Ticonderoga-class guided missile cruiser of the United States Navy, came within 12 nautical miles of the heavily disputed, weaponized Paracel chain in the South China Sea. One of the Pentagon’s reasons behind disinviting the PLAN from the multinational naval exercises was due to reports that the military was again — secretly weaponizing its South China Sea islands. Satellite photographs taken on May 12 revealed surface-to-air missiles or anti-ship cruise missile units staged at Woody Island. In early May, People’s Liberation Army Air Force (PLAAF) for the first time landed several strategic bombers on the islands and reefs, some human-made, in the region where China is actively preparing for war.
China vows to boost 'combat readiness' after US sails two warships near South China Sea islands - China’s Defense Ministry has vowed to bolster its “combat readiness” to defend against what it said was a “serious infringement” of the country’s sovereignty after the U.S. Navy dispatched two warships for an apparent “freedom of navigation” operation (FONOP) in disputed South China Sea waters. The ministry said late Sunday that the Chinese military had warned the two U.S. warships to leave after they entered waters near the contested Paracel Islands in the strategic waterway. The two warships, the USS Antietam, a guided-missile cruiser home-ported in Yokosuka, Kanagawa Prefecture, and the USS Higgins, a destroyer, had “arbitrarily entered China’s territorial waters around the Xisha Islands without permission of the Chinese government,” spokesman Wu Qian said, using the Chinese name for the Paracels. The patrol was apparently the first time the U.S. had sent warships two simultaneously conduct a FONOP in the area. The Chinese military dispatched naval vessels and aircraft “to conduct legal identification and verification of the U.S. warships and warn them off,” Wu said, according to a statement posted to the ministry’s website. “The U.S. has seriously violated China’s sovereignty, undermined strategic mutual trust, and undermined peace and security in the South China Sea,” Wu added.
China steps up pace in new nuclear arms race with US and Russia as experts warn of rising risk of conflict | South China Morning Post: China is aggressively developing its next generation of nuclear weapons, conducting an average of five tests a month to simulate nuclear blasts, according to a major Chinese weapons research institute. Its number of simulated tests has in recent years outpaced that of the United States, which conducts them less than once a month on average. Between September 2014 and last December, China carried out around 200 laboratory experiments to simulate the extreme physics of a nuclear blast, the China Academy of Engineering Physics reported in a document released by the government earlier this year and reviewed by the South China Morning Post this month. In comparison, the US carried out only 50 such tests between 2012 and 2017 – or about 10 a year – according to the Lawrence Livermore National Laboratory. As China joins the US and Russia in pursuing more targeted nuclear weapons as a deterrent against potential threats, the looming arms race would in fact serve the opposite purpose by increasing the risk of a nuclear conflict, experts warn. Pentagon officials have said the US wants its enemies to believe it might actually use its new-generation weapons, such as smaller, smarter tactical warheads designed to limit damage by destroying only specific targets.
China’s Wang Qishan vows to deepen ties with Russia, takes veiled swipe at US | South China Morning Post: Wang Qishan vowed to deepen cooperation with Russia and made a veiled attack on US protectionism on Saturday during his first overseas trip since he became Chinese vice-president in March. He told an economic forum in St Petersburg that China had been in frequent talks with the administration of US President Donald Trump, who has threatened to slap tariffs on numerous Chinese imports and wants to narrow the trade gap between the two countries. The vice-president said there would be no winners if there was a trade war between the world’s two largest economies, but Beijing had to be ready for any turn of events. “Putting just one country’s interests first will only get the opposite result,” Wang told the forum on Friday. “We must avoid a trade war because there won’t be any winners in such a war.” Wang emphasised the importance of the China-Russia relationship, saying Beijing was willing to deepen strategic ties and forge a partnership with “mutual trust and support as well as common prosperity and friendship for generations”.In his meeting with Russian President Vladimir Putin on Thursday, Wang also said China wanted to develop more strategic and long-term cooperation with Russia to upgrade and improve relations and deepen their common interests. Wang’s choice of Russia for his first diplomatic trip as vice-president follows in the footsteps of Xi Jinping, who visited Moscow a week after he became Chinese president in 2013. Wang will also visit Belarus on the six-day trip.
Xi Jinping urges China to go all in on scientific self-reliance after ZTE case exposes hi-tech gaps | South China Morning Post: China will double down to make breakthroughs in core technologies, Chinese President Xi Jinping said on Monday as he urged the country’s top scientists and engineers to build China into a global hi-tech leader. Xi issued the rallying cry amid continued pressure from Washington over Beijing’s “Made in China 2025” programme, a strategy to advance China up the industrial technology chain. “The situation is pressing. The challenges are pressing. The mission upon us is pressing,” Xi said in Beijing at the opening of the joint annual conference of the Chinese Academy of Sciences and Chinese Academy of Engineering. The United States has taken aim at Made in China 2025 with threats to impose tariffs on Chinese imports. Despite an easing in trade tensions, the White House appears determined to contain China’s ambitions to be a leading power in various technologies, including aerospace, industrial robots, software, high-speed trains and semiconductors. Xi’s address also came after ZTE, China’s second-biggest maker of telecom network equipment, was offered the option to pay a US$1.3 billion fine to avoid a US ban on use of American components. The decision could end a month-long wrangle between the Chinese tech giant and the US Department of Commerce, which imposed the ban on ZTE over breaches of trade sanctions on Iran and North Korea. ZTE is heavily reliant on US chips and the ban exposed China’s broader dependence on the technology despite claims of advances in recent years.
Saturday surprise: Korea leaders meet in un-announced summit In the latest surprise development in a week of surprises, North Korean Leader Kim Jong-un and South Korean President Moon Jae-in met to discuss follow up to their April 27 summit, and the on-again, off-again North Korea-US summit. At their two-hour, Saturday afternoon meeting, “The two leaders exchanged candid opinions on how to implement the April 27 Panmunjom Declaration and to have a successful North Korea-US summit,” South Korea’s presidential Blue House announced in a terse press note. The two leaders held their meeting on the Northern side of the truce village of Panmunjom, inside the DMZ. Their previous summit had been held on the southern side. Today’s meeting was only the fourth ever inter-Korean summit, following 2000, 2007 and April events. Moon will hold a press briefing on Sunday morning, the Blue House announced. Blue House officials could not confirm which side had requested the summit, or when. National Intelligence Service Director Suh Hoon of South Korea and Kim Yong Chol, vice-chairman of the Central Committee of the Workers’ Party of Korea of North Korea accompanied their leaders at the summit table. Photos showed that Kim’s sister, Yo-jong, widely believed to be a key player in her brother’s inner circle, was also present. The news of the afternoon summit was broken on Saturday evening almost three hours after it had finished. It came as a complete surprise: The two leaders had not been expected to meet again until the autumn. The meeting indicates that inter-Korean communications – including a recently installed presidential hotline – are working appropriately. The chemistry between the two appeared positive: Photos showed the two leaders hugging on a red carpet, re-kindling the bromance they began a month prior.
As Trump summit appears closer, Kim Jong Un meets with Russian foreign minister - North Korean leader Kim Jong Un met Thursday with Russia's foreign minister, who was in Pyongyang on a visit that Moscow hopes will reassert its role as a force to be reckoned with ahead of Kim's expected summit with President Trump in Singapore next month. Moscow has remained largely on the sidelines as Kim has made a major diplomatic outreach to Seoul, Beijing and Washington over the last several months. But Sergei Lavrov's visit suggests that Russia wants to make sure it is informed of North Korea's intentions and is mindful of Moscow's concerns. AdvertisementLavrov relayed President Vladimir Putin's "warmest regards and best wishes" for Kim's "big endeavors" on the Korean peninsula. He also expressed Moscow's support for an agreement Kim reached with South Korean President Moon Jae-in at a summit last month that focused on measures to ease hostilities and increase exchanges between the two Koreas. Video of the beginning of their meeting showed Lavrov inviting Kim to Moscow and complimenting the North Korean leader on the many new projects that have brightened up the capital. According to Russian media, he also discussed ways to expand relations during a meeting with Foreign Minister Ri Yong Ho. "We welcome the contacts that have been developing in the recent months between North and South Korea, between North Korea and the United States," Lavrov said in comments to the media. "We welcome the summits that already took place between Pyongyang and Seoul as well as planned meetings between North Korean and U.S. leadership." He vowed Russia's support for denuclearization and a broader effort to create a stable and long-lasting peace in the region, but indicated that Moscow believes sanctions can be eased while the process is in progress, which diverges from the U.S. position that denuclearization must come first.
India Resists Lobbying by US Payment Firms to Ease Local Data Storage Rules - India’s central bank is standing firm on a directive to compel global payment firms to store customer data in India, resisting calls from US companies to dilute an order they say would cost them millions of dollars, people familiar with the matter said. The payment companies are worried India’s data onshoring move could set a precedent and nudge other major governments to implement similar rules at a time when there is heightened scrutiny on how companies globally handle their customers’ data. The industry’s tussle with the Reserve Bank of India (RBI) also comes as Prime Minster Narendra Modi aggressively pushes digital and cashless modes of payment that leave an electronic trail as part of a campaign to crack down on the black economy. While Modi’s administration is working on a separate data protection law, foreign companies were caught off guard in April by the RBI’s one-page directive that said all payments data should within six months be stored only in the country for “unfettered supervisory access”. The RBI said storing data locally would help “ensure better monitoring”. A joint lobbying effort by American Express Co, Mastercard Inc and Visa Inc to dilute or reverse the directive has failed to shift the central bank’s position, with the RBI telling the firms in a meeting this month to comply, not complain, sources with direct knowledge told Reuters. The RBI declined to comment, but a government source with direct knowledge confirmed the central bank was “unlikely to back down on its plans”.
Rohingya refugees face catastrophe in Bangladesh - With the monsoon season about to start in Bangladesh, the plight of Rohingya refugees in the Cox’s Bazar district in the country’s south, is about to drastically worsen. Around 900,000 refugees, including those who have fled Myanmar since last August to escape attacks by Burmese military and Buddhist supremacists, are living in flimsy bamboo shelters spread across steep hillsides and in flood-prone valleys and islands.Rohingya in Myanmar’s northwestern Rakhine state are an oppressed Muslim minority. They were stripped of their citizenship rights in 1982 and have faced numerous anti-democratic restrictions and periodic violence. Around 200,000 Rohingya were already living in Bangladesh before the recent wave of refugees.Many refugees are living without adequate clean water, sanitary facilities, health care and food. According to a Daily Star report, the UN refugee agency, UNHRC, estimates that up to 200,000 Rohingya are at risk from landslides, floods and outbreak of epidemics this monsoon season.The UN has admitted that it is “very unlikely” that bamboo community shelters would survive cyclones and the World Health Organisation warned there could be “massive loss of lives” when the monsoons hit. Despite widespread sympathy among ordinary Bangladeshis for the Rohingya, Prime Minister Sheikh Hasani’s Awami League government initially tried to block the most recent refugees from entering Bangladesh and is attempting to push them back into Myanmar.
After Years Of US-Led "Nation-Building", Afghanistan Faces A Human Rights Disaster - After over sixteen years of foreign military occupation, Afghanistan, the fourth most corrupt country in the world, continues to be battered and blasted by war. Its citizens are victims of suicide attacks by insane savages and, according to the magazine Stars and Stripes, the number of US bombs dropped on Afghanistan in March 2018 “was the highest for that month in five years. While ISIS is being pushed underground in Iraq and Syria, the number of fighters pledging loyalty to the group appears to be growing in Afghanistan.” But it isn’t only the ravages of war that are destroying the country. The social fabric is being terminally torn asunder by human rights violations that are either ignored or condoned by both the government and the US-NATO military alliance amongst whose “key functions” is “Supporting the adherence to the principles of rule of law and good governance.” The US Special Inspector General for Afghanistan Reconstruction (SIGAR), Mr John Sopko, has for eight years carried out his duties in an exemplary fashion, being responsible for “independent and objective oversight of the $117.26 billion the US has provided to implement reconstruction programs in Afghanistan,” but has been frequently deflected and misled by the US Department of Defence and the Afghan government. SIGAR’s Report of July 2017 recorded that “Afghan officials remain complicit... in the sexual exploitation of children by Afghan security forces,” but as noted by the Washington Post, “the Pentagon tried to block an independent assessment of child sex abuse crimes committed by Afghan soldiers and police, instead insisting on the creation of its own report offering a far less authoritative review of human rights violations perpetrated by US allies.”
Brazil truckers strike enters sixth day (AFP) - A truckers strike that has paralyzed Brazil entered its sixth day Saturday as government troops slowly cleared roads of barricades in a bid to break the impasse. The strike over a hike in diesel prices has caused widespread fuel shortages that have shut down urban transportation systems, crippled industries and sent prices of food and fuel soaring. "We are moving toward getting back to normal but it is not a rapid thing," said Sergio Etchegoyen, the minister for institutional security. In a televised address Friday, President Michel Temer declared he had "mobilized the security forces" to clear the roads. "We are not going to permit that the population does not have access to essential goods... that hospitals do not have necessary medicines to save lives," he said. Cabinet Secretary Carlos Marun, speaking after a cabinet meeting Saturday, said authorities were seeking arrest warrants for trucking companies that "lock out" employees. By Saturday, government troops had begun escorting fuel trucks to open access to refineries, principally in Duque de Caxias, near Rio de Janeiro. The Defense Ministry said 132 of 519 barricades had been cleared on roads around the vast South American country. But gas stations have run dry and supplies of perishable produce were increasingly scarce in stores. The Sao Paulo union of fuel distributors said 99 percent of the gas stations in Brazil's industrial capital were out of fuel and it would take up to a week to return to normal once the strike is ended.
Truckers strike brings Brazil to brink of collapse -A week-old truckers’ strike has brought Brazilian economic and social life to the brink of collapse as fuel and basic supplies run out in major cities, shutting down transportation and leaving supermarket shelves empty.The right-wing government of President Michel Temer has responded to the walkout by calling out the army to clear highways of truckers’ blockades and suppress the strike. The action marks the first time that the military has been mobilized on such a nationwide basis since the end of Brazil’s two-decade-long dictatorship that began with the US-backed coup of 1964.Truck drivers began the strike last Monday, May 21, leading to more than 1,000 highway blockades in 25 of the 26 Brazilian states.The main reason for the strike is the soaring price of diesel fuel, which increased 19 percent in the past year, rising seven times faster than the overall rate of inflation in the same period, 2.7 percent. In the week prior to the beginning of the strike, diesel prices were readjusted four times, with a 5.6 percent increase in the price of diesel at the state-run oil giant Petrobrás’ refineries.The continuous price rise of diesel and fuel in general in Brazil has been caused by the new fuel price policy adopted by Petrobrás President Pedro Parente since he took office after the impeachment of former Workers Party (PT) President Dilma Rousseff. Under the Rousseff government, the price of fuel was controlled by Petrobrás, being sold below the market price as an anti-inflationary strategy. As part of a series of neoliberal policies that have been adopted by Brazilian President Michel Temer (MDB), in October 2016 fuel prices started to be adjusted according to changes in the value of the national currency, the real, against the dollar and global oil prices. In July 2017, Parente announced that Petrobrás would begin to readjust fuel prices “at any moment, including daily.” This new fuel price policy was introduced at the same time that oil prices were starting to rise, which, combined with the 12 percent devaluation of the real over the last two months, has led the price of diesel to increase exponentially.
Brazil Commodities Slammed As Nationwide Strike Intensifies, GDP Estimate Down 38% - The situation in Brazil has gone from bad to worse, as the nationwide trucker strike has expanded into a strike by oil workers, who began a 72-hour strike on Wednesday - affecting several rigs, plants, refineries and ports in the latest challenge for state-owned oil firm Petroleo Brasileiro SA, whose shares have fallen roughly 30% in two weeks. Brazil produces approximately 2.1 million barrels of oil per day, making it Latin America's largest producer of crude.
- Brazil's nationwide truck driver strike has entered its 10th day
- Key exports have been severely affected, from beef and soybeans to coffee and cars
- Bloomberg cuts GDP growth estimate from 3.2% to 2%, a decline of 37.5%
- Concessions made to truckers will cost the Brazilian government 14.4b Real (US$3.85 Billion) throughout the remainder of 2018
- Lower GDP may reduce revenue by additional 20b-25b reais, or 0.25% of GDP, could force govt to cut expenditures further by 3b-10b reais to meet 159b-real fiscal deficit target (Bloomberg)
- Brazilian oil workers began a 72-hour strike on Wednesday, and have demanded that Petrobras fire CEOP Petro Parente while permanently lowering fuel prices
- Millions of chickens have been prematurely slaughtered as feed failed to reach farmers
Marines took tanks out of secret caves to do military exercises near Russia’s northern border for the first time -- US Marines from the 4th Tank Battalion withdrew tanks and weapons from caves in Norway earlier this month, taking them east to Finland, where, for the first time, they took part in the annual mechanized exercise called Arrow 18. The drills took place from May 7 to May 18 in southern Finland, which shares a long border with Russia and has a history of conflict with its larger neighbor. It involved about 150 armored vehicles and 300 other military vehicles. Only 30 Marines took part, but they were joined by thousands of personnel from Norway and Finland. The live-fire event is led by the Finns, who perform the exercise with partner forces totest the fitness of their military, which is largely made up of conscripts. "The Finnish Army's mechanized exercise concentrates on mechanised units' offensive and involves Army helicopter measures as well as Air Force flight activities," the Finnish army said. "The exercise also aims at enhancing interoperability in cooperation with foreign detachments." Marines joined the multinational exercise for the first time "in order to increase interoperability, reassure partner nations, improve readiness and reinforce relationships," a Corps spokesman told Marine Corps Times. The Marine Corps began storing vehicles, weapons, and other supplies in caves in Norway during the Cold War in an effort to pre-position equipment in case of conflict. The gear is housed in a chain of six caves in the Trondheim region of central Norway; the exact location is not known.
Poland offers US up to $2B for permanent military base - Poland wants a permanent U.S. military presence — and is willing to pony up as much as $2 billion to get it, according to a defense ministry proposal obtained by Polish news portal Onet.The Polish offer reflects a long-standing desire in Warsaw to build closer security relations with the U.S. and put American boots on the ground. The push dates back to Poland’s entry into NATO in 1999, but has taken on added urgency in the wake of Russia’s annexation of Ukraine’s Crimea region four years ago and aggressive posture toward the alliance.Coming just over a month before NATO leaders gather in Brussels for a summit, the Polish initiative is bound to anger Russia, and will be looked at with skepticism by European allies that want to improve relations with Moscow, such as Italy and at times Germany.“This proposal outlines the clear and present need for a permanent U.S. armored division deployed in Poland, Poland’s commitment to provide significant support that may reach $1.5-2 billion by establishing joint military installations and provide for more flexible movement of U.S. forces,” the defense ministry document states. It adds that Warsaw is committed “to share the burden of defense spending, make the decision more cost-effective for the U.S. government and allay any concerns for Congress in uncertain budgetary times.”
Russia Threatens 'Counter-Measures' To Permanent US Military Presence In Poland - The Kremlin has responded to Poland’s Monday offer to the United States in order for the latter to have a permanent military presence in the European country. Kremlin spokesman Dmitry Peskov told reporters Monday the move would undermine stability on the continent. "I In general, when we noticed the gradual expansion of NATO's military infrastructure towards our borders, the immediate approach of NATO's military structure to our borders does not in any way contribute to security and stability on the continent, on the contrary, these expansionist actions, of course, inevitably lead to counter-measures on the Russian side in order to balance the parity that breaks each time," Peskov said, Sputnik News reported. As a member of NATO, the U.S. through the Atlantic Resolve demonstrates its commitment to the security of NATO allies — Poland being one. The operation involves conducting continuous, enhanced multinational training and security cooperation activities with allies and partners in Eastern Europe. This affords U.S. troops to be present in Poland, although currently, they rotate between Poland and the Baltic states of Estonia, Latvia and Lithuania. According to Russia’s largest news agency, TASS, the U.S.’ armored brigade with regard to Atlantic Resolve consists about 3,500 troops, 400 track vehicles, 900 military vehicles, including 87 Abrams tanks and 18 Paladin 155mm self-propelled howitzers. On May 24, the U.S. Senate asked “the Secretary of Defense to report on the feasibility and advisability of permanently stationing a U.S. Army brigade combat team in Poland.” Poland offered up to $2 billion to the U.S. to establish a military base permanently, quoting comments “U.S. President Donald Trump made clear in his landmark Warsaw address.” The address being referred to in a proposal from Poland's Ministry of National Defence was of the trip Trump made when he visited the country in July 2017.
America’s Fifth Column Will Destroy Russia - Paul Craig Roberts -- If the neoconservatives had self-restraint, they would sit back and let America’s Fifth Column—Neoliberal Economics—finish off Russia for them. Russia is doomed, because the country’s economists were brainwashed during the Yeltsin years by American neoliberal economists. It was easy enough for the Americans to do. Communist economics had come to naught, the Russian economy was broken, Russians were experiencing widespread hardship, and successful America was there with a helping hand. In reality the helping hand was a grasping hand. The hand grasped Russian resources through privatization and gave control to American-friendly oligarchs. Russian economists had no clue about how financial capitalism in its neoliberal guise strips economies of their assets while loading them up with debt. But worse happened. Russia’s economists were brainwashed into an economic way of thinking that serves Western imperialism. For example, neoliberal economics exposes Russia’s currency to speculation, manipulation, and destabilization. Capital inflows can be used to drive up the value of the ruble, and then at the opportune time, the capital can be pulled out, dropping the ruble’s value and driving up domestic inflation with higher import prices, delivering a hit to Russian living standards. Washington has always used these kind of manipulations to destabilize governments. Neo-liberal economics has also brainwashed the Russian central bank with the belief that Russian economic development depends on foreign investment in Russia. This erroneous belief threatens the very sovereignty of Russia. The Russian central bank could easily finance all internal economic development by creating money, but the brainwashed central bank does not realize this. The bank thinks that if the bank finances internal development the result would be inflation and depreciation of the ruble. So the central bank is guided by American neoliberal economics to borrow abroad money it does not need in order to burden Russia with foreign debt that requires a diversion of Russian resources into interest payments to the West.
Have central banks missed the exit train? - World Economic Forum - After a decade of stimulus, central bankers have pledged to end loose monetary policy. Their attempts are failing. The Federal Reserve has been raising interest rates, pushing Treasury two-year yields to around 2.5%. However, UK, Japanese and German government bonds are still hovering around record lows, while long-end Treasury yields are flat to short-term rates. The European Central Bank (ECB) now forecasts 1.5% year-on-year consumer price inflation at year-end - yet inflation continues to flatline, with the latest figures pegging it at just 1.2%. In April this year, ECB President Mario Draghi restated his “unchanged confidence” that the bank would hit its target - but in something of a logical about-turn, he also argued that quantitative easing (QE) may have boosted potential output growth, leaving in turn "more room for keeping the ample monetary accommodation in place." Mark Carney, Governor of the Bank of England, has also dampened expectations of a rate hike, which investors had anticipated for May. The Bank of Japan removed its 2% inflation target for 2019. The Fed was supposed to lead global policy normalisation. Instead, it appears to be moving on its own. Have other central banks completely missed the exit train? The official explanation is that a slowdown was overdue after last year's economic performance. But we suspect other structural factors are hindering normalisation outside of the United States. The United States managed to restructure its private debt imbalances thanks to bond markets during the crisis. In Europe, Japan and China instead, the stock of public and private debt has grown larger. Eurozone and Chinese banks hold around 10% of GDP in non-performing loans. Italy's debt-to-GDP ratio remains above 135%. UK households have borrowed up to £200 billion in unsecured consumer debt. Six percent of listed firms in the Eurostoxx 600 firms are “zombies” which cannot fully cover their interest costs, according to an analysis by Bank of America. But low interest rates have inflated property and consumer bubbles even in countries previously deemed as safe havens such as Australia, Sweden and Canada, as Stephen Poloz, Governor of the Bank of Canada, explained earlier this month. Should growth slow or interest rates rise too quickly, these overhangs threaten to hurt consumers and firms, hindering the path to normalisation.
ECB research provides a withering critique of mainstream macroeconomics - Bill Mitchell -- Although this blog post considers some very technical material its message is simple. Mainstream macroeconomic models that are used to determine policy choices by governments are deeply flawed and the evidence strongly supports a central thrust of Modern Monetary Theory (MMT) – that fiscal policy is powerful and that austerity will kill growth. In that sense, it helps us understand why various nations and blocs (such as the Eurozone) struggled after the onset of the GFC. It also explains why the deliberate attack on Greek prosperity by the Troika was so successful in demolishing any prospect of growth – an outcome that the official dogma resolutely denied as they constructed one vicious bailout after another. It also explains why New Keynesian approaches to macroeconomics are flawed and should be ignored. I was reminded this week by a research paper I had read last year (thanks Adam for the reminder) which presents a devastating critique (though muted in central bank speak) of the mainstream approach to macroeconomic modelling. A research paper from the ECB (May 2017, No 2058) – On the sources of business cycles: implications for DSGE models – provides a categorical critique of DSGE models and a range of other stunts that mainstream economists have tried to introduce to get away from the obvious – economic cycles are demand driven. The paper is highly technical and I will avoid discussing those aspects, even though they are very interesting in their own right. The mainstream macroeconomics profession relies heavily on so-called Dynamic Stochastic General Equilibrium (DSGE) models.Central banks and other forecasting agencies deploy to make statements about the effectiveness of fiscal and monetary policy. This is not meagre academic to-and-fro. The use of these models is prominent in current debates about Brexit.
How GDPR Kills The Innovation Economy --May 25th is the day the European Union’s General Data Protection Regulation (GDPR) goes into effect. It’s more likely than not that any reader of mine already knows all about GDPR, but for those who don’t, it’s the most significant new framework for data regulation in recent history. Not only does every company that does business with an EU citizen have to comply with GDPR, but most major Internet companies (like Google, Facebook, etc) have already announced they intend to export the “spirit” of GDPR to all of their customers, regardless of their physical location. And to avoid burying the lead, I think it stinks for nearly all Internet companies, save the biggest ones. That’s a pretty sweeping statement, and I’m not prepared to entirely defend it today, but I do want to explain why I’ve come to this conclusion. First and foremost, the legislation is a response to what many call “surveillance capitalism,” a business model driven in large part (but not entirely) by the rise of digital marketing. The grievance is familiar: Corporations and governments are collecting too much data about consumers and citizens, often without our express consent. Our privacy and our “right to be left alone” are in peril. While surveillance capitalism is best understood as a living system – an ecosystem made up of many different actors – there are essentially three main players when it comes to collecting and leveraging personal data.
- First are the Internet giants – companies like Amazon, Google, Netflix and Facebook. These companies are beloved by most consumers, and are driven almost entirely by their ability to turn the actions of their customers into data that they leverage at scale to feed their business models. These companies are best understood as “At Scale First Parties” – they have a direct relationship with their customers, and because we depend on their services, they can easily acquire consent from us to exploit our data. Ben Thompson calls these players “aggregators” – they’ve aggregated powerful first-party relationships with hundreds of millions or even billions of consumers.
- The second group are the thousands of adtech players, most notably visualized in the various Lumascapes. These are companies that have grown up in the tangled, mostly open mess of the World Wide Web, mainly in the service of the digital advertising business. They collect data on consumers’ behaviors across the Internet and sell that data to marketers in an astonishingly varied and complex ways. Most of these companies have no “first party” relationship to consumers, instead they are “third parties” – they collect their data by securing relationships with sub-scale first parties like publishers and app makers.
- The third major player in all of this, of course, are governments. Governments collect a shit ton of data about their citizens, but despite our fantasies about the US intelligence apparatus, they’re not nearly as good at exploiting that data as are the first and third party corporate players. In fact, most governments rely heavily on corporate players to make sense of the data they control. That interplay is a story into itself, and I’m sure I’ll get into it at a later date. Suffice to say that governments, particularly democratic governments, operate in a highly regulated environment when it comes to how they can use their citizens’ data.
Overwhelmed and confused by the EU’s General Data Protection Regulation - Handelsblatt - Like you, we have been inundated all week by emails informing us about the European Union’s “General Data Protection Regulation”, a landmark online-privacy law that takes effect today. Unlike you, we’ve even had to send some of those emails, because we at Handelsblatt Global and at the German-language mothership also have, and need, some of your data — to send email newsletters like this one, for example. All in all, the regulation is of course a step forward. We were collectively on the way to losing control over the data that pertain to our lives. But as of this week, as the New York Times enthuses, Europe has at last become the “world’s leading tech watchdog”, because even internet firms in America, Asia and elsewhere have to abide by the new rules if they have European customers, or risk huge fines. Sebastian Matthes, Handelsblatt’s digital guru, begs to differ, in this scathing takedown of the Regulation. As so often when bureaucrats go after some social ill — in this case, data abuse — the lawmakers overshot disastrously. They had in mind Google, Facebook, Amazon, and their ilk. Instead, this week they hit hundreds of thousands of small family firms. These are businesses with only a few employees that need to keep and manage some data about their customers. Now they have no easy way to comply with a law vague enough to leave it unclear whether scanning somebody’s business card on your iPhone would already count as a violation. So here we are, like you, feeling confused and overwhelmed. We have given up reading the new privacy notices. We have also stopped clicking the opt-in buttons to keep receiving newsletters we didn’t know we had ever subscribed to. In that way, the week has been like a low-effort spring cleaning, promising to reduce future clutter in our inboxes. At the same time, that same inertia probably kept you from opting in to staying on our mailing lists. So this newsletter is likely to be read by a lot fewer people than last week’s. I can’t say I’m happy about that. We were never intending to spam you in the first place. So please pass this along, and tell people to take a minute to sign up again to whichever of our three newsletters they prefer.
Caught On Video: Islamist Mob Attacks Refugees In Greece "For Not Observing Ramadan" - Graphic video has emerged online showing a mob of baton-wielding Islamists attacking other Muslims in a refugee camp in Greece reportedly for not observing the Ramadan fast. Early unconfirmed Kurdish media reports claim 4 men were killed and many others injured as the group of attackers entered refugee tents with weapons Friday afternoon at a crowded camp in Moria on the eastern Aegean island of Lesbos. However, initial Greek media reporting indicates authorities are refuting rumors of the deaths, instead only confirming large clashes between Arab and Kurdish asylum seekers which resulted in injuries and evacuations. One Greek news broadcast showed seriously injured victims being carried out of the camp, while viral video of the attack itself appears to show up to three bloodied men lying motionless on the ground with attackers carrying large metal batons standing over them, which could suggest the early reports of fatalities are indeed accurate. The UK-based Kurdish Solidarity Campaign said the men were brutally attacked by Islamists in the refugee camp specifically "for not observing Ramadan." The Kurdish rights group identified at least three Kurds among the dead, while Iraq-based Kurdistan 24 identified a 60-year old man as among those brutally beaten, his legs broken after being hit with metal bars. Warning: graphic content Syrian Arabs, Iraqis, Algerians, Pakistanis and Afghans Arabs attacked Kurds in #Mitilini #Greece for NOT keeping Ramadan Islamic holidays. 3 killed and tens heavy injured. @AzadiRojava @vvanwilgenburg @macergifford @4rj1n @realDonaldTrump @brett_mcgurk @SalehMaslem @sinam56 pic.twitter.com/0v6SXYJTkD — Idris Al Oso (@IdrisAl_oso) May 25, 2018 Raman Ghavami, a freelance journalist and Jerusalem Post author, said the reports of deaths are accurate: "I was speaking to a member of EASO [the EU's European Asylum Support Office] about the clashes in one of the refugees camps in Greece. She told me that 'some radical Muslims attacked Kurdish refugees (from Syria) who weren’t fasting with knives and metal bars. Three Kurds have lost their lives and 22 have been injured.'” Greek broadcast footage showing wounded victims being evacuated from the scene:
"A Toxic Coup Narrative": Why Italy's Political Crisis May Be About To Explode - On Friday Europe experienced an existentially terrifying "deja vu" moment straight from the 9th circle of Europe's 2011/2012 sovereign debt hell, when first Italian, and then Spanish, yields exploded amid fears of political chaos in the Eurozone's 3rd largest economy, coupled with the threat of an imminent collapse of the Rajoy government in Spain, the 5th largest economy. But while Spain is a late entrant to Europe's "political chaos" soap opera - although with both El País & El Mundo calling for an early general election, it is only a matter of time before this particular box of gunpowder also explodes, all eyes remain on Italy where not only have short-term rates blown out to levels that would send MF Global into Chapter 22... ... but the BTP-Bund spread exploded well beyond Goldman's "contagion" threshold of 200bps... ... while the scariest chart of all revealed that Italian redenomination risk is now at an all time high, reflecting the reality of Italy's 'Mini-BoT' parallel currency concerns. However, if it was the market's intention into scaring Italy's political system into submission, the same way it did in 2011 when the ECB got Sylvio Berlusconi to "quit" in just a few days as Italian bond yields exploded, it has failed, and according to the latest development in Europe, the Italian crisis may be about to get much worse. For those who missed it, Italy entered the weekend with the country deadlocked in what may be a Euro-defining clash whether euroskeptic professor, Paolo Savona, strongly endorsed by the League party, is allowed to become the country's next economy minister. Here are the latest troubling details from Leonardo Carella:The nomination of the designated Finance Minister, Paolo Savona, is being held back by the President of the Republic - a prerogative he formally has but that has rarely been exercised - reportedly over Savona’s anti-EU views.From President Mattarella’s point of view, Savona, an 82 year-old professor who served in Ciampi and Berlusconi’s administrations, would send the markets out of control and would bring Italy to the brink of open conflict with the EU.From Lega’s point of view, the nomination of Savona was one of their major wins in the coalition formation game, and the only guarantee of a strong anti-EU slant to government policy, after the coalition contract’s sections on Europe were heavily watered down. Salvini just tweeted that he is “really angry”. M5S is, for now, supportive of their coalition partner.
Which Banks Are Most Exposed to Italy’s Sovereign Debt? (Other than the Horribly Exposed Italian Banks) -- Don Quijones: Risk. Exposure. Contagion. These are three words we’re likely to hear more and more in relation to Europe, as the Eurozone’s debt crisis returns. On Friday, Italy’s 10-year risk premium — the spread between Italian ten-year bond yields and their German counterparts — surged almost 20 basis points to 212 basis points. This was the highest level since May 2017, when a number of Italy’s banks, including third biggest bank Monte dei Pacshi di Siena (MPS), were on the brink of collapse and were either “resolved” or bailed out. Now, they’re all beginning to wobble again. Shares of bailed-out and now majority-state-owned MPS, whose management the new government says it would like to change, are down 20% in the last two weeks’ trading. The shares of Unicredit and Intesa, Italy’s two biggest banks, have respectively shed 10% and 18% during the same period. One of the big questions investors are asking themselves is which banks are most exposed to Italian debt. A recent study by the Bank for International Settlements shows Italian government debt represents nearly 20% of Italian banks’ assets — one of the highest levels in the world. In total there are ten banks with Italian sovereign-debt holdings that represent over 100% of their tier-1 capital (which is used to measure bank solvency), according to research by Eric Dor, the director of Economic Studies at IESEG School of Management. The list includes Italy’s two largest lenders, Unicredit and Intesa Sanpaolo, whose exposure to Italian government bonds represent the equivalent of 145% of their tier-1 capital. Also listed are Italy’s third largest bank, Banco BPM (327%), Monte dei Paschi di Siena (206%), BPER Banca (176%) and Banca Carige (151%). In other words, despite years of the ECB’s multi-trillion euro QE program, which is scheduled to come to an end soon, the so-called “Doom Loop” is still very much alive and kicking in Italy. But it’s not just Italian banks that are heavily exposed to Italian debt. So, too, are French lenders, which last year had combined holdings of Italian bonds worth €44 billion, according to data from the European Banking Authority’s 2017 transparency exercise. Spanish banks had €29 billion.
How Worried Should We Be about an Italian Debt Crisis? - Olivier Blanchard, et al - Earlier PIIE research examined whether rising interest rates might unleash a debt crisis in Italy. The answer was "no," under two conditions: First, that rising interest rates reflected economic recovery; and second, that the Italian government would be prepared to cooperate with European authorities—the European Union, the European Stability Mechanism (ESM) and the European Central Bank (ECB)—to manage a loss of market confidence.Ten months later, these conditions no longer hold. Political backlash to slow growth and immigration has produced the least cooperative government imaginable, a coalition between the left-populist Five Star Movement (M5S) and the right-populist Lega. And borrowing costs have started to rise in reaction. Does this mean that a crisis is imminent? If so, how bad would it be? The second question is easier to answer than the first. A crisis could be horrific, for two reasons. First, none of the powerful stabilization instruments that the euro area has developed over the years could be deployed to rescue Italy. Following crisis-related downgrades, Italy would no longer be eligible for the ECB’s quantitative easing bond-purchasing program. The ECB would stop accepting Italian bonds as collateral. Access to emergency support programs—the ESM, and through it, the Outright Monetary Transactions (OMT) program—would be conditional on fiscal adjustment, the opposite of what Italy's new government has promised. Unless the government were to change course, it would be forced to exit the euro, even if this is not its current plan.
Italy’s president scotches populist governing alliance — Italy’s messy post-election drama on Sunday night took another stunning turn.The country’s president rejected a proposed populist 5Star-League alliance that included a Euroskeptic as economy minister and looked poised to appoint a “technocratic” government as early as Monday.The collapse of the proposed coalition leaves Italy on an uncertain path in the days ahead, veering between the possibility of early elections or a technocratic government of longer duration. It also threatens a constitutional crisis, as the leaders of the 5Stars Movement and the League condemned the president and one even called for his impeachment. And it’s sure to further rattle already nervous international financial markets. The coalition unraveled after President Sergio Mattarella refused to accept 81-year-old economist Paolo Savona, citing his opposition to the single currency. The move wasn’t wholly unprecedented: Previous presidents had used their powers to refuse to appoint a minister, though never because of their views on the euro. After both parties refused to switch Savona out, the prime minister-designate — a little-known lawyer called Giuseppe Conte — on Sunday rejected the mandate to form a new government. The president can now call early elections or appoint a technocratic, or “presidential,” government to lead Italy until the next election. Italy’s parliament must sign off on any new government, and that’s going to be a tough bar to clear. Even though the two main opposition parties — Silvio Berlusconi’s Forza Italia and the center-left Democratic Party — have already said they would support a government sponsored by Mattarella, they alone don’t have enough votes.
Italy in Turmoil as New Government Fails to Form - WSJ —Italy was thrown into political turmoil Sunday evening, as the Italian president blocked the formation of a new government supported by two anti-establishment parties due to concerns the coalition could endanger Italy’s membership in the euro.Italian President Sergio Mattarella blocked the ascent to power of a government supported by the maverick 5 Star Movement and the hard-right League after they proposed a euroskeptic figure as economy minister, an especially delicate job for a country with a €2 trillion ($2.3 trillion) public debt.The dramatic developments sparked immediate calls Sunday evening from the two maverick parties for fresh elections.But Mr. Mattarella instead will likely on Monday ask Carlo Cottarelli, a former International Monetary Fund official, to attempt to form a new government. But even if Mr. Cottarelli succeeds in forming a new government, fresh elections in Italy are now increasingly likely.Nearly three months after parliamentary elections, 5 Star and the League appeared poised to form a government that would bring an antiestablishment, euroskeptic coalition to power in the eurozone’s third-largest economy. They proposed Giuseppe Conte, a political neophyte and little-known academic, as prime minister. However, the coalition also insisted on appointing Paolo Savona, an 81-year-old economist and former industry minister, to become Italy’s new economy minister, an especially delicate job in a country with the world’s third-largest public debt, a weak banking sector and an economy that is the only Group of Seven nation still smaller than before the financial crisis which began in 2008. Concerns over the nomination and the coalition’s economic program—including bold promises to radically revamp the rules underpinning the single currency—have driven Italian bond yields higher in the last week, potentially ratcheting up the cost of servicing Italy’s enormous debt.
Italian Bonds, Stocks Crash In Furious Reversal As Political Drama Explodes -- Yesterday, in the aftermath of the latest Italian political drama, in which president Mattarella openly mocked democracy, and under pressure from Europe vetoed the choice of the euroskeptic economy minister, Paolo Savona, we warned that this outcome was even worse for markets than the one which most had dreaded, namely Mattarella folding and greenlighting the 82-year-old professor for reasons we laid out article from Sunday. What happened next was a full court press by so-called experts and momentum reversal algos to spin yesterday's outcome as good news, and sure enough in early trading the EUR bounced sharply, rising above 1.17, Bunds slumped, and Italian bonds and stocks gapped higher at the open. ... And then all hell broke loose when, just as we predicted, Mattarella's decision simply reinforced the League's hard line position, when shortly after the open League leader Matteo Salvini reiterated his support for Savona, and in a Facebook video said that "either EU rules will change or it makes no sense for Italy to remain in the European Union." Worse, dragging Italy to the verge of the constitutional crisis we warned about yesterday, Salvini turned the nation against the Brussels-lackey president and said that Mattarella "chose EU rules over Italians’ vote" which "is an issue for democracy." And the punchline: the League would still seek to form a government with people rejected by Sergio Mattarella. In effect, Salvini confirmed what we said yesterday that the stakes in the upcoming Italian elections were just raised exponentially, and are now an outright referendum on euro membership.
Italian Banks, Bonds Crash As Di Maio Calls For Protests Against "The Arrogance Of Institutions" - Five Star leader Luigi Di Maio addressed the Italian nation on a live Facebook feed this afternoon calling for them to mobilize against the institution represented by President Mattarella and demanding a new election as soon as possible. "We can not stand watching, we must react immediately firmly. Today he will hang an Italian flag out the window and ask you to do the same. We claim the pride of being Italian..." "There are tons of lies. I have said throughout the electoral campaign that we do not want to leave the euro. Savona would not take us out of the euro, he would have asserted Italy's interests in the EU headquarters ". "On June 2nd I invite everyone to come to Rome for a great demonstration." Yesterday - with the "no" of the Quirinale to the binding of Lega and M5s on the name of Sardinian economist Paolo Savona - "was the darkest night of democracy", he added. "We ask to go to the vote as soon as possible. Even in August? As soon as possible", he clarified at the end of the meeting in the Chamber with Matteo Salvini. "We are totally convinced to carry on" the impeachment. "President Mattarella has decided to entrust the country to a technician in the mountains." "It is an ignoble act not to have allowed" the birth of the government governed by M5s and Lega. "I was a deep admirer of the Democratic Party and I am really disappointed. Some of Mattarella's advisors should be put on trial, but there is no such institution," he adds. "The president has shown that he is not an impartial guarantor for our highest democratic institutions and can no longer represent us ." "For this reason I asked the more than 160 mayors of the Lega in Lombardy to remove the photo of Mattarella from their offices."
"We Are Due For A Very Rude Wake Up Call": These Are The Biggest Short-Sellers Of Italian Bonds - In the aftermath of today's political shock in Rome in which the populist coalition of the League and 5-Star launched an open rebellion against the president and Brussles, leaving the country facing a referendum on its Euro membership. and resulting in a furious crash in Italian bonds and bank stocks, which on Monday entered a bear market from their April highs... ... coupled with the sharp, sudden blowout in Bund-BTP spreads to levels suggestive of a news sovereign debt crisis in the Eurozone... ... and confirmed by the soaring redenomination risk not only in Italy, but also Portugal as contagion begins to spread... ... left only one question unanswered: why did it take the market so long to react to what many warned was coming as long ago as lat 2017? After all, it was in December when we first pointed out a dramatic observation by Citi, which noted that over the past several years, the only buyer of Italian government bonds was the ECB, and that even the smallest political stress threatened a repeat of the 2011 "Berlusconi" scenario, when the freshly minted new ECB head Mario Draghi sent Italian yields soaring to prevent populist forces from seizing power in Italy. Consider that according to the latest IHS Markit data, demand to borrow Italian government bonds — an indicator of of short selling — was up 33% to $33.3 billion worth of debt this year to Tuesday while demand to borrow bonds from other EU countries excluding Italy has risen only 5% this year. That said, things certainly accelerated over the last week, when demand to borrow Italian bonds soared by $1.2 billion, which according to WSJ calculations, takes demand, i.e. short selling, close to its highest level since the financial crisis in 2008 (while demand to borrow bonds from EU countries excluding Italy has fallen by $800 million over the past week). According to the WSJ, the most prominent Italian short is also the least surprising: Among big-name managers profiting from the selloff in Italian bonds is Alan Howard, the secretive billionaire co-founder of hedge fund firm Brevan Howard. A little-known hedge fund run personally by Mr. Howard has been betting that Italy’s borrowing costs will rise relative to Germany’s, said two people familiar with the fund’s positioning.
The New York Times Praises the Italian Establishment’s Economic Illiteracy and Assault on Democracy - William K. Black -- Italy’s establishment has just revealed its truest beliefs and priorities. The context was the two parties that received the most votes in the last election forming a coalition government. The two parties seeking to form a coalition government won a majority of the seats in both houses of Italy’s parliament in the most recent election. The New York Times reported many of the key facts, but missed the key analytics.Italy’s populists seethed and the European Union sighed with temporary relief on Sunday night after an anti-establishment alliance poised to govern the bloc’s fourth-largest economy imploded at the last minute amid concerns that it was planning to sneak out the back door of the eurozone. Less than a week after Italy’s populist parties, the anti-establishment Five Star Movement and the anti-immigrant League, ironed out their policy differences and jubilantly received a mandate to form a government that they said would usher in a new era in Italian and European history, its designated prime minister announced on Sunday evening that he had failed to form a government. Both paragraphs are lies. Bizarrely, the rest of the article demonstrates both lies. I do not support key aspects of either party’s platforms, so I am not writing as a disgruntled supporter. I start with the NYT’s second lie, for exposing it also exposes the first lie. Giuseppe Conte, the “designated prime minister,” did not “announce … that he had failed to form a government.” He announced an undisputed fact – a political rival, President Sergio Mattarella, refused to allow the two parties to form a coalition government because he objected to their selection of Paolo Savona as their economics minister. Italian voters crushingly rejected the political policies of President Sergio Mattarella in the recent elections. They strongly supported the views of rival parties – the (generally leftist) Five Star Movement and the (hard right) League. A strong majority of Italian voters rejected Mattarella’s policies. The Five Star Movement and the League’s supporters share the view that Mattarella’s establishment economic policies have done catastrophic damage to the Italian economy and people. The establishment economic policies include devotion to the euro, austerity, anti-worker policies, and continuing public bailouts of failing Italian banks.
Interfering in Italy’s Democracy… and It’s Not Russia - Italy's political turmoil tends to prove the wry old saying that "if voting changed anything, they'd make it illegal". The country is facing a mounting constitutional crisis amid calls for the president to be impeached after he blocked the formation of a new government.The crisis seems to be mainly about a clash over financial policy and a populist challenge to European Union economic austerity, according to to the Financial Times.But lurking too is a concern among the EU establishment in Brussels that a new populist Italian government is proposing to radically restore friendly relations with Russia. That concern is no doubt shared by Washington and NATO.After the populist parties of Five Star Movement (M5S) and League topped the polls in a general election in March, they have formed a would-be coalition to govern. It has taken nearly three months of negotiations to hammer out a governance plan.But there are core policies on which the coalition partners are in strong agreement. Those policies include an end to the EU's orthodoxy of neoliberal economic austerity; and, perhaps just as significant, to end EU sanctions on Russia in a step towards normalizing relations. Both M5S and League have praised Russia's military intervention in Syria to bring the seven-year war there to a close. Both parties have also blamed the United States and the EU for meddling in Ukraine's internal affairs as the cause of the ongoing conflict in that country. The latter viewpoint turns upside-down the conventional US-NATO-EU notion of accusing Russia of interfering in Ukraine. For these reasons, that is why the Italian government-in-waiting wants to abandon the EU position of imposing economic sanctions on Russia for the past four years since the Ukraine conflict erupted in 2014. The EU's sanctions require unanimity among its 28 member states for implementation. If Italy were to vote against the sanctions — as the M5S and League are firmly proposing to do — then the US-EU policy of trying to isolate Russia will be split in two. After the populist parties won the Italian election in March, a Guardian headline captured the apprehension felt among the Washington and Brussels NATO axis: ‘Electoral gains or M5S and League may threaten Italy's strong support for NATO and US'.
Italy’s Political Crisis….How Ugly Might It Get? -- Yves Smith - Italian politics are messy even at the best of times. The battle over forming a government took a nasty turn. We’ll give a short overview and then make a few observations, in the hopes of eliciting informed reader input. The far-right Lega Nord, or League party, which won in the wealthy north, was seeking to form a coalition with 5 Star, which led the polls in the South. One of the things they agreed on is opposition to the Eurozone, so that looked likely to feature even more prominently in any joint policies than it had in their respective campaigns. The coalition had proposed seating Paolo Savona, a very vocal critic of the Eurozone, as finance minister. The president, Sergio Mattarella, nixed the appointment, which he has the power to do. The coalition’s proposed prime minister, Giuseppe Conte, abandoned his efforts to form a government. Mattarella has proposed that Carlo Cottarelli, a former IMF official, form what amounts to a caretaker government, with his key task to get a budget passed, which would have the convenient effect of calming down Mr. Market for a while. Italian bond spreads are at their highest premium to German bunds in four years. However, Lega Nord and 5 Star supporters are not surprisingly up in arms, so the current conventional wisdom is that there will be snap elections in the fall instead. From the Financial Times: “The uncertainty over our position in the euro alarmed Italian and foreign investors who invested in shares and companies,” Mr Mattarella said. “The rise in the [bond] spread increases the debt and reduces the opportunity to spend on social measures. It burns companies’ resources and savings and foreshadows risks for families and Italian citizens.” Unfortunately, that didn’t work as planned. Mr. Market at first liked the idea, with both the Euro and Italian bond prices rising, but then went into full reverse when they saw the severity of the political backlash. Note that despite Savona, the proposed economics minister, having a fabulously acid tongue, he had said he would uphold Eurozone rules. So was the issue that Savona was seen as such a fierce opponent to the Euro that he’s renege on his promise or that he could be still be plenty disruptive while not crossing any official lines? The flip side, as Politco snarked in its daily e-mail: All the fuss, remember, because the president of the Republic rejected one minister (and this is not the first time that has happened) — who seems to have been so crucial to the whole project that without him, it’s better not to govern at all. This is not a constitutional crisis. This is a very bitter, high stakes political crisis, but there are not yet any constitutional issues in play, despite 5 Star calling for Mattarella to be impeached. The underlying issue is austerity and budget constraints. Italy’s economic distress comes from having its GDP contract over the last decade. It needs deficit spending. Eurozone budget rules severely constrain running fiscal deficits.
Italy's fresh election risks being referendum on euro (Reuters) - The euro looked to have dodged a bullet when Italy’s would-be eurosceptic coalition government collapsed at the weekend, but it may turn out to have been the opening salvo in a war over Europe’s single currency. On Sunday, Italy’s president rejected the nomination of a eurosceptic, Paolo Savona, for the economics ministry by the far-right League and anti-establishment 5-Star Movement because Savona had previously said Italy should leave the euro zone. But now the two parties, who were rivals in the March vote, are weighing whether to join forces ahead of a fresh election seen in the autumn or early next year. “The upcoming elections will not be political, but instead a real and true referendum ... between who wants Italy to be a free country and who wants it to be servile and enslaved,” League leader Matteo Salvini said on Monday. “Today Italy is not free; it is occupied financially by Germans, French and eurocrats.” The euro, bonds and stocks initially rallied on Monday after President Sergio Mattarella vetoed Savona’s nomination, but relief turned to fear over snap elections. The gap between Italian and German 10-year bond yields, a measure of Italian risk, widened to its highest in over four years. “The election is going to resemble a referendum, de facto, on the European Union and the euro,” said Francesco Galietti, head of political risk consultancy Policy Sonar in Rome. “It’s an existential threat for the entire euro zone.” If Italians were to cast a protest vote against the EU and euro at fresh elections, it would deliver the bloc’s biggest challenge since Britain voted to quit the union two years ago and raise questions about the future of the single currency. As the euro zone’s third-largest economy, heavily indebted Italy also represents a far bigger potential threat to the single currency than the Greek economic crisis. Polls show the League has gained support since winning 17 percent of the vote in inconclusive March 4 elections, climbing as high as 24 percent. The 5-Star has been drawing about the same 32 percent it got two months ago. Former prime minister Massimo D’Alema, caught speaking on an open microphone on Saturday, summed up the fears of traditional parties: “If we go back to elections because of a veto on Savona, they (anti-establishment parties) are going to win 80 percent.”
Carlo Cottarelli -- Carlo Cottarelli was asked to try to form an Italian government by President Sergio Mattarella. There is no chance that Cottarelli will obtain the confidence of Parliament (parties including a majority of deputies have brought up the possibility of impeaching Mattarella for nominating Cottarelli).Mattarella is using his extraordinary powers to fight populist nationalists who disrespected the Euro. Cottarelli is an odd choice for an anti-anti-globalist — he is currently a top official at the IMF. Nominating him is a declaration of absolute opposition to the current majority in Parliament.My view is that the rise of populist nationalists in Europe is a terrible thing (not quite as bad yet as their taking power in the USA but getting there). I also think the blame mainly belongs to DG-EcFin and the Eurocrats who do not pretend to respect Democracy, who don’t see 11 % unemployment as relevant to macroeconomic policy making, and who are technically incompented technicians. I found this worthwhile still relevant blog post by Roberto Tamborini. It denounces the application of the stability and growth pact and is well worth reading. It turns out that I agree entirely, completely, 100% with Carlo Cottarelli. He has been arguing against Brussels’s approach to austerity. He is much more able than I am to write for non-economists. He makes a very simple practical proposal which I entirely embrace — he says that structural unemployment not NAWRU should be used to calculate output gaps. This is actually very important. I am quite confident there is no counterargument based on econometrics or economic theory. It would have prevented the imposition of pro-cyclical fiscal policy. If they had listened to him, he might have been saved from the very unpleasant next few months.
Italy Headed For July Elections After "Mr Scissors" Fails To Form Government - While it is nothing but a waste of time, today Italy's premier-designate, Carlo Cottarelli, a former IMF official also known as "Mr. Scissors" for his drastic public debt cutting, was supposed to present the country's scandalous president, Sergio Mattarella with a list of people who make up his technocratic government; instead he left the meeting with the president without an agreement on a cabinet team and Italy staring new elections in just two months. While it is unclear what led to the failure by Cottarelli, who will again meet Mattarella on Wednesday, the inability to lay out his government would force the president to dissolve parliament, leading to elections within 60 to 70 days. He may have little choice: as Bloomberg notes, pressure among barious Italian lawmakers mounted on Tuesday to hold elections as soon as possible, with Ansa reporting that Cottarelli’s efforts were stalled by the parties demanding a vote on July 29, or a week later, on August 5. In retrospect, that would be the best, and cheapest, outcome: after all, it has been clear since the weekend that he would not win a confidence vote in Parliament, where the anti-establishment the Five Star Movement, the anti-immigrant League, and ex-premier Silvio Berlusconi’s Forza Italia party all announced their opposition.Even the prospect of a new caretaker government leading Italy into fresh elections in the fall grew dimmer on Tuesday as the Democratic Party of outgoing premier Paolo Gentiloni signaled its readiness for a vote as early as possible.Meanwhile, in the growing confusion over what comes next, and just how hardline the populist government's anti-EU platform will be, Italian bonds suffered their worst day since the 2011 sovereign debt crisis. And since there is little hope of clarity emerging before the actual election, it will be a long two months, while the most likely vote outcome - an avalanche victory by the 5-Star and the League - would mean that summer vacation in Europe, and on Wall Street, will be canceled this year.
Naming of technocratic government plunges Italy into crisis of class rule --A mounting financial and political crisis is spreading across Europe after Italian President Sergio Mattarella named a technocratic government on Monday, effectively nullifying the March 2018 elections. Financial markets are panicking and protests are being called, as bitter divisions inside the Italian bourgeoisie, particularly over the euro currency, erupt to the surface.Initially, financial markets sent Italian interest rates lower on Monday, marking their approval of Mattarella’s decision not to allow the right-wing populist Five Star Movement (M5S) and the far-right Lega party to form a government. Yesterday, however, financial markets continued to push interest rates on Italian debt higher, to 1.937 percent for the first time since 2013, and sent the euro falling to below $1.16. It is ever clearer that deep conflicts in the Italian and the whole European ruling class that underlay the euro crisis following the 2008 Wall Street crash have not been resolved.The market turmoil spread to the United States, where the Dow Jones Industrial Average fell 391 points, or 1.58 percent.On Monday night, designated Prime Minister Carlo Cottarelli indicated that he would oversee a brief technocratic government pledged to austerity and the euro. He said, “My government will be neutral, will ensure prudent management of the state budget and will treat as essential Italy’s participation in the euro.” He also indicated that he would nominate non-partisan state officials as ministers and ask them to sign a pledge not to seek election in the next parliamentary elections.On Tuesday, however, markets and European bank stocks fell, as it became clearer that Italy is set for a protracted period of government instability and political crisis. The Cottarelli government faces opposition from the M5S and Lega, who hold a majority of seats in parliament, so it is unclear whether it can survive a confidence vote or pass a budget. There are widespread expectations that Mattarella will call new elections in early 2019 or even as soon as early September. In the meantime, bitter political conflicts are erupting inside the ruling class between supporters of the EU and the euro and their far-right critics inside Italy and across Europe. However, both factions of the ruling class—the defenders of the EU and the euro grouped behind Mattarella, and the M5S, Lega and their far-right allies across Europe—are reactionary and have nothing to offer to workers.
NIRP’s Revenge: Italian Bonds Plunge, Worst Day in Decades - Yves Smith - While Mr. Market got in quite a tizzy today over 5 Star and Lega’s abandonment of their effort to form a coalition government after the President Sergio Mattarella nixed their choice of economy minister, Paolo Savona. This has produced a first-class political crisis. The technocrats, in trying to appease Mr. Market, has done the reverse.Mattarella is planning to form a caretaker government and wants it to pass a budget and then hold elections, which would have the convenient effect of tying the upstart, wannabe deficit spender populists from getting their hands on the fiscal spigot for another year. Mattarella doesn’t have the votes in Parliament to carry this off unless some members of the failed coalition lose their nerve.Talk last night was of elections in the fall. Talk of yesterday was that they might be held as early as July. But we also are in the midst of what Lambert calls an overly dynamic situation. For instance, as we anticipated, 5 Star has officially abandoned its talk of impeaching Mattarella.And as of late evening in Italy, the head of 5 Star, Luigi Di Maio, broached the idea of reviving the coalition with Lega and prevent the need to hold new elections. Even though this excerpt comes from an article in Bruegel that was published by the Peterson Institute, one can read past the editorializing and hoist useful recaps, such as this summary of the major economic policies of 5 Star and Lega, and estimates of their fiscal impact: M5S promised the introduction of a minimum guaranteed income—which appealed to voters in the economically suffering south. The League party promised a flat tax—which appealed to voters in the economically thriving north. Both parties advocated the repeal of a controversial pension reform introduced in 2011 by the government of former prime minister Mario Monti. The government contract between the two parties features all three promises. Moreover, both parties have committed to repeal an otherwise automatic hike in the value-added tax (VAT) planned in the 2018 budget. Repealing the VAT hike would require €12.5 billion. Osservatorio Conti Pubblici Italiani estimates that the League’s flat tax would cost around €50 billion, while M5S’ guaranteed income would cost about €17 billion. Scrapping the Monti government’s pension reform would add a further €8 billion. Counting in some of the minor promises, the total would reach a whopping €109-126 billion (6 to 7 percent of GDP). Since Italy is running a primary fiscal surplus of roughly 1.5%, this would imply a primary deficit of 4.5% to 5.5% of GDP. While that is arguably just a good big fiscal shot in the arms for a depressed economy, Italy’s deficit in 2017 was 2.3% of GDP, so adding in as much as another 7% of GDP in spending takes it to a nearly 10% of GDP deficit. Those are hair on fire levels to neoliberals and financial markets types. If you take the MMT point of view, Italy is a long way from being inflation constrained, but Italy isn’t a currency issuer and investors would exact a high interest rate to fund this level of deficit spending.
What to Make of Italy’s Astonishing Bond Selloff – WSJ -- Market reporting is prone to hyperbole, but Tuesday’s Italian bond selloff was truly astonishing. Short-dated bonds that can usually be treated as a close proxy for cash turned toxic, and bondholders showed serious panic. Prices fell and yields on short-dated bonds rose as much or more than when the euro was fighting for survival in 2011 and 2012.The reaction in other markets was muted by comparison. Sure, stocks and the flakier end of European government bonds sold off, and there was a flight to the safety of U.S. Treasurys. But this wasn’t much more than a run-of-the-mill bad day. Portugal’s 2-year bond yield rose 0.23 percentage point and Spain’s was up 0.12 percentage point, both their worst day since early last year. The 10-year U.S. Treasury had its best day in almost two years amid a flight to safety.By contrast, Italian 2-year bonds had by far their worst day since at least 1989, when Thomson Reuters data starts. The yield leapt more than 1.5 percentage points to 2.4% at the close of European hours, with more selling later.There are three possible interpretations for why markets outside Italy haven’t sold off more. The first is fundamental: Europe’s weak economies have been transformed since they were threatened by contagion from Greece in the last euro crisis. Ireland is now regarded as a safe “core” country, Spain is growing fast and even Portugal has taken the medicine. Perhaps this time round the trouble can be contained.The second is technical: The lack of significant contagion is because investors elsewhere regard the Italian move as overdone, the result of hedge funds and others piling in to sell bonds in a market that became suddenly illiquid. Buyers stayed on the sidelines because a market that has overshot can always overshoot even further in the short run, but the bond yield isn’t a reflection of the real risks to Italy. The third is the most troubling. Perhaps investors are complacent about the dangers Italy poses, relying on the European elite to once again come up with a way to keep truculent crowd-pleasing politicians under control, as they have so often in the past decade.
Italy’s Nightmare Has No End In Sight - Italy’s president Sergio Mattarella faced an impossible choice when vetoing Paolo Savona, a leading euroskeptic economist, as Italy’s finance minister.Savona’s selection risked causing a self-fulfilling crisis, which would have pushed Italy out of the euro by stealth. Yet even the presidential veto, and subsequent decision to appoint a technocratic government, haven’t been enough to reassure investors. Only a promise from all parties that they will never leave the currency union would reverse the sharp selloff in Italian bonds. That’s unlikely to happen.Mattarella was well within his rights to block Savona’s appointment, despite claims that this was an attack on democracy. Italy’s constitution says the president has the final say over the choice of ministers. Past presidents have exercised this power, for example during the formation of Silvio Berlusconi’s first government in 1994. In the past, parties have usually accepted the rejection. Here, the anti-establishment coalition of Five Star and the League refused to change tack, triggering a collapse of their incipient government. Matteo Salvini, leader of the League, claimed Mattarella blocked Savona because he was disliked in Paris and Berlin. The 81-year old economist had compared the euro to a “German cage” and hinted it was a continuation by other means of the Nazi plan to dominate Europe. However, the real reason for Mattarella’s move was more nuanced: He was deeply troubled by Savona’s conviction that Italy should have a secret “Plan B” to quit the euro in the event of a crisis.
Italy crisis: Asian shares and euro fall sharply as fears spread -Shares in Asia fell sharply and the euro sank to a 10-month low against the US dollar as concern about the political turmoil in Italy spread through international financial markets on Wednesday. Renewed fears of a trade war between the United States and China also contributed to the negative mood after Donald Trump announced $50bn worth of tariffs on Chinese goods just days after his treasury secretary said the trade war was “on hold”. The failure of Italy’s populist parties to form a government in recent days is likely to mean fresh elections, possibly as early as July. Investors fear they could become a referendum on Italy’s future in the single currency. As a result, Asian share markets all plunged into the red on Wednesday. Tokyo was down 1.5%, Hong Kong lost 1.5% and Shanghai was 1.7% lower. Sydney gave up 0.6% and the Kospi in Seoul was down 2.1%. The single currency also remained under pressure in the Asian trading session on Wednesday, sinking to a 10-month low of $1.153 to the US dollar. It also slipped against the pound. However, European markets appeared to shrug off the heavy falls on Wall Street and in Asia when they opened on Wednesday morning, with Italy’s FTSE MIB rising around 1.3% in early trading. “As the third biggest economy in the EU, as a heavily indebted one, and with Eurosceptics seemingly in the ascendancy markets have worried that the EU again faces an existential crisis,” Italian bond yields were much lower than the 7% mark they reached in 2012, prompting European Central Bank chief Mario Draghi to pledge to “do whatever it takes” to preserve the bloc. But : “This pledge marked a high water mark for Italian borrowing costs. It remains to be seen if he will be able to perform the same trick twice, with the hope that he won’t have to.” The turmoil has also sent Italy’s 10-year bond yields more than 300 basis points above Germany’s – the so-called yield spread and a key indicator of investor concerns.
Italian populist parties rekindle talks to form government --Italy’s populist and anti-Brussels Five Star Movement and the far-right League have been plunged back into talks to form a coalition government in an attempt to avoid a new election Italy’s anti-establishment political party Five Star Movement and the far-right League have been plunged back into talks to form a coalition government in an attempt to avoid a new election as early as July and further market turmoil. A renewed effort began last night but there was no guarantee it would come to fruition, people familiar with the talks said. The rekindling of talks to form a new Italian government triggered a sharp rally in Italian bonds on Wednesday. The yield on the politically sensitive two-year note tumbled around 40 basis points to 1.99 per cent as prices rose. The yield on the benchmark 10-year note fell 10 bps to 3.0 per cent. Two-year yields on Tuesday saw the largest rise on an intraday basis since Reuters records began in 1996, trumping the wobbles during the eurozone debt crisis and global financial crisis. It was spurred by worries that fresh elections could lead to a more explicitly Eurosceptic mandate for a new coalition government under a Five Star-League coalition. Five Star and the League had been within striking distance of forming a government on Sunday, but the talks with Sergio Mattarella, the Italian president, collapsed after he blocked their proposed nomination of a Eurosceptic finance minister. On Monday, Mr Mattarella tapped Carlo Cottarelli, a former IMF official, to lead a technocratic government until snap elections as early as the summer, but Mr Cottarelli has been struggling to assemble his team. Mr Mattarella and Mr Cottarelli held an informal meeting at the Quirinal Palace on Wednesday morning. People close to the talks between Five Star and the League say several sticking points remain on the road to a new deal. The League has been insisting that it should claim the prime minister’s job — with Giancarlo Giorgetti, a senior MP, taking the role — but Five Star officials say this is unacceptable.
Italian president considers installing neo-fascist government --On Wednesday, two days after Italian President Sergio Mattarella approved a technocratic government under Prime Minister Carlo Cottarelli, he reversed course and signaled that he might instead install a far-right government. He had vetoed a government of the two leading parties in the March elections, the Five Star Movement (M5S) and the far-right Lega, warning that it could lead Italy out of the euro currency.Yesterday, however, Lega and the M5S advanced a chaotic range of competing scenarios for possible governments or new elections. There were reports that elections could be scheduled as early as September. All the proposals being advanced make clear, however, that Italy’s far-right is rapidly entrenching its position in ruling circles.Initially, M5S leader Luigi di Maio said he could abandon his proposed economy minister, anti-euro economist Paolo Savona, if Mattarella would agree to a M5S-Lega government led by Giuseppe Conte. “There are two paths ahead. Either we launch the Conte government with a reasonable solution or we vote right away,” di Maio said.Lega leader Matteo Salvini rejected this proposal and instead called for fresh elections, mocking di Maio for surrendering to Mattarella on the euro currency: “Di Maio is open to a deal? We are not on the market. Let’s go vote right away. We have tried to do a government, but it is never good enough for Mattarella, so then you give up. The president should explain how we get out of this impasse.”Yesterday evening, however, reports emerged that Mattarella was considering holding a snap election, approving a Conte government with or without Savona as economy minister, or approving a M5S-Lega government led by Salvini, even though M5S received more votes than Lega. Salvini also backtracked, indicating that he might agree to this, or to a coalition of Lega, M5S and the fascistic Fratelli d’Italia party of Georgia Meloni. He also suggested that he might briefly adopt a posture of “technical non-distrust,” allowing the technocrat Cottarelli to stay in office by not voting to bring him down.
The EU Commission’s In-House Bigot Invites Financiers to Extort Italian Voters --William Black - The European Union’s (EU) leadership continues to prove our family rule that it is impossible to compete with unintentional self-parody. “EU leadership” is an oxymoron, largely composed of regular morons. Consider only two examples — European Commission (EC) President Jean-Claude Juncker and Commissioner and Budget and Human Resources Minister (one of the EC’s most powerful leadership positions) Günther Oettinger. Juncker heads the EC because he led the most infamous EU tax giveaway to wealthy corporations as Luxembourg’s finance minister and then prime minister. As EC President, Juncker maintained his ethics-free approach. His defining statement, in the context of the EC’s actions devastating the Greek economy and populace: “When it becomes serious, you have to lie.” (Goldman Sachs made Juncker’s predecessor as EC president wealthy, as soon as the minimum time had run after his resignation, so Juncker was the perfect successor.) Juncker has assembled a right-wing EC leadership team that has often brought further shame to the EC.Oettinger is an example of Juncker’s shameful EC leadership team. Oettinger is the EC’s Roseanne Barr. He shares her love of public display of bigotry (PDBs). Barr’s recent racist rant led Disney to cancel her very popular (and profitable) comedy show. Juncker rewarded Oettinger’s most infamous PDB with a major promotion to Oettinger’s current position as Budget Minister. Oettinger’s PDB displayed four different targets of his bigotry – the Chinese, gays, women, and Walloons. Oettinger’s racist rant was in a public speech recorded on video tape. Oettinger said that his racist rant provided no reason why he should apologize to the targets of his PDBs. Oettinger called Chinese people “slant-eyes” (Schlitzaugen). That compound noun, in German (as in English) is unambiguously a racist insult. As to gays, Oettinger ‘joked’ that Europeans would soon disappear as EU governments mandated “gay marriages.”
Interview with ECB Vice President Vitor Constancio on Italy - SPIEGEL ONLINE: In an interview, outgoing European Central Bank Vice President Vítor Constâncio issues a timely reminder that ECB assistance is tied to conditions, but insists the eurozone is in good shape despite the problems in Italy.
Salvini Bait & Switch: Italy's New Finance Minister Is Also An Outspoken Euroskeptic - For Europe's establishment, it's out of the frying pan and into the fire. Just when Brussels thought it had avoided a potential firestorm by forcing President Mattarella to veto the prior finmin appointee, preventing prominent euroskeptic Paolo Savona from becoming Italy's next finance minister, and instead in the latest proposed government, the finance minister would be the relatively unknown Giovanni Tria - alongside 5-Star's Di Maio who will be Industry Minister, Salvini as Interior Minister and Conte as Prime Minister - it appears that Tria himself is a rather outspoken eurosketpic.As we reported earlier, Tria, 69, is currently the head of the economy faculty at Rome’s Tor Vergata University. However, investors are far more focused and concerned not with his present, but past and especially his views on the economy, the euro and the Eurozone, to determine if he, too, is a dark horse.And what has spooked the establishmentarians in the early rounds of due diligence is the following article from December 2016 published in the Formiche, titled "Vi spiego la competizione truccata in Europa che favorisce la Germania" or translated "I'll explain the rigged competition in Europe that favors Germany" in which Tria, like other run-off-the-mill euroskeptics, criticizes the European monetary union and its fixed exchange rate for allowing countries - such as Germany - to run high external surpluses and says fiscal policy should compensate for that lack of flexibility.Meanwhile, as Bloomberg's Lorenzo Totaro and John Follain report, Tria publicly called for a debate on the euro in both Italy and in the rest of Europe, saying that "the biggest danger is implosion, not exit," in an article co-written with Renato Brunetta, a senior lawmaker of ex-premier Silvio Berlusconi’s Forza Italia party.In the article published in March 2017 in In Sole, looking at the outlook for the euro-region, Tria said that the "German economy’s growing surplus shows that monetary expansion, without a policy that aids economic convergence between the various countries, merely fuels an imbalance that puts us in conflict with the rest of the world." Some notable excerpts from the article, google translated: The German surplus is the sign of the failure of the euro..
Conte Reveals New Italian Government -- With the fate of the Italian finance ministry post resolved amicably earlier in the day, Giuseppe Conte, Italy's new prime minister, accepted the offer to form the new Italian government and revealed the following key members of the his cabinet:
- Five Star leader Luigi Di Maio named labor and economic development minister; deputy premier
- League leader Matteo Salvini named interior minister; deputy premier
- Paolo Savona named European affairs minister
- Enzo Moavero Milanesi named foreign minister
- Danilo Toninelli named transport and infrastructure minister
- Giancarlo Giorgetti named undersecretary to the prime minister
In other words, both Di Maio and Salvini will enter as equals, but the question is who will be the real leader behind the scenes: whether the Five-Star leader, who has seen his poplarity fade rapidly in recent days, or the vocally anti-establishment and anit-immigrant Salvini, who Lega has almost caught up with the 5-Star in recent polling. But the most important nomination was the following: GIOVANNI TRIA NAMED NEW ITALIAN FINANCE MINISTER Why most important? Because Tria is the supposed compromise finance minister, replacing Savona, who will instead be in charge of European Affairs. And, as we noted earlier, Tria was expected to be far more moderate (read: "not Euroskeptic") than Savona; and the moment his nomination was announced earlier in the day it sparked a sharp rally in Italian bonds ad stocks.
Did Italy’s 5 Star-Lega Coalition Blink in Its First Standoff With Eurocrats and Banksters? - Yves Smith - On the one hand, initial skirmishes rarely determine the outcome of war. On the other, they often reveal the predilections of the key players. That in turn can provide a base line for evaluating later moves, for instance, whether the parties have learned from past encounters and are upping their game, or simply reverting to past form.1In the case of Italy, both of the two major power players, 5 Star and Lega, are new to the game of EU level politics and national leadership. That means they have a lot to learn, and how good they are at learning is likely to matter a great deal in terms of achieving their larger goals, the biggest of which seems to be allowing the Italian government to spend more.Let’s look briefly at this first test of the upstarts versus the establishment. Despite 5 Star and Lega succeeding in installing a government, one can read what went down as the parties being daunted by negative market reactions that were well short of crisis level upset. And the wee problem that opponents of austerity in the Eurozone face is that they are stuck in a roach hotel. As we discussed at considerable length in our coverage of Greece, even with Italy’s much large economy, it can’t leave the Eurozone without getting the cooperation of many parties outside its control. Merely printing and distributing paper currency would take the better part of a year, and that’s comparatively simple. Payment systems are fragmented, and the payment players in Italy are not the most important part of the equation. In a very best case scenario, numerous experts have guesstimates that the bare minimum time for software development and testing is three years, which given the lousy success rate of large IT projects, means five years is on the optimistic end of a realistic spectrum. Now Italy can admittedly defy the Eurocrats and the bond gods on a narrower basis, say by introducing a parallel currency or creating government IOUs designed to be tradeable to increase domestic spending. In other words, even though Italy can do great damage to the Eurozone, it will almost certainly suffer more than, say, Germany and France. And since the 5 Star’s and Lega’s mandates are not mainly about opposing the Eurozone for nebulous goals like taking back control that resonated in the UK but about adopting specific economic policies that run afoul of Eurozone rules, like running deficits larger than the sacrosanct 3%, the new coalition partner probably don’t think many of their voters would be keen about making a bad economic situation even worse, particularly if the long-term payoff was at best uncertain. So with that long-winded introduction, for better or worse, 5 Star and Lega appear to be more sensitive to the weakness of their positions than the press coverage might lead you to believe. Let’s recap the events of the last few days:
The anti-worker program of Italy’s new populist and neo-fascist government --The last act in the formation of a far-right government in Italy took place on Thursday night, after a protracted period of three months dominated by a political impasse and intense social and financial instability.After days of a volatile atmosphere both domestically and on world markets following President Sergio Mattarella’s veto on the appointment of euro-skeptic economics professor Paolo Savona for the post of Minister of Economy and Finance, the far-right Lega and the Five Star Movement (M5S) finalized a list of ministers, headed by new Prime Minister Giuseppe Conte, that was approved last night by Mattarella. The new government will be sworn in today.On Tuesday, financial circles had reacted starkly to the prospect of an economy minister who would call into question the future of the euro zone. There are substantial concerns in ruling circles that an exit by the European Union’s third-largest economy would cause a domino effect, hitting a substantial portion of European banks.The uncertainty of the political crisis in Italy has already produced the worst day for Italian bonds, according to analysts worse than during the 2008-2011 financial and debt crisis. Last Tuesday, the two-year yield spiked from 0.3 percent to 2.73 percent, signaling a potential destabilization of financial markets.The main difference between the new Conte administration and the previous list vetoed by Mattarella is the Minister of Economy and Finance. The replacement of Savona with Giovanni Tria, an economics professor, consultant for the World Bank and proven defender of the euro zone, satisfies the concerns of European and international capital over secessionist tendencies within the EU. Savona will head the Ministry for EU Affairs. The most prominent feature of the new government is its anti-worker program. The policies adopted reflect the neo-fascist character of Lega as well as the law-and-order approach of M5S. At one point on Thursday, M5S was open to appointing Giorgia Meloni, leader of the fascist Fratelli d’Italia, to head the defense ministry: “If we stick to the contract [the name given to the Lega-M5S program] the discussion is open to all and we could also have Fratelli d’Italia in the government,” said M5S Congressman Carlo Sibilia.
Italian Yields Spike On Report Italy Ruling Coalition Seeks Funds To Quit Euro --We noted that Italian yields had started to fade wider earlier, but 2Y BTPs are now 50bps higher than the open after headlines that EU lawmakers from the two parties forming Italy’s new government coalition voted this week to set up EU funds to help countries quit the euro. Reuters reports that the vote came as the anti-establishment 5-Star Movement and far-right League were finalizing a deal to form an executive in Rome, under pledges that leaving the euro was not in their government program.Despite the declared intentions to stay in the euro, Cyprus Mail details that all six EU lawmakers from the League and all but one of the 14 5-Star Members of the European Parliament voted on Wednesday for a document that called for the establishment of programmes of financial support “for member states that plan to negotiate their exit from the euro.”The document voted on by their EU lawmakers called for compensation for “the social and economic damages caused by the euro zone membership.”The document was an amendment to a European Parliament resolution on the EU budget for the 2021-2027 period. The proposal was backed by 90 lawmakers, but was rejected by a majority of the 750 MEPs.As we noted earlier, this should come as no surprise since, as we explained, the new coalition government is more anti-establishment than the one Mattarella rejected... And the BTPs that Italy's FinMin bought yesterday are losing ground fast...
New prime minister sworn in to lead populist Italian government - A law professor who has never held political office was sworn in as Italy's new Prime Minister on Friday afternoon, bringing to power a populist new government whose senior figures whipped up anti-immigrant and euroskeptic sentiments in their path to office. Giuseppe Conte took an oath of loyalty to the Italian constitution in a gilded room in the Quirinal, Italy's presidential palace in Rome, ending three months of political turmoil. But while Conte will nominally hold the most powerful office in Italy, the driving forces in his administration will be the leaders of the two political parties that gained the most votes in an inconclusive election in March: the right-wing League party and the anti-establishment Five Star Movement. After initially vetoing the choice of finance minister, Italian President Sergio Mattarella on Thursday evening approved a reshuffled lineup. Conte and his Cabinet ministers were sworn in on Friday, with the apparently unsuitable minister -- who had expressed enthusiasm for extricating Italy from the euro -- shifted to the less high-profile role of Europe affairs minister. Conte and his new government will also face a confidence vote in parliament next week. Speaking at the Quirinal on Thursday evening, Conte pledged his new government would "work intensely to realize the political goals of our agreement" and "work with determination to improve the lives of all Italians." The country's new populist, euroskeptic government is likely to be met with alarm by other European leaders, including French President Emmanuel Macron and German Chancellor Angela Merkel, who are both eager to push for further EU political and economic integration. President of the European Council, Donald Tusk, offered his congratulations to Conte via a statement published on Twitter, writing that his appointment "comes at a crucial time for Italy and the entire European Union" and calling for "unity and solidarity" within Europe.
This Is The New Italy -- Years of neoliberal economic policies imposed by Brussels and by Italian politicians alike have devastated numerous industrial towns and the very fabric of Italian society. Sesto San Giovanni, a town on the outskirts of Milan, used to be one of the industrial capitals of Italy. With around 200,000 inhabitants (45,000 blue collar workers, and a robust middle class), it was the headquarters of some of the most dynamic Italian companies, including Magneti Marelli, Falck, Breda and many more. Today Sesto is an industrial desert – the factories are gone, the professional middle class has fled, many stores have shut down, and the city is trying to reinvent itself as a medical research center. Twenty-three kilometers (14 miles) to the north of Sesto, the town of Meda was the seat of various symbols of Italian excellence: Salotti Cassina and Poltrona Frau, both of which exported high-quality furniture all over the world and employed tens of thousands of workers and designers. They fed a number of small family-based companies providing parts and highly qualified seasonal labour. Today both companies are gone. Luca Cordero di Montezemolo, a former chairman of Ferrari, Fiat and Alitalia, and now a public enemy because of his dismissal of the “Made in Italy” label, acquired both companies and moved them to Turkey, choosing profit over quality - and Italian jobs. Montezemolo, of aristocratic background, is a champion of Italian neoliberalism, having founded the influential “free market” think tank Italia Futura (Future Italy) in 2009. Another victim is the town of Sora, with a population of 25,000, 80 km. (50 miles) east of Rome. Until recently Sora was an affluent commercial city, with medium-sized paper factories and hundreds of shops. Today, all of the factories are gone and 50 percent of shops have closed. All over Italy, the neoliberal policies that led to the economic crisis and resulting social decadence have accelerated in the wake of the financial collapse of 2007.
First Greece, Now Italy, Portugal Next? -- While most investors are focused on Italian politics - the parallel currency 'mini-BoT' fears and potential for a constitutional crisis - Spain is now facing its own political crisis amid calls for a no-confidence vote against Rajoy. However, 'Spaxit' remains a distant concern for investors as another member of the PIIGS peripheral problems is starting to signal concerns about 'Portugone'? And the fundamental data confirms Portugal is next in line for a debt crisis... As Statista's Brigitte van de Pas notes, on average, European Union countries had a gross government debt of roughly 81 percent of GDP in 2018. This average disguises real differences between EU countries. Whereas Greece had a government debt of 177.8 percent in 2018, Estonia had a debt of only 8.8 percent - the lowest in the entire EU zone. While, the high Greek debt is well-known, a number of other countries however also have a debt that is higher than their own GDP. The Italian debt, for example, is lower than the Greek but still significant, at over 130 percent of GDP. Portugal, in third place, had a debt of 122.5 percent. One small positive note though: all three countries had even higher debts in 2017, and the European Commission forecasted a slow, but further decrease of their government debt in 2019. Whether this holds true for Italy, with their newly-elected government of Movimento 5 Stelle and Lega remains to be seen.
This Is The End Of The Euro -- Raúl Ilargi Meijer - The Spanish government is about to fall after the Ciudadanos party decided to join PSOE (socialist) and Podemos in a non-confidence vote against PM Rajoy. Hmm, what would that mean for the Catalan politicians Rajoy is persecuting? The Spanish political crisis is inextricably linked to the Italian one, not even because they are so much alike, but because both combine to create huge financial uncertainty in the eurozone. Sometimes it takes a little uproar to reveal the reality behind the curtain. Both countries, Italy perhaps some more than Spain, would long since have seen collapse if not for the ECB. In essence, Mario Draghi is buying up trillions in sovereign bonds to disguise the fact that the present construction of the euro makes it inevitable that the poorer south of Europe will lose against the north. Club Med needs a mechanism to devalue their currencies from time to time to keep up. Signing up for the euro meant they lost that mechanism, and the currency itself doesn’t provide an alternative. The euro has become a cage, a prison for the poorer brethren, but if you look a bit further, it’s also a prison for Germany, which will be forced to either bail out Italy or crush it the way Greece was crushed. Italy and Spain are much larger economies than Greece is, and therefore much larger problems. Problems that are about to become infinitely more painful then they would have been had the countries been able to devalue their currencies. If you want to define the main fault of the euro, it is that: it creates problems that would not have existed if the common currency itself didn’t. This was inevitable from the get-go. The fatal flaw was baked into the cake. And if you think about it, today the need for a common currency has largely vanished anyway already. Anno 2018, people wouldn’t have to go to banks to exchange their deutschmarks or guilders or francs, they would either pay in plastic or get some local currency out of an ATM. All this could be done at automatically adjusting exchange rates without the use of all sorts of middlemen that existed when the euro was introduced. Americans Technology has eradicated the reason why the euro was introduced in the first place, and made it completely unnecessary. But the euro is here, and it is going to cause a lot more pain and mayhem. Any country that even thinks about leaving the system will be punished hard, even if that’s the by far more logical thing to do.
Corruption crisis prompts demand for snap elections in Spain -- The National Court last week found 29 top officials linked to Spain’s ruling Popular Party (PP) government guilty of corruption. Those convicted forged documents, took bribes and laundered money siphoned from kickbacks linked to public works contracts. They were sentenced to a total of 351 years in prison.The court declared that the PP had spawned “an authentic and efficient system of institutional corruption.”The Gürtel case, as it has become known, is the largest and most pervasive political corruption scandal since the end of the Francoist dictatorship in the mid-1970s.On Friday, Socialist Party (PSOE) General Secretary Pedro Sánchez announced a no confidence vote aimed at him replacing the PP’s Mariano Rajoy as Spain’s prime minister—with the intent of preventing a general election and exacerbating Spain’s economic and social crisis.The no confidence vote is due to take place on Friday. Sánchez, whose party has connived in keeping Rajoy’s minority government in power, appeared before the press to claim the PSOE would “Return [Spain] to political and institutional normality, regenerate democratic life, and set in motion a social agenda that would attend to urgent social issues.” Such words are cynical. The Gürtel case has been around for years. It is almost a decade since it came to public attention. Most suspects were put on trial in 2016. Throughout this time, the PSOE covered for the PP’s corruption, kept it in power and backed its austerity measures and anti-democratic assault in Catalonia during the independence crisis. The PSOE’s support of the PP was also covered up by the pseudo-left party, Podemos, which suppresses any independent mobilisation of the working class in its pursuit of a “progressive alliance” with the PSOE. Podemos leader Pablo Iglesias has now offered his party’s unconditional support for the PSOE motion of no confidence. It was also left to Podemos to make a direct appeal to the right-wing populist Citizens on behalf of Sánchez. Podemos number two and candidate for regional premier in Madrid, Íñigo Errejón, broadcast a video on social networks calling for an end to the PP government, regardless of “political names.” He warned Citizens leader Albert Rivera that he will be “co-responsible” for the “blockade” and “shame” if Citizens keeps the PP in power.Citizens, however, is demanding the PSOE withdraw its no-confidence vote. They do not want to replace Rajoy with Sánchez but want new elections in the hope they will become the main party in Spain
Socialist Leader Sanchez Set To Become New Spanish PM As Rajoy Defeat Inevitable - Spanish Prime Minister Rajoy refuses to resign ahead of tomorrow's 'done deal' vote of no confidence in his administration (given that the opposition apparently has the votes) and Maria Cospedal has confirmed that centre-left Socialist party leader Pedro Sanchez is set to become the new Spanish prime minister.“Are you ready to resign? Resign today and leave by your own will,” Sanchez told Rajoy. “You are part of the past, of a chapter the country is about to close.” Mariano Rajoy became prime minister of Spain on December 20, 2011 and barring some miracle, his political career will end on June 1, 2018, because moments ago it appears that the required number of votes to ouster the premier in tomorrow's vote of no-confidence was reached.As we reported earlier, Socialist leader Pedro Sanchez who is spearheading the vote against the unpopular premier, already had the backing of the anti-establishment group Podemos, and Catalan separatists Esquerra Republicana and PdeCat. He only needed the support of Basque Nationalists to clinch it. Moments ago the Basques officially sided with Sanchez, when the Basque Nationalists informed both Rajoy’s People’s Party and the Socialists that they’ve decided to vote against the prime minister, according to state broadcaster Television Espanola. With the Catalans of PdeCat also expected to support Sanchez, that would be enough to defeat Rajoy, as there are now 177 votes against Rajoy with 176 needed.
Rajoy out- Spain’s government collapses after no confidence vote - Mariano Rajoy has been ousted as Spain’s prime minister after the country’s parliament voted that it had no confidence in his government.Mr Rajoy has been replaced by his socialist rival Pedro Sanchez after deputies voted 180 votes to 169 to make him the new PM, with one abstention.The outgoing centre-right prime minister, who has been in office since 2011, was kicked out of office following a series of corruption scandals that rocked his government and led to ministerial resignations.Mr Sanchez’s centre-left PSOE group was backed by the anti-austerity Podemos group and a constellation of small regional parties in the no confidence vote that brought down Mr Rajoy’s government, which has hobbled on as a minority administration since an election in 2016. Under the Spanish system, a no confidence vote must also propose a new prime minister to replace the one being voted out – with Mr Sanchez now set to take the reins.If Mr Rajoy had survived today’s vote he was expected to face further challenges from other opposition parties hoping to oust him on their own terms.Centre-right liberals Ciudadanos, who are riding high in the polls, wanted fresh elections to take place as soon as possible. The liberals, who have gained political ground by staunching opposing Catalan independence, refused to vote for the PSOE motion and were the only major party to back the Partido Popular. Speaking ahead of the vote, with the numbers against him, Mr Rajoy told the congress of deputies: “Pedro Sánchez will be the prime minister of the government and I want to be the first to congratulate him. “It has been an honour to be the prime minister of the government of Spain. It has been an honour to leave a better Spain than the one I found. Hopefully my replacement can say the same on his day, I wish it for the good of Spain.”
Pedro Sanchez seizes historic opportunity to become Spain’s prime minister - DW -- The Socialist has toppled Spain's Prime Minister Mariano Rajoy by filing a no-confidence motion. But it was systematic corruption that brought about the Conservatives' downfall, as Stefanie Müller reports from Madrid.Over the last couple of years, Mariano Rajoy and his conservative People's Party (Partido Popular, PP) have shown extraordinary perseverance and defied any allegations. "For years on end, they did not accept responsibility for all those cases of corruption which came to light."This can't be the solution," says Wilhelm Hofmeister, Madrid bureau chief of the Konrad Adenauer foundation (KAS). The PP kept holding on to power, even when a number of party members were arrested, put on trial and handed a sentence, as in the case of former economy minister and Managing Director of the IMF, Rodrigo Rato.The prime minister did not even step down on May 24 when the former PP treasurer, Luis Barcenas, was sentenced in the wake of the so-called "Gurtel" trial, along with a number of Madrid-based regional and local politicians. The trial dealt with corruption, embezzlement, money laundering and unlawful enrichment.For the first time, the judges accused the PP of illegal party funding, indicating that the party benefited from criminal activities. At the time, Rajoy would only react by repeating the same assertion in front of rolling cameras: "No member of my government is under suspicion – we don't have anything to do with it." At the ballot box, Socialist leader Pedro Sanchez (pictured above) has lost out repeatedly against PP candidates. Critics don't attribute a great deal of intelligence to the young politician, but they admit he is a fighter. Sanchez realized that he had a historic opportunity to become Spain's new prime minister in next to no time. For the first time since the democratic constitution was established after the end of the Franco dictatorship 40 years ago, one of Spain's political parties has come to power through a no-confidence vote.
Europe's Fragility Is Exposed Again - So much for the return to stability. The euro-region economy grew at its fastest lick in a decade last year and unemployment dropped to the lowest since the global financial crisis. Summer has arrived early and the feel-good factor is set to continue with Europeans glued to the World Cup soccer competition starting in Russia next month. But you wouldn’t tell from the continent’s politics. Italy is in chaos and facing another election that will likely only strengthen the anti-establishment parties. Spanish Prime Minister Mariano Rajoy’s opponents are mobilizing a no-confidence vote and plotting an early return to the polls. Then there’s Britain’s acrimonious Brexit talks, about to hit another critical juncture in June. French President Emmanuel Macron is pushing through economic reforms that have prompted a wave of strikes and hurt his popularity. And all while the European Union is trying to hold the line against U.S. trade tariffs, deal with a resurgent Russia and keep tabs on a potential meltdown next door in Turkey. “Only three months ago the confidence concerning Europe was much more positive due to growth, but also the complacency about the general state of politics,” “It’s again a testament to how quickly sentiment can change.”It’s not that Europe is in a permanent state of crisis, but sturdy economic statistics and relative financial-market calm have served to mask disillusionment and division, especially in the south. The upshot is a sudden return of political risk for investors with the prospect of no let up in the coming weeks and months. In Italy, President Sergio Mattarella asked a former director of the International Monetary Fund to form a government and prepare for new elections. The populist leaders expecting to take power attacked Mattarella for the collapse of their planned coalition and, suggesting an international conspiracy directed against Italy, made clear the coming campaign will focus on Europe and the euro -- for or against. The yield on Italian two-year government debt surged to the highest in four years
Europe’s losing streak – POLITICO - Here are a few words you keep hearing about Europe today: Drift. Relapse. Malaise. Trouble. If news cycles now move in eye blinks, political epochs come in quicker too. The current era — of Europe in trouble once again — is at once jarring and familiar. Only two years ago, of course, Brussels was a city on the verge of a nervous breakdown, struck hard by twin political blows. Shortly after Britain became the first EU country to choose, in June of 2016, to head for the exits, America elected a president vocally hostile to the EU and NATO. The pillars of the post-war order seemed to be shaking.Europe turned things around in 2017. The election surprises early that year were establishment-friendly victories in the Netherlands and France. The voting public’s embrace of stability and the golden middle came personified in the form of Emmanuel Macron, who celebrated his election win in France with Beethoven’s “Ode to Joy,” the EU anthem. The 27 unified as one against Britain in Brexit talks. Plans were drawn up in Brussels, Rome and Bratislava to reboot Europe. The Continent’s economy kept humming. The conventional wish fantasy went like this: The forces of populism are in retreat; the shocks of Brexit and Trump had brought continental electorates to their senses; the relief and confidence about Europe’s future was the real deal. Oh Brussels Joy, indeed! Unmistakably, though, the EU establishment is stumbling in 2018 — cut by cut, notching up losses. Germany, in retrospect, sounded the alarm last fall. Chancellor Angela Merkel, the ur-establishment leader of Europe, held on to power but came out weakened in her reelection bid. Worryingly for her and her colleagues around the EU table, it turned out the populists weren’t on a back foot. For the first time since World War II, a far-right party, Alternative for Germany, took seats (92 after a pair of defections) in the Bundestag. The tab for the Chancellor’s open-door migration policy had come in higher than expected.Clearer wins for anti-Merkels in Austria, the Czech Republic, and most recently Hungary followed. Austria brought the far-right Freedom Party into government. These three blows can be rationalized away by Euro-elites as happening on the margins of the EU, or at least in relatively small countries where the populists could be contained. Not Italy, the biggest political shock of 2018 (so far). There, the March elections sidelined the mainstream right and left and catapulted the anti-establishment 5Star Movement and the far-right League to the top of the polls. It brought home that in this era of political disruption, the disruptors — or extremists, depending on your point of view — aren’t just disrupting; in many cases, they’re replacing the legacy players.
Completing Europe’s banking union means breaking the bank-sovereign vicious circle - Bruegel -- Several euro area leaders, including the German chancellor, her finance minister, and the French president, have recently referred to the need to “complete the banking union”. These public calls echo those made in more formal settings, in intergovernmental meetings and European Commission communications over the last half-decade. They inevitably raise the question of what criteria should be used to assess the banking union’s completeness. A narrow interpretation, based on euro-area leaders’ past commitments, equates it with breaking the bank-sovereign vicious circle; a more ambitious long-term vision for complete banking union implies the removal of all cross-border distortions within the euro-area banking market. Even the minimalist version, however, entails more reforms than those publicly under current consideration.“Banking union” has become a widely used expression to refer to the project of shifting banking-sector policy instruments from the national to the European level, but there is no official or legal definition of what it is or should be. Its first recorded use in public was made outside of officialdom (albeit on a suggestion from a European Commission official, Maarten Verwey), and it was gradually popularised in expert circles and the media. Euro-area leaders endorsed banking union as their policy at a landmark summit in late June 2012, but waited almost a year until adopting the expression itself.
Ireland votes to remove constitutional ban on abortion by resounding two-thirds majority -- The country has voted to remove the constitutional ban on abortion by a two-thirds majority.Thirty-five years after it was placed into the Constitution, the electorate voted for the Eighth Amendment to be repealed and for provision be made for the regulation of termination of pregnancy. See here for liveblog updates on Saturday on developments as count results on the resounding result became clear across the State. Every constituency except Donegal, which voted in favour of retaining the Eighth Amendment by 51. 87 to 48.13, passed the referendum by a clear mandate.There were joyous and tearful scenes in Dublin Castle as the results were announced just after 6pm, showing 66 per cent of the electorate had supported the proposition. Minister for Health Simon Harris, who led the Government’s campaign, said it was a historic day for the country and for the women of Ireland.
Brussels and Brexiteers united in anger over budget extension - Britain will help to determine the EU’s £1 trillion budget up to 2027 after European countries defied Brussels and invited UK officials to take part in negotiations. The invitation, which has been accepted, was made because EU officials believe that Britain will keep paying billions of euros to Brussels for years after Brexit. The European Commission is furious at the plan, which was devised by the EU council representing individual member states. The commission claims that Britain will use budget discussions to change the rules to make it easier for the country to join science, research and other spending programmes after leaving the EU. Eurosceptic Tories are also dismayed as they fear that it raises the chance of Britain continuing to pay big sums to the EU. The Treasury is already expected to make annual contributions of up to €5 billion to stay in some key schemes, but the figure is not confirmed. “This is the type of trickery that the EU gets up to,” Bill Cash, the Brexiteer chairman of the Commons European scrutiny committee, said. “We have agreed to pay £39 billion to get out of the EU’s treaty structure. Taking part in these budget talks risks ensnaring us again.” The EU budget is a seven-year spending programme. Member states decide on the total amount of contributions and how the money will be spent. Britain contributes €14 billion a year at present. Most European governments believe that Britain will continue to pay into the EU budget after Brexit as an “entrance fee” into the single market. It was reported yesterday that British preparations for a no-deal Brexit next March had ground to a halt. Eastern and central European countries that receive large grants under the EU’s regional policy are keen for Britain to continue paying. The council invited Britain to take part in the budget talks despite the fact that the next “multi-annual financial framework” (MFF) comes into force at the end of the transition period after Brexit. The budget decision-making process is expected to drag on into the second half of next year and requires the agreement of all 27 EU governments. Commission officials fear that Britain will “leverage” the splits over money to get a better single-market deal.
BoE denies rift with UK Treasury over post-Brexit regulations - A Bank of England spokesman refuted suggestions of a rift between the central bank and the U.K. Treasury after a report in the Financial Times said the institutions are at “loggerheads” over the future of City of London regulations after Brexit. Citing unnamed officials, the FT said the BOE’s Deputy Governor for Financial Stability, Jon Cunliffe, has fallen out with the Treasury over concerns it will give away regulatory control after the European Union rejected the U.K.’s original proposal. BOE Governor Mark Carney last year said the U.K. does not "want to be a rule-taker as an authority" at the end of Brexit talks.The FT cited a Treasury spokesman saying the ministry is aligned with that stance, and the newspaper said the BOE denied any division.
Sturgeon takes Brexit concerns to Brussels - BBC News: Nicola Sturgeon has raised Scottish concerns over Brexit in a meeting with chief EU negotiator Michel Barnier. The first minister said they held a "constructive and positive discussion" during her trip to Brussels. She said she told Mr Barnier that the Scottish government believed the UK should remain within the customs union and single market after leaving the EU. And she emphasised her "strong view" that "time is running out for the UK" to strike a deal over Brexit. Ms Sturgeon told BBC Scotland: "The clock is ticking and the longer it takes for the UK to reach a sensible position, the greater the risk of a no deal outcome to this which is in absolutely nobody's interest." The UK is due to leave the EU in March 2019 and negotiators have said they want a deal in place by the end of the year. The first minister accused the UK government of "floundering around" in its bid to secure a deal. She added: "With every week that passes without the UK being clear and focused and realistic about what it wants to achieve, that prospect of a damaging no deal seems to me to get greater and that's in nobody's interest.
Brexit Becoming More Unpopular as Yet More Warts, Like VAT Administration, Come Into Focus -- Perhaps because this was a bank holiday week in the UK, there hasn’t been as much political posturing and arm wrestling as we typically see these days on the Brexit front. That may have allowed for a bit more reality to work its way into the press than usual. A major European business group told Theresa May that they will refrain from making investments unless they get more “clarity” on Brexit. They must have awfully short planning horizons to be clearing their throat now, with Brexit ten months away and radically different outcomes, namely a crash-out versus a transition agreement, still very much in play. But on top of that, they think they can have a magic sparkle pony, namely, “frictionless trade.” And they are so poorly informed that they think a customs union will provide it.From the BBC: A group of major European companies [the European Round Table of Industrialists] has warned the Prime Minister they may cut investment without more clarity over the terms of Britain’s EU exit. Business leaders, including from BP, BMW, Nestle, and Vodafone, told Theresa May that “time is running out”. In a statement after the Downing Street meeting, they said that a trade deal with the EU must be “frictionless as with a customs union”… Senior figures from firms including BMW, Phillips, E.On and Ferrovial also attended the meeting with Mrs May and Brexit secretary David Davis. Now of course, it may well be that most if not all of the key players in the ERT are well briefed and know that the Government is not capable of improving on its shambolic performance to date. Their lobbyists and strategic prognosticators are almost certainly well plugged into Brussels and getting unvarnished reports on the state of the negotiations. The Government has ignored the VAT issue, which is going to bite it no matter what it does. The Financial Times published an excellent in-depth report, VAT: Brexit’s hidden border dilemma. The short version is the Government hasn’t thought about VAT despite it being a large administrative issue with real costs. Goods bought from other EU members now come in without being charged VAT at the border. That will, or rather should, change once the UK leaves the EU. But since it has no plans to set up the needed infrastructure to assess VAT on these goods, it faces two choices: not charging VAT, which will lead to considerable loss of revenue and will seriously damage British firms, or accept and comply with the EU VAT regime, which means ceding control over VAT charges and accepting the jurisdiction of the hated ECJ. Key details from the story:
Britain to get new Brexit CURRENCY after EU exit as Tory plans BACKED - BRITAIN could be getting new Brexit coins to celebrate leaving the European Union, after Conservative MPs urged the Government to honour the historic EU referendum. The Treasury has declared its support of the idea, which will now be sent off to the Royal Mint Advisory Committee, which reviews designs of coins and makes recommendations to the Government. Exchequer Secretary to the Treasury, Robert Jenrick, acknowledged his support for the move, saying that he can "see the argument" for a new monetary design to celebrate Brexit day. Whitehall officials are keen for plans to be passed by the panel, who work closely with the Treasury on commemorative ideas. In 1998, Royal Mint manufactured a special 50p coin to honour Britain's 25 anniversary of joining the EU. The Treasury's momentum comes in opposition with the government's business department, who previously overruled proposals to produce a series of Brexit stamps. Brexiteers lashed out at Royal Mail for refusing to acknowledge EU's departure from the UK, which is set to take place next March. However, Foreign Secretary Boris Johnson said: “Leaving the European Union will be a monumental moment in British history, so let’s deliver a commemorative stamp that shows the world we’ve got Brexit licked.”
Brexit: Norway plus - With a rather good sense of timing, the Norwegian government has published a report called "Norway in Europe" - its "strategy for cooperation with the EU 2018-2021". It was actually released on 9 May – Europe Day - but has received no publicity from the zombie media in the UK, despite the fact that it has considerable relevance to the Brexit debate. Cynically, one might say that this almost automatically disqualifies it from being publicised, although it was not helped by the absence of an English translation on the day of publication. As to its relevance, in the Norwegian publication News in English, published a few days after the report's release, we saw the views of Foreign Minister Ine Eriksen Søreide recorded. "Even though Norway is not a member of the EU",” she said, "we will be active participants rather than passive observers", in trying to influence EU policy. And that is what comes over in the report, helpfully set out on Twitter by James Strachan, deputy editor of The Medicine Maker. He has produced a short "explainer" which covers most of the salient points in a 19-point thread. An important part of the report is devoted to the role of the Norwegian government in influencing the making of EU legislation. This is nothing new to readers of this blog, but it very emphatically puts to bed the "no say" meme that the ignorati have spread about. Even then, as James Strachan points out, it does not discuss the role Norway plays in shaping legislation at the global level – such as its role on the Codex fisheries committee which I wrote nearly five years ago, after an interview with Bjorn Knudtsen, Chairman of the Fish and Fisheries Product Committee.
TSB under fire over telling companies customers were dead -- TSB’s computer meltdown woes, which saw nearly two million customers locked out of their accounts, show no sign of abating as fraud reports continue to rise and the bank tells some companies that customers whose direct debit payments had failed, were dead. Action Fraud said since the start of this month there had been more than 320 reports of TSB “smishing” (fake text messages) and “phishing” (emails) fraud – an increase of 970% on the previous month. Over the same period reports of cybercrime mentioning TSB had risen 112%. Customers have also reported a fraud where a victim’s mobile number is ported to a fraudster’s SIM card and used to access the victim’s accounts. Some customers have also seen direct debits cancelled, only to find the bank had told payee firms they had died, according to Money Saving Expert. One customer, David Buttery, said four organisations, including his energy providers, were told he was deceased: “I’ve had to phone every company and tell them I’m not dead and give them my new bank details, which I feel I shouldn’t have to do, and they are all saying it’s what TSB had told them.” Robert Catterall, another TSB customer, said: “I have just had a letter from my council today saying that my house has now got a new owner/occupier. I rang them and they said that TSB had told them that I was deceased.” Tales of this latest TSB IT fiasco come after The National told how Charlie Sweeney, from Largs, North Ayrshire, decided to camp inside his local branch after he lost £2500 to hackers and could not raise anyone in the banks fraud unit.
The NHS doesn’t need £2,000 from each household to survive. It’s fake maths - Last week, the Institute for Fiscal Studies and the Health Foundation published a report on funding for health and social care. One figure from the report was repeated across the headlines. For the NHS to stay afloat, it would require “£2,000 in tax from every household”. Shocking stuff!The trouble with figures like this is that while there may be a sense in which this is mathematically true, that kind of framing is dangerously close to being false.If you’re sitting at a bar with a group of friends and Bill Gates walks in, the average wealth of everyone in the room makes you all millionaires. But if you try to buy the most expensive bottle of champagne in the place, your debit card will still be declined. Similarly, the IFS calculated its “average” figures by taking the total amount it calculated the NHS would need and dividing it by the number of households in the country. That’s certainly one way of doing it – it’s not wrong per se – but in terms of informing people about the actual impact on their own finances, it’s very misleading. We have progressive taxation in this country: not every household gets an equally sized bill. Could you pay more if the government chose to cover the cost of social care through a bump in income tax? Sure, but for the vast majority of the country it would be a few hundred pounds.That’s without engaging with the underlying assumption that a bump in income tax is the way the government will choose to go. Some people have argued that, since the last couple of decades have seen wealth accumulate disproportionately at the very top, government should tax wealth rather than income. Alternatively, researchers have shown that health spending is one of the best ways to stimulate the economy, so the government could opt against tax increases in the short term and instead let healthcare spending act as a fiscal stimulus, at least until purchasing power had increased.
Students with lower A Levels from poorly performing schools do just as well on medical degrees - Students from some of England’s worst performing secondary schools who enrol on medical degrees with lower A Level grades, on average, do at least as well as their peers from top performing schools, a new study has revealed. Students with lower A-level grades (AAB or ABB) from the lowest performing secondary schools tend to do just as well at undergraduate medicine as students from the highest performing schools with top grades (AAA).The research also found that students from poorly performing schools who match the top A Level grades achieved by pupils from the best performing schools, go on to do better during a medical degree.The authors of the research are now calling for medical school entry criteria to be relaxed for all pupils applying from low-performing schools. The study, led by academics from the University of York alongside partners at the Universities of Dundee and Durham, analysed data from UK medical degree courses and linked it to information on secondary schools from the Department for Education. Some universities, such as Birmingham, Southampton and King's College London, have already trialled A Level ‘grade discounting’ for medical school place offers for some disadvantaged applicants. There is fierce competition to study medicine in the UK with normally around 11-12 applications made for each place on offer. Partly as a result of this, entry grade requirements have crept up to AAA or A* AA at A Level. Despite only 5.3% of children in the UK going to private school, around half of medical degree places are currently filled by students who attended selective schools.
YouTube removes “drill” music videos at request of London’s Metropolitan Police --More than 30 “drill” music videos have been taken down by YouTube of the 50 to 60 videos the Metropolitan Police demanded be taken down over the past two years. The rationale for deleting the videos was that they encourage violent behaviour. There is a ludicrous aspect to blaming a musical genre for the very social climate and attendant problems that it reflects. While much drill music takes a backward form, it is a product of growing social distress—reflecting a deeply troubled society, rent by poverty and social inequality, in which many young people face a dismal future. On the basis of a few isolated cases—in which some youths allegedly associated with the drill scene have been involved in violent acts—an entire musical genre is being targeted on the spurious basis that it is responsible for what is described as a “surge” in knife crime and murders in London.The deletion of the videos is the latest act of censorship to be carried out by Google, which owns YouTube. Its readiness to act immediately based on an appeal by the British police is confirmation of the assessment made by the WSWS that Google and the other giant tech conglomerates act as tools of state repression. YouTube confirmed its integration with the British state, including the office of Labour Party London Mayor Sadiq Khan, with a statement reading, “We work with the Metropolitan police, the mayor’s office for policing and crime, the Home Office and community groups to understand this issue and ensure we are able to take action on gang-related content that infringe our community guidelines or break the law … we have a dedicated process for the police to flag videos directly to our teams because we often need specialist context from law enforcement to identify real-life threats.”
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