reality is only those delusions that we have in common...

Saturday, June 30, 2018

week ending Jun 30

Fed's Bullard: Favors Leaving Rates Unchanged  - St. Louis Federal Reserve Bank President James Bullard participated in a moderated Q&A in St. Louis on Thursday. Here are 5 things of note from the speech.

  • - President Bullard repeated his stance of favoring leaving rates where they are right now, contrasting with the FOMC's June SEP that indicated one more rate hike in 2018 than what was reported in March. He noted that market expectations forecast inflation to be lower than the Fed's estimates, suggesting that the Fed is in "good shape" to slow down raising rates or even halt rate increases. He explained that the Fed should watch "how the data evolve" and not necessarily follow the "prescribed further normalization,"
  • - "There could be an upside to the trade rhetoric," Bullard said, but noted that the U.S. is likely to be along for a "bumpy ride" as negotiations continue.   While he did acknowledge the risks and the positive benefits that may come from renegotiated trade policies, he remains skeptical that trade negotiations will lead to anything meaningful, and that we could end up with essentially the same regime.
  • - The potential for a yield curve inversion is a "key near-term risk" for the Fed to consider according to Bullard. The St. Louis chief has been very vocal in warning against the potential for the yield curve to invert. If it does invert, there could be a recession on the forefront according to studies done on the correlation, Bullard explained.
  • - The historically low unemployment rate, now at 3.8%, has caused some economists and policymakers to speculate whether inflation will begin to pick up in the near-term as the Phillips curve has been an indicator of such a reaction, but Bullard disagrees. The Phillips curve has been nonlinear lately, which Bullard explained shows that the correlation between inflation and the unemployment rate may not be as strong anymore. He said that unemployment could continue to go lower without inflation having a large reaction.
  • - Bullard noted that the "best bet" for the U.S. is that it will remain in a low inflation, low growth regime at least for a couple years, later explaining to reporters that despite the high estimates for 2Q GDP, 2019 and 2020 estimates for GDP show growth returning to more normal levels. The fiscal stimulus is likely to have a temporary boost for growth in the near-term, but will fizzle out in the longer-term. Bullard explained that the Fed should not "react with a permanent rate increase to a temporary growth situation."

    Fed's Rosengren: Now Is The Time To Prepare For The Next Recession  - Thanks to the Trump fiscal stimulus, the economy may be decoupling from the rest of the world (at the cost of what the CBO described as a "catastrophic" debt load in the not too distant future) and growing at a torrid pace, at least until the fiscal stimulus fades, but according to at least one Fed president, now is the time to start preparing for the next recession.Speaking at the Peterson Institute for International Economics in Washington, Boston Fed president Eric Rosengren said that fiscal, regulatory and monetary policy makers should take a variety of actions to make periods of high unemployment less likely. In his prepared remarks, he said that high unemployment periods disproportionately affect minorities, people with lower education levels and children.Specifically addressing the next economic downturn, Rosengren said that In the U.S., state and local government financing “should be designed to buffer the economy during recessions." Quoted by Bloomberg, Rosengren said that such steps could include reducing the reliance on pro-cyclical revenue sources, shoring up pension liabilities and increasing “rainy-day funds” during economic upturns.He also said that the Fed should increase the counter-cyclical capital buffer required for large banks to "address the incentive that banks will have to pull back on lending to shrink assets in a future economic downturn" and that the Fed should also consider "more flexibility with the inflation target" in order to give the central bank more room to lower interest rates during the next recession. This goes back to the age old argument whether the Fed will overheat the economy, and hike too high just so it can cut enough to stem the next recession. Rosengren's view: "I think the policy path that will increase the probability of a longer recession-free period is the path where the economy does not run above capacity and thus, fall far below the sustainable unemployment rate."

PCE Price Index: May Headline & Core -- The BEA's Personal Income and Outlays report for May was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.21% month-over-month (MoM) and is up 2.25% year-over-year (YoY). The latest Core PCE index (less Food and Energy) also came in at 0.21% MoM and 1.96% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made to figures for January through April.  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.

Money-Supply Growth Slides Again As Recession Looms - Money supply growth fell to a three-month low in May this year, continuing a general downward slide in growth rates that's been in place since late 2016.In May, year-over-year growth in the money supply fell to a 3-month low, growing 4.2 percent. That was down from April 2018's rate of 4.3 percent, but remains up from November 2017's low of 2.6 percent: The money-supply metric used here — an Austrian or "true" money supply measure — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure than M2. The Mises Institute now offers regular updates on this metric and its growth.The "Austrian" measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short time deposits, traveler's checks, and retail money funds).M2 growth accelerated in May 2018, rising to 3.8 percent, compared to April's rate of 3.7 percent. Overall, though, the M2 growth rates has fallen considerably since late 2016. Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of falling money-supply growth. Factors at work in differences between M2 and the Rothbard-Salerno measure include treasury deposits at the Fed , which have climbed again in recent months back to near all-time highs. Rothbard-Salerno calculates money supply including these deposits as money, although M2 does not. Thus, these recent increases in treasury deposits will result — all else being equal — in more money-supply growth in the Austrian measure of the money supply, than in M2.

Chicago Fed "Index Points to Slower Economic Growth in May " - From the Chicago Fed: Index Points to Slower Economic Growth in May Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.15 in May from +0.42 in April. Two of the four broad categories of indicators that make up the index decreased from April, and two of the four categories made negative contributions to the index in May. The index’s three-month moving average, CFNAI-MA3, decreased to +0.18 in May from +0.48 in April. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. This suggests economic activity was above the historical trend in May (using the three-month average).According to the Chicago Fed:The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories....A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

May 2018 CFNAI Super Index Moving Average Slows: The economy's rate of growth significantly slowed based on the Chicago Fed National Activity Index (CFNAI) 3 month moving (3MA) average - but economic growth remained above the historical trend rate of growth. The single month index which is not used for economic forecasting which unfortunately is what the CFNAI headlines. Economic predictions are based on the 3 month moving average. The single month index historically is very noisy and the 3 month moving average would be the way to view this index in any event. There was insignificant revision to the last 3 months of data. In the table below, see the three month rolling average for the last 6 months - it shows an moderately growing economy. The three month moving average of the Chicago Fed National Activity Index (CFNAI) declined from +0.48 (originally reported as +0.46 last month) to +0.18 PLEASE NOTE:

  • This index IS NOT accurate in real time (see caveats below) - and it did miss the start of the 2007 recession.
  • Expectations from Nasdaq / Econoday was 0.30 to 0.65 (consensus +0.37) - the actual was +0.18 for the single month index which is not used for economic forecasting.
  • This index is a rear view mirror of the economy.

A value of zero for the index would indicate that the national economy is expanding at its historical trend rate of growth, and that a level below -0.7 would be indicating a recession was likely underway. Econintersect uses the three month trend because the index is very noisy (volatile). CFNAI Three Month Moving Average (blue line) with Historical Recession Line (red line) As the 3 month index is the trend line, the overall trend for the last few years is upward - but the short term trend is down As stated: this index only begins to show what is happening in the economy after many months of revision following the index's first release. 

 Q1 GDP Revised down to 2.0% Annual Rate --From the BEA: National Income and Product Accounts Gross Domestic Product: First Quarter 2018 (Third Estimate)Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2018, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.2 percent. With this third estimate for the first quarter, the general picture of economic growth remains the same; private inventory investment and personal consumption expenditures (PCE) were revised down. Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 1.0% to 0.9%. Residential investment was revised up from -2.0% to -1.1%. Most revisions were small. This was below the consensus forecast.

Q1 GDP Third Estimate: Real GDP at 2.0% -The Third Estimate for Q1 GDP, to one decimal, came in at 2.0% (1.99% to two decimal places), a decrease from 2.9% for the Q4 Third Estimate. Investing.com had a consensus of 2.2%.   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 2.0 percent in the first quarter of 2018 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.2 percent. With this third estimate for the first quarter, the general picture of economic growth remains the same; private inventory investment and personal consumption expenditures (PCE) were revised down. [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%.

U.S. first-quarter GDP growth trimmed; labor market strong -  (Reuters) - The U.S. economy slowed more than previously estimated in the first quarter amid the weakest consumer spending in nearly five years, but growth appears to have since regained momentum on the back of a robust labor market and tax cuts. Gross domestic product increased at a 2.0 percent annual rate in the January-March period, the Commerce Department said on Thursday in its third estimate of first-quarter GDP, instead of the 2.2 percent pace it reported last month. The economy grew at a 2.9 percent rate in the fourth quarter. The downgrade to first-quarter growth reflected weaker consumer spending and a smaller inventory build than the government had estimated last month. A $1.5 trillion income tax cut package, which came into effect in January, is expected to spur faster economic growth in the second quarter, putting annual GDP growth on track to achieve the Trump administration’s 3 percent target. Economists, however, caution that the administration’s “America First” policies, which have heightened fears of trade wars, are casting a pall over the economy’s prospects. The United States is engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada, Mexico and the European Union. Analysts fear the tariffs could disrupt supply chains, undercut business investment and potentially wipe out the fiscal stimulus. “The potential of a trade war that threatens the global economic expansion could lead to weaker U.S. economic growth.” Estimates of second-quarter growth are as high as a 5.3 percent rate. Economists had expected first-quarter GDP growth would be unrevised at a 2.2 percent pace. The moderate first-quarter growth is probably not a true reflection of the economy’s health as GDP tends to be weak at the start of the year because of a seasonal quirk. An alternative measure of economic growth, gross domestic income (GDI), increased at a brisk 3.6 percent rate in the January-March period. That was revised up from the 2.8 percent pace reported last month. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 2.8 percent rate in the first quarter, instead of the 2.5 percent pace estimated in May. The income side of the growth ledger was boosted by after-tax corporate profits, which surged at an 8.7 percent rate last quarter rather than the 5.9 percent pace reported in May. The government slashed the corporate tax rate to 21 percent from 35 percent effective in January. After-tax profits rose at a 1.7 percent pace in the fourth quarter. 

Third Estimate 1Q2018 GDP Decreased to 2.0%. Corporate Profits Up.: The third estimate of first quarter 2018 Real Gross Domestic Product (GDP) was revised down to 2.0 % from the second estimate's 2.2 %.. The decline in GDP in this third estimate was primarily due to an consumer services spending and inventory change. The consumer spending declined from the previous quarter Headline GDP is calculated by annualizing one quarter's data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 1Q2018, the year-over-year growth is now 2.8 % (down from the advance estimates 2.9 %) - up from 4Q2017's 2.6 % year-over-year growth. So one might say that the rate of GDP growth improved 0.2 % from the previous quarter.The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income - but whatever the reason, there are differences. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. The table below compares the previous quarter estimate of GDP (Table 1.1.2) with the current estimate this quarter which shows:

  • consumption for goods and services slowed and only adding 0.6% to GDP.
  • trade balance improved and did not affect GDP
  • inventory change did not affect GDP
  • fixed investment growth added 1.2 % to GDP
  • federal spending added 0.1 % to GDP

The following is Table 1.1.2: [click to enlarge]

Q1 GDP Revised Lower To 2.0% As Q2 GDP Surge Awaits -- Two months after the first take of Q1 GDP surprised to the upside, printing at 2.3%, more than the 2.0% consensus estimate, and one month after the second estimate of 2.2%, missed expectations of 2.3%, moments ago the BEA reported its third and final Q1 GDP estimate, which declined again to 2.0%, and below the estimate 2.2%.  The reason for the second consecutive decline in the GDP calculatesion was a downward revision to Personal Consumption, which declined from an annualized bottom line contribution of 0.71% in the last estimate to 0.60%; additionally there was a drip in Private Inventories, which declined from the initial reading of 0.0.13% to a negative -0.01% print, however offset by another increase in Fixed Investment from 1.05% to 1.23%. Meanwhile, net trade was also revised modestly lower, down from 0.08% in the second estimate to -0.04% currently. There was a bit of a positive surprise for inflation watchers, as the GDP price index rose 2.2%, more than the 1.9% expected in 1Q, after rising 2.3% in the prior quarter. Meanwhile, core PCE q/q rose 2.3% in 1Q after rising 1.9% prior quarter. The more concerning print was the ongoing drip in personal consumption, which was again revised lower from 2.75% in Q4 to just 0.60%, the lowest since Q2 2013, largely as a result of a sharp drop in spending on autos and various other durable goods.Separately, corporate profits increased 1.8 percent at a quarterly rate in the first quarter of 2018 after decreasing 0.1% in the fourth quarter of 2017. Over the last 4 quarters, corporate profits increased 6.8 percent.As the BEA reports, profits of domestic non-financial corporations increased 2.2% after increasing 1.5%. Profits of domestic financial corporations increased 1.5 percent after decreasing 3.0 percent.  Profits from the rest of the world increased 0.8 percent after decreasing 1.3 percent.   With the data now quite stale, and reflecting a period of time that is almost three months ago, there was virtually no change across any asset class.What is more important for the market is that Q2 GDP is when the Trump fiscal stimulus appears to have kicked in, with most estimate now expecting prints in the 4% range, with some looking for a number over 5%.But then again - remember in Q1 when 'expectations' were for a 5.4% GDP print?

Visualizing GDP: An Inside Look at the Q1 Third Estimate  --The chart below is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics:Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2018 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.2 percent. With this third estimate for the first quarter, the general picture of economic growth remains the same; private inventory investment and personal consumption expenditures (PCE) were revised down. [more here] Let's take a closer look at the contributions of GDP of the four major subcomponents. The data source for this chart is the Excel file accompanying the BEA's latest GDP news release (see the links in the right column). Specifically, it uses Table 2: Contributions to Percent Change in Real Gross Domestic Product. Here is a chart of the latest estimates. Over the time frame of this chart, the Personal Consumption Expenditures (PCE) component has shown the most consistent correlation with real GDP itself. When PCE has been positive, GDP has usually been positive, and vice versa. In the latest GDP data, the contribution of PCE came at 0.60 of the 1.99 real GDP, down from the previous revision but still a positive contribution to Q1 GDP. Gross Private Domestic Investment was a positive contributor.  Net Exports were slightly negative in Q1.  Government Consumption Expenditures came in with a small positive contribution. As for the role of Personal Consumption Expenditures (PCE) in GDP and how it has increased over time, here is a snapshot of the PCE-to-GDP ratio since the inception of quarterly GDP in 1947. To one decimal place, the latest ratio of 69.4% is just below its record high.

Q1 Real GDP Per Capita: 1.35% Versus the 1.99% Headline Real GDP --The Third Estimate for Q1 GDP came in at 2.0% (1.99% to two decimals), down from 2.9% in Q4. With a per-capita adjustment, the headline number is lower at 1.35% 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.

Q2 GDP Forecasts - From Merrill Lynch:The data sliced 0.4pp from 2Q GDP tracking, bringing our estimate down to 3.6% qoq saar. [June 29 estimate].  And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thesecond quarter of 2018 is 3.8 percent on June 29, down from 4.5 percent on June 27. [June 29 estimate]  From the NY Fed Nowcasting Report The New York Fed Staff Nowcast stands at 2.8% for 2018:Q2 and 2.5% for 2018:Q3. [June 29 estimate] CR Note: These estimates suggest real annualized GDP in the 2.8% to 3.8% range in Q2.

Trump's trade war triggers recession fears - After seeing a boost from taxes and deregulation, businesses and investors are getting spooked by the president’s trade and immigration moves. President Donald Trump could be running a “Morning in America” midterm campaign strategy, bragging about an economy growing as consistently as it has in over a decade with an unemployment rate tied for the lowest level in nearly half a century. Instead, he’s banking on hard-line trade and immigration policies that could excite his base while undoing economic gains from other Trump policies and nudging the U.S. toward a recession. ..On Monday alone, iconic motorcycle manufacturer Harley-Davidson said it would move some production out of the U.S. in response to Trump's tariff fight with the European Union while the Dow Jones Industrial Average tumbled over renewed fears from the president's expected new trade restrictions on China. It's all part of a high-risk trade and immigration strategy that has many Republicans, business leaders and even Trump’s former advisers deeply worried about both the politics and the economics of the president’s strategy. “The economy is doing exactly what we thought and hoped it would do based on what the administration was able to accomplish in tax reform and the deregulatory agenda,” Gary Cohn, Trump’s former National Economic Council director, said in an interview. “Both were aimed at stimulating the economy through growth and job creation. And that’s happened in a very positive way. Anything else that derails or confuses the economic agenda is confusing for the system.” Confusion is certainly coursing through the system now on both trade and immigration 

What’s the Yield Curve? ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention - You can try to play down a trade war with China. You can brush off the impact of rising oil prices on corporate earnings. But if you’re in the business of making economic predictions, it has become very difficult to disregard an important signal from the bond market. The so-called yield curve is perilously close to predicting a recession — something it has done before with surprising accuracy — and it’s become a big topic on Wall Street. Here’s what the fuss is all about. The yield curve is basically the difference between interest rates on short-term United States government bonds, say, two-year Treasury notes, and long-term government bonds, like 10-year Treasury notes. Typically, when an economy seems in good health, the rate on the longer-term bonds will be higher than short-term ones. The extra interest is to compensate, in part, for the risk that strong economic growth could set off a broad rise in prices, known as inflation. Lately, though, long-term bond yields have been stubbornly slow to rise — which suggests traders are concerned about long-term growth — even as the economy shows plenty of vitality. At the same time, the Federal Reserve has been raising short-term rates, so the yield curve has been “flattening.” In other words, the gap between short-term interest rates and long-term rates is shrinking. On Thursday, the gap between two-year and 10-year United States Treasury notes was roughly 0.34 percentage points. It was last at these levels in 2007 when the United States economy was heading into what was arguably the worst recession in almost 80 years. 

In "Catastrophic" Scenario, CBO Projects US Debt/GDP Hitting 247% - The CBO released its latest long-term budget outlook today, and found that America's financial situation continues to deteriorate. While there were not many notable variations from the last forecast, there were some notable differences.A quick summary of the latest financial situation: At 78% of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would approach 100 percent of GDP by the end of the next decade and 152% by 2048 (by comparison, in its March 2017 forecast, public debt was estimated at 113% of GDP in 2017 rising to 150% by 2047). That amount would be the highest in the nation’s history by far.  Moreover, if lawmakers changed current law to maintain certain policies now in place— for example preventing a significant increase in individual income taxes in 2026 as Trump has been suggesting — the result would be even larger increases in debt.A breakdown of projected spending and revenue over the next 30 years is shown below. This is how the breakdown by key spending and revenue components would change from 2018 to 2048. On the GDP side, the CBO forecasts average annual growth of 1.9% for the 2018-2048 period, an increase from the 1.4% average over the past decade. The CBO also forecasts inflation of 2.4% and unemployment of 4.6% for the 2018-48 period.More troubling is the CBO's projection of interest rates which will rise from their currently low levels and as debt accumulates, putting increasing pressure on government finances and push interest payments to record levels in the coming decades.Specifically, the rising levels of federal debt would push debt payments from 1.6% of the gross domestic product in 2018 to 3.1% in 2028 and 6.3% in 2048, which would be the highest level ever. At that point, interest payments would equal spending on Social Security.  Those payments would help put overall federal spending to 29% of GDP for the first time since World War II.

Trump’s top economic adviser says deficit ‘is coming down rapidly,’ contradicting virtually all available data - President Trump's top economic adviser said Friday that the federal deficit is “coming down rapidly,” contradicting estimates by nonpartisan analysts, Congress's official scorekeeper and a branch of the White House. Larry Kudlow, director of the White House's National Economic Council, said on Fox Business that stronger economic growth was creating enough new tax revenue to bring down the deficit. “The deficit — which was one of the other criticisms [of the GOP tax law] — is coming down, and it's coming down rapidly,” Kudlow said. “It's throwing up enormous amounts of new tax revenue.”.@larry_kudlow: "The deficit... is coming down, and it's coming down rapidly. Growth solves a lot of problems." pic.twitter.com/H375h7rV0a— FOX Business (@FoxBusiness) June 29, 2018   Kudlow clarified to The Washington Post on Friday afternoon that he was referring to his expectations about future deficit levels, not arguing that the deficit had already come down. (The deficit from January through April was $161 billion, according to Treasury, up from $135 billion at the same point last year.) “The economy is so strong right now it’s going to produce lower deficits. I probably should have said future deficits,” Kudlow said. But government data and nonpartisan analysts project that deficits will continue to expand, in both the near and long term. 

Documentary Of The Week: Rethinking Fiscal Policy: -  John Lounsbury - Why are governments finding it difficult to fund the services that are competing for the "public dollar"? Stephanie Kelton argues that the reason is a flawed assumption about money. Instead of running fiscal policy based on an assumed level of income (from taxes), she proposes that the policy should be determined by what the body politic can agree is needed and then fund as much as the economy can produce. Prof. Kelton argues that what is produced in the economy should not be limited by how much money is available; the amount of money available should be determined by what the economy can produce (and consume). She says that instead of "defining the economy" by "balancing the budget", governments should be "defining the budget" to "balance the economy".

Democrats back massive Pentagon budget for war and repression - Senate Democrats joined Republicans this week to approve a massive expansion of the US military as demanded by President Donald Trump. Congressional action on the near-record Pentagon budget is taking place behind a veil of silence, with no public discussion and virtually no media coverage.Even as the Trump administration steamrolls ahead with plans to gut social spending, winning a House vote Thursday to slash $23 billion from food stamp spending and advancing a scheme to consolidate the departments of Labor and Education in the name of “cutting costs”, both houses of Congress have approved a bill that expands military spending at the fastest rate since the highpoint of the war in Iraq.The so-called “John S. McCain National Defense Authorization Act for Fiscal Year 2019”, which passed the Senate 85-10 Monday after having been approved by the House of Representatives in May, allocates $716 billion for the Defense Department, an increase of $82 billion.This increase alone is larger than the total budget of the Department of Education, approximately $70 billion. It is also larger than the annual military budget of Russia ($61 billion). The increase in Pentagon spending between 2017 and 2019, $165 billion, is larger than the entire defense budget of China.When funding for the US intelligence agencies, the Department of Homeland Security, federal aid to local police and various “black” operations are factored in, the budget for the United States “total army” amounts to over a trillion dollars, a figure larger than the gross domestic product of Indonesia, a country with a population of 261 million.Just over one third of the Pentagon’s annual budget, or $265 billion, could end world hunger, according to figures from the Stockholm Peace Institute. Another third, or $239 billion, would provide primary and early secondary education for the entire world population. Instead, these vast sums are squandered on building and deploying the tools of mass murder.

 Recent Pentagon Increases Exceed Russia’s Entire Military Budget - “The House of Representatives’ $716 billion Fiscal Year 2019 Pentagon spending bill is one of the largest since World War II.  Spending at this level is both dangerous and unnecessary. It’s good news for Lockheed Martin, Northrop Grumman, and other weapons contractors, but bad news for the rest of us.  “The increase in Pentagon spending in the last two years alone is greater than Russia’s entire military budget. “The bill continues to waste billions of dollars on a new generation of nuclear weapons, part of the Pentagon’s planned $1 trillion-plus nuclear weapons buildup over the next three decades. Even many advocates of nuclear deterrence acknowledge that other countries could be prevented from attacking the United States with a fraction of its current arsenal of over 6,000 warheads. And the only true way to protect us from nuclear weapons is to get rid of them altogether by supporting the global ban that passed the United Nations General Assembly last year. “The new Pentagon spending bill will also continue to underwrite America’s seven current wars, in Afghanistan, Iraq, Syria, Libya, Somalia, Niger, and Yemen.  America’s post-9/11 wars have done more harm than good, resulting in over 370,000 deaths on all sides at a cost of $5.6 trillion and counting, according to the Costs of War project at Brown University. Congress should be acting to end these devastating conflicts, not continuing to fund them.”

What’s inside Trump’s major government overhaul -- The White House’s Office of Management and Budget today released its sweeping plan for government reorganization, which includes drastic changes to agency structures and responsibilities.“This effort, along with the recent executive orders on federal unions, are the biggest pieces so far of our plan to drain the swamp. The federal government is bloated, opaque, bureaucratic, and inefficient. President Trump understands the frustration felt by hard-working Americans,” said OMB Director Mick Mulvaney in a news release on the plan. “I am eager to work with my colleagues across the executive branch and in Congress to deliver a more trusted and efficient government that puts the American taxpayer first.”  The reorganization plan stems from a March 2017 executive order that called for a reshaping of the executive branch. The news release said that the reorganization aims to eliminate problems that many American citizens and companies face in having to deal with multiple agencies to resolve one concern or meet one requirement.Four experts from think tanks and executive agencies testified on the potential effects of federal reorganization, as well as give their own recommendations on the issue.Perhaps the most drastic element of the reorganization plan includes a merging of the Departments of Education and Labor, in order to better transition students into various workforce programs. The Department of Education is a relatively small agency, with just under 4,000 full-time employees in 2017. Comparatively, the Department of Labor had over 14,000 employees in the same year. The combined agency would be called the Department of Education and the Workforce.  “Merging ED and DOL would allow the federal government to address the educational and skill needs of American students and workers in a coordinated way, eliminating duplication of effort between the two agencies and maximizing the effectiveness of skill-building efforts,” the reorganization plan said.

Military largely absent from government reorganization -- As the government prepares reorganize everything from the Postal Service to the Office of Personnel Management, one department is suspiciously absent from the plan. The Defense Department, which commands a budget of more than $700 billion, only has 14 mentions in the 132 page plan to slim down the government.DoD is also missing from the list of 15 departments, agencies and administrations who submitted plans to internally cutback and reorganize.The reorganization plan’s only recommendations for the Pentagon involve areas not traditionally thought of as military responsibilities. Former Associate Director for the Office of Personnel Management Robert Shea told Federal News Radio that DoD’s lack of presence in the plan is a continuation of special treatment the Pentagon gets from policy and lawmakers. “DoD is in many cases immune from a lot of management improvement efforts that go on outside of government, mostly because of the authority they have on the Hill. I think there is plenty of reduction and overlap and duplication you could [find] at DoD,” Shea said. DoD stands alone as the only department to never have performed an audit. The Pentagon is planning its first audit for the end of this year to much anticipation. A high profile 2015 report from the Pentagon stated DoD could save $125 billion over five years just by cutting contractors and streamlining some practices. That money could be saved without firing a single person.

Doug Casey On Trump's Space Force - Last Monday, Donald Trump announced that he’s establishing a new, sixth branch of the military known as the “Space Force.”  It sounds like a joke. But Trump’s dead serious about this. Here’s what he said:  Our destiny beyond the Earth is not only a matter of national identity, but a matter of national security… When it comes to defending America, it is not enough to merely have an American presence in space. We must have American dominance in space. It’s one of the strangest stories I’ve ever come across. So, I called up Doug Casey as soon as I heard it, to get his take... Justin: Doug, what do you think about the creation of a Space Force? Doug: I thought there was an understanding amongst governments that they weren’t going to militarize space, as much as there’s an understanding that Antarctica won’t be militarized. Nice ideas. Ideally you want the smallest militaries possible, in the fewest places possible - instead of large militaries absolutely everywhere. In fact, my ideal would be to limit the size of the military to the head of state and his cabinet, and their area of operations to an octagon, or a small arena someplace. But that’s unrealistic. Weak old men prefer to have foolish young men fight for them, at taxpayer expense.  That said, anything that can be militarized will be militarized in today’s world. So an American Space Force was inevitable. And there’s no point in kvetching about the inevitable. But it takes risks and expenses up to the next level.  Once space is militarized, the Space Force could - is intended to - destroy any or all of the thousands of satellites in space for communications, science, and all sorts of worthwhile things. Causing trillions of dollars of direct and indirect damage. But that’s far from the only thing that Space Force would do. Like any military organization, the purpose is to kill people and destroy property.

North Korea has increased nuclear production at secret sites, say U.S. officials — U.S. intelligence agencies believe that North Korea has increased its production of fuel for nuclear weapons at multiple secret sites in recent months — and that Kim Jong Un may try to hide those facilities as he seeks more concessions in nuclear talks with the Trump administration, U.S. officials told NBC News.The intelligence assessment, which has not previously been reported, seems to counter the sentiments expressed by President Donald Trump, who tweeted after his historic June 12 summit with Kim that "there was no longer a nuclear threat from North Korea." Analysts at the CIA and other intelligence agencies don't see it that way, according to more than a dozen American officials who are familiar with their assessments and spoke on the condition of anonymity. They see a regime positioning itself to extract every concession it can from the Trump administration — while clinging to nuclear weapons it believes are essential to survival. The White House did not immediately respond to a request for comment. In recent months, even as the two sides engaged in diplomacy, North Korea was stepping up its production of enriched uranium for nuclear weapons, five U.S. officials say, citing the latest intelligence assessment. North Korea and the U.S. agreed at the summit to "work toward"denuclearization, but there is no specific deal. On Trump's order, the U.S. military canceled training exercises on the Korean peninsula, a major concession to Kim. While the North Koreans have stopped missile and nuclear tests, "there's no evidence that they are decreasing stockpiles, or that they have stopped their production," said one U.S. official briefed on the latest intelligence. "There is absolutely unequivocal evidence that they are trying to deceive the U.S."

US Lawmakers Want Iran Blacklisted From International Financial System - Senator Rob Portman (R-OH) and Rep. Ed Royce (R-CA) have penned a letter to Treasury Secretary Stephen Mnuchin urging him to pressure world leaders to ban Iran from accessing international financial systems, after it was revealed that the Obama administration covertly helped Tehran sidestep international sanctions and potentially tap into billions in hard currency. Iran was taken off the Financial Action Task Force (FATF) blacklist as part of an incentive package provided by Obama in the runup to the landmark nuclear deal killed by President Trump in early May. "In the push to save its deeply flawed nuclear deal, the Obama administration unwisely backed a wide range of economic relief for Iran - including through the FATF. In June 2016 the administration supported the FATF's decision to suspend "counter-measures" against Iran for one year, following Tehran's submission of an Action Plan to the FATF to address deficiencies in its anti-money laundering/counter-terrorist financing policies." For the last two years, the FATF has continued to suspend these countermeasures at six-month intervals, despite the continued dangerous and belligerent actions of the Iranian regime. Many reports have indicated the regime in Tehran actually increased financial support for its terror proxies in the wake of the nuclear deal.  Portman and Royce - chair of the Senate Permanent Subcommittee on Investigations and chair of the House Foreign Affairs Committee, say that new revelations uncovered through Congressional investigations in to the Obama administration's secret diplomacy with Iran make it all the more important for the Trump administration to take concrete steps against Iran's terror support networks.  The FATF will meet next week in Paris, where Portman and Royce hope to see substantive action against Iran.

Anyone Promoting Regime Change In Iran Is An Evil Piece Of Shit  -- Caitlin Johnstone - I have been saying all year that the 8chan phenomenon known as “QAnon” is bogus, and as time has gone on the evidence has become overwhelming that it is an establishment psyop designed to herd the populist right into accepting the narratives and agendas of the establishment orthodoxy. Whether they’re claiming that every capitulation the Trump administration makes to longstanding neoconservative agendas is actually brilliant 4-D chess strategy, or saying that Julian Assange isn’t really trapped in the Ecuadorian embassy, QAnon enthusiasts are constantly regurgitating talking points which just so happen to fit in very conveniently with the interests of America’s defense and intelligence agencies. A recent “Q drop” (a fancy name for an anonymous user posting text onto a popular internet troll message board with zero accountability) makes this more abundantly clear than ever,  Once you’re cheering for a longtime neoconservative agenda to be accomplished in one of George W Bush’s “Axis of Evil” countries, you are cheering for the establishment. Or, to put it more clearly to Q followers, you are cheering for the deep state. So now you have conspiracy-minded populist right wingers being manipulated into supporting the same standard Bush administration globalist agendas that Alex Jones built his career on attacking. The support for regime change interventionism in Iran isn’t limited to the QAnon crowd, having now gone fully mainstream throughout Trump’s base, and I’d like to address a few of the arguments here that they have been bringing to me: “Iran is nowhere near the same thing as Iraq, Libya or Syria!”  Please go look at a globe and think a little harder about your position here. Iran is a target for regime change for the exact same reasons its neighbors Iraq and Syria have been; it occupies and extremely strategically significant location in an oil-rich region that the US-centralized empire wants full control of. Thinking this one is different because its government isn’t secular is the product of many years of Islamophobic propaganda; the plutocrats and their allied intelligence and defense agencies don’t care what religion sits on top of their oil, and Saudi Arabia proves it. Any argument made against Iranian theocracy could be made even more strongly against KSA theocracy, but you don’t see Sean Hannity advocating the overthrow of the Saudi royals, do you?

US Senate Bans Sale Of F-35s To Turkey: Dealing With An Unreliable Partner - On June 19, the Senate passed a draft defense bill for FY 2019 that would halt the transfer of F-35 Joint Strike Fighter (JSF) aircraft to Turkey, until the secretary of state certifies that Turkey will not accept deliveries of Russian S-400 Triumf air-defense systems. It paves the way for Ankara’s expulsion from the program if it does not bow to this pressure. The support for the measure (85-10) is too strong to be overridden.  Turkey has been one of six major partner nations in the JSF project since 2002. It is responsible for the production of certain components and for providing maintenance services in Europe to other operators of the aircraft. About a dozen Turkish companies are involved in the manufacturing, in accordance with the deal that was reached 16 years ago (2002). Ankara has placed an order to buy more than 100 F-35A Lightning IIs. It has already paid $800 million, so any restrictions that are imposed now will be an illegal breach of obligations by the US. On June 21, the Senate Appropriations Committee added an amendment to the foreign-aid bill that would put a stop to future deliveries, if Ankara does not cancel the S-400 deal already concluded with Moscow. One of the arguments for blocking the F-35 transfer is the fear that Russia would get access to the JSF, enabling Moscow to detect and exploit its vulnerabilities. It would learn how the S-400 could take out an F-35. The House version contains even more limits on arms transfers to Turkey. In May, the bill passed the House with a provision mandating a temporary hold on all major defense sales to Turkey, including F-35s, due in part to its impending purchase of the S-400. Almaz-Antey, the company that manufactures the Triumf, is on a State Department list of banned entities. Any deal with that firm could result in sanctions.

Fighter Sale to Turkey Could Pit Trump Against Congress --Lawmakers on Capitol Hill are threatening to block Turkey from obtaining its promised fleet of 100 F-35 fighter jets over Ankara’s human rights violations and planned purchase of a controversial Russian air defense system. But it’s not clear that President Donald Trump’s administration will back them up. Turkey, the third-largest planned operator of the F-35 after the United States and United Kingdom, just received its first aircraft during a June 21 rollout ceremony at Lockheed Martin’s Fort Worth, Texas, facility. But members of U.S. Congress are pushing to prevent the planned transfer of those jets across the Atlantic to Turkey next summer, after pilot training wraps up, and to kick Ankara out of the nine-nation F-35 consortium altogether. The row underscores how tense U.S.-Turkey relations have become in recent years. The NATO allies have clashed in recent months over Turkish expansion of its campaign in Syria and U.S. support for the Kurdish People’s Protection Units militia, as well as Turkey’s detention of an American pastor and deepening ties with Russia. The international community has also widely condemned Turkish President Recep Tayyip Erdogan’s purge of military officials and civil servants after a 2016 coup attempt. Caught in the middle of the tense bilateral relations is the United States’ flagship fighter jet.“We’re talking about an aircraft here, but what we’re really talking about is whether Turkey can’t be trusted with America’s frontline fighter, particularly if they are buying Russian systems,”  “Most of the leaders I dealt with in Turkey are in prison right now,” said retired U.S. Air Force Lt. Gen. Tome Walters, who served as director of the Defense Security Cooperation Agency from 2000 to 2004. “The assumption was, these are our allies and they will be our allies forever, but now we have Erdogan and we have the Russian S-400, so do we want the F-35 in an authoritarian Turkey?

Who Will Call The First Bluff? US Threatens Turkey With Sanctions Over Russian S-400 Purchase -   Despite an ostentatious "roll out" ceremony by Lockheed Martin last week in Fort Worth to mark the handover of the first F-35-A Lightning II jet bound for Turkey, the advanced stealth multi-role fighter isn't going anywhere anytime soon as we previously explained after the Senate passed a draft defense bill for FY 2019 that would halt the transfer until the secretary of state certifies that Turkey will not accept deliveries of Russian S-400 'Triumf' air-defense systems.  Following upon previous warnings, the US State Department has again threatened that Turkey will be targeted by sanctions if it receives the S-400 from Russia under a contract finalized between Ankara and Moscow at the end of 2017, said to be worth $2.5 billion.  The State Department recalled that this decision is a result of the bill President Donald Trump signed into law last summer, which seeks to punish companies that do business with the Russian defense industry.  On Tuesday a top State Department official — Assistant Secretary of State for European and Eurasian Affairs Wess Mitchell — stated the following at a hearing of the Senate Foreign Relations Committee:“We made it clear that if Turkey buys S-400s… there will be consequences. We will introduce sanctions within Countering America’s Adversaries Through Sanctions Act (CAATSA).” “We believe that we have existing legal authorities that would allow us to withhold transfer under certain circumstances, including national security concerns,” he said. “We believe that we continue to have the time and ability to ensure Turkey does not move forward on S-400 before having to take a decision on – on F-35. We’re being very clear in our messaging to the Turks that there will be consequences.” And notably Mitchell also highlighted Turkey's deteriorating human rights record, estimating that about two dozen Americans remain illegally detained in the country, many of them dual nationals (though we should note that Washington only plays the 'human rights' card on allies selectively and when convenient).    The main argument for blocking the F-35 transfer is the fear that Russia would get access to the extremely advanced Joint Strike Fighter stealth aircraft, enabling Moscow to detect and exploit its vulnerabilities. Russia would ultimately learn how the S-400 could take out an F-35.

US Freezes Civil Assistance to the Palestinian Authority - The United States has completely frozen its civil assistance to the Palestinian Authority, Israeli TV station i24 revealed on Monday. This step, it is said, came two months after the decision of the US Congress to oblige the PA to stop paying salaries for Palestinian prisoners inside Israeli jails and the families of Palestinians killed by Israel. According to the report, Washington has four conditions to be fulfilled before such assistance can be resumed: stopping payments to prisoners and families of Palestinians killed by Israel; cancelling laws that guarantee paying these salaries; taking “credible” measures to fight “terror”; and condemning “Palestinian terror and violence.” A member of the US Senate Foreign Relations Committee confirmed that “the US budget for the West Bank and Gaza is suspended until it is reviewed.” In addition, USAID in the West Bank and Gaza has not received its budget for the year, and so is unable to submit bids for its projects. A number of projects run by international aid agencies working in the Palestinian territories will be suspended due to the freeze of US funding.

Amid Record Approval Ratings, Trump Set To Roll The Dice With Putin Summit In July - With President Trump riding high on near-record-high approval ratings... In what is sure to incense Adam Schiff, The Democrats, and all establishment media, Austrian newspaper Kronen Zeitung reports that a Trump-Putin summit is expected to take place on July 15th in Vienna "according to the latest information"..."For several days diplomatic envoys from Washington and Moscow have been in Vienna, to clarify the details of the discussions between the two presidents."For now, however, no confirmation has been received from either side, as Tass reported, Kremlin spokesman Dmitry Peskov said that Kremlin isn't yet ready to give information, but will provide it when available. But, as M K Bhadrakumar, via The Asia Times, reports, an announcement is expected soon that the meeting will occur after the NATO summit. If the Trump White House had let it be known a couple of months ago that it was working with the Kremlin to schedule a summit meeting between the two presidents, all hell would have broken loose in the Washington Beltway. But that isn’t happening. There is an eerie calm in Washington, as if Trump’s detractors have run out of ammunition. What explains it? First, the fizz seems to have gone out of the Russia collusion theory. Robert Mueller could keep uncovering crimes in American public life (of which there is no dearth) forever but he has not been able to say he has actually substantiated the Russia collusion theory. The latest Pew Research Center analysis on June 20 reveals that only 28% Americans remain any longer “very confident” of the fairness of Mueller’s investigation, while four-in-10 say they are not too sure (19%) or are at all confident (21%) in his ability to do this.  This partly explains why the cascade of criticism that could have been expected over Trump’s plan for a meeting with President Vladimir Putin hasn’t materialized – although a lavish, televised lovefest is sure to make a mockery of the Mueller inquest. Fundamentally, Trump has had remarkable success in boosting his political standing among members of his own party. As Susan Glasser wrote in the New Yorker recently: “Increasingly, few Republicans are willing to stand in Trump’s way, even when the President’s policies clash with their own deeply held views.”

Trump, Putin to meet July 16 in Helsinki to discuss 'range of national security issues' - US President Donald Trump and Russian President Vladimir Putin will meet July 16 in Helsinki, Finland, for talks that could touch on a range of key energy and commodity topics such as US oil sanctions, the Iran nuclear deal, trade tariffs and other geopolitical conflicts. "The two leaders will discuss relations between the United States and Russia and a range of national security issues," the White House press secretary said Thursday in a statement. Trump has been asking OPEC for weeks to increase oil production to moderate prices. OPEC and its non-OPEC allies led by Russia agreed last week to pump more oil to make up an expected shortfall from Iran, Venezuela and Libya. Oil prices rose sharply this week after the US State Department announced it would offer no waivers to Iran's oil buyers when sanctions snap back in November, a hard-line approach many allies did not expect after the Obama administration allowed them to continue some imports in 2012-2015 as long as they made significant cuts every six months. Analysts increased their projections for potential supply shortages in the fourth quarter. In April, the US imposed new sanctions against Russian state-owned Gazprom CEO Alexei Miller, Surgutneftegaz Director General Vladimir Bogdanov, major aluminum producer Rusal, and 36 other Russian individuals and entities in response to Russian's involvement in Crimea, Syria and "ongoing malicious cyber activity," senior Trump administration officials said at the time. The White House official said at the time the sanctions were designed to target senior Russian officials and oligarchs in Putin's inner circle to increase pressure on his government.

US Dems, NATO Allies Express Fear Over Putin-Trump Summit - Russian officials confirmed on Wednesday that a deal has been reached on holding a summit between President Trump and President Putin. Though the two have met twice on the sideline of international events, this will be the first direct summit with the Russian leader of Trump’s time in office. With allegations still swirling about Russian “meddling” in the 2016 election, President Trump has been very cautious with his diplomatic ties with Russian officials. This has meant that, despite substantial issues to be addressed, the US has much less engagement with Russia than in years past. John Bolton, who was in Moscow negotiating this summit, says that President Trump will be raising a “full range of issues” during the summit. He downplayed the significance of the meeting, saying he didn’t view the summit as anything unusual.Which normally it wouldn’t be. US and Russian presidents meet often. That Trump hasn’t done so formally in the last 18 months is much more unusual, however, and the political circus still swirling around the election will  likely make the summit controversial, particularly for Trump’s political opponents. It did not take long for the Democrats to start jumping up and down about this and who else but Rep. Adam Schiff to lead the charge: “I fear that this summit will prove to be another blow to NATO and our allies, and a gift to the Kremlin,” Schiff says in emailed statement, adding that Trump should use the summit to confront Putin “on Russia’s interference in our elections.” Trump should also confront Putin on “the invasion of Ukraine, Russian and Syrian war crimes in Syria, and the chemical weapons attack in the U.K.'”We would expect this rhetoric to ramp up from here.

Kelly expected to leave White House this summer: WSJ | TheHill: White House chief of staff John Kelly is expected to leave his post sometime this summer, The Wall Street Journal reported Thursday. The White House denied the report. “I spoke to the president who refuted this article. He said it is absolutely not true and that it is fake news,” White House spokeswoman Lindsay Walters told reporters traveling on Air Force One. The Journal reported that Kelly could leave his role as early as this week or after President Trump returns from a scheduled trip to Europe next month. Trump will travel to Brussels from July 11 to 12 for a NATO conference, followed by a trip on July 13 to the United Kingdom. He is scheduled to meet with Russian Vladimir Putin on July 16 in Finland. Trump has also spoken in recent weeks with advisers about potential replacements, the Journal reported. Office of Management and Budget Director Mick Mulvaney is considered a favorite for the role, as is Nick Ayers, who currently serves as chief of staff to Vice President Pence. Trump and Kelly have had a tense relationship since the former Homeland Security secretary joined the White House in July 2017. Multiple reports in recent months have indicated that Kelly has limited influence over the president and that the two don't get along. There have been previous rumors about Kelly leaving the White House. In April, Kelly denied a report that he called Trump an “idiot" and mocked the president's lack of policy knowledge. “I spend more time with the president than anyone else and we have an incredibly candid and strong relationship," Kelly said at the time. "I am committed to the president, his agenda, and our country," he added. "This is another pathetic attempt to smear people close to President Trump and distract from the administration’s many successes." 

Mattis Increasingly Shut Out Of Major White House Decisions  According to NBC News, Defense Secretary James Mattis has been cut out of several recent high-profile administration decisions, including Trump's final decision to pull out of the Iran deal, and the decision to call off military exercises around the Korean peninsula. Mattis reportedly learned about both decisions through a colleague and had felt "blindsided" when they were made. The decisions to circumvent the Secretary of Defense were reportedly made because Trump has become fed up with Mattis for stalling his policy decisions. And as if the previous two incidents weren't enough, Trump reportedly cut Mattis out of the loop when he made his decision to order the Pentagon to create a "Space Force" - a sixth branch of the military overseeing operations in space. The two reportedly have had trouble getting along in recent months. "They don't really see eye to eye," said a former senior White House official who has closely observed the relationship. Mattis' fall from grace contrasts with Trump's early praise of the retired four-star general with the quotable nickname "Mad Dog" Mattis. Their relationship has reportedly shifted since the early days of the administration, when Trump would at least keep Mattis in the loop even if Mattis disagreed on Trump's preferred course of action. However, Mattis's fall from grace is the result of Trump blaming him for the administration's clumsy rollout of its ruling on transgender soldiers, as well as for "talking down to him" and slow-rolling the administration's other policies. Crucially, Mattis also opposed moving the US embassy to Jerusalem from Tel Aviv, arguing that it could heighten security problems in the Middle East.  Trump now prefers advice from Bolton - of whom Mattis disapproves - and Secretary of State Mike Pompeo, who until recently led the CIA. One of Mattis's other problems is that Trump has already cleared out Tillerson and McMaster, with whom Mattis shared an early alliance. When Tillerson and Mattis would both disagree with the administration's position, Trump in the past would focus his anger on Tillerson. That isn't so anymore.

Xi tells Mattis China won't give up 'even one inch' of territory (Reuters) - China is committed to peace but cannot give up “even one inch” of territory that the country’s ancestors left behind, Chinese President Xi Jinping told U.S. Defense Secretary Jim Mattis on Wednesday during his first visit to Beijing. Xi’s remarks underscored deep-rooted areas of tension in Sino-U.S. ties, particularly over what the Pentagon views as China’s militarization of the South China Sea, a vital transit route for world trade. But irritants in U.S.-China relations extend to other sensitive areas, including fears of a full-blown trade war between the world economic heavyweights. Beijing is also deeply suspicious of U.S. intentions toward self-governing and democratic Taiwan, which is armed by the United States. China views the island as a sacred part of its territory. Meeting in Beijing’s Great Hall of the People, Xi told Mattis that China had only peaceful intentions and would not “cause chaos,” state television reported. Both countries’ common interests far outweigh their differences, but on territorial issues there can be no concessions, Xi said, without referring to specific areas. “We cannot lose even one inch of the territory left behind by our ancestors. What is other people’s, we do not want at all,” state television cited Xi as saying. Mattis, in comments in front of reporters, told Xi the talks had been “very, very” good. “I am happy to be in China and we are assigning the same high degree of importance to the military relationship” with China, Mattis said. That relationship has been tested in recent months. In May, the Pentagon withdrew an invitation to China to join a multinational naval exercise, citing China’s military moves in the South China Sea. The U.S. decision upset Beijing and was raised during Mattis’ talks, officials said. U.S. defense officials told reporters traveling with Mattis that the talks were generally positive and candid. While both sides acknowledged points of friction, they also sought to focus on areas of alignment — including a shared goal of denuclearization of the Korean peninsula. “Areas of disagreement were identified but not necessarily dwelt upon,” 

South China Sea Issue Dispute Thwarts Common Ground in Mattis-Xi Meeting —U.S. Defense Secretary Jim Mattis met Wednesday with Chinese President Xi Jinping in an attempt to find common ground on security issues, but appeared to agree to disagree over the South China Sea.The visit came as the Trump administration signaled Wednesday that the U.S. wouldn’t harden its position in the burgeoning economic conflict between the U.S. and China. The subject of trade came up briefly during Mr. Mattis’s visit, but aides said he aimed to keep the conversation focused on security issues and didn’t carry any particular message from Mr. Trump on trade.Aides to Mr. Mattis described his meeting with Mr. Xi and other talks as positive and constructive, and aimed at expanding the military-to-military relationship. The meeting was part of a weeklong visit to Asia by the U.S. defense chief that will include stops in Seoul and Tokyo.The talks spanned a range of issues that included Beijing’s concerns about Washington’s relationship with Taiwan, the self-ruled island that China also claims, as well as the denuclearization of North Korea and peace talks in Afghanistan. The longstanding disagreement between the U.S. and China over Beijing’s militarization of the chain of islands in the South China Sea, not surprisingly, emerged as a top issue, said aides to Mr. Mattis, who was making his first visit to China as secretary. The Chinese have maintained their position that the island-building in the South China Sea, along with the construction of military facilities in recent years and the more recent placement of weaponry on some islands, is purely for defensive purposes. Mr. Mattis reinforced the American position that the islands sit in international waters and that China should follow rules-based, international law.  A senior American defense official who attended the meetings said the Chinese have changed the “facts on the ground” in recent months and acknowledged the two sides simply don’t see eye-to-eye on the issue. “We agree to continue the discussion,” said the official after the series of meetings Wednesday that Mr. Mattis had with Mr. Xi and other top Chinese officials. “The secretary was effective in saying these are longstanding principles, these are widely shared, it’s not for one country to diminish what are international rights for navigation as defined in international waters.”

Which American CEOs did Xi Jinping meet in Beijing? UPS, Pfizer, Goldman all on the list  - American executives from the likes of UPS, Pfizer, Cargill, Prologis and Goldman Sachs were at a gathering in Beijing when President Xi Jinping called for multinationals to help fight “protectionism” and told them China would remain open for business, according to images in state media reports and on social media. U.S. business delegates at the Global CEO Council round-table summit on Thursday included David Abney of UPS, Pfizer’s Albert Bourla, Arnold Donald from Carnival, Cargill’s David MacLennan, Hamid Moghadam of Prologis, Thomas Pritzker of Hyatt and David Solomon from Goldman Sachs, the photographs showed. Official media did not provide a full list of foreign executives at the summit, which was held at the Diaoyutai State Guest House. The CEO council was set up in 2013 by the Chinese People’s Association for Friendship with Foreign Countries, one of Beijing’s diplomatic arms, to improve the government’s ties with multinationals. Xi met the executives as a trade war brews between the world’s two biggest economies, after U.S. President Donald Trump escalated the dispute this week by threatening to impose 10 percent tariffs on another $200 billion worth of Chinese products. 

Trump's Doomsday Gamble In China Trade War -- President Trump dramatically resumed a trade war footing this week with Beijing, threatening to impose tariffs on virtually all imported Chinese goods to the US. After earlier negotiations this month appeared to avert a clash, the Trump administration is back to full trade war mode. With fiery language, the US president and his trade advisors said they have run out of patience with what they claim to be “predatory practices” by Beijing.For its part, China quickly hit back, condemning “unacceptable blackmail” by Washington. Beijing said it will not hesitate to respond in kind with counter-tariffs on American exports. Markets in Asia, Europe and America tumbled, with companies and investors panicked by the prospect of a full-blown trade war between the world’s two largest economies, and the uncertain repercussions from such a titanic clash.Trump is gambling big time. He is betting that China will be the “first to blink”, as the New York Times reported. That’s because the Trump administration reckons that with China’s huge trade surplus, Beijing has much more to suffer financially if it goes toe-to-toe with the US in a trade showdown.“China has a lot more to lose than we do,” said Trump’s trade advisor Peter Navarro, who is a hawk when it comes to dealing with Beijing. Navarro, like Trump, has continually accused China of ripping off the American economy and workers through alleged unfair trade practices and theft of intellectual property from US tech companies. During his election campaign, Trump fired up voters with tirades slamming China for “raping America”. Recently, the president railed against “China taking $500 billion out of our economy every year”. But typical of Trump, the emotive charges and figures are not what they appear to be. For a start, the US economy has been running a chronic trade deficit with the rest of the world for the past four decades. To accuse China of being the problem is a deceitful distraction from the way American capitalists have historically cheated US workers with layoffs and downsizing. One of those capitalists profiting very nicely from setting up in China is Donald Trump’s daughter Ivanka whose clothes business profits from manufacturing in China and exporting to the US, thereby contributing to the American trade deficit. Another issue is that whatever complaints the Trump administration may have about trade with China it should settle those disputes through the legal mechanisms of the World Trade Organization. If Trump thinks he has a case against unfair Chinese practices then he should trust the multilateral trading authority. Otherwise it’s a recipe for international chaos and a slippery slope to conflict, as history has shown.

The President Thinks We Need To Pay More -- Warren Mosler - The President no doubt knows that when you go shopping, buying at the lowest price is the mark of a winner, while paying too much is the mark of a loser. Yet when it comes to buying lumber from Canada and cars from Germany, the President viciously attacked those nations for not charging us enough for their products! And while everyone knows that buying at the lowest price is a good thing, there is no serious pushback from Democrats, the 'free trade' Republicans, the media or any of the headline mainstream analysts. There is something very wrong with their underlying logic that leads to this type of costly Presidential blunder.Yes, when we buy imports jobs are lost, just as when we replace workers with machines, including lawn mowers, vacuum cleaners, and power washers, jobs are lost. And yet somehow we've survived all that. We went from needing 99% of the people working to grow our food to less than 1%, and manufacturing jobs are down to only 7% of the labor force as well. And yet the remaining 90% of us are not all unemployed, as jobs have proliferated in the service sector, where most of those jobs are now considered to be better jobs and generally pay more than agricultural and manufacturing jobs. Nor has a trade deficit necessarily resulted in higher unemployment or lower pay. In 1999, for example, we had record imports with unemployment under 4% and inflation under 2%, and students were getting recruited for good paying jobs well before graduation. The answer to sustaining high levels of employment and pay is policy response. Yes, we are better off if we do the obvious and buy our imports at the lowest possible prices. And if weak demand at home is keeping unemployment too high or wages too low, the appropriate policy response is fiscal relaxation- either a tax cut or spending increase- and not to tax or otherwise drive up the cost of imports, even if that results in a higher public debt.   Yes, the right move in response to a slow economy is to cut taxes or increase public spending and let the public debt increase accordingly. Unfortunately however, the policy that allows us to pay the lowest prices for imports and have good paying jobs to replace those lost because of imports has been taken entirely off the table by both Republicans and Democrats. And this is the case even though lowering taxes or increasing public spending are direct benefits for their voters.

Chinese leaders ‘absolutely confused’ by Trump’s demands on trade | South China Morning Post: Donald Trump has called on China to capitulate to U.S. demands on trade. The problem is nobody knows exactly what Trump actually wants – including the Chinese. One week, he condemns threats to American national security interests and the next, agrees to lift a ban on doing business with Chinese telecom giant ZTE. He rails about the U.S. trade deficit with China, then dismisses Beijing’s offer – negotiated by his own officials – to boost its purchases of U.S. goods by billions of dollars. Beyond the feints and jabs, he’s raised so many different issues that it’s hard to know what his priorities might really be. The strategy is straight out of “The Art of the Deal”: “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.” But some doubt that approach translates to negotiating with a global superpower. By all accounts, it has left the Chinese increasingly mystified about what Trump really wants at a pivotal moment when the world’s two largest economies are teetering on the edge of sustained trade warfare. “They’re absolutely confused,” Derek Scissors, a resident scholar at the American Enterprise Institute, said of the Chinese. Without clear demands, he argued, Beijing is unlikely to offer much. “The concession has to get them something. And they don’t know what they’re going to get because the U.S. doesn’t have a strategy.”

Mnuchin Calls Bloomberg, WSJ Stories Of China Investment Restrictions "Fake News" --- In a bizarre development, one day after the FT, WSJ and Bloomberg all reported that the US is preparing restrictions on Chinese investments in the US, moments ago Steven Mnuchin tweeted - on behalf of Donald Trump -  that the stories are "false, fake news." On behalf of @realDonaldTrump, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. However, while some read into this as a potential "risk on" catalyst, what Mnuchin also said that the "statement will be out not specific to China, but to all countries that are trying to steal our technology." In other words, not just China but everyone's investments in the US could be limited! His tweet:On behalf of @realDonaldTrump, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. Statement will be out not specific to China, but to all countries that are trying to steal our technology.— Steven Mnuchin (@stevenmnuchin1) June 25, 2018   There has been no market reaction so far, with stocks largely unchanged, FX flat and 10y TSY near session lows at 2.8750%.

Fearful Of "Triggering" Trump, China Begins Downplaying "Made In China 2025" - Trump's unorthodox policies appears to be bearing fruit. Amid a barrage of constant tit-for-tat escalations which are finally beginning to spillover into markets - a necessary condition for Trump's negotiating strategy to be taken seriously by America's trading partners as Goldman explained at the start of the month - Reuters reports that Beijing has begun "downplaying" Made in China 2025, the state-backed industrial policy that has provoked alarm in the West and is the core reason behind Washington’s complaints about the country’s technological ambitions. Halting China's relentless technological advance, much of which is on the back of reverse-engineered, "merged & acquired", or simply stolen US technologies, is the reason for the latest developments out of Washington, which according to media reports will see the Trump administration enforce rules that bar companies with at least 25% Chinese ownership from buying U.S. firms with “industrially significant technology."To be sure, Trump's attempt to reduce the Chinese trade surplus with the US is just one aspect of Trump's complaint over US-Chinese relations: with a full-blown trade war looming amid U.S. President Donald Trump’s threats to impose tariffs on up to $450 billion in Chinese imports, his administration has fixed on Beijing’s signature effort to deploy state support to close a technology gap in 10 key sectors.And, in what is a sign that these threats and diplomatic bluster are working, Beijing is increasingly mindful that its rollout of the ambitious plan has triggered U.S. backlash.In the Reuters report, which quotes a senior western diplomat, in meetings Chinese officials have recently begun downplaying Made in China 2025.  The officials have stressed that the aspects that have raised the most ire abroad were simply proposals by Chinese academics. In an attempt to prevent further provocations of the Trump administration, the state news agency Xinhua, which made more than 140 mentions of Made in China 2025 in Chinese language news items in the first five months of the year, has not done so since June 5, according to Reuters calculations. According to the report, Chinese officials have gone so far as to suggest it was a mistake for the government to have pushed the plan so forcefully and publicly because it had increased pressure on China. “China is apparently starting to adjust to the blowback caused by the heavy propaganda,”

 "No More Turning The Other Cheek": Chinese President Vows He'll Strike Back At The U.S. - With the market tumbling today on worries that the tit-for-tat trade war escalation between the US and China is now "irreversible", the WSJ just poured gas on the fire with a report that China President Xi Jinping is responding to the Trump administration’s trade-clash escalations "with a bare-knuckle approach that makes a bruising fight more likely."Citing people who were present at a meeting last Thursday between Xi and a group of 20 mostly American and European multinational chief executives, the WSJ reports that  Chinese president said that Beijing plans to strike back.“In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek,” the Chinese leader said, according to the people. “In our culture we punch back.”The WSJ also adds that "Xi has urged senior officials in a recent meeting to promote China’s global role as the U.S. faces a backlash for its America First agenda, according to state media and Chinese officials."This means that whereas until now China merely responded with tits to US tats, the gloves now officially come off.As the Journal further writes, while for months China’s leadership and senior officials have been put off balance by Mr. Trump as he mixed calls for trade penalties with references to Mr. Xi as a friend, coupled with proactive attempts to appears Trump as Xi’s top economic lieutenant twice traveled to Washington for negotiations and offered stepped-up purchases of American goods only to come up empty-handed, Now Xi has settled on an unyielding approach in dealing with Washington. “China is not going to yield to outside pressure and eat the bitter fruit,” a senior official said. “That’s the negotiation principle set by President Xi.”

A tragedy in the making as the US confronts China | Asia Times: Chinese officials are warning that they are prepared not only for trade war, but for financial, diplomatic and limited military confrontation with the United States, in response to American demands for fundamental changes in Chinese economic policy. The dispute between the world’s two largest economies has moved beyond narrow issues of trade or specific areas of prospective conflict: Washington now views China’s technologically-focused economic strategy as a challenge to America’s world position, and China views Washington’s demands on China as the equivalent of a “new Opium War,” as a senior Chinese official told Asia Times last week.This is not a drill. Nor is the result of “Art of the Deal” negotiating on the part of the Trump Administration. Since 2015, China has sought to shift its economy from the smokestack-and-export model introduced in 1978 by Deng Xiaoping to a high-tech, consumer-focused model dubbed “Made in China 2025,” supported by $1 trillion in infrastructure investments to ensure Chinese preeminence in the Eurasian continent. The United States ignored China’s high-tech shift for years; now it has discovered that China threatens to leapfrog the United States in critical areas of high technology, military as well as civilian. What for China is the new normal of economic life is viewed in Washington now as an existential threat. That was the nub of White House adviser Peter Navarro’s June 19 report, entitled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World.” China interprets American action to shut down the operations of its second-largest telecom equipment company, ZTE, as proof that Washington does not propose to negotiate a modus vivendi but rather inflict damage on the Chinese economy. 

Trump Eases Demand for New Tools to Limit Chinese Investment —President Donald Trump suggested he would scrap plans for new restrictions on Chinese investment in U.S. technology and rely mainly on existing tools that some of his advisers have labeled inadequate to guard against the purchase—and theft—of innovations vital to the U.S. economy.“We have the greatest technology in the world. People come and steal it,” he said in response to questions from reporters at the White House on Tuesday. “We have to protect that and that can be done through CFIUS,” referring to an interagency group, the Committee on Foreign Investment in the U.S., which screens foreign investments to see whether they endanger national security.  He called a recent article in The Wall Street Journal that the administration was planning two further initiatives, in addition to CFIUS, to prevent Beijing from obtaining advanced U.S. technology “a bad leak…probably just made up.”As recently as Sunday, administration officials and others who work closely with the administration had said the plans for the restrictions were on track, though Mr. Trump hadn’t yet approved them. If Mr. Trump’s decision holds, it would represent a significant easing of threats the president has made against China and a possible olive branch to Beijing before the July 6 imposition of the first tariffs on Chinese goods under the Trump administration’s trade offensive. The new policy is planned for release on Wednesday, administration officials said. Investment restrictions in addition to CFIUS have long been part of the administration’s planned efforts to keep China from moving ahead with plans outlined in its “Made in China 2025” report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology. A May 29 White House statement said the policies would be aimed at “Chinese persons and entities” that seek to acquire “industrially significant technology.”

Mnuchin: "Unfortunate" Market Got Mixed Messages; CFIUS Won't Target China Specifically - Confirming that the Trump administration was clearly spooked by the market's Monday drop, following news that Trump "blinked" on the escalating trade war, and had decided against creating a new regime to review Chinese investment in the US and will instead rely on the existing CFIUS approach to protect US technology, Treasury Secretary Steven Mnuchin told CNBC that it was "unfortunate" the market got mixed messages and that all Trump advisors were unanimous on this decision."If there are mixed messages, that's something that is unfortunate," Mnuchin told CNBC's "Squawk Box." "What happened over the weekend there were leaks saying that president had made a decision had been made. It was completely not true.""When the president and I discussed this, he suggested I tweet on behalf of him to clarify that a decision had not been made," Treasury secretary added. "Those leaks were not helpful to the markets or not helpful to the process."Mnuchin blamed White House trade advisor Peter Navarro for sending mixed signals Monday about t he Chinese investment restrictions.  * * * Earlier on Wednesday, the White House announced that it won't be looking to block companies with 25 percent or more of Chinese ownership from buying certain U.S. tech-related companies. Instead, the government will rely on the newly-strengthened Committee on Foreign Investment in the United States, or CFIUS, to deal with concerns.In explaining the move, Mnuching told reporters that the move to use CFIUS to protect U.S. technology was "not intended to target China," and added that CFIUS was able to respond appropriately to different threats on different technologies posed by different entities from different countries. Mnuchin also said that if Congress fails to pass Firrma, the administration will look at new executive branch tools.

Trump goes with Mnuchin plan on Chinese investment -- President Donald Trump has moved away from imposing restrictions on Chinese investment in the US under a 1977 law that allows him to declare a “national emergency.” Instead he will rely on legislation currently passing through Congress to strengthen controls on investment from China and other countries.   While the administration denied it, the move appears to have been motivated to a considerable extent by Wall Street’s reaction to the more hardline proposal. The Dow dropped by as much as 500 points in trading on Monday, along with falls of more than 1 percent in other indexes.  In a White House statement, Trump threw his support behind legislation to strengthen the powers of the Committee on Foreign Investment in the US (CFIUS). The bill is in the final stage of its passage through Congress after a 400–2 vote in the House of Representatives.Trump said Congress had made “significant progress towards passing legislation that will modernize our tools for protecting the nation’s critical technologies from harmful foreign acquisitions. This legislation … will enhance our ability to protect the United States from new and evolving threats posed by foreign investment while also sustaining the strong, open investment environment to which our country is committed.”The measures were being developed in line with an investigation Trump ordered under section 301 of the 1974 Trade Act to protect American technology, he said. The new legislation provided additional tools to combat the “predatory investment practices that threaten our critical technology leaders, national security, and future economic prosperity.” The new bill does not specifically single out China but Trump left no doubt that is where it is aimed. He said he would seek to have it implemented “promptly and rigorously” in order to address concerns regarding “state-directed investment in critical technologies in the Section 301 investigation”—a clear reference to China.

China says carefully monitoring U.S. policies on inbound investments (Reuters) - China’s commerce ministry said on Thursday it would carefully monitor U.S. policies on inbound investments, stressing that the country opposes using national security as grounds to restrict foreign investments. U.S. President Donald Trump said on Wednesday he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions. The U.S. Treasury Department has recommended that Trump use the Committee on Foreign Investment in the United States (CFIUS), whose authority would be enhanced by new legislation in Congress, to control investment deals. The legislation expands the scope of transactions reviewed by the interagency panel to address security concerns, Trump said. “China will closely monitor the legislation process and evaluate its potential impact on Chinese companies,” Chinese commerce ministry spokesman Gao Feng told reporters in a regular briefing in Beijing. “China does not agree with (the U.S.) tightening foreign investment conditions using national security as reasons,” he said. The proposed investment restrictions are part of the Trump administration’s efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after U.S. complaints that China has unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of U.S. tech firms. 

The Trade War’s First Casualties – WSJ -- With their escalating trade feud showing little evidence of hurting their economies, the U.S. and China aren’t close to backing down. Investors may get squeezed between the two giants before one of them cracks. The U.S. has already put tariffs on steel and aluminum and will add a 25% tariff on $50 billion in Chinese imports starting next month. China is matching the U.S. tariff for tariff. These actions have sent U.S. steel prices higher and U.S. soybean prices lower. But the broader economic effects so far appear negligible.That could change soon. The administration is set to announce restrictions on Chinese investments in the U.S. next week, and President Donald Trump has threatened to retaliate against China’s retaliation and put tariffs on more goods  The administration thinks that China has more to lose in this dispute, since China runs a big trade surplus with the U.S. The real issue isn’t who has more to lose, but how long each side can bear the pain. This is where it could get dangerous for investors. Worries about what could come next weighed heavily on shares of companies that depend on China for business, such as Caterpillar and Boeing , last week. The next round of tariffs against China, if it comes, will likely hit consumer goods. As a result, it won’t affect just Chinese producers, but also U.S. retailers (if they absorb the cost increases) or U.S. consumers (if the price increases get passed on). This is particularly true for the many goods dominated by Chinese production, such as cellphones and footwear, where the ability to find other sources is limited. A lot of those China-made goods are produced by U.S. multinationals, so they, and their investors, will share in the pain. China could also make things difficult for U.S. multinationals by stepping up regulations against them or encouraging Chinese consumers to avoid their products. And it has ways to blunt the impact of U.S. trade actions, such as supporting affected Chinese exporters and lowering the value of its currency.

"This Has Become An Issue" - Beijing Denies US Request For Talks Over Airline Dispute - President Trump's trade spat with China isn't the only source of tension between the world's two largest economies. Since even before Trump's inauguration, the US's relationship with Taiwan has become an increasingly sensitive issue in Beijing - particularly after Trump publicly mused about abandoning the US's long-standing "One China" policy. Beijing has retaliated by holding a massive live-fire exercise in the Strait of Taiwan (showing off China's expanding military might). And in what looks like a test of corporate allegiance, Beijing has also instigated a mini-diplomatic crisis over its demands that foreign airlines refer to Taiwan on their websites as "Taiwan, China" - a request the White House has dismissed as "Orwellian nonsense." But Beijing isn't about to let this go: Already, Air Canada, Lufthansa, British Airways and other foreign airlines have acquiesced to China's demands, which also included making changes to references for Hong Kong and Macau. But Delta, United and other US carriers have requested an extension beyond Beijing's May 25 deadline for the changes to be instated. Their final deadline is July 25.And in a sign that the request has metastasized into a fully fledged policy dispute, China has reportedly rejected the US State Department's request for talks on the matter, Reuters reported. In late May, the U.S. State Department presented China’s Foreign Ministry with a diplomatic note requesting consultations on the matter, but the ministry has since refused it, two sources briefed on the situation told Reuters. "This has definitely become a foreign policy issue," one of the sources said on condition of anonymity, noting that the U.S. government did not view it as a technical matter for bilateral aviation cooperation. The spat had become "another grain of sand in the wound" amid escalating trade tensions, a second source said, referring to U.S. President Donald Trump’s threat to impose tariffs on billions of dollars worth of Chinese imports to punish Beijing for intellectual property abuses. While the State Department weighs its next move, US airlines are now caught in a difficult position. Beijing could deny them access to lucrative routes within China by revoking their operating permits - but making the requested changes without the White House's blessing could put them at odds with the US government. The CEO of Delta has said that the airline is working with the US government on the issue, but nobody has given any indication about where the talks are heading.

New York Times restates Washington’s anti-China agenda in Sri Lanka --On June 25, the New York Times published a lengthy front page article entitled “How China Got Sri Lanka to Cough Up a Port.” The more than 3,800-word piece repeats the usual allegations manufactured by the Times, and other media conduits for Washington’s foreign policy propaganda, about growing Chinese influence in Sri Lanka.The tone and timing of the piece is aimed at sending a clear message to Colombo: ‘US imperialism is watching you closely, do not attempt to divert from our military-strategic preparations for war against China.’The US and its international allies have long put pressure on Sri Lanka, which is strategically located close to major Indian Ocean sea lanes straddling Asia and Africa. As a result, the island-nation has been dragged into the maelstrom of global geo-political tensions, mainly between the US and China, and Washington’s concerted economic and military offensive to undermine Beijing’s influence throughout the Indo-Pacific region.According to the Times, China is using loans and aid “to gain influence around the world” and is willing to “play hardball to collect.”  To prove this claim, the newspaper comments on China securing a majority share of Sri Lanka’s southern port of Hambantota. The facility was built during former President Mahinda Rajapakse’s rule.Last December, after almost two years of negotiations, the current government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe formally handed over Hambantota Port to China Merchant Port Holdings (CMPH). Under this agreement, Sri Lanka sold a 70 percent stake in the port to CMPH via a 99-year lease, while retaining a 30 percent share under the state-owned Sri Lanka Ports Authority.The Times notes Sri Lanka’s mounting foreign debt, and US imperialist fears over growing Chinese influence in the region and, in particular, the Belt and Road Initiative, which envisages the construction of a series of ports, railway lines and roads connecting China with Europe. The Times’ concern about democracy and Sri Lankan debt is feigned. The newspaper functions as a direct mouthpiece for the US military and intelligence apparatus, maintaining a constant stream of fabrications and outright lies to justify Washington’s crimes. From the US wars of aggression in Iraq and Afghanistan to the proxy war for regime-change in Syria, the Times is a vital cog in the American war machine and US intelligence operations.

US postpones high-level dialogue with India as Donald Trump’s tariff threats ratchet up global tensions | South China Morning Post: The United States has announced postponement of a high-level dialogue with India scheduled for next week in Washington, DC, without assigning any reasons even as its ambassador to the United Nations met with top Indian leaders in New Delhi to step up ties in various fields. US Secretary of State Mike Pompeo spoke with India’s External Affairs Minister Sushma Swaraj and expressed regret over the dialogue postponement for “unavoidable reasons”, said India’s External Affairs Ministry spokesman Raveesh Kumar in a tweet.No new dates were announced for the meeting. Swaraj and Defence Minister Nirmala Sitharaman were to hold talks with their American counterparts Mike Pompeo and James Mattis next week on economic, trade and defence issues. The announcement came at a time of heightened trade tensions between the two countries. India last week announced a plan to raise tariffs on 29 US imports in retaliation for the US decision to include India in its list of countries covered by higher steel and aluminium duties. The US ambassador to the United Nations Nikki Haley said Wednesday she saw opportunities in developing stronger ties with India in multiple ways, especially in fighting terrorism and military cooperation. Haley said her two-day visit to India was aimed at solidifying the partnership between the two countries. She met with Prime Minister Narendra Modi and Swaraj on Wednesday. Haley, the South Carolina-born daughter of Indian immigrants, told reporters in New Delhi that both countries have a willingness to strengthen their partnership. “We see those opportunities between the United States and India in a multiple level of ways. Whether it’s countering terrorism … whether it’s the fact that we’re going to start to work together more strongly on the military aspect. There is a lot of things that India and the US have in common,” she said. 

Take that, America. Europe's tariffs take effect  -- The European Union has imposed additional tariffs of 25% on products such as motorcycles, orange juice, bourbon, peanut butter, cigarettes and denim — part of its response to the Trump administration's tariffs on steel and aluminum exports from Europe. "The trade that we believe in is built on rules, trust, reliable partnership. The United States decision to impose targets on Europe goes against that, in fact it goes against all logic and history," European Commission President Jean-Claude Juncker said on Thursday. "Our response must be clear but measured," he added during a speech to the Irish parliament. EU trade officials have described the US tariffs on steel and aluminum — justified by the Trump administration on grounds of national security -— as "illegal." The bloc has also filed a formal complaint at the World Trade Organization. The initial wave of EU retaliatory tariffs is aimed at American goods worth €2.8 billion ($3.2 billion). If the trade dispute continues or is not resolved by the WTO, the European Union could target a second batch of American exports worth around €3.7 billion ($4.3 billion). That list includes roughly 160 products such as US sunbeds, paper towels, corduroy pants and porcelain tableware. President Donald Trump fired back immediately, repeating his threat to impose tariffs on European car exports to the United States.  "Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S." he wrote on Twitter. "Build them here!" he declared.

Europe Warns Of An Upcoming "Trade Apocalypse" - As European officials struggle to do everything they can to save the WTO, which appears headed for an all-but-certain demise thanks to President Trump's aggressive trade policies, EU leaders have apparently circulated an "internal memo" drafted by the European Commission that accuses the US of deliberately instigating the collapse of the global trade order, and warns of an upcoming "trade apocalypse." In short, if this document is any guide, the trade war is about to get worse - as if Trump's threat to impose 20% tariffs on all cars coming into the US last week wasn't bad enough. According to Bloomberg, the EU warned that the "rules-based system of international commerce" could revert to an trade environment where "the strong impose their will upon the weak," the memo said.Our world will go back "to a trading environment where rules are only enforced where convenient and where strength replaces rules as the basis for trade relations," according to the memo.The flirtations with a return to an environment of "mercantilist deals" have intensified as President Trump has been determined to narrow the trade deficit at any cost - even if the price is the collapse of the multilateral trade order. Specifically, the memo, which was obtained by Bloomberg, spells out three complaints raised by the EU:

  • Gaps in the rulebook of global trade "leading to distortions, many of which associated with non-market policies and practices in major trading nations, that the WTO does not seem able to address adequately"
  • Aggressive unilateral actions by the US targeting allies and foes alike with punitive tariffs
  • The US’s decision to block appointments of members to the World Trade Organization’s Appellate Body that serves as the final arbiter in trade disputes.

The EU also complained about the US's practice of blocking appointments to the appellate body that would help render a judgment in a WTO trade dispute. "As more appellate body members leave office while the new appointments are being blocked, the dispute settlement system will soon fall into paralysis, rendering enforcement of the rules impossible," the commission says in its memo circulated ahead of this week’s summit of EU leaders to discuss trade, among other topics. "That would equate to a 20-year step backward in global economic governance." The Commission will have an opportunity to act on its complaints later this week when the leaders of the world's largest trading bloc meet to hash out a "comprehensive approach" to "improving with like-minded partners, the functioning of the WTO in crucial areas."

Harley-Davidson to move some production out of US to avoid EU tariffs - Harley-Davidson said on Monday it would move production of motorcycles shipped to the European Union from the United States to its international facilities and forecast the trading bloc's retaliatory tariffs would cost the company $90 million to $100 million a year. The shift in production is an unintended consequence of U.S. President Donald Trump's administration imposing tariffs on European steel and aluminum early this month, a move designed to protect U.S. jobs. In response to the U.S. tariffs, the European Union began charging import duties of 25 percent on a range of U.S. products including big motorcycles like Harley's on June 22. In a regulatory filing on Monday, the Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the United States to the European Union, but it would not raise retail or wholesale prices for its dealers to cover the costs of the tariffs. The company expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018, the filing said. "Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region," the company said.

Donald Trump hits out at Harley-Davidson decision to move some production out of US - US President Donald Trump has taken aim at Harley-Davidson after the motorcycle maker said it would begin to shift the production of motorcycles headed for Europe overseas as it faces spiralling costs from European Union tariffs. "Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag," Mr Trump wrote on Twitter. "I fought hard for them and ultimately they will not pay tariffs selling into the EU. "Taxes just a Harley excuse — be patient!" Mr Trump vowed to make the iconic motorcycle maker great again when he took office last year, meeting company executives at the White House and thanking them, "for building things in America". But since then the company has been counting the costs of his trade policy. Harley has warned consistently against tariffs, saying they would negatively impact sales. The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice. The EU tariffs on $US3.4 billion ($4.6 billion) worth of US products are retaliation for duties the Trump administration is imposing on European steel and aluminium. Harley forecast the EU's retaliatory tariffs would cost the company $US90 million ($121 million) to $US100 million ($135 million) a year.   Harley-Davidson sold almost 40,000 motorcycles in the European Union last year, generating revenue second only to the US sales, according to the Milwaukee-based company.

Trump Warns "Beginning Of The End" For Harley: "They Surrendered, They Quit!" - President Trump blamed motorcycle maker Harley-Davidson for using trade war as an excuse to move production for European customers abroad.In an early Tuesday tweet, Trump said that "early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse."Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it.....— Donald J. Trump (@realDonaldTrump) June 26, 2018As a reminder, on Monday, Harley-Davidson said the 31% tariff the EU imposed on its motorcycles would raise the cost of each bike it ships there by over $2,000. The tariffs from the EU are a response to steel and aluminum tariffs from the Trump administration. Trump then warned the company that it would pay a big tax to sell back into the US: "when I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won’t be able to sell back into U.S. without paying a big tax!"  “A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before! “— Donald J. Trump (@realDonaldTrump) June 26, 2018  We would expect a response from Harley as this is very much fighting talk from the President

Brussels to Trump: We’re not backing down on trade - In the escalating trade war with the U.S., Brussels has a clear message for Donald Trump: It’s not backing down. The U.S. president, under increasing pressure from members of his Republican party to de-escalate the conflict, on Tuesday sought to assuage concerns about the iconic American motorcycle maker Harley-Davidson moving some of its production abroad due to retaliatory tariffs imposed by the EU in response to U.S. duties on steel and aluminum. Trump first tweeted on Monday that “Ultimately [Harley-Davidson] will not pay tariffs selling into the E.U.,” adding: “Taxes just a Harley excuse — be patient!” On Tuesday, he doubled down on his assertion that he could “fix” the situation and Brussels would eventually drop its tariffs to avoid his threat of U.S. duties on cars, saying on Twitter that “We are finishing our study of tariffs on cars from the E.U. … In the end it will all even out — and it won’t take very long!” This latest skirmish marks a continued escalation in the trade war between the U.S. and the rest of the world which began when Trump slapped a series of tariffs on some countries at the end of March, which were then extended to close allies such as the EU at the end of May. In the weeks since, the EU has repeatedly sought to show that the bloc will not give in to such bullying tactics: On the contrary, Brussels is increasingly convinced that its retaliation measures — in unison with many of its allies around the world — are bearing fruit. “There are no [trade] talks planned,” EU trade chief Cecilia Malmström said Tuesday, adding that Harley-Davidson’s relocation decision was exactly the type of reaction Europe had been aiming for with its counter-tariffs. “Of course, the consequences are that the American companies … will react and they will put pressure on the American administration to say ‘Hey, hold on a minute. This is not good for the American economy.’ And that’s what’s happening,” Malmström told reporters, adding “there has to be consequences if you do not respect international global rules.”

America Has a 1.39 Billion-Pound Cheese Surplus. How Did That Happen? - America is drowning in American cheese—and cheddar, Swiss, and other varieties, too. The country’s cheese surplus just hit 1.39 billion pounds, or as Vox puts it, enough to "arm" every man, woman, and child in the U.S. with 4.6 pounds apiece. Our obsession with slathering everything in cheese isn’t to blame, though. U.S. dairy manufacturers have been producing too much milk for a few years now, and when there’s excess milk, it gets turned into cheese to make it last longer. In 2014, dairy farmers started scaling up their operations in response to high demand for powdered milk from China’s growing middle class. When China’s economy started to slow a couple years later, American dairy producers were left with too many cows and too much milk. On top of that, the European Union made it more difficult for U.S. cheese producers to do business there. By 2016, the U.S. had 1.2 billion pounds of extra cheese on its hands, and since then, stockpiles have only grown. The problem is compounded by the fact that greater surpluses of milk and cheese tend to be seen in the summer, when demand is lower, and high-yielding cows (a product of genetic improvements) produce more milk in the springtime. So what can be done about this cheesy conundrum? In the past, the Department of Agriculture has bailed out dairy producers by buying up millions of dollars of excess cheese and distributing it to food banks. Whether the department is once again willing to drop that much cheddar remains to be seen.

Canada Weighs Broad Steel Tariffs in Latest Fallout from Trade War - —The Canadian government is considering putting quotas or tariffs on certain steel imports from all its trading partners as it prepares in coming days to impose tariffs on U.S. steel, aluminum and dozens of other American products, according to people familiar with the matter. The possible temporary safeguard measures would aim to keep cheap steel imports, diverted from the U.S. by tariffs, from flooding Canadian markets. The safeguards would be the latest repercussions from an escalating trade battle with the U.S., stemming from Washington’s decision last month to impose tariffs on steel and aluminum from the European Union, Canada and Mexico. European Trade Commissioner Cecilia Malmström has said the European Union is considering similar temporary safeguard measures as soon as mid-July. .Canada’s foreign minister, Chrystia Freeland, met with Ms. Malmström in Brussels on Tuesday, where the Canadian government said they discussed developments in international trade and continued collaboration between Canada and the EU. EU steel imports surged by 8.4% in the first four months of 2018, following record exports into the bloc last year, according to Eurofer, which represents European steel producers. The rise in 2017 was already straining EU producers and the current increase is “almost certainly” a result of the U.S. steel and aluminum tariffs, Eurofer said. The Canadian government is examining data on steel imports into Canada as it decides whether to put in place the safeguard measures, said a person familiar with the government’s thinking. In addition, Jesse Goldman, a lawyer with Borden Ladner Gervais LLP in Toronto who was hired by some Canadian steel fabricators, said the government is actively looking at the option and could launch a temporary safeguard measure as early as next week. While Canada’s steel mills support the move, fabricators who use raw steel to make construction equipment such as rebar say blanket tariffs could devastate their businesses. 

Canada to announce final retaliatory tariff list against U.S. goods -- Canadian Foreign Affairs Minister Chrystia Freeland will announce the government's final retaliatory tariff list, CTV reported Thursday. Freeland is expected to reveal what U.S. goods will be slapped with a 10-percent surtax from July 1. The tariffs are part of countermeasures of the overall 16.6 billion Canadian dollars (12 billion U.S. dollars) on imports of steel, aluminum and other products from the Unites States in response to the U.S. imposing a 25-percent steel tariff and 10-percent tariff on aluminum from Canada. The Canadian federal government has been consulting on the proposed list of goods, which included specific types of gherkins, prepared meals, pizza, chocolate, condiments, toiletries, beer kegs, whiskies, various household items, and motorboats. Freeland stated that the aim of the consultations was to mitigate any unintended consequences for Canadians and potentially expand or contract the final list accordingly. It is expected Canada's International Trade Minister Francois-Philippe Champagne will make a similar announcement Friday, said CTV. Earlier this week, Canadian Finance Minister Bill Morneau said more information regarding financial support for Canadian steel and aluminum businesses that are impacted by U.S. tariffs is coming soon.

Canada ‘will not back down’ over US metals tariffs - BBC -- Canada will "not back down" in the face of new US tariffs on steel and aluminium, according to the country's foreign minister. Chrystia Freeland spoke as officials unveiled a C$2bn (US$1.5bn; £1.15bn) package to support the country's steel and aluminium industries. Retaliatory tariffs on C$16.6bn worth of US products are due to come into effect on 1 July. Ms Freeland said US tariffs left Canada "no choice" but to respond. Canada's tariffs target US steel and aluminium products. It also includes items such as yoghurt, ketchup and orange juice, which are made in key political battlegrounds such as Wisconsin, Pennsylvania and Florida. The list of products is intended to match "dollar for dollar" the US tariffs, which came into effect on 1 June, Ms Freeland said. "Our approach is we will not escalate but equally we will not back down," she said. The US and Canada are among each other's top trade partners, exchanging nearly US$700bn in goods and services last year. But trade relations between the two countries have grown tense, amid disputes over issues such as lumber, dairy and wine. 

Donald Trump’s opponent in his trade war is actually economics, and he will certainly lose - Steve Roach - With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practise the art and science of economics.By now, the verdict is self-evident: Trump and his team continue to flout virtually every conventional principle of the discipline.Trade policy is an obvious and essential case in point. Showing no appreciation of the time-honoured linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem – in effect, blaming China for America’s merchandise trade deficits with 102 countries.Similarly, his refusal to sign the recent G7 communiqué was couched in the claim that the United States is like a “piggy bank that everybody is robbing” through unfair trading practices. But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5 per cent of national income. Not much to rob there!The same can be said of fiscal policy. Trump’s deficit-busting tax cuts and increases in government spending make no sense for an economy nearing a business-cycle peak and with an unemployment rate of 3.8 per cent. Moreover, the feedback loop through the savings channel only exacerbates the very trade problems that Trump claims to be solving. With the Congressional Budget Office projecting that federal budget deficits will average 4.2 per cent of gross domestic product from now until 2023, domestic saving will come under further pressure, fuelling increased demand for surplus saving from abroad and even bigger trade deficits to fill the void. Yet Trump now ups the ante on tariffs – in effect, biting the very hand that feeds the US economy. So what Trump is doing is not about economics – or at least not about economics as most academics, political leaders and citizens know it. Sure, Trump has been quick to draw on some fringe mutations of economics – say, Arthur Laffer’s infamous back-of-a-napkin supply-side musings – but none that have withstood the test of time and rigorous empirical validation.

Companies that want out of new steel tariffs describe a nightmare - American companies looking for a way out of punishing steel tariffs say they're trapped in a bureaucratic nightmare. As they seek exemptions from the tariffs, which have sharply raised costs, these companies describe a lengthy, opaque review process. They say the uncertainty is already hurting their businesses and may cost them jobs. Companies had filed more than 20,000 exemption requests through last week, arguing that they depend on imported steel and that domestic producers can't fill the gap. The Commerce Department had announced a final ruling on only 98 of them. "One of the frustrations is just not knowing," said Rick Huether, whose family has run Independent Can Company, a Maryland can maker, since 1948. Complicating the process, large steel companies like US Steel and Nucor have tried to block many requests at the last minute, giving businesses that want exemptions little or no time to respond. "There's no particular opportunity to go back and say they're wrong," Because of the delay, workers whose jobs could be at risk are stuck in limbo. The nation's largest nail manufacturer, Mid-Continent Nail, laid off 60 of its 500 workers last week because of increased steel costs. The company is in danger of shutting production by Labor Day unless the Commerce Department grants it a tariff exclusion, company spokesperson James Glassman told CNN's Poppy Harlow on Tuesday. President Donald Trump frames his trade philosophy as "America first." Trade policy itself is not always so clear-cut. A tariff that helps one company can hurt another, including in the United States. Trump's effort to protect the American steel industry is hurting many companies that rely on steel and aluminum, often imported at lower cost. An activist trade policy means picking winners and losers, even if indirectly. Some of those losers are American companies. "I like Trump's ideas. I don't like his tactics," Huether said. Saving one job in manufacturing could cost many more at other companies, he added  

Wolf Richter: Beyond the Hysteria About Auto Tariffmageddon -- naked capitalism - Yves here. I wish I had written this piece. It makes a very important point: that auto company and other multinational whinging about the impact of tariffs are based on them not taking adaptive measures, some of which may not be very costly. For instance, with Brexit, where automakers will almost certainly face very high non-tarriff barriers, they have the ability to shift some UK based production to EU factories, where they have surplus capacity. The cost would be in tooling, and it is opaque to outsiders for what products and then how much in time and costs would be involved.Richter also raises the critical issue of unequal tariffs, which is typically absent from the financial press.One final consideration is that there is value in a country being more autarkical, and not just in promoting domestic, but in national security. The US is dependent on China and Taiwan, which is not exactly geographically secure, for chips. As we discussed earlier, the US would go into crisis in months if China were to embargo its supply of drug active ingredients. The US even relies on China to supply combat uniforms and boots. I am at a loss to understand how we got here. Wolf Richter: President Trump’s threat to impose tariffs of 20% or 25% on auto components and vehicles imported to the US is causing a bout of hysteria that is splattered all over the media. The auto industry lobbying group, Alliance of Automobile Manufacturers, is now claimingthat a 25% tariff on imported vehicles and components would cost US consumers $45 billion a year, or $5,800 per vehicle. “This would largely cancel out the benefits of the tax cuts,” it says.I have serious doubts about those numbers, and “propaganda” comes to mind. But even it they’re correct theoretically, the calculation assumes that the industry would not react to those tariffs except by passing them on to consumers. Consumers are unlikely to go for that program, and automakers will end up restructuring their supply chains and manufacturing to bring some production back to the US, after having spent decades on offshoring production. That’s one purpose of tariffs. Another purpose is to persuade other countries to lower their own tariffs. It has been an uneven playing field for decades, stacked against US workers.

GM warns U.S. import tariffs could lead to 'smaller' company - (Reuters) - General Motors Co warned on Friday that expansive U.S. tariffs on imported vehicles being considered by the Trump administration could lead to a "a smaller GM" and risks isolating U.S. businesses from the global market.The Trump administration in May launched an investigation into whether imported vehicles posed a national security threat, and President Donald Trump has repeatedly threatened to quickly impose a 20 percent import tariff on vehicles. The largest U.S. automaker said in comments filed on Friday with the U.S. Commerce Department that overly broad tariffs could "lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs."

New House Bill Would Empower Donald Trump to Punish U.S. Companies that Boycott Israel - The House Committee on Foreign Affairs unanimously passed a measure on Thursday that would give the Trump administration power to decide how to punish U.S. companies that engage in or promote boycotts of Israel — including through criminal penalties.The committee passed an amendment by voice vote from Rep. Ed Royce, R-Calif., that largely replaced the text of a bill called the Israel Anti-Boycott Act. When the original legislation was first introduced last year, it drew outrage from activists, and the American Civil Liberties Union warned that by threatening to impose steep criminal penalties on boycott activists engaged with international bodies’ boycotts, the bill was unconstitutional.  After the uproar, the initial bill, which was supported by the influential America Israel Public Affairs Committee, lost momentum. But Royce’s effort to move his version out of the Foreign Affairs Committee is part of a push to reinvigorate Capitol Hill’s efforts to use statutory means to clamp down on the growing movement to boycott, divest from, and sanction the Jewish state for human rights violations against the Palestinians. Pro-Palestinian activists said Royce’s amendment, despite being an apparent attempt to work around civil liberties concerns, could be the most dangerous version of the bill yet, because it delegates the lawmaking power to the Trump administration. “This is another blatant attempt to criminalize Americans’ right to boycott and potentially even more dangerous than previous attempts to do so,” Josh Ruebner, policy director for the U.S. Campaign for Palestinian Rights, told The Intercept by email. “Given the Trump administration’s track record on trampling civil liberties through executive action and its pledge to crack down on boycotts for Palestinian rights, this would be an especially egregious derogation of power.”

US Navy planning to build military camps to jail 120,000 immigrants -- A draft memo leaked to Time magazine Friday reveals preparations by the United States Navy to build sprawling internment camps to house over 120,000 undocumented immigrants. Massive camps housing nearly 50,000 each are being proposed in Northern and Southern California, close to the country’s largest immigration populations, with an initial 25,000 to be housed on military bases in Alabama.  The capacity of the new facilities would match the total number of Japanese and Japanese-Americans detained during World War Two. This follows a separate Department of Defense announcement Thursday that the military will erect detention camps on four Army bases in Texas and Arkansas that will hold another 20,000 migrant children.The establishment of military prison camps on American soil marks an ominous milestone in US history. These are being erected to detain not only immigrants, but also striking workers, protesters against police violence, and all who resist conditions of deepening exploitation, war and dictatorship. This police state policy is aimed at the entire working class.  Indicative of the complicity of the corporate media in these dictatorial moves, neither NBC, ABC nor CBS mentioned the proposal for the Navy to set up concentration camps on their Friday evening news broadcasts.  The internal memo details plans to construct “temporary and austere” tent camps to house 25,000 undocumented migrants immediately, with massive facilities to come later. Under the proposal, 25,000 beds would be built within weeks at two Navy airfields near Mobile, Alabama—Navy Outlying Field Wolf in Orange Beach and Navy Outlying Field Silverhill—at an estimated cost of $233 million for six months of operation.  Navy officials suggest a timeline of 60 days to complete the first stage of tent construction, which would hold 5,000 detainees. After that, capacity could be expanded at a rate of 10,000 beds per month. The document also proposes construction of two internment camps in California that would each house up to 47,000 detained immigrants.  The memo also calls for further study of a proposal to detain an unspecified number of undocumented workers at the Marine Corps Air Station outside of Yuma, Arizona.

Drone Footage Gives A Bird's-Eye View Of Texas 'Tent City' For Separated Migrant Children -- In a quiet corner of Texas with vast lands for agriculture, Tornillo has been making national news since President Trump erected his first migrant tent city last week. This small town with no traffic lights has a population of roughly 1,568, according to the latest Census data.  In June 2018, that all changed, when the Trump administration rushed to construct a tent city detention facility for migrant children at the Marcelino Serna Port of Entry on the Mexican border of the town, which attracted protestors, lawmakers, and media from all over the nation.  Known as the Tornillo tent city, it is a temporary detention facility for migrant children operated by the Department of Health and Human Services. The tent city can house about 450 illegal immigrant children. The location was confirmed on June 14, after MSNBC and a handful government picked reporters toured America’s largest detention facility for migrant children inside an old Walmart in Brownsville, Texas. Within 24 hours of being erected, the tent city housed more than 100 minors, as the Trump administration scrambled to contain the overflow and avoid a national crisis. However, the tent city has come under scrutiny from the mainstream media, who jumped on the opportunity to spin President Trump’s zero-tolerance immigration policy as a “family separation crisis before the 2018 midterms.  President Trump, who had defended the zero-tolerance immigration policy blamed Democrats even though his administration implemented the new immigration law, looking ahead, the president signed an executive order Wednesday to end the separation because of the media excitement of the detention facilities could damage Republicans in the upcoming midterms. BBC News originally posted drone footage showing a temporary detention facility for migrant children operated by the Department of Health and Human Services, in Tornillo, Texas.

Images of Children Crying – Illargi - The two most viral photographs of the ‘Trump Separation Scandal’ have now been debunked, or at the very least been proven to have been used ‘out of context’. This is a dangerous development, as are the reasons to use them the way they have been. Both pictures are of children who had not been separated from their mothers at all. But both were used to depict just that: a child being taken away from its mother. What’s dangerous about this is, first, that those who spread the narrative regardless of the truth may next permit themselves to use images from entirely different locations or times to make their point. Yes, children have been taken from parents at US borders.  But playing loose with the facts turns those facts into a mere narrative in which nobody can tell fact from fiction anymore. First, a week ago already, I saw this on RT: Debunked: Viral Image Of Crying, Caged Toddler ‘Detained By ICE’ Not What It Seems A distressing image of a crying toddler locked in a barred cage after purportedly being detained by US immigration officials has gone viral – but despite online claims, it does not actually depict what has been alleged.  It has since emerged that the picture was in fact not from a detention facility at all, and instead was taken at a protest against Trump’s immigration policies held on June 10 outside Dallas City Hall.  Ergo: an activist journalist and undocumented immigrant makes it look as if a picture depicts something that in reality it did not. But then, hey, that’s social media, right? Anyone can say anything. It’s different, though, when TIME Magazine uses such politics. And its editor-in-chief defends the use of the picture by saying it was the most visible symbol of something, even though he knew full well that the photo didn’t depict that something. That’s a mighty slippery scale. Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.” Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”.

‘They stripped me so I was naked’: Honduran teenager tells of beatings, starvation and solitary confinement in US immigrant camp | South China Morning Post: The stretches in solitary confinement inside a detention centre in the mountains of Virginia were what broke him, the Honduran teenager said. The guards stopped bringing food, he said. One time they let him out, and a group of them came at him. So many guards were kicking him in the gut, he said, he couldn’t breathe. “I was just crying and praying to see my mother one more time,” said the 18-year-old immigrant, who gave his first-hand account on condition of anonymity because he feared the government might retaliate against him for speaking publicly. “I ended up getting put in solitary confinement for no reason.” The teen’s experience echoes abuse claims by other children whose accounts are included in a federal civil rights lawsuit charging that guards at the Shenandoah Valley Juvenile Centre in Staunton, Virginia, beat them, locked them up for long periods in solitary confinement and left them nude and shivering in concrete cells.  He arrived at Shenandoah in the summer of 2016 when he was 16 years old – during part of the time period covered by allegations in the lawsuit, which spans both the Obama and Trump administrations.  The Honduran teen said he began his journey to the United States with his brother after he and his family received death threats from drug traffickers in his rural region of Honduras. He was 15 when he hopped a goods train known as the beast, or La Bestia, on a frightening journey through Mexico. He turned himself in to US authorities in the spring of 2016 at the US-Mexico border, he said. Because he entered the country illegally and without relatives, he was routed to a few shelters run by the US Department of Health and Human Services meant for unaccompanied immigrant children. 

Obama officials explain viral photos of immigrant children in cages -- Several former Obama administration officials took to social media and news outlets last month to explain a gallery of years-old photos that showed immigrant children sleeping in shoddy conditions at a government-run holding facility in Arizona.The images, which the Associated Press first published in 2014, resurfaced recently for reasons that remain unclear, and quickly prompted viral outrage on Twitter. One particularly disturbing image showed two children sleeping on mattresses on the floor inside what appeared to be a cage.A number of prominent liberals — and even a former Obama administration official — shared the photos, mistakenly believing they depicted the Trump administration's treatment of immigrant children who were forcibly separated from their parents.Jon Favreau, who worked as a speechwriter for former President Barack Obama, tweeted, "This is happening right now, and the only debate that matters is how we force our government to get these kids back to their families as fast as humanly possible." Favreau said he later deleted the tweet after social media users pointed out that the photos were taken during the Obama administration. But by that point, critics had already rushed to accuse him of concealing Obama's own harsh immigration tactics while condemning Trump's. Favreau said in a series of tweets that he made a "mistake" by not checking the date of the photos before sharing them on Twitter. He explained that the photos were taken in 2014, when the Obama administration faced "an influx of unaccompanied minors who showed up at the border, fleeing violence from Central America." He added that the pictures had been taken while the government was trying to "move those children out of those shelters as fast as humanly possible and connect them with their parents, most of whom were already in the United States.

Look Deeper: Child Detention and the US’s Paramilitary Politics Abroad - Attorney General Sessions didn’t lose any sleep over those children forcibly separated from their parents. He maintained most of the asylum seekers will be denied because “many of them . . . like to make more money . . .” Unfortunately, however, when children are used as bargaining chips we may never know the conditions these families have experienced. As Daily Kos argues, “sign here and get your baby back” is hardly a way to elicit accurate information. US policy has played a major role in fostering or sustaining the violence that impels many to flee. Admitting that role by implication challenges the legitimacy of those policies. Trump’s hard right base imagines hordes of greedy, poorly educated workers eager to steal our well- deserved prosperity. Unfortunately, amidst the justifiable horror evoked by US authorities’ criminal treatment of these children there is too little examination of the conditions that spur many of these mass migrations. Nor is this an accident. US policy has played a major role in fostering or sustaining the violence that impels many to flee. Admitting that role by implication challenges the legitimacy of those policies. From the days of the Monroe Doctrine on the US has treated Central and South America as wholly owned subsidiaries. That has included support for even the most vicious authoritarians as long as they were hospitable to US multinationals.Throughout Central America extreme inequality along with ruthless and repressive governments have led to a pathological politics. Governments are brutal but also unstable. Often they rely on or tacitly encourage paramilitary forces. These allow them to evade responsibility for the crimes on which their rule depends. That these conditions should constitute grounds for asylum is clear, but the Trump Administration defines violence in as narrow a manner as possible. Only a gun pointed at one’s head and imminently prepared to shoot is violence. To view violence of paramilitary forces or even spousal violence systemically– where murder and regular intimidation are the backdrop of daily life– might make the Trump administration appear soft on immigration and disdainful of its base. But equally significant, attention to these conditions and their cause casts doubt not only on the substance of US foreign policy but also on its methods. The Obama Administration supported regressive economic policy in Latin America and stood idly by in the face of a brutal coup. Trump ups the ante.

How US Policy In Honduras Set The Stage For Today's Mass Migration -- Central American migrants – particularly unaccompanied minors – are again crossing the U.S.-Mexico boundary in large numbers. Under the Obama administration In 2014, more than 68,000 unaccompanied Central American children were apprehended at the U.S.-Mexico boundary. There were more than 60,000 in 2016.The mainstream narrative often reduces the causes of migration to factors unfolding in migrants’ home countries. In reality, migration is often a manifestation of a profoundly unequal and exploitative relationship between migrant-sending countries and countries of destination. Understanding this is vital to making immigration policy more effective and ethical.Through my research on immigration and border policing, I have learned a lot about these dynamics. One example involves relations between Honduras and the United States. U.S. military presence in Honduras and the roots of Honduran migration to the United States are closely linked. It began in the late 1890s, when U.S.-based banana companies first became active there.  By 1914, U.S. banana interests owned almost 1 million acres of Honduras’ best land. These holdings grew through the 1920s to such an extent that, as LaFeber asserts, Honduran peasants “had no hope of access to their nation’s good soil.” Such developments made Honduras’ ruling class dependent on Washington for support. A central component of this ruling class was and remains the Honduran military. By the mid-1960s it had become, in LaFeber’s words, the country’s “most developed political institution,” – one that Washington played a key role in shaping. This was especially the case during the presidency of Ronald Reagan in the 1980s. At that time, U.S. political and military policy was so influential that many referred to the Central American country as the “U.S.S. Honduras” and the Pentagon Republic. The Reagan years also saw the construction of numerous joint Honduran-U.S. military bases and installations. Such moves greatly strengthened the militarization of Honduran society. In turn, political repression rose. There was a dramatic increase in the number of political assassinations, “disappearances” and illegal detentions. In the post-Reagan era, Honduras remained a country scarred by a heavy-handed military, significant human rights abuses and pervasive poverty. Still, liberalizing tendencies of successive governments and grassroots pressure provided openings for democratic forces.

Private companies are making millions detaining immigrant kids taken from their parents -- Private companies are being paid millions of dollars in lucrative federal government contracts to provide housing and other services for undocumented immigrant children – including the thousands of recently arrived youngsters separated from their relatives at the U.S. border, Yahoo News reported this week.After reviewing publicly available contracts, Yahoo found 10 different contracts totaling approximately $92 million, awarded to five different vendors starting in September 2017. The contracts lasted for five years, through September 2022. The website first wrote about the contracts in a June 19 online post. A Florida-based company, Comprehensive Health Services Inc. (CHSI), which boasts experience with “immigrant shelter services” received the bulk of the contracts. According to GovTribe.com, the company was awarded three contracts worth up to about $65 million.Yahoo wrote that CHSI last February was awarded a contract worth $30.9 million to operate an “emergency shelter” in Homestead, Florida, with “500 UAC beds,” an acronym referring to “unaccompanied alien children.” Southwest Key Programs was awarded two contracts in September 2017 worth up to $1.8 million each for providing “emergency shelter operations,” according to information posted on the site GovTribe.com. Yahoo, citing a report in ABC News, said the Texas based nonprofit runs 26 facilities for young migrants including Casa Padre in Brownsville, Texas. Casa Padre, located in a cavernous former Walmart, is the country’s largest licensed facility for immigrant children, with a capacity of 1,500.

Trump wants to send undocumented immigrants back without hearings: What we know now -- President Donald Trump pressed his case for cracking down on undocumented immigrants on Sunday, tweeting that "zero tolerance" is fair and gives preference to those who "legally wait their turn.""We cannot allow all of these people to invade our Country," Trump said on Twitter. "When somebody comes in, we must immediately, with no Judges or Court Cases, bring them back from where they came. Our system is a mockery to good immigration policy and Law and Order."Sen. Elizabeth Warren, D-Mass., visiting a processing center for undocumented immigrants on the Texas border, dismissed the implication that the migrants should be denied due process. A mother with a young child who faced threats from gangs and asks for asylum in the U.S. should not be rejected without a hearing, she said."That's not what our country stands for," she said. "We do have a system of laws." Under zero tolerance, undocumented adult immigrants who did not cross at legal entry points are arrested and separated from their children. Trump's tweets Sunday came hours after federal officials released a plan to reunify migrant children with their parents in a mass detention center in Texas. The Department of Homeland Security said the reunifications may not happen until after a parent's deportation proceedings are complete.

"By Securing The Border, Trump Is Threatening Money-Flow For Lots Of Connected Interests" - President Trump  doubled-down on his plan for "immediate" deportation of illegal immigrants this morning, explaining in a tweet that "hiring many thousands of judges, and going through a long and complicated legal process, is not the way to go," adding that this deterrence approach "is the way to go to stop illegal immigration in its tracks."Hiring many thousands of judges, and going through a long and complicated legal process, is not the way to go - will always be disfunctional. People must simply be stopped at the Border and told they cannot come into the U.S. illegally. Children brought back to their country....  ....If this is done, illegal immigration will be stopped in it’s tracks - and at very little, by comparison, cost. This is the only real answer - and we must continue to BUILD THE WALL! — Donald J. Trump (@realDonaldTrump) June 25, 2018 But, as NBC News reports,  that hasn't stopped civil rights attorneys from flocking to the Texas border to 'protect' the rights of illegal immigrant parents not to be separated from their children - the exact same policy that is utilized on American parents when they commit a crime with children in tow.Attorneys have become a lifeline for migrants in detention, responding as would clergy to a disaster or tragedy, as the legal labyrinth of immigration has become more complicated. Although many are accustomed to the immigration system's complexities, attorneys are finding the situation created by the Trump "zero-tolerance" prosecutions full of never-before-seen hurdles and restrictions that hamper their access to children and parents and are making their work to ensure those with valid asylum and other claims get to stay more difficult. Ali Rahnama, an immigration attorney from Washington, D.C. who works on public policy and high impact litigation, said he woke up last Monday and felt he needed to be on the border. He found a private donor to pay for him and a few colleagues to fly to the border. Another attorney, Sirine Sheboya, is choking back emotion over the lengths mothers and fathers are going to be reunited with their children.

Leaked manual reveals ICE informants posing as attorneys, clergy --The independent media outlet Unicorn Riot has published the “Undercover Operations Manual” used by Immigration and Customs Enforcement (ICE) to regulate the use of informants and to infiltrate pro-immigrant organizations. This handbook is the fifth and latest document related to the functioning of ICE that has been published by Unicorn Riot as part of its “Icebreaker” series.The manual has been in use for at least eight years since 2008 and its later editions are reportedly very similar to the version that has been exposed.Divided into 14 chapters and 10 appendices, the 227-page manual provides a detailed look at the ways in which the agency has charted procedures governing all kinds of covert actions including, but not limited to, breaking federal laws.The text contains information on special training programs where agents can obtain training for various covert operations, including the infiltration of religious, political, legal and media organizations. ICE operatives are told how they might obtain false identities and insert falsified records into government databases. The manual also spells out the specific steps needed for approval of undercover operations, including those that are “sensitive” and would need “statutory exemptions.” The manual also gives insight into the shady world of budgeting such operations. There are detailed instructions on how commissions and stipends can be used to pay informants, and how profits from illegal undercover operations can be funneled back into more secret operations.

Leaked manual shows how US officials were authorised to use entrapment and sexual liaisons against immigrants - A leaked undercover operations training manual reveals how US agencies were authorised to carry out entrapment and other illegal activities against people who immigrated to the United States. These included forming long-term sexual liaisons with targets. Independent investigative media outlet Unicorn Riot has now published the manual [pdf]. And a Freedom of Information Act (FOIA) request by GovernmentAttic.org has established that the manual has been operational for at least eight years (from April 2008 to the end of 2016). But Unicorn Riot believes much of it is still in use:Yesterday we published a leaked copy of the #ICE Undercover Operations Handbook. The copy we received was dated 2008 but is known to have been current up to 2016. Current ICE policies are believed to include much of these same materials. https://t.co/oOjM3ATpFt pic.twitter.com/4c8sG23FbI — Unicorn Riot (@UR_Ninja) June 23, 2018 The manual reveals how US Immigration and Customs Enforcement (ICE) officers can infiltrate religious, political and media organisations, while also carrying out a range of undercover operations, including: entrapment, the adoption of fake IDs, and forming long-term intimate relationships with targets to get information. Below are seven examples:

11 States Will Challenge Trump’s New Immigration Executive Order in Court - Flanked by Gov. Jay Inslee, immigrant-rights leaders, state lawmakers and others, Attorney General Bob Ferguson announced Thursday that Washington will lead a coalition of nearly a dozen states that will sue the Trump administration over its "zero tolerance" policy of separating immigrant children from their parents during illegal border crossings. The lawsuit, announced in front of the Federal Detention Center in SeaTac, will challenge the constitutionality of the family separation policy and President Donald Trump's new executive order meant to replace it, Ferguson said. The suit will be filed "imminently" in federal court in Seattle, he said, but he did not give a specific date other than "within the next few business days.""We'll allege that the administration is violating constitutional due-process rights of the parents and children by separating them as a matter of course and without any findings that the parent poses a threat to the children," Ferguson said. "The policy is also irrationally discriminatory in violation of constitutional guarantees of people protection, because it only targets people crossing our southern border, not any other entrance to the United States." The other states joining the lawsuit are Oregon, California, Massachusetts, Maryland, New Mexico, Pennsylvania, New Jersey, Iowa, Illinois and Minnesota, Ferguson said. Additional states may also join the suit, he said.Ferguson's office had intended to file the lawsuit Thursday, but he is now modifying the legal complaint to address President Trump's executive order, signed on Wednesday, that reversed the administration's policy and seeks to detain families together for potentially more than 20 days. Ferguson described the executive order as "riddled with so many caveats that it is essentially meaningless," contending it does not address children in custody who've already been separated from their families.

Customs and Border Protection head says agency has stopped referring immigrant parents for criminal prosecution - - The head of U.S. Customs and Border Protection says he has temporarily stopped referring for criminal prosecution adults who cross the border illegally with children. Commissioner Kevin McAleenan told reporters in Texas Monday he ordered referrals suspended within hours of President Trump's executive order last week that stopped the practice of separating families. ..He says that the zero tolerance policy remains in effect, but cases cannot be prosecuted because parents cannot be separated from their children. He says he is working to develop plan to resume illegally entry prosecutions of adults with children. Meanwhile, Attorney General Jeff Sessions said in Reno, Nevada that federal prosecutors would continue to criminally prosecute adults caught crossing the border. 

18 Democratic attorneys general sue Trump over family separations | TheHill: Seventeen states and Washington, D.C. filed a lawsuit on Monday against the Trump administration over the separations of migrant families at the border. The lawsuit, filed by 18 Democratic attorneys general, seeks to force the Trump administration to reunite more than 2,000 children with their parents. California Attorney General Xavier Becerra, Washington Attorney General Bob Ferguson and Massachusetts Attorney General Maura Healey are leading the coalition. The lawsuit alleges that the “zero-tolerance” policy to prosecute more illegal border crossers and separate them from their children is in violation of immigrants’ constitutional rights, and is illegally inflicting trauma on children. The lawsuit is the first legal challenge by states over the policy. President Trump signed an executive order last week to halt the separations of families, but the complaint says that the order does not address the reunification of families, and is “so vague and equivocal that it is unclear when or if any changes will actually be made.” Becerra said in a release that Trump’s policy is a “heartless political maneuver.” “Child internment camps in America...the Trump Administration has hit a new low. President Trump’s indifference towards the human rights of the children and parents who have been ripped away from one another is chilling,” Becerra said. 

Judge orders U.S. to reunite families, stop border separations - A federal judge in San Diego ordered immigration agents on Tuesday to stop separating migrant parents and children who have crossed the border from Mexico and to work to reunite families that have already been split up while in custody.U.S. District Court Judge Dana Sabraw issued a preliminary injunction in a lawsuit filed by an anonymous woman from the Democratic Republic of Congo and backed by the American Civil Liberties Union, which pursued it as a class action as U.S. authorities began a "zero tolerance" policy in early May.President Donald Trump issued an executive order to end the family separations last Wednesday, but the government has yet to reunite about 2,000 children with their parents.Trump said last week that the order would "solve that problem" of children being separated from their parents, and government lawyers argued that he had "largely" addressed the issue. But Sabraw wrote that statements submitted by the government show that the order was intended to reunite families only "after the parent's immigration case is concluded" so they can "be deported together."The order "is silent on the issue of reuniting families that have already been separated or will be separated in the future," he wrote.Moreover, he wrote, "the record also reflects that the practice of family separation was occurring before the zero tolerance policy was announced, and that practice has resulted in the casual, if not deliberate, separation of families that lawfully present at the port of entry, not just those who cross into the country illegally."And he zeroed in on a provision of the order intended to let the government continue to separate migrant families when "there is a concern that detention of an alien child with the child's alien parent would pose a risk to the child’s  welfare."Sabraw called that standard "subjective" and wrote, "Objective standards are necessary, not subjective ones, particularly in light of the history of this case"

House Rejects Second Immigration Bill After Hardline Measure Fails - A second GOP immigration compromise bill died in the House on Wednesday, ending a several month-long drama that wouldn't have likely made it through the Senate even if it had passed.  Fewer votes were cast for the compromise bill than the more hardline measure rejected last week in a 193-231 vote. Just 114 Republicans backed it, with 34 having not yet voted.  The vote itself was postponed twice in order to give Republicans more time to drum up support for the measure which was sharply opposed by Democrats, and not expected to survive the Senate even if the House approved it.  Earlier Wednesday, Trump sent a very "boomer" all-caps Tweet urging House GOP to pass the measure. HOUSE REPUBLICANS SHOULD PASS THE STRONG BUT FAIR IMMIGRATION BILL, KNOWN AS GOODLATTE II, IN THEIR AFTERNOON VOTE TODAY, EVEN THOUGH THE DEMS WON’T LET IT PASS IN THE SENATE. PASSAGE WILL SHOW THAT WE WANT STRONG BORDERS & SECURITY WHILE THE DEMS WANT OPEN BORDERS = CRIME. WIN!— Donald J. Trump (@realDonaldTrump) June 27, 2018  The compromise bill would have provided a pathway to citizenship for so-called Dreamers, the issue that led centrist Republicans to launch a discharge petition to force a series of votes on immigration.Discharge petitions are a way of getting around the House leadership to force a vote, and are rarely used by members in the majority. Democrats backed those Republicans pushing the discharge petition to raise pressure on GOP leaders. The decision to vote on the hardline immigration measure last week and the compromise bill on Wednesday were part of a deal within the GOP conference that effectively quashed the petition. -The HillThe bill would have also set aside $25 billion for Trump's border wall and other security measures, while ending the diversity visa lottery program and imposing limits on family-based migration. It would also prevent migrant families from being separated - however an Executive Order from last week already covered that base.

Photos of the Day: 575 Protesters Charged at Senate's Hart Building at Immigration Rally - An afternoon of protests ended in many arrests in the Hart Senate Office Building on Thursday as a group of mostly female protesters flooded the atrium of the work space to protest President Donald Trump’s immigration policies.   United States Capitol Police charged nearly 575 individuals with “unlawfully demonstrating,” according to a Capitol Police statement Thursday.Several Democratic lawmakers including Sen. Tammy Duckworth of Illinois and Rep. Jamie Raskin of Maryland were in attendance, and Rep. Pramila Jayapal of Washington — an immigrant herself — was among those arrested.  Here’s the afternoon in photos:

It’s not just people in the U.S. illegally — ICE is nabbing lawful permanent residents too - In 2001, Jose Luis Garcia was convicted of a misdemeanor domestic violence charge. Whatever tumult it caused within his family, the event seemed to fade with every passing year as Garcia became a grandfather and inched closer toward retirement. This month, the nearly 20-year-old conviction came roaring back when immigration agents arrested the 62-year-old as he drank coffee and watered the lawn of his Arleta home.His daughter, Natalie Garcia, thought there must be a mistake. Her father has been a lawful permanent resident since 1988. He carries his green card in his wallet.“We thought this was happening to people like they said — criminals, the gang members,” she said in an interview between sobs.Legal immigrants in the U.S. have never been completely protected from possible deportation. But in its war against illegal immigration, the Trump administration has lowered the bar for whom immigration agents can go after, experts say. President Trump has vowed to crack down on immigrants with criminal records, saying they should be deported to their home countries. Immigration and Customs Enforcement agents have carried out a series of sweeps in California this year, detaining hundreds of people. While there has been much emphasis on the arrest of people who don’t have criminal records but are here illegally, the arrest of legal immigrants who have convictions deep in their pasts has gotten less attention. Trump’s supporters see this as an important part of his get-tough approach. But others question the fairness of deporting people with legal status who committed crimes, some of them relatively minor, long ago. “They are going to go after anybody they can get their hands on who may be deportable,” . “That leads to cases like Mr. Garcia’s, where you have somebody who has lived in the country for decades. He may have committed a crime a long time ago, but he has rehabilitated himself and he’s fully an upstanding member of his community and key support for his family.”

America’s Immigration Crisis Has Real Culprits — And They Aren’t Immigrants - Marshall Auerback - President Trump has finally signed an executive order purporting to end his attorney general’s inhumane practice of separating migrant children from their parents when families are found illegally crossing the border. But let’s not pretend that an immigration solution is at hand—certainly not from the GOP, whose supporters may not like the practice of separating children from their parents, but have little problem with a “zero tolerance policy” on illegal immigration. Even the Democrats have been complicit here, most being perfectly content to use photographs of crying babies being taken away from incarcerated parents to score political brownie points with their base in time for the 2018 congressional elections. Their humanitarian concerns are admirable. One only wishes that the Democratic Party evinced similar outrage in regard to its own citizen-workers, who have been repeatedly victimized by offshoring and wage depressing, union busting mass immigration. The Democrats have apparently made a cynical political calculation whereby today’s economic migrants become part of tomorrow’s emergent electoral majority, even if it means screwing a historically loyal constituency—American labor—in the process. And that’s what this basically comes down to: politics. Children are being used as pawns because the country’s demographics are changing, and with that, so are voting patterns. The seemingly endless political deadlock on immigration reform is ultimately about voters, as much as wages. The immigration waves of the past 20 years brought big changes to the South and the Southwest, as Hispanic immigration has turned hitherto “red” states into ones hueing increasingly purple (and ultimately blue). You can see this clearly in states such as Colorado, and before that, California, which used to regularly elect Republican governors (until Pete Wilson’s infamous Proposition 187—“a 1994 ballot initiative to establish a state-run citizenship screening system and prohibit illegal aliens from using non-emergency health care, public education, and other services in the State of California”). The GOP is increasingly at war with these demographic trends, whereas the Democrats are increasingly dependent on voting blocs from immigrant groups.

These U.S. industries can’t work without illegal immigrants - The nation's attention is currently on the southern border, where the Trump administration's "zero tolerance" policy has caused a crisis over separated immigrant children. Sometimes forgotten as the nation focuses attention on migrants currently trying to cross the border is that millions of undocumented immigrants continue to live in the U.S. – and most of them work.  And in fact, these workers play vital roles in the U.S. economy, erecting American buildings, picking American apples and grapes, and taking care of American babies. Oh, and paying American taxes. My work as the director of the Cornell Farmworker Program involves meeting with undocumented workers in New York, and the farmers who employ them. Here's a snapshot of who they are, where they work – and why Americans should care about them.  Pew Research Center estimates that about 11.3 million people are currently living in the U.S. without authorization, down from a peak of 12.2 million in 2007. More than half come from Mexico, and about 15 percent come from other parts Latin America. About 8 million of them have jobs, making up 5 percent of the U.S. workforce, figures that have remained more or less steady for the past decade. Geographically, these unauthorized workers are spread throughout the U.S. but are unsurprisingly most concentrated in border states like California and Texas, where they make up about 9 percent of both states' workforces, while in Nevada, their share is over 10 percent. Their representation in particular industries is even more pronounced, and the Department of Agriculture estimates that about half of the nation's farmworkers are unauthorized, while 15 percent of those in construction lack papers – more than the share of legal immigrants in either industry. In the service sector, which would include jobs such as fast food and domestic help, the figure is about 9 percent.  Further studies show that the importance of this population of workers will only grow in coming years. For example, in 2014, unauthorized immigrants made up 24 percent of maids and cleaners, an occupation expected to need 112,000 more workers by 2024. In construction, the number of additional laborers needed is estimated at close to 150,000. And while only 4 percent of personal care and home health aides are undocumented, the U.S. will soon require more than 800,000 people to fill the jobs necessary to take care of retiring baby boomers.

ICE Criminal Investigators Ask to Be Distanced from Detentions, Deportations in Letter to Kirstjen Nielsen - A majority of ICE’s top criminal investigation agents are asking Homeland Security Secretary Kirstjen Nielsen to spin their division off from the agency. In a letter sent last week, 19 special agents in charge at ICE’s Homeland Security Investigations unit said that ICE’s controversial detention and deportation policies have made it hard for them to conduct investigations into threats to national security, organized crime, narcotics smuggling and human trafficking. “HSI’s investigations have been perceived as targeting undocumented aliens, instead of the transnational criminal organizations that facilitate cross border crimes impacting our communities and national security,” the special agents in charge wrote in the previously unreported letter. They also wrote that “the perception of HSI’s investigative independence is unnecessarily impacted by the political nature” of ICE’s immigration enforcement. “Many jurisdictions continue to refuse to work with HSI because of a perceived linkage to the politics of civil immigration.” The letter comes as ICE faces criticism for President Trump’s crackdown on immigrants, including the “zero-tolerance” policy that resulted in thousands of immigrant children being separated from their parents. (embedded)

Lawmakers take immigration battle to ballot box | TheHill: Both parties think their immigration message will fire up their base in the midterm elections, ensuring a clash on the campaign trail over one of the most divisive issues facing Congress. Democrats are slamming Republicans for failing to address the plight of “Dreamers” and families separated at the U.S.-Mexico border, labeling the Trump administration as inhumane and accusing GOP leaders of being ineffective.Trump, meanwhile, is calling attention to the crimes committed by immigrants in the country illegally and MS-13 gang members and drumming up fear that the Democrats want open borders, resurrecting the same anti-immigration rhetoric he used on the 2016 campaign trail. “As a base mobilizer, it’s an effective issue,” said GOP strategist Matt Mackowiak. “But it’s effective for both sides,” he added. Amplifying the issue, however, could be a risky gambit for vulnerable GOP lawmakers who are up for reelection in suburban and moderate swing districts. “A lot of the competitive races are in suburban districts with upper-class independents and Republicans,” said Brad Bannon, a Democratic strategist. “They aren’t preoccupied with MS-13. They care about these kids at the border.”

Most Americans Want Illegal Aliens Either Deported Or Detained, CBS Poll Says - Ignore the outrage surrounding the Trump administration's "zero tolerance" border policy: Polls are still showing that most Americans are on the president's side. The latest proof of that comes from a CBS poll released Monday showing that a slight majority of Americans want to see illegal aliens detained or deported. Furthermore, 51% of respondents said that a border wall would be a good idea, even if it doesn't cover the entire border. The poll was conducted last week, between June 21 and June 22 - following nearly two weeks of intense public scrutiny surrounding Trump's controversial border policy, which he rescinded last week with an executive order.Also CBS poll: only 21% of voters favor releasing illegal immigrants into the country. Nearly 3/4 support incarceration and deportation pic.twitter.com/ULUkvkQOP0— Ryan James Girdusky (@RyanGirdusky) June 24, 2018 This all jives with what we reported last week - namely that a majority of voters think the parents of children detained at the US border are to blame for the crisis. Only 35% believe the government is at fault for enforcing the law, while 11% are unsure who is to blame. While strong immigration policies remain broadly popular, politicians in blue states are growing even more hostile toward President Trump's immigration enforcement efforts, directing most of their hostilities at ICE. Cynthia Nixon, who is challenging Gov. Andrew Cuomo in the New York State Democratic gubernatorial primary, just this week called for the abolition of ICE, saying the group has strayed far from its original purpose - even going so far as to label ICE a "terrorist organization." She said this while the poll confirmed that the president's approval rating has held strong, with more than 40% of respondents identifying as a "Trump supporter".

How Trump's immigration crackdown could slam the U.S. economy -- The Trump administration’s immigration crackdown could severely limit American companies’ ability to hire workers in a tight labor market, economist Mark Zandi says.  “The labor market is very tight and we have a record number of open positions already, and it’s just going to get worse,” Zandi, chief economist at Moody’s Analytics, said in the latest edition of the POLITICO Money podcast.“If the president wants to build his wall between Mexico and the United States, he’s going to have to hire Mexicans to do it because there are literally no American construction workers there to do anything other than build the homes that are going up,” Zandi said. “Immigrants are key to the workforce in every industry. Every industry is going to feel it. It’s pretty much across the board.” The nation’s jobless rate sits at just 3.8 percent with more job openings than available workers, Zandi noted, a situation made more acute by the aging of the U.S. workforce.  “It’s pretty clear that if we don’t increase the number of immigrants coming into the country, the growth in the labor force is going to come to a standstill and it’s going to be very difficult if not impossible for businesses to find the workers that they need,” he said. “And if they can’t find the workers, then growth is going to remain weak and it could even slow.”

 Maxine Waters calls on supporters to confront Trump officials in public spaces | TheHill: Rep. Maxine Waters (D-Calif.) on Saturday called on her supporters at a rally to confront Trump Cabinet officials in public spaces like restaurants and department stores to protest the administration's policies. "I have no sympathy for these people that are in this administration who know it is wrong what they're doing on so many fronts but they tend to not want to confront this president," Waters said at a Los Angeles rally on Saturday. "For these members of his Cabinet who remain and try to defend him they're not going to be able to go to a restaurant, they're not going to be able to stop at a gas station, they're not going to be able to shop at a department store, the people are going to turn on them, they're going to protest, they're going to absolutely harass them until they decide that they're going to tell the president 'no I can't hang with you, this is wrong this is unconscionable and we can't keep doing this to children,' " she continued. Waters's call comes as the Trump administration faces major backlash over the handling of its "zero tolerance" immigration policy, which has resulted in the separation of immigrant families. Protesters confronted Homeland Security Secretary Kirstjen at a Mexican restaurant in Washington, D.C., last week, yelling “shame” at Nielsen and “End Texas concentration camps.” Demonstrators in a separate incident outside Nielsen's home on Friday blasted audio of crying migrant children who had been separated from their parents. White House press secretary Sarah Huckabee Sanders has also faced public backlash for her work in the administration, recently being told by one of the owners of the Red Hen restaurant in Lexington, Va., to leave due to her role in the administration.

"Not On My Watch": Trump Warns Left Over Escalating Confrontations, Tells Voters "Time To Defend Our Principles" - President Trump has put the left on notice after several key members of his staff were publicly harassed over his administration's "zero tolerance" immigration policy, telling supporters in a letter: "Not on my watch." After several high profile harassment incidents, Democratic Rep. Maxine Waters (CA) tossed a can of gasoline on the dumpster fire last weekend, calling for people to form into mobs and physically confront members of the Trump administration if they see them out in public.  "If you see anybody from that Cabinet in a restaurant, in a department store, at a gasoline station, you get out and you create a crowd and you push back on them, and you tell them they’re not welcome anymore, anywhere," said Waters.Since then, White House advisor Stephen Miller's apartment was swarmed by protesters who tacked up "Wanted" posters, and on Tuesday a group of Georgetown students harassed Senator Mitch McConnell (R-KY) and his wife. These youths are quite lucky there was a security detail separating them from Secretary Chao. https://t.co/AP3CG2jQPx— Senator Hatch Office (@senorrinhatch) June 26, 2018  And on Monday, we reported that a decapitated and burned animal carcass was found on the porch of a Department of Homeland Security (DHS) staffer, according to WTOP/ABC.Around two dozen incidents have been reported against government employees issued in the past few days - primarily against Immigration and Customs Enforcement (ICE) officers, which resulted in a determination by Homeland Security that there is a "heightened threat against DHS employees."   In a fundraising email titled "Harassment," Trump wrote:  Sarah Huckabee Sanders was kicked out of a restaurant.Kirstjen Nielsen was harassed in her own home.Homeland Security staffers have been warned of “increased threats” from the open borders mob. ...And now Democrat Maxine Waters is calling for MORE HARASSMENT of the Silent Majority. The Left is trying to bully and buy their way back into power. Not on my watch. I will always stand up for you. The President followed up on this thread this morning, tweeting about the "unhinged" left and once again highlighting Maxine Waters' "crazy rants."

Let the Trump team eat in peace - Editorial Board, WaPo -- OVER THE WEEKEND there was a fair bit of argument about the decision by a small restaurant in Lexington, Va., not to serve dinner to President Trump’s press secretary. It wasn’t the first time recently that strong political feelings have spilled into what used to be considered the private sphere. We understand the strength of the feelings, but we don’t think the spilling is a healthy development.  Sarah Huckabee Sanders was dining with a few other people at the Red Hen in Lexington Friday night. Several of the restaurant’s staff are gay and objected to Ms. Sanders’s defense of Mr. Trump’s discriminatory policies against transgender people. The staff also objected to the administration’s recent actions leading to the separation of thousands of children from their parents at the U.S.-Mexico border. Respecting her staff’s wishes, the restaurant owner politely asked Ms. Sanders to leave, and Ms. Sanders politely acceded. She then tweeted about the episode, turning it into a public controversy. This followed by a few days the very public heckling of two architects of that border policy, Homeland Security Secretary Kirstjen Nielsen and White House senior policy adviser Stephen Miller, at Washington restaurants. Last month a Nebraska sociology professor was found guilty of vandalism for spraying false blood at the home of a National Rifle Association lobbyist in Alexandria.  Most obviously, passions are running high. Those who defend the Red Hen staff, or Ms. Nielsen’s hecklers, say this is no ordinary policy dispute. Mr. Trump has ordered terrible violations of human rights at the border, he is demonizing immigrants by his actions and his rhetoric, and people need to speak up however they can.  We nonetheless would argue that Ms. Huckabee, and Ms. Nielsen and Mr. Miller,  should be allowed to eat dinner in peace. Those who are insisting that we are in a special moment justifying incivility should think for a moment how many Americans might find their own special moment. Down that road lies a world in which only the most zealous sign up for public service. That benefits no one.

Burned & Decapitated Animal Carcass Left On DHS Employee's Porch - A decapitated and burned animal carcass was found on the porch of a Department of Homeland Security (DHS) staffer, the latest in a spate of threats tied to President Trump's immigration policy, according to WTOP/ABC. Around two dozen incidents have been reported against government employees issued in the past few days - primarily against Immigration and Customs Enforcement (ICE) officers, which resulted in a determination by Homeland Security that there is a "heightened threat against DHS employees." The uptick in threats comes amid multiple protests directed at ICE and Customs and Border Protection officers, as well as the DHS secretary. It’s unclear exactly how much the threats have increased. -WTOP/ABC“This assessment is based on specific and credible threats that have been levied against certain DHS employees and a sharp increase in the overall number of general threats against DHS employees,” said Claire Grady, acting deputy secretary of Homeland Security in a Saturday letter to employees. DHS employees aren't the only ones receiving backlash for Trump's enforcement of existing immigration laws. On Sunday, Congresswoman Maxine Waters (D-CA) openly called for people to form a mob and physically confront members of Donald Trump's administration if they see them out in public after controversy over separated migrant families erupted two weeks ago.   Waters' rhetoric drew a sharp rebuke from President Trump, who wrote over Twitter: "Congresswoman Maxine Waters, an extraordinarily low IQ person, has become, together with Nancy Pelosi, the Face of the Democrat Party. She has just called for harm to supporters, of which there are many, of the Make America Great Again movement. Be careful what you wish for Max!"

Maxine Waters Cancels Events Following "Very Serious" Death Threats - Congresswoman Maxine Waters - who earlier this week urged her supporters to accost members of the Trump administration at restaurants and other public venues - has been forced to cancel a pair of public events after receiving a "very serious death threat." The Congresswoman told CNN on Thursday that she's seen an increase in threats since she made the controversial comments. Waters canceled appearances in Alabama and Texas this week after receiving "threatening messages" and "hostile mail" at her office, including "one very serious death threat" from an individual from Texas. "As the President has continued to lie and falsely claim that I encouraged people to assault his supporters, while also offering a veiled threat that I should 'be careful', even more individuals are leaving (threatening) messages and sending hostile mail to my office," Waters said in a statement. "There was one very serious death threat made against me on Monday from an individual in Texas which is why my planned speaking engagements in Texas and Alabama were cancelled (sic) this weekend," she continued. "This is just one in several very serious threats the United States Capitol Police are investigating in which individuals threatened to shoot, lynch, or cause me serious bodily harm."

Is The Media Deliberately Trying To Spawn Civil War 2.0? - Everyone is talking about a looming civil war on American soil, but they’re all blaming the “other” side. The media is deliberately trying to stir things up with breathless headlines about how awful the “other” side is. And it’s working so well it could lead us right to Civil War 2.0. The fact is, both the Left and the Right are to blame, threatening those who don’t have the same worldview. What it’s essential for us to keep in mind is that these are the opinions of the extremes of both sides. We in America have had conservative and liberal points of view along with everything in between for decades without the constant, looming threat of violence.. For example, Wendy Wolfe Herd, CEO of the dating app Bumble and a member of Forbes Magazine’s 30 Under 30, was the victim of a cyber attack launched by a “neo-Nazi organization” that posted Herd’s personal details online, as well as the contact information of her staff.The cyber attack occurred a couple of weeks after the Charlottesville rally last August, in which a man was with charged with a federal hate crime after driving into the crowd of counter-protesters. Herd released a statement saying that her company was “joining forces to ban all forms of hate from Bumble including racism, hate speech, and bigotry.” She believes this is why she and her employees were targeted. Herd now travels with bodyguards.At the same time, the Far Left is also stirring the pot and threatening dissenters with violence. Some guy named Hamilton Nolan recently posted an article on the “progressive” website Splinter that seemed to have referenced the politically-motivated bombings that took place during Richard Nixon and Gerald Ford’s administrations in response to the Vietnam War.  While some of his points about the warmongers in Congress are legitimate, he goes way, wayyyy off into the ether in his calls to action. Here are some excerpts from his essay, entitled “This Is Just the Beginning.”

Explaining The Political Situation In The United States - Dave Cohen - As humanity's long-term journey your inevitable reduction or extinction proceeds apace, the shorter-term situation in the United States is becoming more and more dire. This relatively short essay will explain that dire situation in terms of the "flatland" model of human nature laid out in the 4th essay and the previous three.It has not gone unnoticed in better reports of the current situation that the United States is now divided into two primary tribes, those on the political "left" (liberals) and those of the political "right" (conservatives). The tendency for humans to cohere into in-groups (Us) and out-groups (Them) is as natural as breathing. This natural cognitive process, which occurs unconsciously—it occurs wholly outside subjective awareness—ties "self" identify to the identity of the social group that person belongs to. This tie is strong if not unbreakable. In this sense, the "self" as an independent free-thinking individual can hardly be said to the exist.An attack on the social group is therefore construed psychologically as an attack on the "self" who identifies with that group, and vice versa. Moreover each group sees the other group as a real existential threat (a threat to its very existence). These conflicts are therefore perceived to be life and death matters, so instincts are very much in play (Live & Grow, 4th essay).This so-called "polarization" is far beyond the point of no return. Because there are perceived to be existential threats in this inter-group conflict, this dire situation is not malleable in some way good way which would defuse the situation over tiem as Stanford researcher Robert Sapolsky believes (Big Think video below).  Yankees and Red Sox fans? Give me a break.

Supreme Court upholds Trump travel ban - The Supreme Court ruled Tuesday that President Trump has the authority to ban travelers from certain majority-Muslim countries if he thinks it is necessary to protect the United States, a victory in what has been a priority since Trump’s first weeks in office and a major affirmation of presidential power.The vote was 5 to 4, with conservatives in the majority and Chief Justice John G. Roberts Jr. finding that a string of unprecedented comments and warnings from Trump about Muslims did not erode the president’s vast powers to control entry into this country.The president reacted on Twitter: “SUPREME COURT UPHOLDS TRUMP TRAVEL BAN. Wow!”Later, the White House issued a formal response that also took a swipe at Trump’s declared enemies. It called the ruling a “vindication following months of hysterical commentary from the media and Democratic politicians who refuse to do what it takes to secure our border and our country.” Lower courts had struck down each of the three iterations of the president’s travel ban, the first of which was issued in January 2017. But the administration said it fortified the order in response to each judicial setback, and it had reason to be optimistic about the Supreme Court, since the justices previously decided to let the ban go into effect while considering the challenges to it.

The new Dred Scott: Supreme Court upholds Trump travel ban - The US Supreme Court’s decision in Trump v. Hawaii upholding President Trump’s anti-Muslim travel ban is a shameful landmark in the destruction of democratic rights. It has been met with contempt and outrage by tens of millions of Americans and countless more millions around the world. In its legal, political and moral bankruptcy, the decision ranks alongside such infamies as Korematsu v. United States, which upheld the internment of Japanese-Americans, Plessy v. Ferguson, which sanctioned racial segregation, and Dred Scott v. Sandford, which held that slaves were chattel property and had no rights. By upholding Trump’s power to seal the country’s borders, the court has granted the president limitless authority to enact his fascistic policies against immigrants and political opponents. There can now be little question that the country’s highest court will rubber-stamp whatever authoritarian measures Trump plans on enacting, including the abolition of due process for immigrants and the erection of concentration camps. As a result of the decision, roughly 250 million inhabitants of Iran, Libya, Syria, Yemen, Somalia, North Korea and Venezuela will remain effectively barred from entering the US. The decision is a major political victory for Trump, who boasted yesterday that he had been vindicated by the ruling.

A world of free movement would be $78 trillion richer - The Economist - If something seems too good to be true, it probably is not actually true. But occasionally it is. Michael Clemens, an economist at the Centre for Global Development, an anti-poverty think-tank in Washington, DC, argues that there are “trillion-dollar bills on the sidewalk”. One seemingly simple policy could make the world twice as rich as it is: open borders. Workers become far more productive when they move from a poor country to a rich one. Suddenly, they can join a labour market with ample capital, efficient firms and a predictable legal system. Those who used to scrape a living from the soil with a wooden hoe start driving tractors. Those who once made mud bricks by hand start working with cranes and mechanical diggers. Those who cut hair find richer clients who tip better.  “Labour is the world’s most valuable commodity—yet thanks to strict immigration regulation, most of it goes to waste,” argue Bryan Caplan and Vipul Naik in “A radical case for open borders”. Mexican labourers who migrate to the United States can expect to earn 150% more. Unskilled Nigerians make 1,000% more. “Making Nigerians stay in Nigeria is as economically senseless as making farmers plant in Antarctica,” argue Mr Caplan and Mr Naik. And the non-economic benefits are hardly trivial, either. A Nigerian in the United States cannot be enslaved by the Islamists of Boko Haram.   Workers in rich countries earn more than those in poor countries partly because they are better educated but mostly because they live in societies that have, over many years, developed institutions that foster prosperity and peace. It is very hard to transfer Canadian institutions to Cambodia, but quite straightforward for a Cambodian family to fly to Canada. The quickest way to eliminate absolute poverty would be to allow people to leave the places where it persists. Their poverty would thus become more visible to citizens of the rich world—who would see many more Liberians and Bangladeshis waiting tables and stacking shelves—but much less severe.

Bill to save net neutrality is 46 votes short in US House -- Congressional Democrats seeking to reinstate net neutrality rules are still 46 votes short of getting the measure through the House of Representatives.The US Senate voted last month to reverse the Federal Communications Commission's repeal of net neutrality rules, with all members of the Democratic caucus and three Republicans voting in favor of net  neutrality. A discharge petition needs 218 signatures to force a House vote on the same net neutrality bill, and 218 votes would also be enough to pass the measure. So far, the petition has signatures from 172 representatives, all Democrats. That number hasn't changed in two weeks."We're 46 [signatures] away from being able to force a vote on the resolution to restore the Open Internet Order," Sen. Ed Markey (D-Mass.) tweeted yesterday.Republicans have a 235-193 majority in the House. You can see which representatives haven't signed the petition at this page maintained by net neutrality advocacy group Fight for the Future. Several groups including Fight for the Future held an "advocacy day" yesterday to urge lawmakers to support the petition.  FCC Chairman Ajit Pai's net neutrality repeal took effect on June 11.

AT&T collaborates on NSA spying through a web of secretive buildings in the US  --A new report from The Intercept sheds light on the NSA’s close relationship with communications provider AT&T.The Intercept identified eight facilities across the U.S. that function as hubs for AT&T’s efforts to collaborate with the intelligence agency. The site first identified one potential hub of this kind in 2017 in lower Manhattan.The report reveals that eight AT&T data facilities in the U.S. are regarded as high-value sites to the NSA for giving the agency direct “backbone” access to raw data that passes through, including emails, web browsing, social media and any other form of unencrypted online activity. The NSA uses the web of eight AT&T hubs for a surveillance operation code-named FAIRVIEW, a program previously reported by The New York Times. The program, first established in 1985, “involves tapping into international telecommunications cables, routers, and switches” and only coordinates directly with AT&T and not the other major U.S. mobile carriers.AT&T’s deep involvement with the NSA monitoring program operated under the code name SAGUARO. Messaging, email and other web traffic accessed through the program was made searchable through XKEYSCORE, one of the NSA’s more infamous search-powered surveillance tools. The Intercept explains how those sites give the NSA access to data beyond just AT&T subscribers: The data exchange between AT&T and other networks initially takes place outside AT&T’s control, sources said, at third-party data centers that are owned and operated by companies such as California’s Equinix. But the data is then routed – in whole or in part – through the eight AT&T buildings, where the NSA taps into it. By monitoring what it calls the “peering circuits” at the eight sites, the spy agency can collect “not only AT&T’s data, they get all the data that’s interchanged between AT&T’s network and other companies,” according to Mark Klein, a former AT&T technician who worked with the company for 22 years.

Republican tax law hits churches - Republicans have quietly imposed a new tax on churches, synagogues and other nonprofits, a little-noticed and surprising change that could cost some groups tens of thousands of dollars.Their recent tax-code rewrite requires churches, hospitals, colleges, orchestras and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees.  That could force thousands of groups that have long had little contact with the IRS to suddenly begin filing returns and paying taxes for the first time.Many organizations are stunned to learn of the tax — part of a broader Republican effort to strip the code of tax breaks for employee benefits like parking and meals — and say it will be a significant financial and administrative burden. It also means political peril for lawmakers, many of whom were surely unaware of the provision when they approved the tax plan. Churches’ tax-exempt status, in particular, has long been considered sacrosanct and Republicans are relying on the faithful to back them in the November elections.

Trump proposes to privatize the US Postal Service -- The Trump administration’s Office of Management and Budget (OMB) released a proposal last week to restructure and then privatize the United States Postal Service (USPS). The proposal is part of a sweeping reorganization of multiple government agencies following a review ordered by Trump in March 2017 to “identify redundancies and streamline agencies."Two months ago, Trump issued an executive order for a task force to investigate the operations and finances of the postal service, claiming USPS “was on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout." The task force was ordered to outline so-called reforms, including “private ownership.”Long the dream of right-wing free market proponents, the carve up of the postal service would be a windfall for big investors. With nearly 650,000 employees, USPS would rank 99th in the world as a private sector company and 37th on the list of Fortune 500 companies, according to Fortune magazine. The White House said privatization could occur through an initial public offering or by sale to an existing company. OMB's proposal calls for a two-stage process, beginning with an initial reorganization of the USPS “to return it to a sustainable business model or prepare it for future conversion...into a privately held corporation.” The report cites the supposed success of the “European model” as its criterion. While privatization in Europe has indeed been successful for investors, it has led to rising costs and poorer service for consumers, and the deterioration of the conditions and benefits of European postal workers.

Analysis | Trump's GOP is looking to deeply cut food stamps — hitting his voters hard - If Republicans succeed in their multi-front campaign to cut back on food stamps, the burden will fall heaviest on the working-class, rural white voters on whom President Trump has staked the future of their party.House Republicans on Thursday passed legislation that would require Americans ages 18 through 59 to either work part time or spend 20 hours a week in workforce training to receive food stamps. On the same day, the White House unveiled a proposal to consolidate the public safety net — including the Supplemental Nutrition Assistance Program (SNAP) — under a revamped health department. The program, The Washington Post's Amy Goldstein and Caitlin Dewey write, “has an explicit aim of building standardized requirements that people must work or prepare for jobs to qualify for government help.”  On the surface, these efforts seem like they will affect Democratic voters the most. The highest rates of food-stamp assistance tend to be in the most Democratic areas. But that’s a superficial reading of the numbers. Yes, the most Democratic-leaning 20 percent of counties tops the rankings in terms of reliance on food stamps. Fourteen percent of all households got SNAP assistance, based on 2012-16 data. But the most Republican-leaning 20 percent runs a close second at 13.5 percent of households receiving assistance. All groups are adjusted for population so that they're not distorted by the large Republican advantage in thousands of low-population counties.

Supreme Court rules against unions in Janus case --Wednesday’s Supreme Court ruling in the Janus v. AFSCME case is a defeat for the union bureaucracy, not the workers.Teachers, firefighters and other state and municipal workers have absolutely no interest in upholding the power of the unions to forcibly extract dues from their paychecks when these organizations do absolutely nothing to defend them.In the 5-4 decision, the Supreme Court ruled that state governments and public-sector unions can no longer extract so-called agency or union security fees from public employees who choose not to join a union. Up until now, 22 states, plus the District of Columbia and Puerto Rico, have deducted agency fees while 28 states have prohibited the practice.For weeks, the unions, the Democratic Party and various pseudo-left organizations have been warning that this ruling would be a calamity for workers. In oral arguments before the court, however, union attorneys asserted that the government had a “state interest” in propping up the unions because of their role in suppressing the class struggle and imposing “labor peace.” It was understood that this meant imposing one round of layoffs and wage and benefit cuts after another.“Union security is a tradeoff for no strikes,” an attorney for the American Federation of State, County and Municipal Employees (AFSCME) argued, adding that the removal of agency fees could “raise an untold specter of labor unrest throughout the country.”In a Washington Post column, American Federation of Teachers President Randi Weingarten pointed to the wave of teachers’ strikes in states where unions were weakest and warned that the type of “activism” seen in West Virginia would “be multiplied and magnified across the country if collective bargaining is struck down.” Both factions on the court argued from the premise that the unions’ function is to police the workers and undermine their resistance to the corporations and the government. However, the Republican majority on the court concluded that it was more important to undercut the unions’ ability to serve as a cash cow for the Democratic Party. Hailing the decision, President Trump tweeted, “Big loss for the coffers of the Democrats!”

Supreme Court rules against public unions collecting fees from nonmembers -  Conservatives on the Supreme Court said Wednesday that it was unconstitutional to allow public employee unions to require collective-bargaining fees from workers who choose not to join the union, a major blow for the U.S. labor movement.The court, in a 5-to-4 decision, overturned a 40-year-old precedent, arguing that the rule could require workers to give financial support to public policy positions they oppose. “States and public-sector unions may no longer extract agency fees from nonconsenting employees,” Justice Samuel A. Alito Jr. wrote for the majority. “. . . This procedure violates the First Amendment and cannot continue.”Justice Elena Kagan wrote for the dissenting liberals, objecting to a decision that she said would “wreak havoc” by undoing labor agreements throughout the country.“There is no sugarcoating today’s opinion,” Kagan wrote. “The majority overthrows a decision entrenched in this Nation’s law — and in its economic life — for over 40 years. As a result, it prevents the American people, acting through their state and local officials, from making important choices about workplace governance.”It was a devastating, if not unexpected, loss for public-employee unions, the most vital component of organized labor and a major player in Democratic Party politics. Major public-employee unions pour millions into independent campaigns, largely to bolster Democratic candidates up and down the ballot, and their members are steadfast participants in sophisticated get-out-the-vote efforts on Election Day.

Debt-collection dispute gets U.S. Supreme Court review - The U.S. Supreme Court agreed to decide whether thousands of borrowers can invoke a federal debt-collection law when they are facing foreclosure.The justices said they will hear an appeal from a Colorado man who defaulted on a $330,000 home loan in 2009 and is now battling a law firm that sought foreclosure on behalf of lender Wells Fargo & Co. The issue is whether the Fair Debt Collection Practices Act, which protects borrowers, applies in foreclosure proceedings that take place outside the court system. Lower courts are divided on the question.The action was on a list of orders the court released Thursday in wrapping up its nine-month term.The debt dispute could have important implications for the tens of thousands of foreclosures that are initiated every month. In 2016 alone, almost 400,000 homes were subjected to foreclosure, about half through non-court proceedings.The borrower,  Dennis Obduskey, invoked a provision in the federal law that requires collectors to confirm the validity of a debt and provide documentation.

Anthony Kennedy Retires - Anthony Kennedy will retire July 31. This gives Trump and Republican Senators a chance to nominate and confirm a fifth hard right justice. Already the Court has become extremely ideological and activist. Today it declared that Unions couldn’t require employers to pay the union a a fixed amount per worker, because that allegedly violated the first amendmenr rights of workers in unionized workplaces which disagree with the union leadership. This is Lochner v New York level right wing judicial activismBut it is nothing compared to what a court with Kennedy replaced by another justice similar to Gorsuch, Alito or Thomas. That court would almost certainly overturn Roe v Wade, probably declare affirmative action unconstitutional, and quite possibly reverse the gay marriage decision.The vast majority of Democratic Senators who have spoken have said they won’t confirm a justice in this congress but will insist on a delay until senators elected November 2018 are seated. They note McConnell’s argument against considering Garland and quote, among other things, a tweet of his. There are only 49 Democratic Senators. They need two Republicans (or one if McCain misses the vote). They also need Democrats up for re-election in red states to resist. Already Senator Donnelly of Indiana has begun to semi-break with Senate Democratic leadership. I’m sure the vast majority of Democrats will do what they can to block confirmation. It is possible that there will be two or three Republicans will agree. Sen Flake of Arizona already announced he is blocking judicial confirmations over tariffs and Cuba. A supreme court nomination is completely different, but Flake hates Trump and is not running for re-election. Sens Collins and Murkowski are pro-choice. The might block an anti-abortion nominee. Democratic victory is not likely but it is possible.  I think there are two important reasons that the crisis might help Democrats win the Senate. First, for decades there have been more single issue pro-life voters than single issue pro-choice voters, because Roe V Wade was there and seemed secure. Solid majorities support Roe v Wade. Now that it is clearly in great danger, it is likely that many pro Roe V Wage voters will vote on that issue alone so long as there is an open seat on the Supreme Court. Abortion is an issue in which a passionate minority has more political impact than a complacent majority. The pro Roe V Wade majority won’t be complacent anymore

The big picture: What Anthony Kennedy's retirement means - Anthony Kennedy's retirement has given Republicans a once-in-a-generation shot at reshaping the Supreme Court.  Republicans already preserved a conservative seat by denying Merrick Garland a vote in 2016. Now they will likely be able to replace Kennedy's swing vote with a more reliable conservative, with immediate implications.

  • Abortion: Kennedy voted with the court’s liberals to strike down some of the most aggressive efforts to limit women’s access to abortion. A more conservative court likely would be far more open to curtailing Roe v. Wade.
  • LGBT rights: It’s hard to imagine the court ever overturning Kennedy’s historic 2015 decision on same-sex marriage. But it’s very easy to imagine a broader range of carve-outs and exemptions for people like the Christian baker who refused to bake a cake for a same-sex wedding.
  • Criminal justice: Kennedy was skeptical of the death penalty in certain cases, and had recently suggested that solitary confinement is unconstitutional.

Sources close to the White House told Axios' Jonathan Swan that during the previous Supreme Court search Trump bonded with Thomas Hardiman, 52, and others in the White House were high on Raymond Kethledge, 51. And when Trump added Brett Kavanaugh, 53, to his list of possible choices last year, court watchers thought that was significant.

  • The court's term starts in October, so Senate Majority Leader Mitch McConnell has more incentive to get someone in place by then.
  • Trump will "immediately begin" the selection process, he said today.
  • Democrats can't block it by themselves: Republicans hold 51 seats, and only need 50 votes.
  • Republicans to watch: Susan Collins and Lisa Murkowski, two generally pro-choice Republican senators.
  • Democrats to watch: Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana and Joe Manchin of West Virginia all voted for Neil Gorsuch and are defending seats in states Trump won in 2016.
  • The Merrick Garland precedent: Chuck Schumer wants to wait until after the election, citing 2016. Republicans say no thanks, arguing the precedent only applies to presidential election years.

Talk About ‘The Appearance of Corruption’ - Charles Pierce -- From The New York Times: One person who knows both men remarked on the affinity between Mr. Trump and Justice Kennedy, which is not obvious at first glance. Justice Kennedy is bookish and abstract, while Mr. Trump is earthy and direct. But they had a connection, one Mr. Trump was quick to note in the moments after his first address to Congress in February 2017. As he made his way out of the chamber, Mr. Trump paused to chat with the justice. “Say hello to your boy,” Mr. Trump said. “Special guy.” Mr. Trump was apparently referring to Justice Kennedy’s son, Justin. The younger Mr. Kennedy spent more than a decade at Deutsche Bank, eventually rising to become the bank’s global head of real estate capital markets, and he worked closely with Mr. Trump when he was a real estate developer, according to two people with knowledge of his role. During Mr. Kennedy’s tenure, Deutsche Bank became Mr. Trump’s most important lender, dispensing well over $1 billion in loans to him for the renovation and construction of skyscrapers in New York and Chicago at a time other mainstream banks were wary of doing business with him because of his troubled business history.  Am I just naïve, or did I have a good reason for the way I just bounced my head off the wall?

"He's Out!": Establishment Democrats Rocked By Joe Crowley Primary Loss To Socialist Millennial - Establishment Democrat Joe Crowley's nearly two-decade career in Congress came to an end Tuesday night in a shocking primary loss to 28-year-old Democratic Socialist and former Bernie Sanders organizer Alexandria Ocasio-Cortez - a harsh critic of Israel and immigration enforcement. Crowley - the 56-year-old Chairman of the House Democratic caucus had long been viewed as a potential House Speaker, and has been a staple in New York City politics as chairman of the Queens County Democratic Party.  His loss to insurgent candidate Ocasio-Cortez, his first primary challenge in 14 years, is a major upset to establishment Democrats trying to cobble together a "blue wave" of progressive support to combat Republicans in the upcoming midterms. Instead, it looks like Democrats are as fractured as ever.

  • There are a lot of reasons why @Ocasio2018's win (and Crowley's crushing loss despite the entire Democratic establishment united behind him) is so exciting and awesome. She's a genuinely great candidate for so many reasons. But this chart is simply huge for US politics: https://t.co/TTdM0SWUVI — Glenn Greenwald (@ggreenwald) June 27, 2018
  • I'm going to show you just who @Ocasio2018, Justice Democrats, and DSA beat tonight. it isn't @JoeCrowleyNY. It's the most powerful people in America. Here are Crowley donors Sheryl Sandberg, Sean Parker, Google NET Pac, and Facebook's PAC. pic.twitter.com/tqkKYhqSLm — Matt Stoller (@matthewstoller) June 27, 2018
  • Crowley donors who lost tonight, part II: Intel, American Bankers Association, Citigroup, UPS, T-Mobile, Altria (Phillip Morris), ERNST & YOUNG, Florida Sugar Cane, Boeing, Constellation Brands, Altice, The Options Clearinghouse, Diageo, Cisco Systems... — Matt Stoller (@matthewstoller) June 27, 2018
  • Crowley donors who lost tonight: Facebook, Google, Blackrock, Humana, Raytheon, Capitol One, AFLAC, Microsoft, CIGNA, TD Bank, H&R Block, Salesforce dot com, United Technology, Deloitte, Covington and Burling, Anheuser-Busch, Honeywell... — Matt Stoller (@matthewstoller) June 27, 2018

(there are eleven more tweets listing Crowley donors, so we'll stop here)

Mention of Trump campaign may be off the table at Manafort trial -- The former Trump campaign chairman Paul Manafort and special counsel Robert Mueller have finally found something they can agree on.Mueller‘s prosecutors and Manafort‘s defense team filed separate motions with a federal court in Alexandria, Virginia, on Friday asking to block lawyers at an upcoming trial for the longtime lobbyist and political consultant from mentioning his stint at the helm of the Trump campaign in 2016. The requests came in court filings spurred by Manafort‘s looming trial next month on charges of tax evasion, bank fraud and failing to report overseas bank accounts.Mueller’s team went first, asking U.S. District Court Judge T.S. Ellis to prevent Manafort‘s defense from arguing to jurors that he was targeted for prosecution because of his role in Donald Trump’s presidential bid. “Manafort should … be precluded from arguing that he has been singled out for prosecution because of his position in the campaign of then-candidate Donald J. Trump, or otherwise asserting that he has been selectively prosecuted by the Special Counsel’s Office,” Mueller’s team wrote.Prosecutors noted that Manafort never filed a legal motion asking for the case to be dismissed on selective-prosecution grounds. Manafort‘s defense followed up a short time later with an even broader motion asking to bar any discussion at all of the defendant‘s role in the Trump campaign, as well as all mention of Mueller‘s mandate to investigate potential collaboration between Trump‘s team and Russia.

Mueller’s Fruit of the Poisonous Tree --Special counsel Robert Mueller’s investigation may face a serious legal obstacle: It is tainted by antecedent political bias. The June 14 report from Michael Horowitz, the Justice Department’s inspector general, unearthed a pattern of anti-Trump bias by high-ranking officials at the Federal Bureau of Investigation. Some of their communications, the report says, were “not only indicative of a biased state of mind but imply a willingness to take action to impact a presidential candidate’s electoral prospects.” Although Mr. Horowitz could not definitively ascertain whether this bias “directly affected” specific FBI actions in the Hillary Clinton email investigation, it nonetheless affects the legality of the Trump-Russia collusion inquiry, code-named Crossfire Hurricane. Crossfire was launched only months before the 2016 election. Its FBI progenitors—the same ones who had investigated Mrs. Clinton—deployed at least one informant to probe Trump campaign advisers, obtained Foreign Intelligence Surveillance Court wiretap warrants, issued national security letters to gather records, and unmasked the identities of campaign officials who were surveilled. They also repeatedly leaked investigative information.Mr. Horowitz is separately scrutinizing Crossfire and isn’t expected to finish for months. But the current report reveals that FBI officials displayed not merely an appearance of bias against Donald Trump, but animus bordering on hatred. Peter Strzok, who led both the Clinton and Trump investigations, confidently assuaged a colleague’s fear that Mr. Trump would become president: “No he won’t. We’ll stop it.” An unnamed FBI lawyer assigned to Crossfire told a colleague he was “devastated” and “numb” after Mr. Trump won, while declaring to another FBI attorney: “Viva le resistance.”

Mueller's office attacked The New York Times and The Washington Post for 'inaccurately' reporting on his investigation -- Robert Mueller has attacked the news media, including The New York Times and The Washington Post, for reporting "inaccurately" on the Russia investigation.  The rebuke came in a court filing Thursday, which asked a judge to issue a 19-page questionnaire to potential jurors in the special counsel's coming trial in Virginia against Paul Manafort.Manafort, who's in jail while awaiting trial, is the one-time Trump campaign chief who came under close scrutiny during the investigation into Russia's interference in the 2016 election.Mueller is preparing to face Manafort in a Virginia court on July 25 and wants to ensure that jurors aren't biased by things they've read in the media before the trial begins.In a footnote, the special counsel singled out two stories in The New York Times and The Washington Post last year, which indicated Mueller's office had conducted "no-knock" raids of Manafort's house. Here it is: The Times cited two anonymous sources "close to the investigation" to report that FBI agents had picked the lock on Manafort's door rather than announcing their presence before raiding his house. Many other news outlets, including the BBC, Vox, and Business Insider, then cited the Times report on the no-knock warrant. Mueller's office later denied carrying out no-knock raids, though until Thursday it had stopped short of attacking specific outlets over claims to the contrary. The Thursday court filing said:"The reporting, at times inaccurately, comments on the nature of the evidence collected in the case or activities of the parties."Furthermore, the amount of publicity about this case is only likely to grow as the trial date approaches, and such publicity increases the possibility that jurors will form biases or pre-formed opinions that may prejudice one or both parties." It also called out reports that "question the legitimacy of the Special Counsel's investigation, tending to advance the opinion that the investigation is 'tainted' and therefore its results are suspect," and stories that "include disparaging descriptions of the defendant."

Mueller Snags Blackwater Founder Erik Prince's Phones, Computer - Special Counsel Robert Mueller has been provided "total access" to Blackwater founder Erik Prince's phones and computer, and is voluntarily cooperating with the Russia investigation, reports ABC News. Prince, America's most famous private military contractor, admitted last week that he has "cooperated" with the Mueller probe after allegations of an alleged attempt to establish a backchannel emerged - something Prince has repeatedly denied.  A spokesperson for Prince told ABC that Prince basically thinks the Mueller investigation is a farce, but he is cooperating.  “As Mr. Prince told the Daily Beast he has spoken voluntarily with Congress and also cooperated completely with the Special Counsel’s investigation, including by providing them total access to his phones and computer,” the spokesperson said. “Mr. Prince has a lot of opinions about the various investigations, but there is no question that they are important and serious, and so Mr. Prince will keep his opinions to himself for now and to let the investigators do their work. All we will add is that much of the reporting and speculation about Mr. Prince in the media is inaccurate, and we are confident that when the investigators have finished their work, we will be able to put these distractions to the side.”

Russiagate’s ‘Core Narrative’ Has Always Lacked Actual Evidence – radio interview -Stephen F. Cohen, professor emeritus of Russian studies and politics at NYU and Princeton, and John Batchelor continue their (usually) weekly discussions of the new US-Russian Cold War. Cohen reminds listeners that the Russiagate scandal, which first leaked into the media in mid-2016, has already done immense political damage during these two years. It has cast doubt on the legitimacy of this presidency and possibly future ones. It has questioned the authenticity of a popular election and probably future ones, and thus of American democracy itself. And with high-level former US officials, influential columnists, and an array of mainstream-media outlets regularly declaring that President Trump is “a quisling” and “a Russian agent,” the scandal has greatly diminished his capacity to avoid war with Russia, conceivably nuclear war. Meanwhile, as happened during the McCarthy era, a myriad of official and media “investigations” have cast an ever-widening net in search of evidence of other “colluders,” from peripheral Trump “advisers” and shadowy “informants” to a Russian prostitute and her pimp in Thailand. Amid this daily frenzy, it’s often forgotten that Russiagate’s “core narrative,” as one of its most devout and prominent promoters terms it, was inspired by, and continues to be based on, two documents, both published in January 2017: an “Intelligence Community Assessment” and the anti-Trump “dossier” compiled by a retired UK intelligence officer, Christopher Steele. The “core narrative” of both was, of course, that Putin’s Kremlin had intervened in the 2016 presidential election—essentially an “attack on America”—in order to damage Hillary Clinton’s candidacy and abet Trump’s. At the time, a few critics questioned the authenticity of the ICA and the dossier, but for political and media Russiagaters, they instantly became, and have remained, canons, despite their deficit of facts and logic. Reread today, in light of what is now known, they are examples of the adage “rubbish in, rubbish out.”

Stormy Daniels' interview with Michael Cohen prosecutors canceled -    — Stormy Daniels, the porn star who says she had an affair with Donald Trump and was paid to keep quiet about it, was to sit down for an interview Monday with the federal prosecutors investigating his lawyer Michael Cohen, according to a person close to the probe.The interview, first reported by The Washington Post, was to take place in New York, said the source who requested anonymity to discuss the ongoing investigation.But late Sunday, Michael Avenatti, Daniels' lawyer, tweeted that the meeting was off."So I was just informed by the US Attys office that they are canceling the mtg tmrw scheduled with me and my client (for weeks) because the press found out about the mtg and they can’t handle a few cameras outside their offices. If they consider this a big deal, how will they ever bring any serious criminal charges against Cohen et al., let alone handle a trial, in such a high profile matter? We have bent over backwards to accommodate them. This is unheard of. We remain willing to cooperate but something isn’t right..."  Cohen has not been charged with a crime, but he has been the subject of a months-long criminal investigation that burst into public view when the FBI raided his home and offices in April. Investigators are examining his business dealings as well as potential campaign-finance violations. 

Did Sen. Warner and Comey ‘Collude’ on Russia-gate? -- An explosive report by investigative journalist John Solomon on the opinion page of Monday’s edition of The Hill sheds a bright light on how Sen. Mark Warner (D-VA) and then-FBI Director James Comey collaborated to prevent WikiLeaks editor Julian Assange from discussing “technical evidence ruling out certain parties [read Russia]” in the controversial leak of Democratic Party emails to WikiLeaks during the 2016 election.  A deal that was being discussed last year between Assange and U.S. government officials would have given Assange “limited immunity” to allow him to leave the Ecuadorian Embassy in London, where he has been exiled for six years. In exchange, Assange would agree to limit through redactions “some classified CIA information he might release in the future,” according to Solomon, who cited “interviews and a trove of internal DOJ documents turned over to Senate investigators.” Solomon even provided a copy of the draft immunity deal with Assange.   But Comey’s intervention to stop the negotiations with Assange ultimately ruined the deal, Solomon says, quoting “multiple sources.” With the prospective agreement thrown into serious doubt, Assange “unleashed a series of leaks that U.S. officials say damaged their cyber warfare capabilities for a long time to come.” These were the Vault 7 releases, which led then CIA Director Mike Pompeo to call WikiLeaks “a hostile intelligence service.”  Solomon’s report provides reasons why Official Washington has now put so much pressure on Ecuador to keep Assange incommunicado in its embassy in London.

House Passes Measure To Force DOJ Documents While Rosenstein Grilled In Heated Testimony --The House passed a resolution on Thursday demanding that the Department of Justice (DOJ) hand over a trove of sensitive documents related to the FBI's investigations into both Hillary Clinton's email probe and the Russia investigation. The floor vote passed 226-183, representing a further escalation in an ongoing feud between Congressional investigators and the DOJ. The demand sets a July 6 deadline for outstanding materials, which Rep. Mark Meadows (R-NC) said on Wednesday that failure to comply could result in holding Deputy Attorney General Rod Rosenstein in contempt, or even impeachment.  Moments before the resolution was passed, Rep. Jim Jordan (R-Ohio) and Deputy Attorney General Rod Rosenstein traded barbs in a fiery exchange during Congressional testimony - with Jordan accusing Rosenstein of keeping information from Congress.   “I am not keeping any information from Congress,” Rostenstein insisted, before being cut off.“In a few minutes, Mr. Rosenstein, I think the House of Representatives is gonna say something different,” Jordan fired back. “I don’t agree with you … If they do, they will be mistaken,” replied Rosenstein."Your use of this to attack me personally is deeply wrong."  Deputy AG Rosenstein hits back Rep. Jim Jordan in combative exchange that saw multiple other lawmakers intervening. https://t.co/VJbmi0BL2N pic.twitter.com/JYoRgJGUZP— ABC News (@ABC) June 28, 2018  Rosenstein then launched into Jordan - defending redactions in various documents, and said "the use of this to attack me personally, is deeply wrong," adding "I’m telling the truth and I'm under oath."  The House panels have been feuding with Rosenstein for months over the documents.

 BofA sued for role in alleged $102 million Ponzi scheme - Bank of America has been accused in a lawsuit of providing more than 100 accounts used to perpetrate what the U.S. regulators called a $102 million Ponzi scheme. The class-action suit filed behalf of people who lost money follows a complaint last week by the Securities and Exchange Commission alleging that five men and three companies defrauded more than 600 investors. One of the alleged ringleaders once commissioned a song about himself for a party in Las Vegas with lyrics celebrating his $10,000 suits and his partner’s affinity for champagne, according to Monday’s complaint in federal court in Ocala, Fla. The brother and sister who sued to recover losses from their late father’s investment claim the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed," according to the complaint. Bank of America spokesman Bill Halldin had no immediate comment on the suit. The lender is accused of failing to spot suspicious activity, including deposits of hundreds of thousands of dollars into accounts with relatively small, negative or nonexistent balances, followed by transfers within the same week to other accounts or investors seeking to cash out. The architects of the scheme promised they would put investor funds into profitable and perhaps dividend-paying companies, according to the SEC. But they spent $20 million from the investment pool to enrich themselves, made $38.5 million in "Ponzi-like payments" and transferred much of the rest away from the companies that were supposed to receive the money, the regulator said. 

Wells Fargo accused of misconduct again: Wells Fargo is once again being accused of misconduct, this time because it allegedly used complex financial investments to take advantage of mom-and-pop investors. The Securities and Exchange Commission said on Monday that between 2009 and 2013, Wells Fargo (WFC) reaped large fees by "improperly encouraging" brokerage clients to actively trade high-fee debt products that were intended to be held to maturity. Wells Fargo Advisors, the bank's brokerage division, agreed to pay a $4 million penalty over its handling of the products, known as market-linked investments. The bank must also return $930,377 of ill-gotten gains — plus $178,064 of interest. Wells Fargo, which neither admitted nor denied the SEC's allegations, said in a statement that it "cooperated fully" with the latest investigation. Over the past two years, Wells Fargo has been caught up in a series of scandals over how the bank treats its account holders, borrowers and employees. Even though the bond-like investments were designed to be held, the SEC said Wells Fargo pushed its clients to sell them before maturity. The bank then directed its clients to invest the proceeds into new ones. The SEC criticized Wells Fargo for "misconduct" and said its financial advisers "did not reasonably investigate or understand the significant costs of the recommendations." Further, the agency said that supervisors at Wells Fargo "routinely approved" these transactions despite internal policies that banned the "flipping" of such complex products.

Congress passes on short-term pot banking solution — Bills to provide explicit regulatory protections for banking legal pot business so far have failed to gain traction, and now recent attempts to clarify marijuana banking rules through the congressional appropriations process have also fallen flat.The Senate Appropriations Committee recently tabled a measure — by a vote of 21-10 — to ban regulators' use of federal funds to punish banks for working with legal pot businesses. House members defeated a similar appropriations measure earlier this month.  The spending measures have drawn opposition from even fans of legal pot banking, who say the budget bills are not the appropriate vehicle to address the issue.’

Tax law upends banks’ CCAR stress test scores — The president’s signature tax reform law muddled this year’s stress test results, causing several banks to incur greater-than-expected losses and spurring the Federal Reserve to constrain capital distributions at a handful of banks. The Fed issued the results of its annual Comprehensive Capital Analysis and Review stress test Thursday, revealing that three banks — Goldman Sachs, Morgan Stanley and State Street — were unable to retain the minimum post-stress capital levels. All three banks fell below the 4% Tier 1 leverage ratio, while State Street also fell below the 4.5% common equity Tier 1 capital ratio. Those three banks faced “conditional non-objections” to their capital plans, but required Goldman and Morgan Stanley to maintain last year’s capital distribution plans again this year. State Street, meanwhile, is required to “take certain steps regarding the management and analysis of its counterparty exposures under stress.” DB USA — the U.S.-based affiliate of Deutsche Bank — was the only bank to receive an objection to its capital plan. Though the bank retained capital levels well in excess of the required minimums, the Fed said the firm has “material weaknesses in the firm’s data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress.” DB USA will have to resubmit its capital plan. 

Bank stocks are on their longest losing streak ever -- Bank stocks just hit a record — a record of losses. The S&P 500 Financials Index fell for the 12th straight day Tuesday, the longest losing streak on record. Coming into the year, many cited the tax overhaul and a rising rate environment as reasons for banks to rally. Instead, they’ve endured pressure from a flattening yield curve. The losses also come ahead of the final phase of the Federal Reserve’s annual stress tests and waning consumer confidence. “They’re facing a rising rate environment, which historically has been fairly positive for banks,” Mona Mahajan, U.S. investment strategist at Allianz Global Investors, said on Bloomberg Television. “What we’re seeing here is the shrinking yield curve is actually not a good sign for the banks. Obviously, they like to borrow short, lend long, and if that yield curve is shrinking, that margin goes down as well.” The New York Stock Exchange Bloomberg News The S&P 500 Financials Index fell 0.4% to close $443.50 Tuesday. Investors are taking note too, yanking cash from the largest exchange-traded fund tracking U.S. financials. The Financial Select Sector SPDR Fund has seen eight straight days of outflows, the longest streak in two years. Together, that’s amounted to nearly $1.8 billion in withdrawals from the fund, about 6% of its total market cap. In addition to a flattening yield curve casting a shadow over bank profits, the 2018 Comprehensive Capital Analysis and Review (CCAR) stress tests loom ahead of Thursday results. That’s when the Federal Reserve approves or rejects banks’ plans to return money to shareholders through higher dividends and share buybacks. All 35 banks tested passed the first round of tests last week, but not every one cleared the bar by a comfortable margin. "The Fed stress tests are proving to be a ‘sell the news’ event as the yield curve collapses,"

Deutsche Bank fails Fed stress test while three U.S. lenders stumble (Reuters) - Deutsche Bank AG’s U.S. subsidiary failed on Thursday the second part of the U.S. Federal Reserve’s annual stress tests due to “widespread and critical deficiencies” in the bank’s capital planning controls. The Fed board’s unanimous objection to Deutsche Bank’s U.S. capital plan marks another blow for the German lender, sending its shares down 1 percent after hours. Its financial health globally has been under intense scrutiny after S&P cut its rating and questioned its plan to return to profitability. The Fed also placed conditions on three banks that passed the test. Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) cannot increase their capital distributions and State Street Corp (STT.N) must improve its counterparty risk management and analysis, the Fed said. Deutsche Bank last week easily cleared the Fed’s easier first hurdle that measures its capital levels against a severe recession, the strictest ever run by the Fed. Thursday’s second test focuses on how the bank’s plan for that capital, such as dividend payouts and investments, stands up against the harsh scenarios. “Concerns include material weaknesses in the firm’s data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress,” the Fed said in a statement. While failing the U.S. stress test would not likely affect the bank’s ability to pay dividends to shareholders, it will require Deutsche Bank to make substantial investment in technology, operations, risk management and personnel, as well as changes to its governance. It also means the bank would not be able to make any distributions to its German parent without the Fed’s approval and could potentially result in the bank further paring back some of its U.S. operations. 

Fed Test Fails Deutsche Bank, Forces JPMorgan, Goldman, Four Others to Limit Payouts - Tougher Federal Reserve stress tests forced six U.S. banks to scale back proposals for doling out more cash to shareholders, while failing Deutsche Bank's US unit on "qualitative" grounds:

  • The Fed failed the U.S. subsidiary of Deutsche Bank AG, citing “widespread and critical deficiencies” in its planning, limiting the unit’s ability to send capital home to Germany.
  • Goldman Sachs Group Inc. and Morgan Stanley -- agreed to freeze payouts at previous years’ levels. Both banks were required to rein in their dividend and stock buyback plans after the Fed warned their initial, more bullish, proposals would have left them with inadequate capital buffers.
  • JPMorgan Chase, American Express, KeyCorp and M&T Bank Corporation also rethought their original plans for payouts to shareholders, although they got the thumbs up after submitting more modest plans in the past week, the Fed said.

Twenty-eight other firms can proceed with their original proposals to boost stock buybacks and dividends after the Fed found they’d still hold enough capital to weather a hypothetical economic shock.As the FT notes, given the disappointing results on Thursday for some banks, the industry’s overall payout ratio — capital distributed as a proportion of earnings — was expected to remain roughly unchanged from last year at about 95 per cent.Even with the more conservative capital plans, Goldman and Morgan Stanley fell below some required capital thresholds. Yet the Fed gave the less punchy payouts the go-ahead anyway. Officials said weakness in the stress test partly reflected the accounting impact of landmark tax reforms that Mr Trump signed into law last year. Randal Quarles, the Fed’s regulatory chief, said they had created “one-time challenges”. The results overall were weaker than last year, although Fed officials noted that the regime had become stricter this year. They also said the tax reforms reduced banks’ capital ratios just as the stress tests were beginning, because the cut in the corporate tax rate from 35 per cent to 20 per cent cut the value of deferred tax assets. Furthermore, Trump reforms eliminated a beneficial tax treatment that had enabled banks to smooth their earnings by carrying losses forwards or backwards from periods of crisis. And here are select banks' capital plans announced in response:

Fed gives OK to 32 of 35 biggest US banks to raise dividends (AP) — The Federal Reserve has given the OK to 32 of the 35 biggest banks in the U.S. to raise their dividends and buy back shares, judging their financial foundations sturdy enough to withstand a major economic downturn. Announcing the results of the second round of its annual stress tests, the Fed also approved the plans of Wall Street powerhouses Goldman Sachs and Morgan Stanley, but on condition they keep their total dividend payouts and stock buybacks at current levels. The new tax law that took effect in January helped tip the two banks' capital reserves below required levels under the hypothetical stress, the Fed said. It was pegged as a one-time impact of the tax law. The Fed rejected outright the capital plan of the U.S. holding company of Germany's Deutsche Bank, citing weaknesses in its assumptions for forecasting revenues and losses. State Street Corp. gained Fed approval on condition that it improve its analysis of hypothetical lending risks with other big banks. The yearly check-up tests the banks to determine if their current plans for paying out capital to shareholders would still allow them to keep lending if hit by another financial crisis and severe recession. They have now been approved to pay out to shareholders about 95 percent of their total net revenue over the next four quarters. The Fed said it applied its toughest-ever "severely adverse" scenario for the economy in this year's tests to see how the banks would fare. All the banks have at least $50 billion in assets. 

The Fed Gives Wall Street Banks Okay to Prop Up Their Stock Prices -- Pam Martens -  The U.S. Federal Reserve, the country’s central bank that is supposed to serve the interests of the nation, gave the largest Wall Street banks a big, irresponsible gift yesterday. The big banks will now be able to spend approximately $170 billion buying back their own stock and paying out increased dividends to shareholders instead of doing what banks are supposed to do: make loans to worthy businesses to stimulate the U.S. economy. But don’t expect to find that critical news on the front page of your local newspaper. According to the Federal Reserve’s announcement yesterday, under its stress test known as the Comprehensive Capital Analysis and Review (CCAR), the biggest Wall Street banks will be able to dramatically expand a technique of manipulating their own share price through share buybacks and richer dividend payouts.The news was announced by the Fed at 4:30 p.m. yesterday and the banking behemoths could barely contain themselves before publicly boasting of their big buyback and dividend plans. Citigroup announced it would spend $22 billion in buybacks and dividend boosts over the next year, an increase of $3.1 billion from a year ago. Citigroup said $17.6 billion of that $22 billion would go to buybacks of its stock.JPMorgan Chase wasted no time in announcing it would boost its quarterly dividend by 43 percent while increasing its share buybacks over the next year to as much as $20.7 billion from an estimated $19.4 billion for the past 12 months. According to the Fed’s announcement, JPMorgan had originally asked to spend more than that but was turned down by the Fed. Goldman Sachs and Morgan Stanley were also turned down by the Fed for their requested boosts in capital spending and forced to stay within the limits imposed previously. CNBC reported that Morgan Stanley plans to “raise its quarterly dividend to 30 cents a share from 25 cents and buy back $4.7 billion of stock, consistent with the $6.8 billion in capital it returned over the last year.” Goldman Sachs, according to CNBC, will “raise its dividend by 5 cents a share to 85 cents and buy back $5 billion of shares, not going over $6.3 billion.”

Some Public Pension Funds Give KKR a Wet Noodle Lashing Over Toys ‘R’ Us Collapse - On the one hand, the punishment that some pension funds are considering meting out to private equity kingpin KKR over its role in the Toy ‘R’ Us bankruptcy would be so small as to amount to couch lint. On the other, as we’ve documented at considerable length, private equity investors, and in particular, public pension funds, are so badly captured by the private equity industry that they haven’t even criticized, much the less done anything about, SEC speeches and enforcement actions that revealed widespread abuses, including ones that were tantamount to stealing. Informed sources tell us that virtually no public pension funds asked private equity firms about specific abuses they had engaged in, much the less told them to cut it out.1 Since it is completely out of character for public pension funds to make even a feeble protest over the well-established private equity practice of company wreckage, which they depict as an unfortunate but inevitable risk of their tender ministrations, one has to wonder what’s afoot. Although it is way too soon to determine what this incident portends, at a minimum, some investors are flexing badly atrophied muscles. The open question is whether Toys ‘R’ Us is a special situation, or whether investors are finally starting to become skeptical of private equity even as they continue to throw money at the strategy. Cognitive dissonance would still be an improvement compared to blind faith. But why would the death of Toy R Us be different than any of a myriad of other private-equity-induced business failures? One reason is that the overleveraging of the retailer was more directly responsible for its collapse than in other company deaths. Another was that the media, and more important, Congresscritters took interest. Recall that Toys ‘R’ Us filed for bankruptcy last September and shuttered one-fifth of its stores in January in an effort to keep the chain going. In March, the company threw in the towel, announcing it was liquidating its US operations, which destroyed 33,000 jobs.

The John Taylor-backed “stablecoin” that's backed by, um, stability - Stanford economist John Taylor, a former Republican Treasury official and once afavourite to succeed Janet Yellen as chair of the Federal Reserve, is probably best-known for the “Taylor rule”. This is essentially a guideline for how much central banks should adjust interest rates in response to changes in economic conditions, which suggests monetary policy should be more systematic, and less sensitive to politics and other outside pressures. But now, Mr Taylor has got into crypto. Sigh. Yawn. Oh gosh not another one, etc. No but wait! This isn't the lambo-flaunting, money-stealing, nose-diving kind of crypto you might be used to. This is stable crypto. Stablecoins are a fast-emerging part of the fast-emerging world of cryptocurrency. If normal crypto is fist-pumping electronic music, these coins are slow radio. Their basic premise is that although cryptocurrencies are too volatile to be used as currency, they do have some potential advantages like fast international transfers, being available to anyone with an internet connection, and providing an alternative to people in countries like Venezuela, whose own currencies are being eroded away by runaway inflation. So rather than floating freely on the market and being subject to the wild price swings of other cryptos, stablecoins are pegged to a stable central-bank-issued currency -- the dollar, usually. Some stablecoins, like the “USD Coin” that crypto firm Circle will be launching soon, say they are backed one-for-one by the mighty US dollar. The most famous of these is Tether, though many worry that it does not have the dollars it says it does and that Tethers are instead being produced out of thin air and pumped into the system to prop up the prices of other cryptocurrencies. Basis, however, does not claim to have any such reserves, despite receiving $133min investment from a bunch of big name VC investors such as Bain Capital Ventures and Andreesen Horowitz. Instead Basis, “a stable cryptocurrency with an algorithmic central bank”, uses a complex market mechanism borrowed from traditional financial markets to ensure stability. That, in turn, is what gives it its value, we are told.

Bitcoin Drops to $5,860, Lowest since October 2017. True Believers with Fake Hopes Got Cleaned Out by Early Movers -  Bitcoin dropped to $5,860 at the moment, below $6,000 for the first time since October 29, 2017. It has plummeted 70% in six months from the peak of $19,982 on December 17. There have been many ups on the way down, repeatedly dishing out fakes hopes, based on the ancient theory that nothing goes to hell in a straight line (chart via CoinMarketCap): If you’re a True Believer and you just know that bitcoin will go to $1 million by the end of 2020, as promised by a whole slew of gurus, including John McAfee – “I will still eat my dick if wrong,” he offered helpfully on November 29 – well you probably don’t need this sort of punishment. You’re suffering enough already. And I apologize. I feel your pain. I was a true believer too a few times, and every single time it was a huge amount of fun, and I felt invincible and indestructible until I got run over by events. With 17.11 million bitcoins circulating today, if bitcoin were at $1 million today, it would amount to a market cap of $17 trillion. But new bitcoins are constantly being created out of nothing (“mined”) by computers that suck up enormous amounts of electricity. And by the end of 2020, there will be many more bitcoins, and if the price were $1 million each, the total would amount to about the size of US GDP. This doesn’t even count all the other cryptos that would presumably boom in a similar manner, amounting perhaps to half of global GDP, or something. People who promote this brainless crap are either totally nuts or the worst scam artists. But I feel sorry for the True Believers whose fiat money got transferred and will continue to get transferred from them to others.

Crypto Collapse Spreads With Hundreds of Coins Plunging in Value- The meltdown in Bitcoin is weighing on more than the biggest cryptocurrency. Over 80 percent of 1,586 digital coins Finder.com tracks in a weekly survey decreased in price in the past seven days. The tokens fell 19 percent on average, Finder.com found in the week ended June 25. Trading volume dropped as well, declining by 6 percent from the previous week, Finder.com said. Bitcoin, Tether, Ether, EOS and Bitcoin Cash were the top five traded cryptocurrencies. Volume was half of what it was at the end of April, when Finder.com first started releasing its Weekly Coin Analysis.

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero - Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books. Down about 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero -- following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s. While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bulls point to the Nasdaq’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most big money managers on the sidelines.

Feds ran a bitcoin-laundering sting for over a year - More than 40 alleged dark-web drug dealers have been arrested as part of a sweeping federal effort described by the Department of Justice as “the first nationwide undercover operation targeting dark net vendors.” The core of the operation was an online money-laundering business seized by agents from Homeland Security Investigations and operated as a sting for over a year. By offering cash for bitcoin, HSI agents were able to identify specific drug dealers, ultimately tracing more than $20 million in drug-linked cryptocurrency transactions.“For the past year, undercover agents have been providing money-laundering services to these dark net vendors, specifically those involved in narcotics trafficking,” said HSI Special Agent in Charge Angel Melendez, in a press conference earlier today. Melendez led the operation from New York. The hijacked money-laundering service was offered across a number of different marketplaces, with agents claiming at least some presence on AlphaBay, Dream Market, Wall Street, and others. In the past, law enforcement efforts have focused on taking down marketplaces in full, most notably Silk Road, Silk Road 2.0, and AlphaBay. But Melendez says his office has shifted focus to the individual dealers, who often operate independent of any single site.“When we take down a dark net marketplace, these criminals will move to other marketplaces,” Melendez said. “So the focus of this operation was really the bad actors, the people utilizing the dark net to sell drugs.”

Treasury's fintech report to encourage sandboxes, weigh in on charters - The Treasury Department’s fourth and final report on economic markets will encourage regulators to offer “sandboxes” to financial technology firms and consider the benefits of fintech charters at the state and national level, a senior official said Thursday. The report, which could come out as early as this month, is expected to offer guidance for regulators to adapt to the growing fintech space. “The increasing scale of technology-enabled competitors and the threat of disruption by new interests has raised the stakes for traditional firms to embrace innovation...and adapt a strategy,” said Craig Phillips, counselor to Treasury Secretary Steven Mnuchin. “Frankly we think it’s adapt or die. And with the implications of millennials and their behaviors and interests, these institutions must change a lot particularly with the presence of these disruptive forces.” “Our report will explore the implications of federal charters, federalization,” said Craig Phillips, counselor to Treasury Secretary Steven Mnuchin. Bloomberg News Regulators must ensure there is a level playing field for startups and traditional financial firms, Phillips said. In particular, Phillips said Treasury would like to encourage regulators to offer sandboxes, which provide relief from certain regulatory requirements in a space where fintech startups can test products and government authorities can offer guidance. Other countries, including the United Kingdom, have offered such setups. But there needs to be more cooperation among regulators in the area, Phillips said. 

U.S. Supreme Court backs American Express on credit-card suit - The U.S. Supreme Court threw out a government lawsuit that accused American Express Co. of thwarting competition by prohibiting merchants from steering customers to cards with lower fees. The justices, voting 5-4 along ideological lines, said the U.S. government and 11 states failed to prove that the American Express rules harmed cardholders as well as merchants. American Express jumped as much as 2.95 percent in New York. Visa Inc. slipped as much as 2.4 percent, and Mastercard Inc. fell as much as 2.3 percent. The case was being closely watched in Silicon Valley because of the prospect it could insulate tech giants like Facebook Inc. and Amazon.com Inc. from some antitrust suits. The ruling preserves American Express’s high-fee business model and deals a blow to retailers looking to reduce the $50 billion in fees they pay to credit-card companies each year. It’s a defeat for Discover Card Services, which said the rules undercut its ability to compete with American Express. Discover fell as much as 1.7 percent. Writing for the court, Justice Clarence Thomas said the government "did not offer any evidence that the price of credit-card transactions was higher than the price one would expect to find in a competitive market." American Express called the ruling a "major victory" for consumers as well as the company. "It will help to promote competition and innovation in the payments industry," the company said in a statement. The Justice Department declined to comment. The high court dispute turned on what antitrust lawyers call a "two-sided market." In a two-sided market a company sells products or services to two distinct but interrelated groups of customers -- merchants and cardholders, in American Express’s case. Antitrust enforcers said American Express uses its leverage over merchants to thwart competition from cards that would charge retailers lower fees.

Who won, who lost in Supreme Court’s credit card ruling -- Whether they take the form of cash, miles or points, credit card rewards have become a staple of U.S. consumer culture. Many households, particularly at the upper end of the income spectrum, charge just about every purchase, mainly so they can collect rewards with each swipe. Between 2010 and 2016, the nation’s six largest card issuers more than doubled their spending on rewards, according to one study published last year. Many of those perks were funded through increases in the fees that banks and card networks charge to retailers that accept their cards. On Monday, the U.S. Supreme Court ruled in favor of American Express in a 5-4 decision that enshrines the economic model upon which credit card rewards rely. The Obama administration and numerous states had sued Amex, arguing that provisions in the company’s contracts with retailers were harmful to competition. Amex’s contracts essentially bar merchants that accept American Express cards from steering consumers to pay with rival cards that charge lower fees. If the government’s argument had prevailed, retailers that accept American Express but aren’t happy about the fees Amex charges could have encouraged customers to use Visa, Mastercard or Discover, perhaps by posting a sign near the cash register in an effort to influence which card the customer pulls out of the wallet. But in an opinion written by Justice Clarence Thomas, and joined by the rest of the court’s conservative bloc, the court sided with Amex, and said that the New York-based company can ban steering practices in its contracts with retailers. The decision is likely a win for consumers who are avid users of credit card rewards programs. But for consumers who typically pay with cash or debit cards, it may be a loss, since merchants contend that they pass along the cost of higher swipe fees to their customers. The decision is also a setback for retailers, which persuaded Congress to rein in debit card swipe fees in 2010, but have been unable to replicate that success in the credit card market. The ruling’s impact on Discover, Visa and Mastercard, as well as banks that issue credit cards on the latter two networks, is murkier. 

Equifax reaches deal with 8 states on steps to avoid future breaches - The credit reporting giant Equifax has agreed to shore up its data security efforts after a massive breach of personal information sparked scrutiny from state regulators. Regulators from Texas, California, New York and five other states have signed a consent order with the Atlanta-based company, state officials said Wednesday. The eight-page agreement does not include any financial penalties, but it does require Equifax to take various steps to prevent future data breaches. “After the breach was announced, my state counterparts and I believed strongly that a targeted regulatory response was required,” Charles Cooper, the banking commissioner in Texas, which led the multistate examination, said in a press release. “This demonstrates the flexibility and responsiveness of the state financial regulatory system as we work together to protect all of our citizens.” An Equifax spokesperson said in an email that a good number of the steps the company agreed to take under the consent order have already been completed, and indicated that most of the states’ findings are already part of the company’s remediation plans. “We expect to meet or exceed all the commitments made under the consent order,” the spokesperson said. 

California passes nation's first statewide consumer privacy law  - The state of California has passed a sweeping law that gives its 39 million residents more control over and insight into how companies use their personal data.  A similar measure that gathered enough signatures to qualify for a statewide ballot was withdrawn after Democratic Gov. Jerry Brown signed the bill into law on Thursday. Though consumer privacy advocates applauded the bill’s passage, banks, technology companies and other business groups had opposed it as burdensome. “California consumers should be able to exercise control over their personal information and should have reasonable certainty that there are safeguards in place to protect against misuse of their personal information,” Assembly member Ed Chau, a Democrat, said at a press conference after the governor signed the bill. “It is also possible for businesses both to respect consumers’ privacy and provide a high level of transparency to their business practices.”  The law gives Californians the right to know all the data that companies collect on them and for what purpose, to refuse the sale of their personal information, and to delete their data. It also mandates an opt-in for children under 16. Additionally, the legislation makes it easier for consumers to sue after a data breach.

Citi forced to pay $335M refund on card malfunction, but no CFPB fine - Citibank will refund $335 million, or $190 apiece for 1.75 million accounts, to customers for miscalculating interest rate charges over eight years, but will not pay an additional penalty to the Consumer Financial Protection Bureau, the agency said Friday. The CFPB said that because the issue was self-reported and the bank took steps to correct it, the agency would not assess an additional penalty on top of the mandated restitution. "The bureau did not assess civil money penalties based on a number of factors, including that Citibank self-identified and self-reported the violations to the Bureau, and self-initiated remediation to affected consumers," the CFPB said in a press release.  The move was a break from the agency's previous assessments.  Acting CFPB Director Mick Mulvaney's predecessor, Richard Cordray, issued guidance in 2013 on self-policing and self-reporting, but companies hit with consent orders during his tenure typically paid significant fines on top of refunds to consumers.

Chaos atop CFPB could get worse after appeals court ruling… With leadership of the Consumer Financial Protection Bureau already facing plenty of uncertainty, a looming court decision could further upend the calculus of who runs the agency. The U.S. Court of Appeals for the D.C. Circuit has been deliberating since April on whether Mick Mulvaney can continue as acting CFPB director. The three-judge panel appeared skeptical of the claim by Leandra English, the chief of staff under former CFPB Director Richard Cordray, that she is the rightful acting director. But the judges also raised questions about Mulvaney's dual role running the bureau and the Office of Management and Budget. Lawyers say while a victory is unlikely for English, they are still preparing for a possible outcome where Mulvaney is disqualified as acting director as well. That could repeat the scenario from last fall where, for a short time, no one really knew who was in charge. "The litigation could throw things into a cocked hat — until it gets sorted out again," said Alan Kaplinsky, the co-practice leader at Ballard Spahr's consumer financial services group. As OMB director, Mulvaney reports directly to President Trump. Legal experts say the court could determine that his appointment is in direct conflict with Congress' express description in the Dodd-Frank Act that the CFPB be independent from the White House.  The case stems from a lawsuit filed in November by English, now the agency’s deputy director. When he stepped down in the fall, Cordray had attempted to install English as acting director, citing authority under Dodd-Frank. But the administration argues that the Federal Vacancies Reform Act authorized Trump to name Mulvaney. English faces long odds in challenging the president's naming of Mulvaney as acting director. But the litigation raises bigger questions including whether the White House improperly sought control of the CFPB by naming Mulvaney, a Cabinet-level appointee. "What if the court agrees that Mulvaney can't be in that position, not because the appointment is improper, but because he's not sufficiently independent?"

CFPB ends RESPA inquiry into Zillow co-marketing practices - The Consumer Financial Protection Bureau has dropped its investigation into allegations that Zillow Group Inc. violated Section 8 of the Real Estate Settlement Procedures Act.Zillow "received a letter from the Bureau stating that it had completed its investigation that it did not intend to take enforcement action," according to an 8-K filing by the company. The CFPB previously had requested documentation related to a review of Zillow's co-marketing program. The bureau and Zillow had discussed the possibility of a settlement last year.

Court keeps Ocwen records sealed in CFPB dispute over escrow accounts -- Ocwen Financial is able to keep the answers to questions from the Consumer Financial Protection Bureau involving the improper handling of escrow accounts confidential, a federal magistrate ruled.The CFPB had argued that Ocwen's narrative answers to how it managed escrow accounts should not be kept under seal because of the substantial public interest in the government's enforcement action and because they did not contain trade secrets, Magistrate Judge William Matthewman noted in his ruling in a case being tried in the U.S District Court for the Southern District of Florida.In its response, Ocwen replied several answers contained sensitive personal information along with disclosing the mortgage servicer's internal procedures for performing and reviewing its control functions. The judge agreed. " "The Court has already determined that there is no common-law right of access to discovery and therefore the public's interest in the documents do not outweigh Defendants' interest in keeping the documents confidential at this time," Matthewman wrote. "Further, in balancing Defendants' request to keep the answers confidential at this juncture of the case with Plaintiff's burden in filing sealed discovery motions, the Court finds that the narrative answers should remain confidential at the discovery phase of litigation."

HUD taking a closer look at 'disparate impact' rule — The Department of Housing and Urban Development has launched a process to amend its use of the "disparate impact" standard in fair lending rules. The legal standard, which can be used to punish lenders for discriminatory effects even if none were intended, has long been unpopular with banks. In 2015, the U.S. Supreme Court decided that such a standard does apply under the Fair Housing Act, but left it to HUD to determine if changes to its disparate impact rule were necessary. HUD released six questions for public comment in an advance notice of proposed rulemaking. Among the queries were whether the prior rule, which was written in 2013 and revised in 2016 under the Obama administration, could be changed "that could add to the clarity, reduce uncertainty, decrease regulatory burden, or otherwise assist the regulated entities and other members of the public in determining what is lawful?"  While the court ruling was seen as a victory for supporters of disparate impact, it placed the burden of proof in disparate impact cases on the plaintiffs. HUD's disparate impact rule is currently independent of the Fair Housing Act, and the department is reviewing the rule to decide if any changes are necessary in light of the court’s ruling.  “As HUD conducts its review, it is soliciting public comment on the disparate impact standard set forth in the final rule and supplement, the burden-shifting approach, the relevant definitions, the causation standard and whether changes to these or other provisions of the rule would be appropriate,” HUD said in the ANPR.In October, the Treasury Department released a report calling for HUD to reexamine its use of the disparate impact rule, questioning whether it is consistent with state law and the McCarran-Ferguson Act, which gave states freedom to regulate the business of insurance without federal interference. “HUD should also reconsider whether such a rule would have a disruptive effect on the availability of homeowners insurance and whether the rule is reconcilable with actuarially sound principles,” the report stated.

Maxine Waters unveils bill to restore HUD fair housing policies - — Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, has introduced a bill to reverse or reform recent policies by the Department of Housing and Urban Development that she called "deeply problematic and harmful" for lower-income Americans. Speaking at a hearing Wednesday with HUD Secretary Ben Carson, Waters said her bill, the Restoring Fair Housing Protections Eliminated by HUD Act of 2018, "responds directly to each action that Secretary Carson has taken to undermine fair housing."  “Congress should not stand by while the agency charged with ensuring fair housing turns its back on its mission and takes actions that roll back critical protections that ensure that all Americans have fair access to housing,” Waters, a California Democrat, said at the committee hearing.

5 questions on Trump’s plan to reform Fannie Mae, Freddie  -— The Trump administration's plan to end the conservatorship of Fannie Mae and Freddie Mac marked its first effort to solve a problem left over from the financial crisis, but ultimately raised more questions than it answered. Under the plan, the government-sponsored enterprises would be converted into "fully private entities" responsible for raising their own capital in the private market and backed by an explicit government guarantee. But the proposal, made as part of the Office of Management and Budget's broader effort to reorganize the government, doesn't get into key specifics and there are doubts about whether the rest of the administration even supports the plan. “The devil is always in the details and this plan is almost devoid of all of the most important details,” said Ed Mills, a policy analyst at Raymond James. Housing and Urban Development Secretary Ben Carson offered at least some support for the plan on Wednesday, saying he agreed with the objectives laid out in the proposal. But he stopped short of the full-throated endorsement many have expected. “I love the fact that many people are talking about how do we get" the GSEs out of conservatorship, Carson told the House Financial Services Committee, but "how do we put them on a playing field in the secondary market with potentially other private-sector guarantors to create real competition and still have an appropriate guarantee so that we encourage capital in the market from foreign areas.” Following are five key questions that the White House plan still needs to address:  (slides)

 Freddie Mac: Mortgage Serious Delinquency Rate Decreased in May -- Freddie Mac reported that the Single-Family serious delinquency rate in May was 0.87%, down from 0.94% in April. Freddie's rate is unchanged from 0.87% in May 2017.Freddie's serious delinquency rate peaked in February 2010 at 4.20%. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The increase in the delinquency rate late last year was due to the hurricanes - no worries about the overall market (These are serious delinquencies, so it took three months late to be counted). After the hurricane bump, maybe the rate will decline to a cycle bottom in the 0.5% to 0.8% range.

Fannie Mae: Mortgage Serious Delinquency rate decreased in May --  Fannie Mae reported that the Single-Family Serious Delinquency rate decreased to 1.03% in May, down from 1.09% in April. The serious delinquency rate is down from 1.04% in May 2017. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. By vintage, for loans made in 2004 or earlier (3% of portfolio), 3.07% are seriously delinquent. For loans made in 2005 through 2008 (6% of portfolio), 5.72% are seriously delinquent, For recent loans, originated in 2009 through 2018 (91% of portfolio), only 0.44% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.The recent increase in the delinquency rate was due to the hurricanes - no worries about the overall market (These are serious delinquencies, so it took three months late to be counted). Following the hurricane bump, the rate will probably decline to 0.5 to 0.7 percent or so to a cycle bottom.

MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey: Mortgage applications decreased 4.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 22, 2018.... The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 1 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.84 percent from 4.83 percent, with points decreasing to 0.42 from 0.48 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The first graph shows the refinance index since 1990.

Home Prices Rise Again in April --With today's release of the April S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.21% 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 0.21% from the previous month. The nonseasonally adjusted index was up 6.6% year-over-year.  Here is an excerpt from the analysis in today's Standard & Poor's press release. “Home prices continued their climb with the S&P CoreLogic Case-Shiller National Index up 6.4% in the past 12 months,” says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Cities west of the Rocky Mountains continue to lead price increases with Seattle, Las Vegas and San Francisco ranking 1-2-3 based on price movements in the trailing 12 months. The favorable economy and moderate mortgage rates both support recent gains in housing. One factor pushing prices up is the continued low supply of homes for sale. The months-supply is currently 4.3 months, up from levels below 4 months earlier in the year, but still low. “Looking back to the peak of the boom in 2006, 10 of the 20 cities tracked by the indices are higher than their peaks; the other ten are below their high points. The National Index is also above its previous all-time high, the 20-city index slightly up versus its peak, and the 10-city is a bit below. However, Only three cities – Dallas, Denver and Seattle – are ahead in real, or inflation-adjusted, terms.   [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 6.4% year-over-year in April -- S&P/Case-Shiller released the monthly Home Price Indices for April ("April" is a 3 month average of February, March and April 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 Continue Their Upward Trend 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 6.4% annual gain in April, down from 6.5% in the previous month. The 10-City Composite annual increase came in at 6.2%, down from 6.4% in the previous month. The 20-City Composite posted a 6.6% year-over-year gain, down from 6.7% in the previous month.Seattle, Las Vegas, and San Francisco continue to report the highest year-over-year gains among the 20 cities. In April, Seattle led the way with a 13.1% year-over-year price increase, followed by Las Vegas with a 12.7% increase and San Francisco with a 10.9% increase. Nine of the 20 cities reported greater price increases in the year ending April 2018 versus the year ending March 2018... Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% in April. The 10-City and 20-City Composites reported increases of 0.6% and 0.8%, respectively. After seasonal adjustment, the National Index recorded a 0.3% month-over-month increase in April. The 10-City and 20-City Composites posted 0.1% and 0.2% month-over-month increases, respectively. Nineteen of 20 cities reported increases in April before seasonal adjustment, while 17 of 20 cities reported increases after seasonal adjustment. 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 0.1% in April (SA). The Composite 20 index is 1.9% above the bubble peak, and up 0.2% (SA) in April. The National index is 9.1% above the bubble peak (SA), and up 0.3% (SA) in April. The National index is up 47.5% 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 6.2% compared to April 2017. The Composite 20 SA is up 6.5% year-over-year. The National index SA is up 6.4% year-over-year.

Real House Prices and Price-to-Rent Ratio in April --It has been over eleven years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 9.1% above the previous bubble peak.However, in real terms, the National index (SA) is still about 9.9% below the bubble peak (and historically there has been an upward slope to real house prices).  The composite 20, in real terms, is still 15.8% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now around 6%. In April, the index was up 6.4% YoY. Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through April) 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. In real terms, prices are back to mid 2004 levels, and the price-to-rent ratio is back to late 2003, early 2004.

Zillow Case-Shiller Forecast: Slower House Price Gains in May - The Case-Shiller house price indexes for April were released Tuesday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Aaron Terrazas at Zillow: April Case-Shiller Results and May Forecast: The New Normal In a normal housing market, there is almost always a decently balanced pool of winners and losers. But as severely limited inventory continues to help push up home prices at a rapid clip, it’s clear that current housing trends are far from normal – and that there are a lot more losers right now than winners. The U.S. National Case-Shiller Index rose 6.4 percent in April from a year ago, largely in line with expectations. April was the eighth straight month of annual appreciation of 6 percent or higher, and the longest such streak since a stretch of 19 months of breakneck appreciation that began in December 2012 as the housing market began to bounce back in earnest from the depths of the recession. Over the past 30-plus years, dating to January 1988, annual U.S. home price growth as measured by the Case Shiller National Index has averaged 3.8 percent. ... Looking ahead, rapid home value growth may slow somewhat, although not likely by much to make a difference in the underlying trends of high demand and low supply that are driving the market right now. Zillow expects the U.S. National Index to grow by 6.3 percent in May from a year ago, down only slightly from April. The 10- and 20-city indices are likely to slow down further. Full Case-Shiller data for May is scheduled for release Tuesday, July 31.

Housing: Part 305 - If only we could burn all the extra houses down. -Kevin Erdmann - From Andrew Ross Sorkin's "Too Big to Fail"(pg. 190), from the summer of 2008 before Fannie and Freddie were taken over by the Treasury. Paulson and a half dozen staff members huddled to hear the former Fed chairman's faint voice through the speaker.Rattling off reams of housing data, Greenspan described how he considered the crisis in the markets to be a once-in-a-hundred-year event and how the government might have to take some extraordinary measures to stabilize it.  The former Fed chairman had long been a critic of Fannie and Freddie but now realized that they needed to be shored up.  He did have one suggestion about the housing crisis, but it was a rhetorical flourish befitting his supply-and-demand mind-set: He suggested that there was too much housing supply and that the only real way to really fix the problem would be for government to buy up vacant homes and burn them. After the call, Paulson, with a laugh, told his staff: "That's not a bad idea.  But we're not going to buy up all the housing supply and destroy it."  IW readers know there weren't too many homes.  The only things the American housing market and the economy needed were sufficient money and credit. I have the same feeling reading these retrospectives as I do hearing debates about the market today. It's like we're a tribe that shares a religious origin story in which the spirit of spring floods plays the devil's role. We're in the midst of a terrible drought, but it is simply part of our cultural DNA that water cannot be part of the solution.  So the elders desperately engage in plans and discussions about dealing with the drought in which they cannot reference water as a solution.  To mention canals would only serve one purpose - identifying yourself as a heretic.

Housing: Part 308 - Why is inventory so low? - Kevin Erdmann - One facet of the housing market that gets a lot of attention is the very low level of inventory, especially in low-tier markets.  It looks like a strange market.  Prices seem high on a price-to-income basis, and they continue to rise.  Low inventory tends to correlate with a seller's market, and it is frequently treated as a sort of causal element.  Prices will rise because inventories are low.  I don't find that sort of framing very helpful.  But, the mysteries about the current housing market go beyond that.  If inventories are low and prices are high, why aren't buyers just moving into new stock?  Why aren't homebuilders filling this market? Timothy Taylor has some comments on this today, here.  He covers some of these issues.  He references a study that mentions rising costs, limited lot supply, builder caution coming out of the crisis, etc.  I think all of these are false flags.  They appear to be important issues, but until a full reconsideration of the housing boom and the crisis is undertaken, it would be impossible to solve the mystery of low inventory.  The truth is that, relative to high tier home prices, low tier prices are very low.  And, taking into account very low long term real interest rates, prices are also low.  There are many regulatory barriers to new lot development, so it appears that this is the constraint.  It is a constraint, but it's not binding.  On the margin, builders are being outbid for land because the use of the land that they are trying to develop is underpriced by 20-40%.  Is there any doubt that lots would be widely available if home prices were 40% higher and builders could double their bids for lots? But, if inventory is so low, then why don't prices rise until that happens? The reason is that we have imposed a regime shift in regulatory barriers to home ownership, and probably more than a third of households live in homes that they would not currently qualify for.  We have created non-price barriers to ration housing through mortgage regulation, so now about half the country are housing have-nots, who must rent.  Renting comes with higher costs for management, vacancy, tenant conflicts, etc.  So, supply for rented units tends to be lower, rents relative to unit value tend to be higher, and so the quantity demanded by renters is lower than it is by owners.  This is only made worse by income tax benefits targeted at owners.

Housing markets across the country show dire warning signs — in West Coast tech hubs, it’s worse -- Housing in America is getting more expensive, disproportionately burdening middle- and low-income people, and perpetuating wealth inequality. Those dynamics are felt acutely in West Coast tech hubs, like San Francisco and Seattle.That’s according to Harvard University’s latest State of the Nation’s Housing report released Tuesday. The report shows that the country’s housing market has soundly recovered from the Great Recession but underlying issues portend a dark future for renters and would-be homeowners, particularly in expensive cities.One of the biggest takeaways from the report is the growing number of Americans who are cost-burdened by housing. Nearly one-third of all households spent more than 30 percent of their incomes on housing in 2016. That’s much higher than previous decades though the share has declined slightly in recent years.For the lowest-earning quarter of American households, real median incomes grew just 3 percent between 1988 and 2016. The median income for adults 25 to 34 grew just 5 percent. As wages for young people and low-income Americans lagged, median rents rose 20 percent faster than inflation between 1990 and 2016 and median home prices grew 41 percent faster. “If incomes had kept pace with the economy’s growth over the past 30 years, they would have easily matched the rise in housing costs,” said Daniel McCue, the lead author of the report, in a statement. “But that hasn’t happened.”We also aren’t building enough multi-family housing to meet the needs of Americans. New construction ticked up slightly between 2016 and 2017 but the increase was driven entirely by single-family homes, which increased 8.6 percent. New construction on multifamily buildings declined by 9.7 percent to 354,100 units in 2017. The result is shrinking for-sale inventories, particularly in booming cities with swelling populations of newcomers.

 Reis: Apartment Vacancy Rate increased in Q2 to 4.8% --Reis reported that the apartment vacancy rate was at 4.8% in Q2 2018, up from 4.7% in Q1, and up from 4.3% in Q2 2017.  This is the highest vacancy rate since Q3 2012. The vacancy rate peaked at 8.0% at the end of 2009, and bottomed at 4.1% in 2016.  From Reis: Once again, the apartment vacancy rate increased in the quarter to 4.8% from 4.7% last quarter and 4.3% in the second quarter of 2017. The vacancy rate has now increased 70 basis points from a low of 4.1% in Q3 2016.The national average asking rent increased 1.3% in the first quarter while effective rents, which net out landlord concessions, increased 1.2%. At $1,404 per unit (market) and $1,337 per unit (effective), the average rents have increased 4.4% and 4.0%, respectively, from the second quarter of 2017. Net absorption was 37,265 units, slightly above last quarter’s absorption of 36,124 units but below the average quarterly absorption of 2017 of 46,031 units. Construction was 50,360 units, higher than the first quarter’s 50,244 units but below the 2017 quarterly average of 60,514 units. We still expect total construction for 2018 to surpass that of 2017.We expect construction to remain robust for the rest of 2018 and in early 2019 before completions drop off in subsequent periods. Occupancy is expected to remain positive, although vacancy rates are expected to continue to increase as new supply will outpace demand growth. Still, as long as job growth remains positive, we expect rent growth to remain positive over the next few quarters.

New Home Sales Up 6.7% in May, Better than Expected -- This morning's release of the May New Home Sales from the Census Bureau came in at 689K, up 6.7% month-over-month from a revised 646K in April. The Investing.com forecast was for 667K. Here is the opening from the report:Sales of new single-family houses in May 2018 were at a seasonally adjusted annual rate of 689,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.7 percent (±14.1 percent)* above the revised April rate of 646,000 and is 14.1 percent (±19.9 percent)* above the May 2017 estimate of 604,000.The median sales price of new houses sold in May 2018 was $313,000. The average sales price was $368,500. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales increase to 689,000 Annual Rate in May --The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 689 thousand.  The previous three months were revised down, combined. "Sales of new single-family houses in May 2018 were at a seasonally adjusted annual rate of 689,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.7 percent above the revised April rate of 646,000 and is 14.1 percent above the May 2017 estimate of 604,000. "The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply. The months of supply decreased in May to 5.2 months from 5.5 months in April.The all time record was 12.1 months of supply in January 2009.This is in the normal range (less than 6 months supply is normal)."The seasonally-adjusted estimate of new houses for sale at the end of May was 299,000. This represents a supply of 5.2 months at the current sales rate." Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed.The third graph shows the three categories of inventory starting in 1973.  The inventory of completed homes for sale is still somewhat low, and the combined total of completed and under construction is also somewhat low. The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).In May 2018 (red column), 64 thousand new homes were sold (NSA). Last year, 57 thousand homes were sold in May.The all time high for May was 120 thousand in 2005, and the all time low for May was 26 thousand in 2010.This was above expectations of 665,000 sales SAAR, however the previous months were revised down, combined. I'll have more later today.

New-home sales rise to six-month high on surge in South - Purchases of new homes advanced in May to a six-month high as sales in the South increased to the fastest pace since 2007, according to government data released Monday. Single-family home sales rose 6.7% month-over-month to a 689,000 annualized pace (the estimate was 667,000) after a 646,000 rate (revised from 662,000). The median sales price decreased 3.3% year-over-year to $313,000. The supply of homes at the current sales rate fell to 5.2 months from 5.5 months.The stronger-than-forecast gain in U.S. sales reflected a 17.9% surge in the South, the nation’s largest region, to a 409,000 annualized pace. While that was the strongest in almost 11 years, demand was mixed in other parts of the country.The report also showed a six-month high in the number of homes sold but not yet started, indicating residential construction will continue to boost growth. Inventory remains lean as the supply of homes available at the current sales pace fell to 5.2 months' worth, the lowest since November.The pickup in contract signings is an indication that a build-up in home equity tied to rising property values is benefiting trade-up buyers. Demand also remains underpinned by steady hiring and lower taxes.At the same time, prospects for first-time buyers and those with modest incomes have deteriorated. Mortgage rates near a seven-year high and home prices that are rising much faster than wage growth remain obstacles for these Americans.The cost of borrowing may continue to creep higher. The Federal Reserve boosted interest rates by a quarter point in June and increased to two the number of additional hikes possible this year.Data on existing homes released last week showed that sales unexpectedly fell in May for a second month as an inventory crunch pushed prices up a nd left buyers, particularly first-timers, on the sidelines.

A few Comments on May New Home Sales – McBride- New home sales for May were reported at 689,000 on a seasonally adjusted annual rate basis (SAAR). This was above the consensus forecast, however the three previous months. combined, were revised down. Sales in May were up 14.1% year-over-year compared to May 2017.   This was strong YoY growth, however, this was also a fairly easy comparison since new home sales were soft in mid-year 2017. Earlier: New Home Sales increase to 689,000 Annual Rate in May.This graph shows new home sales for 2017 and 2018 by month (Seasonally Adjusted Annual Rate).Sales are up 8.8% through May compared to the same period in 2017. Decent growth so far, and the next three months will also be an easy comparison to 2017.This is on track to be close to my forecast for 2018 of 650 thousand new home sales for the year; an increase of about 6% over 2017.   There are downside risks to that forecast, such as higher mortgage rates, higher costs (labor and material), and possible policy errors.And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years. The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through May 2018. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.   The gap has persisted even though distressed sales are down significantly, since new home builders focused on more expensive homes. I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

Pending Home Sales Decrease in May, Fifth Consecutive Month --This morning the National Association of Realtors released the May data for their Pending Home Sales Index. Here is an excerpt from the latest press release:Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. “Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” he said. “Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”The lackluster spring, according to Yun, has primarily been a supply issue, and not one of weakening demand. If the recent slowdown in activity were because buyer interest is waning, price growth would start slowing, inventory would begin rising and homes would stay on the market longer. Instead, the underlying closing data in May showed that home price gains are still outpacing income growth, inventory declined on an annual basis for the 36th consecutive month, and listings typically went under contract in just over three weeks. (more here). The chart below gives us a snapshot of the index since 2001. The MoM came in at -0.5%, up from a 1.3% decrease last month. Investing.com had a forecast of 1.1%.

Mortgages take a back seat as consumer debt levels soar -- Mortgage debt outstanding remains below pre-crisis levels and home equity is growing, even as overall consumer debt is on pace to surpass its previous 2008 peak by $1 trillion, according to LendingTree.  U.S. consumers carried 5.5% less mortgage debt in the first quarter of 2018 than they did in the third quarter of 2008, as a result of falling homeownership rates, home prices and interest rates during and after the Great Recession. Now, as home prices and wages are increasing, homeowners have more equity and their mortgages are less of a liability. Mortgage balances represented 68% of consumers' disposable income during the first quarter of 2018, down from 98% in the third quarter of 2008.Overall household debt, which includes mortgages, as well as consumer credit, should hit $15.7 trillion by the end of the second quarter, up from $14.7 trillion almost 10 years ago.Consumer credit debt loads — consisting of credit cards and auto and student loans — are up 45% from 3Q08 and on pace to top $4 billion by December. Student loan balances, the fastest growing type of consumer credit, has risen 130% since the start of the housing crisis. Auto loan debt grew at a slower pace, increasing 39% since 2008.Meanwhile, household net worth hit the $100 trillion mark for the first time in 1Q18, with assets gaining more than $1.07 trillion and outpacing additional debt accumulated by consumers, according to Federal Reserve data cited in the LendingTree report.

Homeowner Equity Increase Over The Last 12 Months Tops $1 Trillion: The amount of equity in mortgaged real estate increased by $1 trillion in Q1 2018 from Q1 2017, an annual increase of 13.3 percent, according to the latest CoreLogic Equity Report. Homeowner equity has more than doubled in five years, increasing by $4.4 trillion from Q1 2013 to Q1 2018 [ 1]. The nationwide negative equity share for Q1 2018 was 4.7 percent of all homes with a mortgage, more than 20 percentage points lower than the peak negative equity share - 26 percent - recorded in Q4 2009.[2] Over the past 12 months, 640,000 borrowers moved into positive equity. The improvement in negative equity has been experienced across the country, with only two states registering a year-over-year increase in Q1 2018 (Wyoming saw a 0.1 percentage point increase and New York a 0.9 percentage point increases). Figure 1 shows the 25 states with the largest percentage-point decreases in the negative equity share from the previous year. Nevada’s 5.5-percentage-point decrease between Q1 2017 and Q1 2018 represented the nation’s largest year-over-year decline, and the drop from a high of 72.7 percent in Q1 2010 to 6.8 percent in Q1 2018 represented the largest decline from the peak. Figure 2 shows the average dollar amount of negative equity and the negative equity share for 10 large Core Based Statistical Areas (CBSAs) in Q1 2018. The average amount of negative equity is inversely related to the negative equity share. For example, in this group of CBSAs, San Francisco has the largest average amount of negative equity, but the negative equity share is only 0.6 percent. Miami has the smallest average amount of negative equity, but has a negative equity share that is nearly three times the national average.

 Personal Income increased 0.4% in May, Spending increased 0.2% --The BEA released the Personal Income and Outlays report for May:Personal income increased $60.0 billion (0.4 percent) in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $63.2 billion (0.4 percent) and personal consumption expenditures (PCE) increased $27.8 billion (0.2 percent). Real DPI increased 0.2 percent in May and Real PCE decreased less than 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent. The May PCE price index increased 2.3 percent year-over-year (up from 2.0 percent YoY in April) and the May PCE price index, excluding food and energy, increased 2.0 percent year-over-year (up from 1.8 percent YoY in April). The following graph shows real Personal Consumption Expenditures (PCE) through May 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 below expectations. Using the two-month method to estimate Q2 PCE growth, PCE was increasing at a 3.0% annual rate in Q2 2018. (using the mid-month method, PCE was increasing 3.4%). This suggests decent PCE growth in Q2, but below expectations.  (Estimates for Q2 GDP will be revised down).

 American Spending Grows Faster Than Income For The 29th Straight Month - For the 29th month in a row, Americans annual spending grew faster than their incomes as the 'no consequences' new normal rolls on, leaving the savings rate languishing near record lows - even if it did very modestly uptick in May. Year-over-Year income growth reached 4.0% - the highest since Nov 2015; while YoY spending growth stalled at 4.4%. Income growth was dominated by private workers seeing another uptick... On the month, personal incomes grew 0.4% (as expected) - the fastest rate since Dec 2017. However, for the second straight month, month-over-month spending growth disappointed - rising just 0.2% MoM vs +0.4% expectations. But the growth in both continues. The PCE Inflation data came in a little hotter than expected - rising at the fastest since March 2012... As a reminder, the vast gap between extreme high confidence and extreme low savings rate - a borrow-my-way-to-happiness narrative - has never ended well in the past...

Report: $117K a year considered 'low income' in some Bay Area counties --New figures from the U.S. government show just how high the cost of living is in the Bay Area. REPORT: Six-figure salaries considered low income in some Bay Area counties. A family of four that brings in a little more than $117,000 a year is now considered "low income" in San Francisco, Marin and San Mateo counties.That's according to the Federal Housing and Development Department.Santa Clara County is not far behind. Low income is defined as a family that makes a bit more than $94,000. In Alameda and Contra Costa counties, the low income threshold is $89,600.

Consumer Confidence Down in June --The latest Conference Board Consumer Confidence Index was released this morning based on data collected through June 15. The headline number of 126.4 was a decrease from the final reading of 128.8 for May, an upward revision from 128.0. Today's number was below the Investing.com consensus of 127.6.Here is an excerpt from the Conference Board press release.“Consumer confidence declined in June after improving in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of present-day conditions was relatively unchanged, suggesting that the level of economic growth remains strong. While expectations remain high by historical standards, the modest curtailment in optimism suggests that consumers do not foresee the economy gaining much momentum in the months ahead.”Putting the Latest Number in Context  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.

Why the Online Sales-Tax Ruling May Have Limited Impact -- The era of avoiding sales tax on online purchases may be over, but consumers may not feel much of a dent in their wallet. The Supreme Court ruled Thursday that states can now require online retailers to charge you sales tax, even if the retailer has no physical presence in your state. That means nearly anything you buy on the web will be subject to state sales tax. Though consumers will no doubt be paying more to their state government, the actual amount may be somewhat limited. That’s because many big online retailers like Amazon already charge sales tax on items they sell directly. With the new ruling, third-party vendors on Amazon will now have to charge you as well. "Many people will never even notice a difference," says Verenda Smith, deputy director of the Federation of Tax Administrators. The court ruling mainly affects small vendors, including those who did business on big platforms like Amazon marketplace, eBay, and Etsy, says Joseph Bishop Henchman, executive vice president at the Tax Foundation, based in Washington, D.C. Even so, some other larger merchants, including Wayfair, Newegg, and Overstock, don't always collect sales tax. Most states currently have some kind of sales tax, though the amount—and what items or services are taxed—varies widely from state to state. Some experts think states will need to pass additional legislation to collect more tax on online purchases, which could take some time. “The Court’s decision provides no hard-and-fast rules for states to follow," says Carl Davis, research director at the Institute on Taxation and Economic Policy, in Washington, D.C. “The process of enacting state laws could take years.” 

Forget Iran Nukes, This Is The Worst Deal Anyone Ever Made... Back in January 2000, AOL bought Time Warner for $162 billion, which was considered an astonishing amount of money back then. Their goal was to create a tech/media giant. And they failed miserably.  January 2000 was literally THE top of the market. The dot-com bubble burst almost immediately afterwards. Recession followed.  . By 2002, the merged companies were performing so poorly that they had to take a $99 billion write-off– the largest in corporate history– to account for the deterioration of AOL’s business. They say history doesn’t repeat, but it often rhymes. And today the tech world and media world are once again in a frenzy to merge. Earlier this month, telecom giant AT&T completed its acquisition of media titan Time Warner following a 2-year ordeal to obtain government approval. Now, the fact that these two private companies had to fight in court against the government simply to be able to merge is pretty ridiculous. But this letter isn’t about the heavy hand of government. It’s about debt. Because, including the whopping amount of debt that AT&T inherited, the deal between the two companies was valued at $108 billion. $108 billion. That’s an awful lot of money that AT&T paid for Time Warner. Yet in exchange for such a princely sum, Time Warner will only contribute around $1 billion in annual Free Cash Flow to AT&T. This is crucial to understand. Remember that, in simple terms, Free Cash Flow represents the final profit available to shareholders after all capital investments, taxes, and other expenses have been deducted. Plus, because Free Cash Flow filters out most accounting gimmicks, it’s one of the better representations of a company’s true profitability. So that means AT&T bought Time Warner for about 100x Free Cash Flow, equivalent to a yield of just 1%. AT&T believes, however, that certain ‘synergies’ exist between the two companies, which could increase that Free Cash Flow level to $3 – $3.5 billion. Yet even if they’re successful in achieving that target, AT&T’s effective return will only rise to 3%. That’s the best case scenario… which is hardly worth writing home about.

Headline Durable Goods Orders Down 0.6% in May - The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in May decreased $1.4 billion or 0.6 percent to $248.8 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 1.0 percent April decrease. Excluding transportation, new orders decreased 0.3 percent. Excluding defense, new orders decreased 1.5 percent. Transportation equipment, also down two consecutive months, led the decrease, $0.9 billion or 1.0 percent to $86.1 billion.Download full PDF The latest new orders number at -0.6% month-over-month (MoM) was better than the Investing.comconsensus of -0.9%. The series is up 9.2% year-over-year (YoY). If we exclude transportation, "core" durable goods came in at -0.3% MoM, which was worse than the Investing.com consensus of 0.5%. The core measure is up 7.8% YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 1.8% MoM and up 5.5% YoY. Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.2% MoM and up 6.1% YoY.  For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Rail Week Ending 23 June 2018: Rail Growth Continues To Outpace Economic Growth: Week 25 of 2018 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. We review this data set to understand the economy. If coal and grain are removed from the analysis for carloads, this week it expanded 4.7 %. We primarily use rolling averages the analyze the data due to weekly volatility - and the 4 week rolling average for the intuitive sectors was again improved from 3.6 % to 4.0 %. Year-over-Year economic growth in 1Q2018 was 2.8 %. Intermodal transport growth remains strong year-over-year. The following graph compares the four week moving averages for carload economically intuitive sectors (red line) vs. total movements (blue line): A summary of the data from the AAR: For this week, total U.S. weekly rail traffic was 557,340 carloads and intermodal units, up 3.7 percent compared with the same week last year. Total carloads for the week ending June 23 were 268,464 carloads, up 2.5 percent compared with the same week in 2017, while U.S. weekly intermodal volume was 288,876 containers and trailers, up 4.9 percent compared to 2017. Nine of the 10 carload commodity groups posted an increase compared with the same week in 2017. They included metallic ores and metals, up 2,297 carloads, to 24,786; grain, up 2,237 carloads, to 24,104; and chemicals, up 2,059 carloads, to 32,422. One commodity group posted a decrease compared with the same week in 2017: coal, down 3,103 carloads, to 83,006. For the first 25 weeks of 2018, U.S. railroads reported cumulative volume of 6,476,498 carloads, up 1.3 percent from the same point last year; and 6,860,230 intermodal units, up 5.9 percent from last year. Total combined U.S. traffic for the first 25 weeks of 2018 was 13,336,728 carloads and intermodal units, an increase of 3.6 percent compared to last year. The middle row in the table below removes coal and grain from the changes in the railcar counts as neither of these commodities is economically intuitive. 

Chemical Activity Barometer Increased in June -- Note: This appears to be a leading indicator for industrial production. From the American Chemistry Council: Chemical Activity Barometer Continues Upward Climb Into Third Quarter The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 0.1 percent on a three-month moving average (3MMA) basis in June to 122.27. This marked the barometer’s tenth consecutive gain, following revisions. The barometer is up 4.1 percent on a 3MMA compared to a year earlier. The unadjusted CAB also increased, notching a 0.3 percent gain, pushing it to a 4.3 percent gain year-over-year. The March, April, and May readings were all adjusted upward. June readings indicate a continued expansion of U.S. commercial and industrial activity into early 2019... Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

Dallas Fed Manufacturing Outlook: Continued Expansion in June -- This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for June. The latest general business activity index came in at 36.5, up from 26.8 in May. All figures are seasonally adjusted.Here is an excerpt from the latest report:The expansion in Texas factory activity continued in June, albeit at a slower pace than in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, declined 12 points to 23.3, signaling a deceleration in output growth.Perceptions of broader business conditions were even more positive in June than in May. The general business activity index rose 10 points to 36.5, and the company outlook index rose five points to 33.2, its highest reading since 2006.Expectations regarding future business conditions remained largely optimistic in June. The indexes of future general business activity and future company outlook moved up to 35.9 and 38.7, respectively, with both readings significantly above average. Other indexes of future manufacturing activity showed mixed movements but remained in solidly positive territory. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. Here is a snapshot of the complete TMOS.

 Richmond Fed Manufacturing: Continued Expansion in June -- Today the Richmond Fed Manufacturing Composite Index jumped to 20 for the month of June, up from last month's 16. Investing.com had forecast 15. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 11.0, which indicates expansion. The complete data series behind today's Richmond Fed manufacturing report, which dates from November 1993, is available here. Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

Kansas City Fed: Regional Manufacturing Activity "Continued to Expand at a Rapid Pace" in June, Concern about Tariffs --  From the Kansas City Fed: Tenth District Manufacturing Activity Continued to Expand at a Rapid PaceThe Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand at a rapid pace, and expectations for future growth increased moderately.“The composite index remained strong for the third consecutive month, and many firms reported difficulties finding qualified workers,” said Wilkerson. “Prices indexes remained at high levels.” The month-over-month composite index was 28 in June, similar to the reading of 29 in May and higher than 26 in April. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factory activity increased at durable and nondurable goods plants, particularly for computer, electronics, and food products. Most month-over-month indexes were slightly lower than the previous month, but all indexes remained at high levels. The production index edged down from 41 to 38, and the volume of shipments and new orders for exports indexes eased slightly. The employment index was unchanged, while the new orders and order backlog indexes saw a modest decline. The raw materials inventory index improved from 19 to 27, and the finished goods inventory index also increased.  This was the last of the regional Fed surveys for June. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index: The New York and Philly Fed surveys are averaged together (yellow, through June), and five Fed surveys are averaged (blue, through June) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through May (right axis). Based on these regional surveys, it is possible the ISM manufacturing index will be close to 60 in June (to be released on Monday, July 2nd).

June 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 June is 22.5, up from the previous month's 21.4. It is near its all-time high of 25.1, set in May 2004.

Chicago PMI Expanded Faster in June -- 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 June to a value of 64.1 from 62.7 in May, which was above the Investing.com forecast 60.0.  Here is an excerpt from the press release:“Stronger outturns in May and June left the MNI Chicago Business Barometer broadly unchanged in Q2, running at a pace similar to that seen throughout 2017. While impressive, supply-side frustrations are undermining firms’ productive capacity,” said Jamie Satchi, Economist at MNI Indicators.“Confusion surrounding the trade landscape continues to breed uncertainty among businesses and their suppliers and has led to many firms’ altering their immediate purchasing decisions,” he added. [Source] Let's take a look at the Chicago PMI since its inception.

 Weekly Initial Unemployment Claims increased to 227,000 --The DOL reported: In the week ending June 23, the advance figure for seasonally adjusted initial claims was 227,000, an increase of 9,000 from the previous week's unrevised level of 218,000. The 4-week moving average was 222,000, an increase of 1,000 from the previous week's unrevised average of 221,000. The previous week was unrevised.  The following graph shows the 4-week moving average of weekly claims since 1971.

Philly Fed: State Coincident Indexes increased in 45 states in May ---From the Philly Fed:The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for May 2018. Over the past three months, the indexes increased in all 50 states, for a three-month diffusion index of 100. In the past month, the indexes increased in 45 states, decreased in one, and remained stable in four, for a one-month diffusion index of 88. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed: The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Teamsters reach sellout agreement “in principle” with UPS -- The Teamsters union and United Parcel Service are preparing to impose historic concessions on UPS workers, according to a tentative agreement announced last night.Full details of the deal have not been released and the contract has yet to be finalized. Further talks are scheduled from July 9 to July 12. However, the details that have been made public make clear that the agreement is a betrayal of UPS workers, who voted by a margin of 93 percent to authorize a strike. UPS has long been a pioneer in developing a low-paid, highly exploited workforce, with 70 percent of its 230,000 US employees working part-time for starting wages of as little as $10 per hour. This has been implemented with the active support of the International Brotherhood of Teamsters, which has colluded over decades in imposing contract concessions. According to a statement released by the union, the tentative agreement would create a new “hybrid driver” position, a second and lower-paid tier of drivers who would split their time between deliveries and working at UPS distribution hubs. These workers would start out at $20.50 per hour and top out at $34.79 by 2022, significantly less than what drivers currently make. Up to now, UPS driver has been one of the few remaining decent-paying hourly positions at the company.The hybrid driver plan was originally proposed by the Teamsters union, not the company, according to leaks from the union negotiating committee. This information has provoked widespread anger among the rank and file. The agreement includes a paltry $4.15 per hour increase in wages for full-time employees over the five-year life of the contract, barely enough to keep up with inflation.

What happened when Walmart left -- When Walmart left town, it didn’t linger over the goodbyes. It slashed the prices on all its products, stripped the shelves bare, and vanished, leaving behind only the ghostly shadow of its famous brand name and gold star logo on the front wall of a deserted shell.The departure was so quick that telltale signs remain of the getaway, like smoldering ashes in the fireplaces of an evacuated town. Notices still taped to the glass entranceway record with tombstone-like precision the exact moment that the supercenter was shuttered: “Store closed at 7pm, Thursday 28 January 2016.”Ten years. That’s all the time it took for the store to rise up in a clearing of the lush forest of West Virginia’s coal country and then disappear again, as though it had never been there.  But for the people of McDowell County – proud country folk laboring under the burdens of high unemployment, low income and endemic ill health – even such a fleeting visit to this rural backwater by the world’s largest retailer had a profound impact. Both in the arrival, and in the hasty leaving.   Much has been written about what happens when the corporate giant opens up in an area, with numerous studies recording how it sucks the energy out of a locality, overpowering the competition through sheer scale and forcing the closure of mom-and-pop stores for up to 20 miles around. A more pressing, and much less-well-understood, question is what are the consequences when Walmart screeches into reverse: when it ups and quits, leaving behind a trail of lost jobs and broken promises.

US Communities Can Suffer Long-term Consequences After Immigration Raids -- U.S. immigration agents raided an Ohio gardening company on June 5, arresting 114 suspected undocumented workers. This followed other large workplace raids, including a raid on a rural Tennessee meat-processing plant in April. The raids suggest the U.S. Department of Homeland Security is returning to sweeping immigration enforcement tactics not seen since the George W. Bush administration. While the immediate shock and trauma of these raids is visible, there are also longer-term impacts on communities. Research I conducted in Massachusetts, Iowa and South Carolina from 2007 to 2013 shows that large-scale raids are experienced locally as disasters, even by those not directly affected. In 2007, Immigration and Customs Enforcement agents raided the Michael Bianco factory in New Bedford, a working-class Massachusetts port. The plant made backpacks for the Pentagon. Six hundred ICE agents arrested 361 people, mainly young Mayan seamstresses from Guatemala.Postville is an Iowa town of 2,000. In 2008, 800 ICE agents raided Agriprocessors, one of the nation’s largest meatpacking plants and the town’s biggest employer, arresting 389 undocumented workers, mainly Guatemalans.In 2008, ICE also raided the House of Raeford poultry plant on the outskirts of Greenville, South Carolina, arresting more than 300 workers, mainly Guatemalans.These raids were spectacles, with helicopters and hundreds of ICE agents. “It was like a military operation," described Marc Fallon, a Catholic social worker in New Bedford. The raids led to panic in each community: Relatives of detainees ran to nearby churches to seek sanctuary and information, terrified to go home. Landlords showed up with children who had been dropped off at empty apartments. The raids created havoc for families and “first responders," which in these cases included churches, immigration attorneys and other community advocates who scrambled to provide legal aid, track down children and missing detainees, and stock food pantries.  “It was like a war zone," recalls Corinn Williams, director of the Community Economic Development Center in New Bedford. “Family members were walking around in a daze looking for their loved ones." Postville lost one-third of its population after the raid, as undocumented Guatemalans and Mexicans fled. High school students made a photo banner to remember friends whose desks suddenly were vacant. Schools hired counselors to help children deal with post-raid depression and anxiety. Some humanitarian responders suffered serious stress-related health effects.

Residents of Salem, Ohio, remain in shock after immigration raid - In the wake of a raid by agents of the US Immigration and Customs Enforcement (ICE) and local police at a meatpacking plant in Salem, Ohio, members of the local immigrant community remained traumatized. ICE agents seized some 146 workers in the raid, 48 women and 98 men at the Fresh Mark plant on June 19. The male detainees were taken to the Northeast Ohio Correctional Center where immigrants arrested in a previous raid on a garden center in Sandusky, Ohio, are also being held. The women were taken to the Geauga County Jail. Most of the workers were from Guatemala. Following the raid ICE said it had released some 66 people for “humanitarian” reasons. However, at least some of those released were workers who were later able to produce immigration documents. A World Socialist Web Site reporting team that visited Salem on Saturday found Salem’s downtown shopping area virtually deserted. Local residents told WSWS reporters that the streets were normally full of immigrant families on a Saturday, but that many people were now fearful of leaving their homes since the raid earlier in the week. Veronica Dahlberg, the founder and director of immigrant rights group HOLA Ohio, called the events in Salem “an unfolding catastrophe,” warning that many of those seized by ICE agents now faced deportation. According to press reports there were about 35 families affected that had children and about 50 to 60 young people involved, with ages ranging from infants through to the teens.

Exclusive: Immigrant Detainees In an Oregon Federal Prison Are Being Held In General Population Units - Reuters reported this month that federal authorities were moving 1,600 immigrant detainees, awaiting civil immigration court hearings, to five federal prison complexes across the country, a practice that has never beencarried out on such a large scale. The Appeal has learned that immigrant detainees are being held in prison housing units with the general population in at least one of these federal prisons, in Sheridan, Oregon, rather than in separate facilities. The detainees at FCI Sheridan have been there since mid-May. The arrangement could be dangerous and raises constitutional concerns, according to a source in the federal Bureau of Prisons and Lisa Hay, Oregon’s federal public defender. Prison staff members are concerned about detainees’ safety during their stay in the facility, said the Bureau of Prisons employee, who requested anonymity because they were not authorized to speak about the issue. Consequently, prison officials have sought to cut off these 123 detainees’ interactions with the general population, confining them to their cells for 22 hours a day this week, according to Hay. During brief respites outside their cells, detainees are allowed to shower and attempt to use the phone, said Hay, who has visited the facility with her staff three times over the last two weeks. Carissa Cutrell, an ICE spokesperson, confirmed this physical arrangement in an email, noting that there are “ICE detainees and federal inmates in the same unit, but on different tiers.” Asked about the claims of 22 hour confinement Cutrell said that is not “ICE’s understanding” and said the detainees are supposed to be moved to their own housing unit Friday. Cutrell did not respond to The Appeal’s inquiries as to whether ICE detainees at other federal prisons have been held in the same housing units as federal inmates.

Jogger says she was detained by border patrol for two weeks after accidentally crossing Canadian border | TheHill: A French national who was visiting her mother in Canada's British Columbia says she was arrested and detained by U.S. Customs and Border Protection (CBP) agents for two weeks after accidentally jogging over the U.S.-Canada border into Washington state. Cedella Roman, 19, told CBC News that she was confronted while jogging near Blaine, Wash., by Border Patrol agents who said she had crossed the border illegally and was caught on security cameras. Roman says she was jogging south down a beach and did not see any warning signs indicating that she first had crossed a municipal boundary and later an international border. She told reporters that she was detained for two weeks at the Tacoma Northwest Detention Center, an Immigration and Customs Enforcement facility in Tacoma, Wash., after her arresting officers discovered she had no forms of identification with her on her jog. "They put me in the caged vehicles and brought me into their facility," she told CBC. "They asked me to remove all my personal belongings with my jewelry, they searched me everywhere. "Then I understood it was getting very serious, and I started to cry a bit." Roman contacted her mother, Christiane Ferne, to bring her identifying paperwork. According to CBC, her mother's arrival was not enough to convince agents of the need for her release, and Roman remained in detention while officials from both countries determined her citizenship status. 

Inequality Crisis: UN Warns 40 Million In Poverty, US Most 'Unequal' Developed Nation -- A new report by the U.N. Special Rapporteur on extreme poverty and human rights in the United States finds about 40 million live in poverty, 18.5 million in extreme poverty, and 5.3 million live in Third World conditions. The 20-page report by Philip Alston, U.N. Special Rapporteur on extreme poverty, warned the U.S. has one of the highest rates of income inequality among Western nations. He criticized the Trump administration for the $1.5 trillion in debt-fueled tax cuts in December 2017 overwhelmingly benefited the wealthy and worsened inequality among the middle class and poor. Alston could be right because companies are expected to spend $2.5 trillion this year for financialization purposes, including stock buybacks, dividends, and M&A deals, according to UBS, which does not entirely benefit the real economy. Alston called the U.S. the most unequal society in the developed world. He said U.S. policies had benefited the rich by hollowing out the middle class. 

The U.N. says 18.5 million Americans are in ‘extreme poverty.’ Trump’s team says just 250,000 are. The Trump administration says the United Nations is overestimating the number of Americans in “extreme poverty” by about 18.25 million people, reflecting a stark disagreement about the extent of poverty in the nation and the resources needed to fight it.In May, Philip G. Alston, special rapporteur on extreme poverty and human rights for the U.N., published a report saying 40 million Americans live in poverty and 18.5 million Americans live in extreme poverty. But in a rebuke to that report on Friday, U.S. officials told the United Nations Human Rights Council there only appear to be approximately 250,000 Americans in extreme poverty, calling Alston's numbers “exaggerated.”The rift highlights a long-running debate among academics over the most accurate way to describe poverty in America, one with enormous implications for U.S. policy-making and the nation's social safety net. It also sheds light on the ongoing feud between Trump and U.N. officials over Alston's report on American poverty, with U.S. Ambassador Nikki Haley last week calling the report “politically motivated” and arguing it “is patently ridiculous for the U.N. to examine poverty in America.”  The U.N.'s numbers come from the official Census definition that has been kept for decades by the U.S. government, defining extreme poverty as having an income lower than half the official poverty rate, Alston said in an interview.   By this criteria, the poverty rate in America has only slightly ticked downward since the mid-1960s. The U.N. is using the Census figure that is “the gauge most people rely on when measuring extreme poverty,” said Mark Rank, a poverty expert at Washington University in St. Louis. Some on the right have long rejected this measure in part since it only counts income, or how much money each American receives. Instead, American officials in Geneva cited survey data produced by the Heritage Foundation, a conservative think tank, that also measures purchasing power. Citing a recent survey of American households, Heritage found only 0.08 percent of American households (or about to 250,000) are in “deep poverty,” defined by Heritage as living on less than $4 a day. This statistic does account for government social spending programs that help the poor — like Medicaid, food stamps, and housing assistance — while the figure cited by the U.N. does not.

Just a “stab at humor”  -- The ACLU’s Ría Tabacco Mar reviewed a recent SCOTUS decision in the NYT. South Dakota is being allowed to murder a man rather than commit him to a life time of hell in a natural life sentence . Charles Rhines was convicted of murdering a man while robbing a Dunkin Donut store he used to work at and was fired from a couple of weeks earlier. The jury in deciding Charles Rhines fate in deliberation sent questions to the judge asking;Would Rhines have a cellmate? Would he be allowed to “create a group of followers or admirers”? Would he be allowed to “have conjugal visits”? They apologized if any of the questions were “inappropriate,” but indicated that they were important to their decision-making. The judge declined to answer, telling the jurors everything they needed to know was already in the jury instructions they’d received. Eight hours of deliberation later and the jury sentenced Charles Rhines to death. It was not until 2016, when the newly appointed federal capital defenders found the jury note and restarted the appeals process and they interviewed the jurors learning what can be described as a preconceived bias of the jury towards Charles Rhines because he was gay. One juror said Rhines was gay “and thought that he should not be able to spend his life with men in prison.” A second recalled another juror making a comment “sentencing Rhines to life in prison would be sending him where he wants to go.” A third said “there was lots of discussion of homosexuality” in the jury room. Another juror said, “There was a lot of expressed disgust. This is a farming community. There were a lot of folks who were like, Ew, I can’t believe that.” All of which is not pertinent to the sentencing. The jury sentenced Charles Rhines to death because he was gay and not because he murdered someone.

Pennsylvania judge breaks teachers’ strike --Teachers in the northeastern Pennsylvania town of Dallas went on strike on June 19 to fight to secure a contract and oppose school authorities’ demands for cuts in wages and healthcare and pension benefits. The teachers who have been without a contract for three years struck for 22 days at the beginning of the school year in 2017. Less than 24 hours after the strike began, a Luzerne County judge issued an injunction ordering the teachers back to work, citing a state law that mandates that students receive 180 days of instruction per year. Issuing his back-to-work order, Judge Williams Amesbury, a Democrat who previously ran under the ticket of both parties, was particularly vindictive. “Teachers will teach, they will be in the classroom, there will be no labor activity,” the judge bellowed. “Do you understand?” He continued, “There are too many people involved; too many children who have the right to an education.”  Union officials from the Dallas Education Association immediately capitulated and submitted to court-supervised bargaining sessions. The judge’s sudden concern for the right of students to a quality education was disingenuous to say the least. While throwing the book at the teachers—who are fighting not only for improved wages but better funding for their children—the judge has said nothing about those who are really stripping working-class youth of the right to public education. Students have suffered years of savage budget and program cuts in Dallas and other towns and cities in the economically depressed area, a former coal mining and manufacturing center. In 2016, schools in Dallas and nearby Wyoming, Hanover and Wilkes Barre carried out deep cuts and many threatened close operations altogether because of a state funding crisis. Pennsylvania already ranks worst in the nation for the gap between rich and poor school districts.

Oklahoma teachers are so fed-up that nearly 100 are running for office - Just 11 days after Oklahoma educators stormed the state’s Capitol building in early April to demand higher wages and more funding, more than 100 teachers declared their intentions to run for legislative office. Now, 98 of them will appear on the ballot in Oklahoma’s Tuesday primary. They represent more than one-fifth of the 466 running for legislative office in the state. In the throes of a heated and public fight over teacher pay and other education funding issues, teachers’ coordinated efforts to break into politics could provide a strong rebuke of the state’s near decade-long slide into mediocrity in education. “There was a lot of frustration with how [the walkout] ended,” said Alberto Morejon, an 8th-grade teacher in Stillwater Oklahoma and the web administrator for the now-famous group that helped organize the march on the Capitol. “A lot of teachers just came together and agreed that since the walkout didn't turn out the way we wanted, the next step is that we’re going to remember when it comes time to vote.” Morejon’s group, “Oklahoma Teacher Walkout - The Time Is Now,” gave many teacher candidates a platform to discuss their ideas — and even a push to run for office. To start, they want better pay and another $50 million in education funding. Oklahoma ranks dead last in teacher funding, and over the past decade, funding for schools has decreased almost 25 percent. But the walkout ended without the governor meeting their demands. That’s when many decided to make a bid for the state Legislature. Cyndi Ralston, a 30-year veteran of Broken Arrow Public Schools, had no intention of running. But she became one of the first teachers to file her candidacy after an unlikely push from her district’s state senator. Ralston even thought she was done teaching when she retired in 2016, but the increase in demand for qualified teachers brought her back into the classroom.

Dear High School Graduates... Dear high school graduates: please glance at these charts before buying into the conventional life-course being promoted by the status quo. Here's the summary: the status quo is pressuring you to accept its "solutions": borrow mega-bucks to attend college, then buy a decaying bungalow or hastily constructed stucco box for $800,000 in a "desirable" city, pay sky-high income and property taxes on your earnings, and when the stress of all these crushing financial burdens ruins your health, well, we've got meds to "help" you--lots of meds at insane price points paid for by insurance-- if you have "real" insurance without high deductibles, of course. Here's the truth the status quo marketers don't dare acknowledge: every one of these conventional "solutions" only makes the problem worse. Student loan debt only makes your life harder, not easier, as the claimed "value" of a college degree is based on the distant past, not the present. The economy is changing fast and the conventional "solutions" no longer match the new realities. But don't expect anyone profiting from the predatory profiteering higher-education cartel to admit this.   The "solution" to crushing levels of debt is not to borrow more just to prop up a rotten, corrupt, dysfunctional and self-serving status quo. In effect, the young generations are being groomed to be the hosts for the parasitic classes that feed on young taxpayers, student loan debt-serfs, young buyers of bubble-priced housing, unaffordable sickcare "insurance" and all the rest of the status quo "solutions."  The status quo claims that getting a college diploma more or less guarantees you a slot in the elite class of folks with secure incomes and opportunities to get ahead and build real wealth. The reality is only the top 5% of the work force are doing well. So of the 33% of the work force with university diplomas, the system only creates slots for the top 15% of that educational elite. The next 15% (the rest of the top 10% of the entire work force) can pick up the 2nd tier technocrat positions and everyone else gets the scraps: insecure jobs, mediocre pay, limited opportunities. Before you accept that becoming a debt-serf to get a college diploma is a "solution," check out the other side of that trade: the mostly older, wealthier folks profiting from your debt-serfdom: 

Koch Money and the Unflappable Economist - At the beginning of May 2018, there was a brief furor over donations from Koch family-affiliated philanthropies to fund the Mercatus Institute and the newly-named Antonin Scalia School of Law at George Mason University (GMU). Although articles concerning the admirable efforts of the GMU student organization UnKoch My Campusappeared in many of the prominent news outlets, the attention span of journalists seemed to barely outpace that of interest in one of Donald Trump’s tweets, with even less consequence. But more to the point, the silence of the economics profession concerning the revelations was pretty deafening.  The details of the controversy can be briefly summarized: the assortment of Koch family foundations and allied charitable cutouts (which some libertarians have dubbed the “Kochtopus,” but will henceforth here be shortened to ‘the Kochs’) have been making targeted donations to more than 300 schools since 2005, predominantly to economics departments. But George Mason University has been the most lavishly favored, garnering more than a third of the estimated $150 million bequeathed to universities from 2005-2015. The event that stirred campus resistance at GMU was a massive donation of $10 million from the Kochs tied to a $20 million donation from an anonymous benefactor to rename the Law School after Antonin Scalia, “formally” earmarked for “student scholarships.” The first thing one notices was the budgetary legerdemain which obscured the relationship between faculty selection and line items in budgetary terms. Thus, the GMU Provost S. David Wu could tell his Faculty Senate in April 2016 that the bequest came with “no strings attached…The entire $30M is for scholarships for students and nothing else.” This narrative might have prevailed, if not for the document dump by UnKoch My Campusat the end of April,[1]a result of a FOIA suit by Transparency GMU, which detailed the series of negotiations with the Kochs (including the overwhelming role of figures from the Federalist Society as intermediaries: another Koch funded arm), including stipulations of how designated representatives would have input into GMU hiring decisions. This forced GMU President Angel Cabrera to reverse earlier statements that existing donor arrangements had not been allowed to influence internal academic matters. This, in turn, was the trigger which attracted the national press.

How Student Debt Is Worsening Gender And Racial Injustice -- I frequently regale my friends and family members with awful student loan facts. (Here are a few: federal student loans have no statute of limitations. They can follow you forever. The federal government doesn’t have to sue you to garnish your wages. They can send you a notice and start taking a big chunk of your paycheck a few weeks later. Even public benefits, which are off-limits to most other creditors, are fair game for federal student loans. Oh, you’re a disabled veteran barely scraping by on your VA disability checks? The feds will garnish those benefits if you have student loans in default. People in default on their student loans and suffering through destroyed credit and wage or benefit garnishment are mostly poor, mostly Black and Latinx.  Many were targeted by for-profit schools that are essentially just marketing offices with a few minimum-wage “professors”—often students who just graduated the program—on staff. I have had clients who were recruited for for-profit schools out of unemployment lines, or while homeless. They are still battling their student debt decades later. Etc., etc., etc.—I could go on!)  Last week, however, I saw a study with some facts that surprised even me. The American Association of University Women’s report, Deeper in Debt: Women and Student Loans (originally issued last year, but updated this year with some new data) found that women hold 2/3 of the outstanding student debt in the U.S.* 2/3! Women are a little over half the population, so why do they hold such a large share of the total debt? It’s true that more women go to college than men, but not that many more. Around 56 percent of people enrolled in colleges and universities last year were women. That still doesn’t account for a full 2/3 of debt being owed by women. Here are some other possible reasons, each of which is it its own rabbit hole of injustice:

  • (1) Women are more likely than men to take out student loans (44 percent of women use loans while undergraduates vs. 39 percent of men)
  • (2) Women take out more in loans than men (by an average of around $1,500 for undergraduates)
  • (3) Men who work during college make more than women who work during college (oh hi gender pay gap)
  • (4) Because women make less after college (yes hello again gender pay gap), it takes women longer to pay off their loans, meaning they carry higher balances for longer and they pay more in interest.

More Americans living without partners, especially young adults -  Americans are less likely to share a roof with a partner than they were a decade ago, according to a report released Wednesday by the Pew Research Center. Whereas 39% of all US adults lived without a partner or spouse in 2007, that number has risen to 42% in 2017, according to data from the US Census Bureau. "People are more conscious of the potential costs" of living together, said Stephanie Coontz, director of research and public education for the Council on Contemporary Families, a nonpartisan group of experts and researchers. "A good part of it, of course, is the delay in marriage," said Coontz, who was not involved in the Pew analysis. The dropping marriage rate is large enough to tip the scales, despite an opposing trend: Unmarried adults are still more likely to live with a romantic partner than before, according to Pew Research.  These trends ring especially true for those under 35: About 61% of them are "unpartnered," versus 56% a decade ago. "Unpartnered" people may include couples who live apart, single parents or people who live with their parents. "They feel like they're not financially stable, and so they just don't think that they're ready to enter into a partnership like that," said Kim Parker, director of social trends research at Pew.  "In the past, it seems like young adults sprung right into marriage, whether or not they felt financially ready, and then built a life and built financial stability as a couple," Parker said.  "Now, you find that young adults are waiting until they've checked some of the other boxes."

Judge Blocks Kentucky’s Plan for Work Requirements on Medicaid - A federal judge on Friday struck down the Trump administration’s approval of a Kentucky plan to impose work requirements on many Medicaid recipients, a ruling that could have a chilling effect on other states seeking new rules for the program covering 75 million people. U.S. District Judge James Boasberg said Health and Human Services Secretary Alex Axar hadn’t adequately considered whether the proposal would help the state provide medical assistance to residents, which he noted was a central objective of Medicaid. As such, he said, the approval was “arbitrary and capricious.” The judge vacated the HHS approval and sent the proposal back to the department for further review. Kentucky had hoped to save about $33 million as it reduced the number of beneficiaries by about 90,000 through the new requirements under its new Medicaid program, called Kentucky HEALTH. “The Secretary never provided a bottom line estimate of how many people would lose Medicaid with Kentucky HEALTH in place,” wrote Judge Boasberg, who was appointed by President Barack Obama. “This oversight is glaring, especially given that the risk of lost coverage was ‘factually substantiated in the record.’ ”

The Trump Administration's Squeeze On Affordable Health Insurance For 50- To 64-Year-Olds - In a series of recent decisions, the Trump Administration is taking steps that will sharply raise insurance premiums for people aged 50 to 64, just before they become eligible for Medicare. While these steps are likely to make coverage less expensive for young, healthy consumers, they will inevitably raise costs for middle-aged people with chronic conditions. For many, insurance will become unaffordable. And that lack of coverage will eventually result in higher costs for Medicare.Trump is taking three major steps that will affect the availability of Affordable Care Act health insurance for middle-aged consumers.  First, at the urging of the Trump Administration, Congress last year repealed the tax penalty that has to be paid by those without health insurance, effective for tax year 2019. The penalty is the ACA’s mechanism to push people to buy insurance. The logic: By broadening the pool of those with ACA insurance to include those less likely to incur significant medical costs, the individual mandate would keep premiums relatively low for everyone. Then, early this month, the Trump Administration refused to defend the remaining provisions of the ACA in federal court. In the case Texas v. the federal Department of Health and Human Services, 20 red states argued that, absent the now-repealed individual mandate, the rest of the ACA will be unconstitutional. Thus, all its other provisions, including several important to those older consumers, also would be thrown out. They include premium limits for those 50-64, minimum benefit requirements,  and the ban on insurance companies rejecting potential purchasers due to pre-existing conditions. But the story doesn’t end there. This week, the Trump Administration took one more step towards dismantling the ACA in a way that will likely harm pre-Medicare consumers: The Department of Labor adopted new rules opening the door to low cost, low-benefit health plans.  These will now be widely available to small businesses and, importantly, self-employed individuals.

  The High Cost of Prescription Drugs in the United States - Spending on prescription medications is higher in the US, per capita, than in any other country in the world, according to a recent Journal of the American Medical Association study. And, the report said, those costs are “largely driven by brand-name drug prices that have been increasing in recent years at rates far beyond the consumer price index.” An NBC News report noted that, “Paying for medicine can be the most expensive out-of-pocket health cost for Americans.”Why?If you look at the landscape of prescription drugs in America, you’ll notice there is nothing in place to keep drug prices low. There are no specific regulations to keep a ceiling on costs. The pharmaceutical manufacturers have the very tempting opportunity to charge whatever they think a drug’s demand and the market will bear. It’s simply possible for a drug company to charge high prices if they want to, just because they can. There’s nothing regulating whatever cost they want to charge. So the opportunity to charge more exists. Drug companies will tell you immediately that their costs to research, develop and bring a drug to market are astronomical, and they have to cover those costs and make a profit to continue to stay in business and develop even more innovative prescription medications that will help save more lives. That’s a primary reason pharmaceutical companies will point to as a reason for escalating prices on all the medications they manufacture. And that’s true – to a degree. But according to a May 2017 AARP cover story in their AARP.org bulletin, “Even after accounting for their research investments, however, drug companies are among the most profitable public businesses in America. And an analysis from the research company Global Data revealed that 9 out of 10 big pharmaceutical companies spend more on marketing than on research.”

Study: Almost half of diabetics skip care because of high cost - ALMOST HALF OF PEOPLE with diabetes have temporarily gone without treatment because they couldn't afford it. According to a new survey by UpWell Health, True Cost of Diabetes, 45 percent of diabetics have skipped care because of affordability issues. A similar number, 43 percent, paid up to $1,000 out of pocket in the past year for treating complications related to the condition. Sixteen percent paid $1,000 to $5,000. The American Diabetes Association recently reported that the average diabetic incurs about $9,601 in diabetes-related medical expenses per year. Recently, insulin prices have skyrocketed. According to CBS News, the cost of insulin from two manufacturers rose almost 8 percent last year, to more than $275, and some patients' costs have jumped from $300 to almost $1,000 in the last year. In addition to financial burdens, diabetes takes its toll on sufferers' personal lives as well. According to the survey, 37 percent of respondents say the condition has harmed their relationships with loved ones, friends or coworkers. Forty-six percent say they've missed activities, outings or other personal events, and 38 percent had to give up hobbies, activities or other interests because of diabetes. Sixty-two percent of diabetics say complications from the chronic condition interrupt their sleep every week and 8 percent say it happens more than 10 times per week.Additionally, from meal planning and managing medications to monitoring blood glucose levels and going to doctors' appointments, many diabetics say they spend countless hours worrying about their condition. More than 40 percent of respondents report spending one to five hours on their diabetes per week. Thirty percent spend up to two extra hours per week shopping for and preparing meals suitable for their diabetes.Daily maintenance is required as well. Forty-one percent check their blood sugar one to two times per day, and 29 percent check it three to five times. When it comes to medications, 45 percent take them twice a day and almost a quarter take them three to four times a day. Almost all, 91 percent, spend time going to the pharmacy for their diabetes needs at least once a month, with 28 percent making two to four trips per month.

The health care industry is bound to collapse soon, experts say --The US health care sector may be incubating the next big Lehman-style disaster that could tip the economy into a full-blown recession, according to industry analysts.  The health care sector is nursing its own toxic mess, with soaring debt, the analysts say. “As a nation, we have to step up our game and get on top of it; this is a huge issue,” said Chris Oretis, a former Washington lobbyist who now works as executive vice president in the life insurance secondary markets at GWG Holdings.As industry spending and debt servicing rage out of control, health care is ranked as the No. 1 US “systemic recession risk” in a new report. The sums at stake are staggering: Spending in the sector accounted for $3.3 trillion in 2015, and is 18 percent of the US economy today. The industry generates 16 percent of private sector jobs nationwide, up from 10 percent in 1990.US health care spending is forecast to grow by an average 5.6 percent annually in the coming decade, according to a report by the Center for Medicare and Medicaid Services (CMS), a projection based on no changes out of Washington and in the Affordable Care Care through 2025. Meanwhile, national spending on health care is forecast to outpace US gross domestic product growth by 1.2 percent. CMS has estimated that spending will comprise 19.9 percent of GDP by 2025, up from 17.8 percent in 2015.“There’s no question that rising health care costs are hurting our overall economy,” said New York-based financial adviser Michael Mondiello. “With consumer spending accounting for some 70 percent of economic activity, the more we spend on health care, the less we have to purchase other things like a vacation or to save for retirement.”The feeble economic growth elsewhere has failed to keep up with a gargantuan health care debt binge among both individuals and governments, critics said. Then there’s the boom in mergers, in facility building and in manpower hiring that analysts say could be signs of a speculative bubble that could eventually burst.

The Conservative Case for Universal Healthcare - Don’t tell anyone, but American conservatives will soon be embracing single-payer healthcare, or some other form of socialized healthcare. Yes, that’s a bold claim given that a GOP-controlled Congress and President are poised to un-socialize a great deal of healthcare, and may even pull it off. But within five years, plenty of Republicans will be loudly supporting or quietly assenting to universal Medicare. And that’s a good thing, because socializing healthcare is the only demonstrably effective way to control costs and cover everyone. It results in a healthier country and it saves a ton of money.That may seem offensively counterintuitive. It’s generally assumed that universal healthcare will by definition cost more.In fact, in every first-world nation that has socialized medicine–whether it be  a heavily regulated multi-insurer system like Germany, single-payer like Canada, or a purely socialized system like the United Kingdom–-it costs less. A lot, lot less, in fact: While healthcare eats up nearly 18 percent of U.S. GDP, for other nations, from Australia and Canada to Germany and Japan, the figure hovers around 11 percent. (It’s no wonder that smarter capitalists like Charlie Munger of Berkshire Hathaway are bemoaning the drag on U.S. firm competitiveness from high healthcare costs.) Nor are healthcare results in America anything to brag about: lower life expectancy, higher infant mortality and poor scores on a wide range of important public health indicators.   Why does socialized healthcare cost less? Getting rid of private insurers, which suck up a lot money without adding any value, would result in a huge savings, as much as 15 percent by one academic estimate published in the American Journal of Public Health. When the government flexing its monopsony muscle as the overwhelmingly largest buyer of medical services, drugs and technology, it would also lower prices-–that’s what happens in nearly every other country. So while it’s a commonly progressive meme to contrast the national expenditure of one F-35 with our inability to “afford” single-payer healthcare–and I hesitate to say this lest word get out to our neocon friends–there is no need for a tradeoff.  If we switched to single payer or another form of socialized medicine, we would actually have more money to spend on even more useless military hardware.

Study: 70K Opioid Deaths Potentially Unreported Due to Incomplete Death Certificates -- Death certificates that did not specify the drugs involved in fatal overdoses may have masked more than 70,000 opioid-related deaths across the U.S. from 1999 to 2015. In Alabama, Indiana, Louisiana, Mississippi and Pennsylvania – where more than 35 percent of overdose deaths per state were tied to unspecified drugs – the potential number of opioid-related overdose deaths may be more than double in each, according to the study."Proper allocation of resources for the opioid epidemic depends on understanding the magnitude of the problem," Dr. Jeanine Buchanich, the study's lead author and a research associate professor in Pitt Public Health's Department of Biostatistics, said in a statement. "Incomplete death certificate reporting hampers the efforts of lawmakers, treatment specialists and public health officials. And the large differences we found between states in the completeness of opioid-related overdose mortality reporting makes it more difficult to identify geographic regions most at risk."For the analysis, published Wednesday in the journal Public Health Reports, researchers examined death data by state from 1999 to 2015 from the National Center for Health Statistics, which gathers and codes death certificate information from coroners and medical examiners nationwide. The study also involved the chief medical examiner of Allegheny County, Pennsylvania.Buchanich and her team specifically looked at reported drug overdose deaths, categorizing them into opioid-related, non-opioid-related and unspecified groups. They examined the proportional changes in each group over the 17-year period, and from there extrapolated how many unspecified overdoses were likely related to opioid use.

American Farmers Are Killing Themselves At An Unprecedented Rate - Suicide is exploding in America - and the increase isn't confined to celebrities like Kate Spade and Anthony Bourdain. Suicide rates have risen by an astonishing 30% since 1999, with suicidal people citing relationship stress, financial difficulties and other issues as the underlying cause.But suicide rates have increased for some professions more than others. According to CBS, farmers are facing the highest suicide rate of any profession in the US. The suicide rate for people in the field of farming, fishing and forestry is 84.5 per 100,000 people - more than five times that of the broader population. And with retaliatory tariffs from China and the European Union set to further undermine US crop prices, a bad situation could be about to get worse. Meanwhile, the Federal Reserve is raising interest rates, making the loans on which farmers depend increasingly expensive. The study comes with a few caveats: For one, it leaves out Iowa, a major agricultural state. And while farmers make up the bulk of the workers in their subgroup, they do share the designation with a small number of workers from related occupational groups, like fishing and forestry. But the figures largely jive with other recent studies. For example, suicide rates are highest in rural areas - where the bulk of farming is done.One source said today's crisis of suicide might be worse than a similar wave that gripped the American heartland in the 1980s. "The farm crisis was so bad, there was a terrible outbreak of suicide and depression," said Jennifer Fahy, communications director with Farm Aid, a group founded in 1985 that advocates for farmers. Today, she said, "I think it's actually worse.""We're hearing from farmers on our hotline that farmer stress is extremely high," Fahy said. "Every time there's more uncertainty around issues around the farm economy is another day of phones ringing off the hook." Finances are probably the most pressing reason: Since 2013, farm income has been declining steadily according to the US Department of Agriculture. This year, the average farm is expected to earn 35% less than what it earned in 2013.

Unlocked And Loaded: Families Confront Dementia And Guns -- With a bullet in her gut, her voice choked with pain, Dee Hill pleaded with the 911 dispatcher for help. “My husband accidentally shot me,” Hill, 75, of The Dalles, Ore., groaned on the May 16, 2015, call. “In the stomach, and he can’t talk, please …” Less than four feet away, Hill’s husband, Darrell Hill, a former local police chief and two-term county sheriff, sat in his wheelchair with a discharged Glock handgun on the table in front of him, unaware that he’d nearly killed his wife of almost 57 years.The 76-year-old lawman had been diagnosed two years earlier with a form of rapidly progressive dementia, a disease that quickly stripped him of reasoning and memory. “He didn’t understand,” said Dee, who needed 30 pints of blood, three surgeries and seven weeks in the hospital to survive her injuries. As America copes with an epidemic of gun violence that kills 96 people each day, there has been vigorous debate about how to prevent people with mental illness from acquiring weapons. But a little-known problem is what to do about the vast cache of firearms in the homes of aging Americans with impaired or declining mental faculties. Darrell Hill, who died in 2016, was among the estimated 9 percent of Americans 65 and older diagnosed with dementia, a group of terminal diseases marked by mental decline and personality changes. Many, like the Hills, are gun owners and supporters of Second Amendment rights. Forty-five percent of people 65 and older have guns in their household, according to a 2017 Pew Research Center survey.But no one tracks the potentially deadly intersection of those groups. A four-month Kaiser Health News investigation has uncovered dozens of cases across the U.S. in which people with dementia used guns to kill or injure themselves or others.

 Hepatitis Spikes as Poverty and Isolation Grip the Homeless and Forgotten -- The first signs that something was amiss surfaced in the weeks before the 2016 election, when public-health officials began to notice one patient after another walking into a clinic, or hospital emergency room in the Detroit metropolitan area complaining of the same symptoms: nausea and vomiting, pains in their stomach and joints, fatigue, fever, loss of appetite, yellowing of the skin and eyes, dark urine, and pale-colored feces. It didn’t take long for the medical community to hone in on the culprit: hepatitis A. For the roughly 21-month period between Aug. 1, 2016 to June of 2018, more than 846 cases of hepatitis A have been reported in Michigan, with more than 80 percent occurring in the southeast portion of the state that revolves around Detroit and its closest suburbs. For the sake of comparison, that is nearly triple the number of hepatitis A cases reported in Michigan for the 60-month period between 2011 and 2015. Twenty-seven of those infected with the virus have died, and nearly 650 have been hospitalized.  What’s happening in Michigan is the largest outbreak of hepatitis A in the state’s history. But Michigan is hardly unique: In nearby Ohio, Indiana and Kentucky — and as far away as San Diego, Salt Lake City, and New York City — the number of hepatitis A cases is spiking sharply. It has, by at least one estimate, increased by nearly 50 percent over the past two years. Hepatitis A is a curable but highly contagious disease of the liver caused by the hepatitis A virus or HAV, which is found in human excrement. You can contract the virus through contaminated food or water, unprotected sexual intercourse — particularly a combination of anal and oral sex — living with an infected person, or merely touching a doorknob after someone infected with the virus. It can take as long as 50 days for people infected with the disease to develop symptoms, and in rare cases it is fatal. The most effective safeguard is a vaccine, and public health experts recommend frequent hand washing with soap and warm water before cooking, or after using the bathroom, or changing a diaper.

Fluoridation is mass medication, NZ Supreme Court rules - Water fluoridation is compulsory mass medication, in breach of human rights, the Supreme Court has ruled by a majority vote. It confirmed that fluoridation is a medical treatment as claimed by opponents for over 60 years. It is not a supplement “just topping up natural levels”, as claimed by the Ministry of Health. The impracticality of avoiding fluoridated water makes it compulsory in practice, the majority also ruled. Three judges held that there was conflicting scientific evidence, confirming that the science is NOT settled. Chief Justice Sian Elias then held that fluoridation was not prescribed by law (i.e. is unlawful), applying section 6 of the Bill of Rights Act. That was the correct decision in Fluoride Free NZ’s view. The rest of the majority held that it was prescribed by law, and it was then necessary to apply a balancing test to determine if the breach of the right - not to be subject to medical treatment without consent - was justified in the case of fluoridation. Justice Glazebrook held that it was for a local authority to do this when making its decision, potentially taking into account specific local circumstances.  On the balance of information before the Court – the misinformation promulgated by promoters that water fluoridation measurably reduces tooth decay and presents no real health risk – two judges held that it was justifiable. This is despite the court reiterating that it is now accepted that benefit for fluoride is from topical application, not from ingestion.

Flight attendants get more uterine, thyroid, other cancers -- A flight attendant's life may look glamorous, but the job comes with health hazards that go beyond managing surly passengers. As a group, they get certain cancers more than the general population, according to a new study. Scientists have long found that flight attendants get more breast cancer and melanoma. The new study, published Monday in the journal Environmental Health, saw the same trend and detected a higher prevalence of every other cancer the researchers examined: Non-melanoma skin cancer, uterine, gastrointestinal, cervical and thyroid cancers were all seen at a higher rate in flight attendants. "Something that somewhat surprised us, to some extent, was that we also saw a higher instance of breast cancer in women with three or more children," said study co-author Irina Mordukhovich, a research associate at the Harvard T.H. Chan School of Public Health. Typically, the more children a woman has, the lower her risk of breast cancer. A previous study showed a result similar to the new breast cancer finding, she said, but Mordukhovich didn't expect those findings would be replicated.  The research does not answer why flight attendants report higher cancer numbers, but the authors have some ideas, based on earlier research. Flight attendants are often exposed to possible or probable carcinogens like pesticides, fire retardants, jet fuel and other chemicals more frequently than the general population. They are also exposed to higher levels of cosmic ionizing radiation; the World Health Organization says this is a cancer risk.

 Air pollution killing thousands of infants in Africa, study says -- Modest reductions in air pollution can prevent the deaths of tens of thousands of infants in sub-Saharan Africa each year, according to a new scientific study that investigated the link between breathable air pollutants and premature deaths in 30 countries across the continent. There is a "robust relationship" between breathable particulate matter and infant mortality in some of the world's poorest countries, according researchers from Stanford University and the University of California, San Diego published Wednesday in the journal Nature.Although few pollution monitoring systems exist in Africa, the researchers combined satellite-based data estimating the concentration of air pollutant particles with household health survey data on the location and timing of almost 1 million infant births -- and any subsequent deaths -- between 2001 and 2015.Particulate matter, one of many air pollutants, is believed by many experts to be the most harmful to human health. The term refers to small particles suspended in the air, including dust and black carbon originating from such sources as fossil fuel and biomass burning. Air pollution contributes to the global burden of heart disease, lung cancer, as well as respiratory diseases such as asthma and pneumonia, according to the World Health Organization (WHO).  Many people in Africa, where the process of rural electrification has been slow, still burn wood to cook or heat their homes. Other sources of pollutants may be natural, including large amounts of dust from the Sahara Desert.

 Synthetic biology raises risk of new bioweapons, US report warns - A new US report fears that lethal viruses could be used as weapons.  The rapid rise of synthetic biology, a futuristic field of science that seeks to master the machinery of life, has raised the risk of a new generation of bioweapons, according a major US report into the state of the art. Advances in the area mean that scientists now have the capability to recreate dangerous viruses from scratch; make harmful bacteria more deadly; and modify common microbes so that they churn out lethal toxins once they enter the body. The three scenarios are picked out as threats of highest concern in a review of the field published on Tuesday by the US National Academy of Sciences at the request of the Department of Defense. The report was commissioned to flag up ways in which the powerful technology might be abused, and to focus minds on how best to prepare.  Michael Imperiale, chair of the report committee, and professor of microbiology and immunology at the University of Michigan, said the review used only unclassified information and so has no assessment of which groups, if any, might be pursuing novel biological weapons. “We can’t say how likely any of these scenarios are,” he said. “But we can talk about how feasible they are.” Today, the genetic code of almost any mammalian virus can be found online and synthesised. “The technology to do this is available now,” said Imperiale. “It requires some expertise, but it’s something that’s relatively easy to do, and that is why it tops the list.” Other fairly simple procedures can be used to tweak the genes of dangerous bacteria and make them resistant to antibiotics, so that people infected with them would be untreatable. A more exotic bioweapon might come in the form of a genetically-altered microbe that colonises the gut and churns out poisons. “While that is technically more difficult, it is a concern because it may not look like anything you normally watch out for in public health,” Imperiale said.

Dirty canal water may have tainted romaine lettuce with E. coli - Contaminated irrigation canals may have helped spread the E. coli bacteria that spoiled fields of romaine lettuce and made the crunchy salad green off-limits to millions of Americans for weeks this spring, the government said on Thursday.The outbreak of E. coli disease killed five people and sickened at least 210 in 36 states, making it the largest outbreak of the killer bacterial infection in a decade.It was traced to romaine lettuce grown around Yuma, Arizona. The Centers for Disease Control and Prevention and the Food and Drug Administration cautioned people to avoid romaine lettuce unless they could be sure that it wasn’t grown in the Yuma area. The CDC and the FDA said the outbreak was over weeks ago, but the investigation into how so much lettuce got contaminated will take months. No single farm was implicated in the outbreak.The FDA and CDC said Thursday that they found one possible explanation — contaminated canal water.“To date, CDC analysis of samples taken from canal water in the region has identified the presence of E. coli O157:H7 with the same genetic fingerprint as the outbreak strain,” the FDA said.“Analysis of additional samples is still ongoing, and any new matches to the outbreak strain will be communicated publicly and with industry in the region.”  The last person to become ill got sick on June 6, the CDC said. "Some people who became sick did not report eating romaine lettuce, but had close contact with someone else who got sick from eating romaine lettuce," the CDC said.Most E. coli bacteria are harmless, but one strain, called E. coli O157:H7, can cause severe disease, including a type of kidney failure called hemolytic uremic syndrome, as well as stomach cramps, bloody diarrhea and vomiting.  E. coli thrives in the digestive tract of animals. It can get into meat at slaughterhouses and it gets into the soil, into water and onto crops from manure.

Warming drives spread of toxic algae in US, researchers say (AP) — The words blasted to cellphones around Oregon’s capital city were ominous: “Civil emergency . prepare for action.” Within half an hour, a second official alert clarified the subject wasn’t impending violence but toxins from an algae bloom, detected in Salem’s water supply.Across the U.S., reservoirs that supply drinking water and lakes used for recreation are experiencing similar events with growing frequency. The trend represents another impact of global warming and raises looming questions about the effects on human health, researchers say. “When water bodies warm up earlier and stay warmer longer ... you increase the number of incidents,” said Wayne Carmichael, a retired Wright State University professor specializing in the organisms. “That’s just logical, and it’s being borne out.”Technically called cyanobacteria, the ancient class of organisms that create the blooms are present nearly everywhere water is found but thrive in warm, still bodies like lakes and ponds. They also create a unique class of toxins, the impact of which on humans is only partly understood. Long linked to animal deaths, high doses of the toxins in humans can cause liver damage and attack the nervous system. In the largest outbreaks, hundreds have been sickened by blooms in reservoirs and lakes, and officials in some areas now routinely close water bodies used for recreation and post warnings when blooms occur.But less is known about exposure at lower doses, especially over the long term. Small studies have linked exposure to liver cancer — one toxin is classified as a carcinogen, and others have pointed to potential links to neurodegenerative disease. But definitively proving those links would require larger studies, said Carmichael, who helped the World Health Organization set the first safe exposure standards for the toxins.

Superbugs Found in Nearly 80 Percent of U.S. Supermarket Meat - The latest round of tests by federal scientists found antibiotic-resistant bacteria on nearly 80 percent of supermarket meat in 2015, according to a new analysis by the Environmental Working Group.Those bacteria were resistant to at least one of 14 antibiotics tested for by the National Antimicrobial Resistance Monitoring System, a federal public health partnership."Consumers need to know about potential contamination of the meat they eat, so they can be vigilant about food safety, especially when cooking for children, pregnant women, older adults or the immune-compromised," said Dawn Undurraga, EWG's nutritionist and author of the report.The World Health Organization calls antibiotic resistance a serious threat to global health and food security.Drug-resistant bacteria—sometimes referred to as superbugs—were detected on 79 percent of ground turkey, 71 percent of pork chops, 62 percent of ground beef, and 36 percent of chicken breasts, wings and thighs sampled in supermarkets by NARMS in 2015, the latest year for which data is available."Bacteria transfer their antibiotic resistance genes to other bacteria they come in contact with in the environment and in the gastrointestinal tract of people and animals, making it very difficult to effectively treat infections," said Dr. Gail Hansen, a public health consultant and veterinarian. Despite this serious threat, the federal government still allows meat producers to give antibiotics important for human health to healthy animals. This practice aims to compensate for stressful, crowded or unsanitary conditions on factory farms.  "When one person or group misuses antibiotics, they cause resistance to the antibiotics to spread, hurting everyone in society,"   "It's not acceptable for one group of people to profit by hurting everyone else in society."

Red Meat Allergies Caused By Tick Bites Are On The Rise - Tick bites can cause all sorts of nasty afflictions. And if you're bitten by a Lone Star tick, here's one more to add to the list: a red meat allergy. Laura Stirling, 51, a Realtor who lives in Severna Park, Md., got a tick bite while walking on a trail with her dog, Gunner, near her home. Then, three weeks later, after she ate an Italian-style pork sausage for dinner, she had a horrible reaction.  "It was the middle of the night. I woke up covered in hives," Stirling recalls.  She felt lightheaded, and she experienced stomachaches and other gastrointestinal troubles. An allergist gave her a blood test to check for an alpha-gal meat allergy. When the test came back positive, she was told to avoid all red meat, including beef, pork and lamb. Some people who develop the allergy can no longer tolerate dairy products. Stirling was surprised when she first got the news. "I thought it was completely crazy, because I've eaten dairy and red meat all my life," she says. But she quickly realized the diagnosis was spot on. Meat and dairy did trigger her symptoms. Dr. Scott Commins, an allergist and associate professor of medicine at the University of North Carolina says it is a meat allergy, but about 15 to 20 percent of patients with the alpha-gal allergy also report getting symptoms from dairy, especially high-fat dairy such as ice cream. About 10 years ago, Commins was among the first physicians to identify the allergy in patients with tick bites. Back then, there were just a few dozen known cases. That has increased dramatically. "We're confident the number is over 5,000 [cases], and that's in the U.S. alone," Commins says. There are also cases in Sweden, Germany and Australia — likely linked to other species of ticks

A Seventy-five percent Decline in Bugs? -- Big Picture Agriculture by k.m. - (video)  This story of noticeably fewer bugs on the car windshield was something I mentioned at least five years ago in one of my reports from personal observation following a visit driving across the state of Nebraska to Eastern Nebraska farm country. When I was a child, there were so many! We are well on our way to sterilizing farm country. But, not just in the U.S. From PLOS ONE:  More than 75 percent decline over 27 years in total flying insect biomass in protected areas ...we used a standardized protocol to measure total insect biomass using Malaise traps, deployed over 27 years in 63 nature protection areas in Germany (96 unique location-year combinations) to infer on the status and trend of local entomofauna. Our analysis estimates a seasonal decline of 76%, and mid-summer decline of 82% in flying insect biomass over the 27 years of study.

Why It’s Time to Curb Widespread Use of Neonicotinoid Pesticide -- Almost every field corn seed planted this year in the U.S.—approximately 90 million acres' worth—will be coated with neonicotinoid insecticides, the most widely used class of insecticides in the world. The same is true for seeds in about half of U.S. soybeans—roughly 45 million acres and nearly all cotton—about 14 million acres. In total, by my estimate, these insecticides will be used across at least 150 million acres of cropland, an area about the size the Texas. Neonicotinoids are very good at killing insects. In many cases they require only parts per billion, equivalent to a few drops of insecticide in a swimming pool of water.  In recent years, concerns have been raised about the influence of neonicotinoids on bee populations. As anapplied insect ecologist and extension specialist who works with farmers on pest control, I believe the focus on bees has obscured larger concerns. In my view, U.S. farmers are using these pesticides far more heavily than necessary, with potential negative impacts on ecosystems that are poorly understood. Unlike most insecticides, neonicotinoids are water soluble. This means that when a seedling grows from a treated seed, its roots can absorb some of the insecticide that coated the seed. This can protect the seedling for a limited time from insects. But only a small fraction of the insecticide applied to seeds is actually taken up by seedlings. For example, corn seedlings only take up about 2 percent, and it only persists in the plant for two to three weeks. The critical question is where the rest goes.Because neonicotinoids are water soluble, the leftover insecticide not taken up by plants can easily wash into nearby waterways. Neonicotinoids from seed coatings are now routinely found polluting streams and rivers around the country.Here it is likely that they are poisoning and killing off some of the aquatic insects that are vital food sources for fishes, birds and other wildlife. In the Netherlands, neonicotinoids in surface waters have been associated with widespread declines in insectivorous bird populations—a sign that concentrations of these insecticides are having strong effects on food webs.

The Farm Bill Is Chock-Full of Anti-Environment Policy Riders - The hyper-partisan farm bill, narrowly passed by the House of Representatives last week, contains dangerous handouts to the chemical industry and Big Ag. If enacted in its current state, the bill would have serious ramifications for small farmers, biodiversity, public health and America's hungry.Leaders in the Senate are promising a better bill that supports sound agricultural policies. Well, senators, here are seven lowlights in the House bill that deserve special attention. Get your red pens ready!

  • 1. Weaker Pesticide Laws - The farm bill would bar local governments from adopting pesticide laws that are stronger than the federal government's—something particularly concerning, considering the Trump administration's penchant fordelaying and rolling back public health protections.
  • 2. Contaminated Drinking Water Sources - It would repeal the Clean Water Rule, which clarifies which waterways are covered by the Clean Water Act's pollution control and cleanup programs. The rule helps protect streams that contribute to the drinking water supplies for one-third of all Americans.
  • 3. More Polluted Waterways - Companies would no longer need a permit to spray hazardous pesticides directly into waterways that Americans use for swimming, fishing, and drinking—even though this is precisely the sort of high-risk scenario the Clean Water Act is meant to prevent.
  • 4. Toxic Giveaway  - The bill would weaken restrictions on methyl bromide, a highly toxic pesticide that has caused around 1,000 documented human-poisoning incidents and contributes in a major way to the depletion of the ozone layer.
  • 5. Hungry Kids and Families - The measure unacceptably targets some of the country's most vulnerable populations, such as families dealing with food insecurity. The farm bill would restrict the available nutritional assistance under the SNAP program, commonly known as food stamps, and could cause nearly a million Americans to lose eligibility.
  • 6. Wildlife at Risk - The Endangered Species Act currently requires the U.S. Environmental Protection Agency to consult with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service before approving a chemical that could harm protected species—a rule that helped ban DDT and bring species like bald eagles back from the brink. The farm bill trashes the requirement, putting endangered species, including pollinators like the rusty patched bumblebee, at risk of deadly pesticide exposure.
  • 7. Goodbye, Small Farms The bill eliminates the Conservation Stewardship Program, which promotes whole farm stewardship and sustainability in rural communities. To add insult to injury, it would allow mining and drilling on lands in the Agricultural Conservation Easement Program, which is supposed to help preserve agricultural lands as working farms.

Vanishing Rio Grande puts pressure on San Luis Valley farmers during extreme drought — Seldom has the Rio Grande, the nation’s fourth-longest river and the one that nourishes the most drought-prone terrain, flowed so low. One headwaters tributary curling around the Great Sand Dunes National Park has dried up. The main stem of the Rio Grande probably won’t make it out of Colorado to New Mexico this summer, state water authorities calculate, let alone Texas and Mexico. The federal government has designated the San Luis Valley, like most of the land along the Rio Grande’s route to the Gulf of Mexico, as in “extreme drought.” And years of gains by farmers ordered to replenish a depleted underground aquifer, the water equivalent of a savings account, may be lost if farmers with wells turn back to pumping to survive. “It’s getting scary. We’re a way over-appropriated system,” said alfalfa grower Greg Higel as he stood at the edge of his 9,000 acres by a paltry, ankle-deep flow, shaking his head. He doesn’t have the option of drawing from a well. “We’re going to be out of water in 10 days.”The pressure hitting food growers along the Rio Grande headwaters in southern Colorado reflects a widening water squeeze that has revealed the precariousness of life across the southwestern United States, where prolonged dry times and climate change increasingly force adaptation.Exceptionally low snow in the Rocky Mountain region this year, at 37 percent of “normal” atop the Rio Grande River Basin, is playing out in water volumes less than 20 percent of the 120-year average. San Luis Valley agricultural leaders warn that the low flows may accelerate a projected loss of 100,000 acres of irrigated land, a fifth of the food production in an area dependent on farming. The low water also is hurting ecosystems, hastening the slide toward extinction of endangered species, including the southwestern willow flycatcher, western yellow-billed cuckoo and Rio Grandesilvery minnow. These troubles add to the intensifying and more publicized problems in the adjacent Colorado River Basin, where an 18-year trend toward less water strains the growing population of 40 million people who use more each year than what the river provides. Tensions flared this year when Arizona officials planned to siphon more water faster from the Lake Mead reservoir. The North American Atmospheric Administration this week issued a forecast estimating that upper Colorado River Basin flows into Lake Powell reservoir will be 39 percent of average, compelling completion of drought-response plans in seven states.

Overpumping of Central Valley groundwater has side effect: too much arsenic - The many wells that nourish the farms of the Central Valley are not only pumping so much water from the ground that the land is sinking, they’re creating a dangerous vacuum where arsenic can slip in, new research shows.  Scientists at Stanford University are warning if heavy groundwater pumping continues, water supplies for dozens of communities as well as billions of dollars of irrigated crops are at risk of contamination. The findings, published Tuesday in the journal Nature Communications, heighten concern about water quality as California’s agricultural belt faces a lingering water shortage even while much of the state has recovered from the recent drought. Both of the problems are greatest in rural parts of the southern San Joaquin Valley, often where poor, farmworker towns can least afford them. “We’ve known for a long time that after a lot of pumping, you start running out of groundwater,” said Ryan Smith, a doctoral candidate in geophysics at Stanford and lead author of the study. “We hadn’t really thought that pumping too much water would cause water quality issues.”  While arsenic is a naturally occurring element often present at low levels in groundwater, at high doses it can be toxic. Consuming too much of it, through tainted water supplies or agricultural products, has been linked to cancer, heart disease, skin lesions, and liver and kidney damage. The Stanford researchers found a direct correlation between aquifer contamination and how much the land had sunk due to overpumping. In spots where the ground had dropped more than half an inch, the risk of water being at unsafe arsenic levels doubled or even tripled. “It’s definitely a big deal,” Smith said. “This is a resource that a lot of people are relying on for their drinking water as well as their livelihoods through the economic value of the crops.”

U.S. Allows Nestlé to Keep Piping Water From Drought-Ridden Southern California -  The U.S. Forest Service offered Nestlé a three-year permit on Wednesday to keep taking millions of gallons of water from the San Bernardino National Forest in California, the Associated Press reported. The offer has certain restrictions. Nestlé, which sells bottled water under the Arrowhead brand, can continue piping from the Strawberry Creek watershed "when there is water available consistent with the forest's Land Management Plan," according to the AP, citing the Forest Service offer. The watershed is currently rated as "impaired." California has suffered from years of recurring drought. Last year's record-breaking rains in the state's north brought some relief, but large swaths of the south—where the forest is located—remain in "severe" drought, according to the latest data from the U.S. Drought Monitor. Nestlé has 60 days to decide whether to accept the terms of the offer.  The Swiss food and beverage giant has been criticized by environmentalists for depriving the region's plants and animals of water. Additonally, the company had only paid an annual $524 permit fee to siphon off as much as 162 million gallons of water a year from Strawberry Creek and sell it back to the public in plastic bottles. Furthermore, that permit expired in 1988.  In 2015, the Forest Service was sued by environmental and public interest groups, who accused Nestlé of being allowed to operate its Strawberry Creek pipeline on a permit that expired 30 years ago.

Pediatrician who exposed Flint water crisis shares her 'story of resistance' -  Dr. Mona Hanna-Attisha, a pediatrician in Flint, knew that the city had changed its water source the previous year. Instead of channeling water from the Great Lakes, residents were now drinking water from the nearby Flint River. She had been aware of some problems with bacteria after the switch, but she thought everything had been cleared up.  Her friend warned otherwise: "She said, 'Mona, the water isn't being treated properly. It's missing something called corrosion control. ... Without that corrosion control, there is going to be lead,' " Hanna-Attisha remembers.  The possibility that the city's drinking water had been tainted by lead raised alarms in Hanna-Attisha; exposure to lead can result in long-term cognitive and behavioral problems, especially in children.  As Hanna-Attisha began reviewing her patients' medical record, she noticed that the percentage of children with elevated lead levels had increased after the water switch. But when she shared her data at a hospital press conference, government officials tried to discredit her. "The state said that I was an unfortunate researcher, that I was causing near-hysteria, that I was splicing and dicing numbers," Hanna-Attisha says. "It's very difficult when you are presenting science and facts and numbers to have the state say that you are wrong." But Hanna-Attisha refused to give up. Instead, she spearheaded efforts to publicize and address the water crisis in Flint. She writes about her experiences in the book What the Eyes Don't See.  "This is a story of resistance, of activism, of citizen action, of waking up and opening your eyes and making a difference in our community," she says. "I wrote this book to share the terrible lessons that happened in Flint, but more importantly, I wrote this book to share the incredible work that we did, hand in hand with our community, to make our community care about our children."

EPA’s Pruitt Wants to Limit His Own Agency’s Authority —The chief of the Environmental Protection Agency is trying to limit one of the agency’s most powerful tools to manage or block mining, real-estate and other developments by removing the effective veto power it has over permits to dump waste into waterways. The move, described in a memo reviewed by The Wall Street Journal, would limit the agency’s power to pre-emptively or retroactively block U.S. Army Corps of Engineers approval of the waste dumping, hindering or potentially killing large development projects. It is the latest attempt at a regulatory rollback from EPA Administrator Scott Pruitt, who has pledged to ease environmental restrictions on businesses. He wrote in the memo to some senior staff, including regional administrators, that the powers he intends to curb have a chilling effect on economic development. “I am concerned that the mere potential of EPA’s use of its… authority before or after the permitting process could influence investment decisions and chill economic growth by short-circuiting the permitting process,” he wrote in a four-page memo he signed Tuesday. Mr. Pruitt is ordering EPA’s Office of Water to relinquish authority the agency has had for about 40 years under the Clean Water Act of 1972 to prohibit some approvals by the Corps even before a developer formally applies for them, or to throw them out years after they were granted—even after a project is complete and operational. The Corps has permitting authority when developers want to dump excavated land and waste into waterways, most commonly sought for mines and real-estate development, experts said. But Congress granted EPA the review authority over that permitting and power to reject permits approved by the Corps. While advocates see it as a fail-safe the agency can leverage to encourage developers into more environmentally friendly practices, Mr. Pruitt thinks the power is so broad it is vulnerable to abuse, according to a person familiar with his thinking. 

Nigeria herders, farmers conflict highlights squeeze on arable land (Thomson Reuters Foundation) - The violent conflicts between farmers and semi-nomadic herders in Nigeria that left dozens of people dead over the weekend illustrate the intensifying pressure and competition for arable land in Africa, experts said on Monday. Fertile land that is dwindling due to climate change combined with a population boom are fueling conflicts across the continent, they said. The weekend deaths of at least 86 people in Nigeria's central Plateau state are seen as part of an escalation of conflicts that have raged for years, often over land. Nigeria has one of the world's fastest growing populations, rapidly approaching 200 million and expected to be bigger than the United States by 2050, according to United Nations estimates. With the Boko Haram jihadists' insurgency in the last decade in Nigeria's central and northern states, herders have been pushed south to populated farming areas, said Rinaldo Depagne, West Africa project director for the International Crisis Group (ICG). At least 2,000 people died annually in Nigeria's Middle Belt due to communal land conflicts between cattle herders and farmers between 2011 and 2016, the ICG estimates. The weekend clashes are "the extension of the violence," Depagne told Thomson Reuters Foundation. Africa's arable land is being taken up by infrastructure, farmers and multinational agricultural firms seeking to produce food for a growing population, depriving herders of grazing reserves, Depagne said. "More people to feed means more agricultural settlement and less available land and water for herders. All of this tend to trigger more and more disputes," he said. 

Daughters are sold for cows and goats in South Sudan and Kenya as war and climate change plague East Africa | South China Morning Post: Child marriage is increasing in parts of war-torn South Sudan and drought-hit Kenya as parents swap their daughters for cows and goats to survive, campaigners said on Wednesday. Africa accounts for nine out of the 10 countries with the highest rates of underage unions globally, advocacy group Girls Not Brides said, with girls marrying due to tradition, family ties, poverty and the stigma of pregnancy out of wedlock. But long-running wars and climate change are now leading factors too, activists said, highlighting a rise in marriage among girls under the age of 18 in South Sudan to 52 per cent from 40 per cent in 2010, according to United Nations data. “The conflicts just worsened the situation,” said Dorcas Acen, a gender protection expert at the charity Care International in South Sudan. “Majority of the parents wish to give up their girls and marry them off because of the economic hardship,” she said. “They are looking at how to reduce the number of mouths they need to feed.” Chinese peacekeepers in tense stand-off with armed militants in South Sudan Despite a global decline in child marriages, there are still some 12 million underage girls married every year, often with devastating consequences for their health and education. South Sudan has been gripped by civil war since 2013, pitting forces loyal to President Salva Kiir against rebels linked to former Vice-President Riek Machar, and millions are going hungry amid rampant inflation and declining oil output. As the conflict drags on and hard currency loses its lustre, parents can now receive up to 300 cows as a dowry when their young girl weds, up from about 30 cows during peacetime, Acen said. 

Fires to clear land lead to near-record loss of tree cover in 2017, study shows - Burning of forests to make way for farms from the Amazon to the Congo basin caused a loss of global tree cover amounting to an area almost the size of Italy in 2017, an independent forest monitoring network said on Wednesday.Tree cover loss, mostly in the tropics, totalled 294,000 square kilometres last year, just short of a record 297,000 sq kms in 2016, according to Global Forest Watch, run by the US-based World Resources Institute (WRI). "Tropical forests were lost at a rate equivalent to 40 football fields per minute" in 2017, Frances Seymour, of the WRI, told a news conference before a June 27-28 meeting of 500 experts in Oslo on slowing deforestation. Brazil, Democratic Republic of Congo, Indonesia, Madagascar and Malaysia suffered the biggest losses in 2017, it said, based on satellite data. The study omits, however, how far tree plantings or new growth offset the losses. "Vast areas continue to be cleared for soy, beef, palm oil and other globally traded commodities. Much of this clearing is illegal," Seymour said. "We are trying to put out a housefire with a teaspoon," she said of global efforts to protect forests.   Brazil alone lost 45,000 sq km of tree cover, down 16 per cent from a record in 2016. Fires raged in the southern Amazon region of Brazil, many of them set to clear land for agriculture, the study said. Unlike most of the world's tropical forests, Indonesia saw a drop in tree cover loss in 2017, including a 60 per cent decline in primary forest loss, the report said. Primary forest loss in protected peat areas went down by 88 per cent between 2016 and 2017, reaching the lowest level ever recorded.  It said the decrease was likely due to the government's efforts such as its blanket ban on the cultivation of carbon-rich peatlands across the country in 2016 and that last year (2017). In addition, last year was not an El Nino year, resulting in wetter conditions and fewer fires compared to past years.

Near-record tree cover losses in 2017 strip area as big as Italy (Reuters) - The world lost tree cover the size of Italy in 2017 as forests were cleared using fire to make way for farms from the Amazon to the Congo Basin, an independent forest monitoring network said on Wednesday. Tree cover loss, mostly in the tropics, totalled 294,000 square kilometers (113,000 square miles) last year, just short of a record 297,000 sq kms in 2016, according to Global Forest Watch, run by the U.S.-based World Resources Institute (WRI). “Tropical forests were lost at a rate equivalent to 40 football (soccer) fields per minute” in 2017, Frances Seymour, of the WRI, told a news conference at a June 27-28 Oslo Tropical Forest Forum of 500 experts. Norwegian Environment Minister Ola Elvestuen said the pace of forest losses was “catastrophic” and threatened efforts to slow global warming. Trees soak up carbon dioxide from the air as they grow and release it when they burn or rot. “Forest destruction is driving climate change,” he said. Norway has invested about $2.8 billion to safeguard tropical forests in the past decade - more than any other rich nation. Brazil, Democratic Republic of Congo, Indonesia, Madagascar and Malaysia suffered the biggest losses in 2017, Global Forest Watch said, based on satellite data back to 2001. The study omits, however, how far tree plantings or new growth offset the losses. “Vast areas continue to be cleared for soy, beef, palm oil and other globally traded commodities. Much of this clearing is illegal,” Seymour said. Brazil alone lost 45,000 sq km of tree cover, down 16 percent from a record in 2016. Fires raged in the southern Amazon region of Brazil. Justin Adams, of the the Nature Conservancy environmental group, said only three percent of public finance for slowing climate change went to natural solutions like forests.

FWS Proposal 'Dooms' Wild Population of Endangered Red Wolves -- In April, The U.S. Fish and Wildlife Service (FWS) released a report saying that the only remaining wild population of red wolves, in eastern North Carolina, could go extinct within eight years. On Wednesday, the FWS published a proposal that seems likely to speed that process along. The proposal would limit protected territory to public lands and remove restrictions on killing or harming wolves on private lands. "We're very disappointed in this plan," Southern Environmental Law Center attorney Ramona McGee told The Washington Post. "It's a plan that effectively dooms the red wolf in the wild. It's not enough to sustain a population, and if they wander off that [refuge] they can be shot and killed the moment they cross that boundary." The FWS estimates there are approximately 35 red wolves left in the wild, a dozen of which live in the public lands that would be their only protected habitat under the new proposal: the Alligator River National Wildlife Refuge and the Dare County Bombing Range.

May 2018: Earth's 4th Warmest May on Record - May 2018 was the planet's fourth-warmest May since record keeping began in 1880, said NOAA's National Centers for Environmental Information (NCEI) on Monday. NASA also rated May 2018 as the fourth-warmest May on record. NOAA found that the only warmer May months were 2016, 2015, and 2017, in that order, while NASA found the warmer Mays to be 2016, 2017, and 2014. Occasional differences in rankings between NASA and NOAA arise mostly due to how they handle data-sparse regions such as the Arctic, where few surface weather stations exist. The two agencies agreed that the planet's four warmest Mays in a century-plus of recordkeeping have all occurred in the past five years.  Global ocean temperatures during May 2018 were the fourth warmest on record, and global land temperatures were the seventh warmest on record, according to NOAA. Global satellite-measured temperatures in May 2018 for the lowest 8 km of the atmosphere were the ninth or seventh warmest in the 40-year record, according to the University of Alabama Huntsville (UAH) and RSS, respectively.  An El Niño Watch is now in effect as sea surface temperatures (SSTs) in the eastern tropical Pacific Ocean continue to rise, said NOAA’s Climate Prediction Center (CPC) in its June 14 monthly advisory. Over the past week, sea surface temperatures (SSTs) in the benchmark Niño 3.4 region (in the equatorial Pacific) varied from near average to about 0.3°C above average, continuing this year's gradual warm-up from cool La Niña conditions that ended in April.

Pacific Hints at El Nino -ENSO-neutral is favored through Northern Hemisphere summer 2018, with the chance for El Nino increasing to 50% during fall, and about 65% during winter 2018-19. However, computer forecast models now point to a slightly stronger and faster-forming El Nino than the models were indicating during May. The official El Nino ocean temperature threshold is 0.5 degree Celsius above average -- and that value is now showing as a possible development by late summer-early fall -- the August/September/October period, as opposed to later in the fall season, October/November/December.The sea surface temperature is not the only parameter showing a tendency toward El Nino features. Low-level winds in the Pacific equator region are showing a stronger west-to-east tendency. That's also an El Nino characteristic -- and this ties in with recent values of the Australia Southern Oscillation Index (SOI) which have been running at minus 10 or lower -- another indicator of El Nino conditions forming. These trends are important for a possible positive impact on crops. El Nino-related wind patterns make it difficult to maintain a standing, stagnant, and crop-threatening high pressure cell over the central U.S.

A city in Oman just posted the world’s hottest low temperature ever recorded: 109 degrees  - Over a period of 24 hours, the temperature in the coastal city of Quriyat, Oman, never dropped below 108.7 degrees (42.6 Celsius) Tuesday, most likely the highest minimum temperature ever observed on Earth.  For a location to remain no lower than 109 degrees around the clock is mind-boggling. In many locations, a temperature of 109 degrees even during the heat of the afternoon would be unprecedented. For example, in nearly  150 years of weather records, Washington, D.C.’s high temperature has never exceeded 106 degrees. Quriyat’s suffocating low temperature, first reported by Jeff Masters at Weather Underground, breaks the world’s previous hottest minimum temperature of 107.4 degrees (41.9 Celsius), also set in Oman, on June 27, 2011.  Masters received word of the exceptional temperature from weather records expert Maximiliano Herrera. Incredibly, the temperature in Quriyat, Masters said, remained above 107.4 degrees (41.9 Celsius) for 51 straight hours. Its blistering afternoon high temperature of 121.6 degrees (49.8 Celsius) Tuesday was just about two degrees shy of Oman’s all-time heat record and its highest June temperature, Masters reported. Quriyat, sometimes also spelled Qurayyat, is a small fishing village in northeast Oman adjacent to the Sea of Oman that spills into the Arabian Sea. The city’s population is just over 50,000, and it is about an hour southeast of Muscat, Oman’s capital. Tuesday’s record-breaking heat resulted from a strong high-altitude, high-pressure system or heat dome anchored over the region, which pumped air temperatures up to 15 degrees above normal. Masters said sea surface temperatures in the adjacent waters were about 90 degrees, keeping air temperatures elevated even through the night and offering no reprieve from the oppressive conditions.

Ocean science agency chief floats removing ‘climate’ from mission statement and focusing on trade deficit - A recent presentation by the acting head of the United States’ top weather and oceans agency suggested removing the study of “climate” from its official mission statement, focusing the agency’s work instead on economic goals and “homeland and national security.” Critics say this would upend the mission of the $5.9 billion National Oceanic and Atmospheric Administration. But the administration disputes that interpretation, saying the presentation did not intend to create a change of direction at a vast agency that tracks hurricanes and atmospheric carbon dioxide, operates weather satellites, manages marine reserves and protects endangered ocean species, among other functions. NOAA’s mission, the agency says, is “to understand and predict changes in climate, weather, oceans, and coasts, to share that knowledge and information with others, and to conserve and manage coastal and marine ecosystems and resources.” But in a presentation at a Commerce Department “Vision Setting Summit” this month, Rear Adm. Timothy Gallaudet, the agency’s acting administrator, suggested a change to that mission statement, as well as a new emphasis on tripling the size of the U.S. aquaculture industry within a decade and moving to “reduce the seafood trade deficit.” The new NOAA mission, the presentation said, would be “to observe, understand and predict atmospheric and ocean conditions, to share that knowledge and information with others, and to protect lives and property, empower the economy, and support homeland and national security.”

Gillnet Fishing Blamed for Killing Up to 100 Baby Hammerhead Sharks in Honolulu - Up to 100 hammerhead shark pups were found dead Tuesday morning near Keehi Lagoon in Honolulu. Experts suggested that gillnet fishing could be the culprit.Authorities at the state's Division of Conservation and Resources Enforcement have opened an investigation after the baby sharks were discovered by the La Mariana Sailing Club, according to local media. The Keehi Lagoon is known as a breeding ground for hammerhead sharks, but state officials said it is not natural for shark pups to be found ashore in such large numbers, the Star Advertiser reported. Andrew Rossiter, director of the Waikiki Aquarium, told Honolulu's KHON that the young sharks were probably caught in a gillnet and then dumped on land by a fisherman."To breathe they have to keep moving, so once they're in the net for even two to three minutes, they're unable to breathe and they suffocate," he explained.Rossiter said the state should have tougher laws to prevent such killings. "When it's the pupping season and it's a pupping area, then maybe they should restrict or ban the use of gillnets just for a couple of weeks to give them a chance," he said.

Time to Get Real. There Aren’t Plenty of Fish in the Sea and It’s Our Fault - It seems that we humans, as land-dwellers, have little appreciation of our world’s vast oceans. The oceans provide us with 70 percent of the  world’s oxygen and absorb 30 percent of the greenhouse gases that we release into the atmosphere. But, despite this amazingness, we feel free to take as many fish as we want from those mysterious depths, and fill them with untold amounts of chemicals, plastic, and other trash. Fears that we are taking far too much from our oceans – without making adequate efforts to replace what has been lost – have been building for years. After WWII, the development of sonar technology began to take off and with it, so did the methods used to locate and capture large swaths of fish for consumption. The proliferance of large-scale commercial fishing operations has pushed many species of fish to the brink of extinction, with some conservation experts predicting that our oceans could be empty by the year 2048 if fishing continues at its current rate. Methods such as long line fishing, bottom trawling, and the use of purse seine nets often devastate marine ecosystems by removing far more fish from an area than was intended. Bycatch – a term used to describe untargeted marine animals who end up in enormous commercial fishing nets – is also a serious problem that threatens species such as turtles, dolphins, sharks and manta rays. Using incredibly advanced and aggressive technology to meet demands for seafood, we’re waging a war on our oceans. A new study published in the Nature Communications Journal has attempted to set about accurately measuring the impact that overfishing has had on marine animals. While acknowledging the importance of fish to rural people in developing countries – many of whom rely on seafood for sustenance – the authors Daniel Pauly and Drik Zeller added that “the growing popularity of fish in countries with developed or rapidly developing economies creates a demand that cannot be met by fish stocks in their own waters (for example, the EU, the USA, China, and Japan). These markets are increasingly supplied by fish imported from developing countries, or caught in the waters of developing countries by various distant-water fleets.”

Five Pacific islands lost to rising seas as climate change hits  -- Five tiny Pacific islands have disappeared due to rising seas and erosion, a discovery thought to be the first scientific confirmation of the impact of climate change on coastlines in the Pacific, according to Australian researchers. The submerged islands were part of the Solomon Islands, an archipelago that over the last two decades has seen annual sea levels rise as much as 10mm (0.4in), according to research published in the May issue of the online journal Environmental Research Letters.The missing islands, ranging in size from 1 to 5 hectares (2.5-12.4 acres) were not inhabited by humans.But six other islands had large swaths of land washed into the sea and on two of those, entire villages were destroyed and people forced to relocate, the researchers found. Many of the Solomon Islands are low-lying and prone to flooding from rising seas. Photograph: BBC NHU/Jon Clay/BBC NHU One was Nuatambu island, home to 25 families, which has lost 11 houses and half its inhabitable area since 2011, the research said.The study is the first that scientifically “confirms the numerous anecdotal accounts from across the Pacific of the dramatic impacts of climate change on coastlines and people,” the researchers wrote in a separate commentary on an academic website. The scientists used aerial and satellite images dating back to 1947 of 33 islands, as well as traditional knowledge and radiocarbon dating of trees for their findings.

Sea Level Rise Will Threaten Thousands of California Homes - Sea-level rise threatens thousands of homes in California by 2035, especially in cities near San Francisco and Los Angeles, according to an analysis released today.Chronic flooding by that year imperils nearly 5,000 homes in the Silicon Valley south of San Francisco, a region that’s home to affluent homeowners and an international airport. In the suburbs north of San Francisco, roughly 4,000 homes are at risk, according to the study from the Union of Concerned Scientists.A decade later, if sea levels rise faster due to accelerated melting of ice sheets, roughly 13,000 homes valued at about $8.6 billion are in danger in the nine counties surrounding the San Francisco Bay Area.The findings are part of a national report that analyzed coastal regions around the county. It identified ZIP codes most at risk, tallied the number of homes threatened, and calculated the value of those homes and the amount in property taxes that could be lost.“We know that sea levels are rising and putting our coasts at risk,” said Kristina Dahl, senior climate scientist at UCS. “The near-term threat to our properties—our homes and businesses—is really flying under the radar. And that’s dangerous.”Researchers looked at areas that have flooded on average 26 times per year. They studied 20 years of data for coastal tide gauges and determined the “chronic inundation” water level. UCS then added sea-level rise projections to existing water levels and developed a chronic inundation point for the time frames of 2035, 2060 and 2099. The analysis also used digital elevation models from NOAA to estimate the extent of flooding. Researchers then applied data from the real estate site Zillow to calculate the number of homes at risk and their values.

Southern California's coastal communities could lose 130 feet of cliffs this century as sea levels rise -  It’s not just beaches and sand that are disappearing as the ocean pushes inland. Sea level rise is also eating away at California’s coastal cliffs. The question is by how much, as Californians have heavily developed and continue to build along the edge of the Pacific. Scientists are now one step closer to projecting how these bluffs will fare this century — and the outlook is sobering. In Southern California, cliffs could recede more than 130 feet by the year 2100 if the sea keeps rising, according to a new study led by the U.S. Geological Survey. ”It’s a pretty big number,” said Pat Limber, a coastal geomorphologist and lead author of the study. “Hopefully this model will give coastal managers a broad-scale picture of how the cliffs might respond to sea level rise, so that they can start planning for the future.”   The consequences of this erosion could be severe on major roads along the Palos Verdes Peninsula. In Malibu and other coastal cities, blocks of homes, parks and public facilities could be lost to the sea under such projections. 

Florida has more to lose with sea rise than anywhere else in the U.S., new study says - Florida stands to lose more homes — and real estate value — to sea level rise damage than any other state in the nation this century, according to a new study. By 2045, nearly 64,000 homes in Florida face flooding every other day. Half of those are in South Florida.If you buy a house now, before your new mortgage is paid you might have to regularly do the rolled-up-pants, shoes-in-hand commute that has become an enduring image of sea rise.These numbers, released in a report compiled by the Union of Concerned Scientists, used housing information from Zillow and a flood model from the National Oceanic and Atmospheric Administration that predicts 6 1/2 feet of sea rise by the end of the century. Former studies of Zillow data showed Florida has hundreds of thousands of homes worth billions of dollars with the risk of being permanently drenched with six feet of sea rise.This report, said one of its authors, Rachel Cleetus, talks about “a looming threat flying completely under the radar” — regular flooding. “Well before homes go under water we’ll start to see chronic inundation that affects home value,” she said.

Underwater: Rising Seas, Chronic Floods, and the Implications for US Coastal Real Estate (2018), Union of Concerned Scientists -- Sea levels are rising. Tides are inching higher. High-tide floods are becoming more frequent and reaching farther inland. And hundreds of US coastal communities will soon face chronic, disruptive flooding that directly affects people's homes, lives, and properties.Yet property values in most coastal real estate markets do not currently reflect this risk. And most homeowners, communities, and investors are not aware of the financial losses they may soon face.This analysis looks at what's at risk for US coastal real estate from sea level rise—and the challenges and choices we face now and in the decades to come.

2018 Arctic sea ice melt season just got a big headstart - At May’s mid-point, freakishly warm weather brewed above the northern ocean. But in the end, May 2018 staggered over the finish line in second place, and far from a photo finish at 12.2 million square kilometers (4.7 million square miles). That’s 310,000 square kilometers (120,000 square miles) greater than the all time May record set in 2016.Yet the fact that so much debate swirled around May this year is news enough, as it’s often a month overlooked by the sea ice community and by the media, with May falling between March’s winter maximum sea ice extent and September’s summer minimum. But attention is shifting as global warming escalates. “Now, what’s happening in winter and spring is starting to become very, very interesting,” says Mark Serreze, director of the National Snow and Ice Data Center which tracks and analyzes sea ice. September, he says, is no longer the only hot topic: “We’re seeing these big heatwaves over the North Pole in the middle of winter. Wow. That’s not supposed to happen and yet [it has] the last four winters.”These recent winter headstarts, along with a growing understanding of how the melt season operates, means that the months of March, April, and May (which qualify as the start of the melt season), are no longer being pushed to the sidelines, but are being seen as increasingly important in forecasting how things could shake out come September.And clearly, summer ice loss matters in a big way. Scientists monitor Arctic sea ice melt not only because it’s a key local and regional climate indicator, but because less sea ice and more open water in summer appears to impact the entire global climate system. Ice loss could even be destablizing the planetary climate by causing jet stream blocking (acting like a traffic jam in the sky, according to new findings), which can result in extreme weather around the globe. It’s likely that the Arctic Ocean could regularly experience near ice-free summers within the next few decades. So scientists are keen to document when exactly that tipping point will occur, as well as the conditions leading to it.

A huge stretch of the Arctic Ocean is rapidly turning into the Atlantic. That’s not a good sign - Scientists studying one of the fastest-warming regions of the global ocean say changes in this region are so sudden and vast that in effect, it will soon be another limb of the Atlantic Ocean, rather than a characteristically icy Arctic sea. The northern Barents Sea, to the north of Scandinavia and east of the remote archipelago of Svalbard, has warmed extremely rapidly — by 2.7 degrees Fahrenheit just since the year 2000 — standing out even in the fastest-warming part of the globe, the Arctic.  Sigrid Lind, a researcher at the Institute of Marine Research in Tromso, Norway and her colleagues have shown, based on temperature and salinity measurements taken on summer research cruises, that this warming is being accompanied by a stark change of character, as the Atlantic is in effect taking over the region and converting it into a very different entity. Their results were published this week in Nature Climate Change by Lind and two colleagues at Norway’s Institute of Marine Research and University of Bergen. They underscore that the divide between the Atlantic and the Arctic isn’t just a geographical one — it’s physical in nature.While the Southern Barents is milder, the northern Barents has — until recently — had all the characteristics of an Arctic sea. It featured floating sea ice that, when it melted, helped to provide an icy, freshwater cap atop the ocean. This kept internal heat from escaping to the atmosphere, and also kept the ocean “stratified” — cold, fresher waters in the upper part of the ocean and warmer, Atlantic-originating waters down below.This situation, which obtains in much of the Arctic, was reinforced by the fact that freshwater is less dense than salt water, preserving stratification. But that’s changing. Less sea ice is floating down through the northern Barents Sea from higher Arctic latitudes, the research shows.

Rising bedrock below West Antarctica could delay catastrophic ice sheet collapse - Science - The news last week out of Antarctica was sobering. According to a consensus estimate published in Nature, the continent has lost 3 trillion tons of ice in the past 25 years—most of it from the vulnerable West Antarctic Ice Sheet, where the loss rate tripled over the study period. Although West Antarctica contributed just 6 millimeters of sea level rise in that time, scientists say ice-sheet collapse there could raise global sea levels by 3 meters in the coming centuries. The accelerating loss could be a sign that the catastrophe has already been set in motion. But a study in this week's Science offers a glimmer of hope, documenting a process that could slow the collapse. As ice melts and the load on the crust lightens, the bedrock beneath West Antarctica is rising rapidly. In places it could rise 8 meters over the coming century—potentially protecting the ice from the warm seawater that is melting it from below. " The West Antarctic Ice Sheet is vulnerable because its bed lies far below sea level, forming a giant basin that slopes inland to a depth of more than a kilometer. Glaciers—"rivers" of ice—shed ice into the ocean. For the moment, some are snagged on ridges in the sea floor, slowing their flow. But as the warming ocean erodes them from below, they could retreat behind the ridges. Seawater would then pour into the basin, lifting ice off the bedrock and melting it in a runaway process. "It's a very unstable situation," says Natalya Gomez, a geophysicist at McGill University in Montreal, Canada. The bowl under West Antarctica was created during the last ice age, when the weight of the ice, much thicker at the time, pressed down on the bedrock. But the rock was ready to spring back. "The earth acts like a memory foam mattress," says Valentina Barletta, a geophysicist at the Technical University of Denmark in Kongens Lyngby who led the new study. Some rebound occurs immediately, as soon as ice melts. But some takes place more slowly, as the gummy rock of the deeper mantle gradually readjusts to the lighter burden. Gomez models this process and had found that rising bedrock might slow ice retreat, by raising the bowl and the ridges that stabilize the glaciers. But just how much help crustal rebound can offer depends on how fast it takes place, which reflects how hot and gooey the underlying mantle is.

Scientists Fear 'Slow Earthquakes' Will Lead To The Next Big California Quake -- The next big California earthquake has concerned scientists and California residents for decades. Now, recent research points to the regular occurrence of "slow earthquakes" as increasing the risk of a magnitude 7 or greater earthquake.The San Andreas fault is one of the most closely watched and feared faults in the country due to its history of creating high powered earthquakes and proximity to millions of people.A recently published study in Nature Geoscience outlines how slow earthquakes influence the likelihood of higher magnitude earthquakes in California. Geologists and geophysicists have known about the slow earthquakes occurring along the San Andreas fault, however, the recent study shines new light on how the fault moves during slow earthquakes. Previously, it was thought that slow earthquakes involve the slow and consistent movement of a fault like the San Andreas. The conclusion was that these smaller movements steadily released built up stress in a fault system and reduced the likelihood of a larger earthquake. However, the recent research finds that slow earthquakes involve not a slow and steady movement but sharp and sporadic movement along the fault (albeit at low magnitudes).The research team used historical synthetic-aperture radar records from 2003 to 2010 to reconstruct three-dimensional images of the San Andreas fault. After piecing together the record, the research team found the movement along the San Andreas fault was more akin to a stick-slip periodic movement as opposed to the slow and steady motion. In all, the team found that movement along the fault varied from about 10 centimeters per year (4 inches) to zero. The key difference in these two types of slow earthquake movements along the San Andreas fault is their ability to either reduce or increase stress along the fault. Slow and steady movement is thought to dissipate stress, however, it does not appear the movement is actually slow and steady. Therefore, the periodic and jerky movement along the fault acts to compress "stuck" areas along the fault, increasing stress and the likelihood of a large earthquake.

Mysterious emissions of banned greenhouse gas traced to Chinese factories -  Chinese factories are illegally producing chemicals that damage the ozone layer and the climate.  That was revealed in a survey of manufacturers carried out by the Environmental Investigation Agency (EIA) and corroborated by the New York Times on Monday. The EIA identified eight companies in four provinces that were using CFC-11 in the production of plastic foams, which are most commonly used for building insulation. It is one of a group of chemicals banned under the 1987 Montreal Protocol to protect the ozone layer.“These and other well placed sources in the Chinese chemical industry strongly suggest that this is a wider practice,” said the agency’s Avipsa Mahapatra.The green watchdog estimates up to 70% of Chinese rigid foam production uses CFC-11, which has a global warming effect as well as depleting ozone. By the EIA’s calculation, this illegal activity has a climate impact equivalent to 16-20 coal power stations. Its findings go a long way to explain mysteriously high levels of the pollutant detected by air monitors, in data published in Nature last month. A factory owner in Xingfu, Shandong province, told the NYT he only found out CFC-11 was bad for the atmosphere last year – and it was cheaper than the substitutes. As he spoke to the reporter, Zhang Wenbo was ordered by officials to close his refrigerator plant, in a crackdown across the town. Evidence of other illegal production hotspots has been passed to the Chinese authorities. Production of chlorofluorocarbons, which were also used as coolants, was fully banned in developed countries from 1996. The developing world was given until 2010 to phase out usage, with financial support to switch to substitutes.

The End Of Growth - Chris Martenson  -- More and more, I hear that folks are feeling frustrated and betrayed, combined with a sense of loss and despair. I feel this way, too.As I've written recently, I observe this is due more than anything else to a widespread demoralization society is suffering from. Certainly the statistics reflect this. Suicides in the US are up 30% since the turn of the millennium, obesity is at epidemic proportions, mortality rates are rising especially among white working-class Americans, and our national opioid addiction is now the “epidemic of epidemics.”To these we can also add falling birthrates and the truly startling shift towards a younger age for the onset of depression; declining from age 30 now to age…14(!) When an organism gives up on self-care, breeding, or its will to live, it's suffering from a tremendous amount of strain that is cutting it off from its own life force.  A dispirited lion wasting away in a cage has a lot in common with the average American today.At a deep level, what ails us is not a host of unrelated, intractable problems, but the fact that our model of pursuing eternal economic growth simply isn't working anymore. It doesn’t work for the planet’s increasingly strained ecosystems, nor does it work for the bottom 99% of folks in society (i.e., the non-elites).The various health epidemics noted above are merely symptoms of a larger acute spiritual crisis.But viewed at a certain angle, this may be a good sign. Why? Because in order to shift from one model to another, the old one first has to become unbearable.And, as the data cited earlier is making increasingly clear, our addiction to growth is killing us and the ecosystems we depend on. The loss of life on this planet, the diminishment of once complex ecosystems into barren, simplistic shadows of their former selves, is a source of very real and profound sadness.  It is my belief that the existential dread many of us feel is our registering this loss of life -- consciously or not -- as Nature retracts her abundance.Who hear still hears crickets at night? With the unfolding insect apocalypse, fewer and fewer can make that claim. The point of all this is that the one and only way out of this box in which we find ourselves is by adopting a better model for living. And to do that, we first need to re-write the narrative that guides us.

Judge Dismisses Climate Suits Targeting Big Oil Companies -- A federal judge on Monday dismissed lawsuits by the cities of San Francisco and Oakland alleging that five of the world’s largest oil companies should pay to protect the cities’ residents from the impacts of climate change. U.S. District Judge William Alsup granted a motion by the companies— BP PLC, Royal Dutch Shell PLC, Exxon Mobil Corp. , ConocoPhillips and Chevron Corp. —to dismiss the suits, ruling that while global warming was a real threat, it must be fixed “by our political branches.” “The dangers raised in the complaints are very real,” he wrote. “But those dangers are worldwide. Their causes are worldwide. The benefits of fossil fuels are worldwide. The problem deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case.” The ruling is a blow to an emerging legal campaign by cities and municipalities that are trying to argue that oil and gas companies created a public nuisance by producing fossil fuels they knew would result in harmful emissions. New York City and several other local governments in California, Washington and Colorado have also sued on similar grounds. “Reliable, affordable energy is not a public nuisance but a public necessity,” said R. Hewitt Pate, Chevron’s general counsel. “Using lawsuits to vilify the men and women who provide the energy we all need is neither honest nor constructive.” Oakland City Attorney Barbara Parker said the city was “disappointed” by the ruling and is weighing an appeal. “These defendants must be held accountable for misleading the American people” about climate change, said Ms. Parker. A spokesman for San Francisco, John Coté, said the city would decide on its “next steps” shortly. The suits by San Francisco and Oakland sought to force the companies to pay for infrastructure, such as sea walls, that they expect to need due to rising sea levels and other changes linked to a changing climate. The cities didn’t specify how much they were seeking but said the costs could run into the billions of dollars.

We still have no idea how to eliminate more than a quarter of energy emissions MIT Technology Review - Climate discussions typically center on the need to replace fossil-fuel power plants with technologies like wind turbines and solar panels.  But a new paper in Science offers a stark reminder that there are still huge parts of the global energy system where we simply don’t have affordable ways of halting greenhouse-gas emissions. Air travel, long-distance transportation and shipping, steel and cement manufacturing, and remaining parts of the power sector account for 27 percent of global emissions from the energy and industrial sectors. And the authors say we need much more research, innovation, and strategic coordination to clean up these sources. “If we’re really ambitious about meeting our climate targets, we need to be tackling these hard sectors now,” says the paper’s lead author, Steven Davis, an earth system scientist at the University of California, Irvine.  The declining cost and improving performance of lithium-ion batteries and hydrogen fuel cells has made it possible to begin cleaning up big portions of the transportation industry, including cars, light-duty trucks, and short-haul semis.  But batteries and fuel cells are still too heavy and expensive for long-distance hauling and shipping, as well as the vast majority of air travel. For these, the authors conclude, liquid fuels are likely to remain the preferred energy source, given the amount of energy that can be packed into a given weight and volume. The researchers survey a range of solutions, including hydrogen or ammonia fuels, advanced biofuels, synthetic fuels, and solar fuels produced using what are known as artificial leaves (see “The race to invent the artificial leaf”). But none of these can be generated anywhere near as inexpensively as a standard gallon of gasoline or diesel.

GOP chairman: Chinese may use US environmental laws to undermine military - GOP: House Natural Resources Committee Chairman Rob Bishop (R-Utah) said Monday that China’s government may be using United States environmental laws to thwart the military. Bishop, speaking Monday on Hill.TV’s “Rising,” said potential Chinese actions to undermine the military are one of the main focuses of a series of investigations his panel recently launched into U.S.-based environmental groups. “There is obviously a great deal of concerns,” Bishop told host Buck Sexton, adding that some of the green groups “are claiming that they’re suing the government once every 10 days.” “Last time I was in the Pacific in some of our territories, we had a briefing from some of the military that simply said the Chinese know our environmental laws and they use them against us,” Bishop continued. “We’re trying to explore how deep that actually goes, whether it’s something done on purpose or something just by serendipity. But we’re trying to see where that takes us,” he said. Bishop and Rep. Bruce Westerman (R-Ark.) launched the project earlier this month with a letter demanding certain documents and answers from the Natural Resources Defense Council (NRDC), the dominant U.S. group in environmental lobbying. For both NRDC and the Center for Biological Diversity, Bishop and Westerman say they’re investigating suspicions that the groups’ activities amount to lobbying on behalf of foreign governments. Such lobbying without proper Justice Department disclosure is a federal crime.

Mining set to begin in land Trump removed from national monument | TheHill: A Canadian company is looking to begin mining in land that was previously protected as part of the Grand Staircase-Escalante National Monument in Utah. President Clinton established the monument in 1996, but in December President cut the 1.87 million-acre site nearly in half, removing many of the federal protections. Glacier Lake Resources Inc., a copper and silver mining firm based in Vancouver, announced its acquisition of the Colt Mesa deposit last week in a press release, saying that the area “recently became open for staking and exploration after a 21 year period moratorium.” The president and CEO of Glacier Lake Resources, Saf Dhillon, told NPR News on Thursday the project was "a welcome addition to the company's ever growing portfolio."“The target is a high value, underground scenario with modest disturbance,” Dhillon said. Nada Culver, counsel and senior director for agency policy of the Wilderness Society, claimed in a statement to NPR that mining remains prohibited in the Grand Staircase-Escalante National Monument, arguing that the president does not have the power to reduce the size of the state’s national monuments. Culver added that “any mining claims are invalid, just like President Trump's attempt to dismantle the monument, which we are already challenging in court. This company's actions, and any others that try to mine within monument boundaries, will be scrutinized. We are monitoring this situation and will not stand by and watch mining companies rush to leave irreplaceable scars and damage the natural values of these lands.”

Trump stacks key renewable energy office with former Koch officials - To fill key positions in the renewable energy and energy efficiency office at the Department of Energy (DOE), the Trump administration is lifting people straight from the Koch brothers’ numerous anti-clean energy efforts.Next week, the Senate Energy and Natural Resources Committee will consider the nomination of Daniel Simmons, who spent years working for anti-renewable energy groups funded by the Kochs, to head the Office of Energy Efficiency and Renewable Energy (EERE). Simmons was previously the vice president for policy at the Institute for Energy Research (IER). He held the same position at the American Energy Alliance, the advocacy arm of IER. Both are Koch-funded groups. In 2015, AEA, called for Congress to use 2016 budget cuts to “eliminate” EERE. Simmons, who has been leading EERE on a temporary basis since the spring of 2017, has also questioned the value of promoting renewable energy sources. In keeping with President Trump’s mission to slash regulations, the administration has nominated and hired people whose policy positions directly conflict with the mission of the agency where they serve. As temporary head of EERE, Simmons has been working with many like-minded individuals, including other officials who came from Koch-funded groups.Earlier this year, DOE hired a longtime policy analyst for Koch-funded groups to serve as a senior adviser under Simmons. Sofie Miller, who previously wrote papers critiquing federal energy efficiency standards, is now advising department officials on energy efficiency programs and regulations. From 2010 to 2012, Miller worked as a senior policy analyst and research fellow at the Charles Koch Institute where she conducted economic analysis of DOE and Environmental Protection Agency (EPA) regulations, according to her LinkedIn page.

The EPA just killed three expert advisory committees -- The Environmental Protection Agency (EPA) continues to become a shell of its former self under Scott Pruitt. The latest salvo: the agency’s rejiggered science advisory board stocked with industry types just killed three committees it has traditionally relied on.The move is another way in which Pruitt’s EPA is becoming hermetically sealed off from outside, impartial advice. In its place, industry and partisan political voices are taking greater prominence in the debates over policies that affect Americans’ health.The decision to shut down the Ecological Processes and Effects Committee, the Environmental Engineering Committee, and the Environmental Economics Advisory Committee was made at a late May meeting of the EPA’s Science Advisory Board, but researchers on the committees were only notified on Thursday. In an email reviewed by Earther, Tom Brennan, the acting director of the Science Advisory Board office told researchers that, “On the recommendation of the SAB Staff Office, the SAB, unanimously agreed, at our 5/31/18 administrative meeting, to retire three of our current seven standing committees.”The email went on to say that the decision to disband the committees was made because the “workload does not justify the effort.” Four other committees remain empaneled.  In a response to questions, the EPA reiterated to Earther that keeping the committees “creates unnecessary management and ethics obligations for both committee members and the Agency.” Committee members who spoke with Earther said, however, that they didn’t view it as unnecessary obligations on their end and welcomed the chance to work with the agency. They were also blindsided by the move. “The message was a surprise,” Timothy Haab, an environmental economist at Ohio State University who was on the economics committee, told Earther. “I fear that losing the advisory committees could jeopardize the objectivity of the science used in making economically sound environmental decisions.”

U.S. states sue EPA, Pruitt for rolling back climate change rule - (Reuters) - A group of U.S. states led by New York sued the Environmental Protection Agency on Wednesday, accusing Administrator Scott Pruitt of trying to illegally roll back limits on the use of climate change pollutants known as hydrofluorocarbons.  Eleven states and the District of Columbia said Pruitt violated the federal Clean Air Act on April 27 by issuing “guidance” that they said effectively rescinded regulations adopted in 2015 under the Obama administration. New York Attorney General Barbara Underwood accused the EPA under President Donald Trump of trying “to gut critical climate protection rules through the backdoor,” by revoking the 2015 limits rather than going through a public review process. The states petitioned the U.S. Circuit Court of Appeals in Washington, D.C. to throw out Pruitt’s decision. An EPA spokeswoman said the agency does not discuss pending litigation. Hydrofluorocarbons, or HFCs, are often used in air conditioning, refrigerants, aerosols and foam-blowing. The EPA had in 2015 estimated that limiting the pollutants’ use could by 2020 reduce annual greenhouse gas emissions by 26 million to 31 million metric tons. Underwood said 30 million metric tons was enough to power 3.2 million homes. She also noted that the D.C. Circuit last August upheld EPA authority to declare that HFCs were not safe substitutes for ozone-depleting substances, though it refused to require manufacturers that had replaced such substances with HFCs - when HFCs were thought safe - to switch to something else. 

News of Scott Pruitt’s ‘quid pro quo’ condo deal raises questions about criminal law violations -   New revelations have emerged about Environmental Protection Agency (EPA) Administrator Scott Pruitt’s relationship with the energy lobbyist tied to the sweetheart D.C. condo deal Pruitt got last year. The news provides “concrete evidence” of wrongdoing some say and raises questions about whether Pruitt has violated not only ethics law, but criminal law. According to a Sunday night report by the New York Times, the EPA’s chief of staff discussed hiring a friend of the lobbyist family that owned the Capitol Hill condominium that Pruitt rented for only $50-a-night in 2017. This took place during the same time that Pruitt was staying in the condo and contradicts statements previously made by the administrator during a Fox News interview on April 4 in which he said the lobbyist “has no business before this agency.” In response to the New York Times article, Norm Eisen, former White House ethics czar under the Obama administration, said in a tweet that Pruitt’s relationship with lobbyist Steven Hart and Hart’s wife — the owner of the condo — is looking not only like an ethics violation but a violation of a criminal statute prohibiting government officials from engaging in quid pro quo. In the case of Pruitt, the quid pro quo would be the exchange of the below-market rate on the condo for political favors.Pruitt's relationship with owner & spouse of his $50 a night luxury lobbyist lodgings is looking more & more like not only an ethics violation (5 CFR 2635.502) but also one under 18 USC 201, forbidding quid pro quos. Er, Scott, that's a criminal statute. https://t.co/4J1PdIoBT6— Norm Eisen (@NormEisen) June 24, 2018  Emails obtained by the Sierra Club, as part of a lawsuit filed against the EPA, and reviewed by the New York Times show numerous communications between Pruitt’s chief of staff, Ryan Jackson, and lobbyist Stephen Hart. The emails appear to show that Hart tried to guide and influence EPA decisions at the same time that Pruitt was renting the condo below market rate — efforts Hart and Pruitt had earlier denied.

Trump nominates climate doubter Simmons to head DOE renewables office - Simmons, who has headed EERE on a temporary basis since last year, is the latest climate doubter and fossil fuel ally to be given a top energy role under the Trump administration. From 2008 to 2017, Simmons worked for IER and AEA, which receive funding from oil interests like Koch Industries and coal companies like Peabody Energy. During that time, AEA pushed Congress to completely defund EERE, writing that the office "aims to control multiple sectors of the economy, from energy production and transmission to manufacturing and construction."Simmons also authored materials that questioned mainstream climate science during his time leading the Natural Resources Task Force at the American Legislative Exchange Council (ALEC), a conservative policymaking group, from 2005 to 2008.ALEC convenes state legislators and private companies to craft model legislation behind closed doors. In 2007, Simmons co-authored a guide for lawmakers on energy and environmental issues that questioned climate science, notes the Energy and Policy Institute, a liberal watchdog group.The ALEC report denies that greenhouse gas emissions are "increasing the rate of sea level rise," as well as their connection to higher temperatures."Al Gore is indeed correct that there is a correlation between carbon dioxide increased and temperature, but the connection is the opposite of what he assumes," the report reads. "The studies show that carbon dioxide follow temperature, not the other way around."ALEC has often been a venue for conservative attacks on clean energy — most recently by IER, Simmons' last employer. In April, IER backed a policy resolution against electric vehicles at ALEC's spring meeting, pushing lawmakers to pledge opposition to subsidies for non-gas vehicles and utility ownership of EV charging stations. Electric utilities and UPS banded together to defeat the resolution.

An Unexpected Carbon Tax Proposal - Call it a tax without tears. It is a proposal to address carbon pollution by replacing a raft of tax subsidies and regulatory requirements with a carbon tax. What is surprising is who is pushing it: dyed-in-the-wool, rock-ribbed Republicans. They are the top of the GOP: Every one of them has had an outstanding career in finance, industry or academia. They are men and women who contribute to Republican candidates regularly -- and some of them quite generously. These Republican grandees and party financiers have formed the Alliance for Market Solutions (AMS), which aims to educate conservative policymakers on the benefits of market-oriented solutions to climate change. “A carbon tax, if the myriad of subsidies and regulations that policymakers now use to affect markets are stripped away, would lead to economic growth and achieve significant carbon pollution reductions,” says Alex Flint, executive director of AMS. Well-known in Republican circles, he previously served as staff director of the Senate Committee on Energy and Natural Resources and as senior vice president of government affairs at the Nuclear Energy Institute. The organization’s 10-member advisory board includes John Rowe, former chairman and CEO of Exelon Corporation, the largest diversified utility in the United States, and Marvin Odum, former chairman and president of Shell Oil Company and board member of the American Petroleum Institute. What we need now, Rowe said, is “a new approach to energy tax and regulation that advances our strategic policy objectives and recognizes that the period of scarcity that began in the 1970s is over. We no longer need to subsidize energy production.” 

GOP will back carbon tax if tied to innovation, tech group predicts -   The Republican climate policy of choice may be a revenue-neutral carbon tax, says a new study by a prominent technology think tank. The Information Technology and Innovation Foundation issued the report on Monday, describing why Republicans and conservatives would get behind a tax on carbon dioxide emissions, because it's more efficient than federal regulations, places less stress on businesses and the economy, and makes the U.S. a technological leader while increasing jobs. Republicans are also supporting cleaner forms of energy, which would make them in favor of a carbon tax, the report says.  Eighty-four percent of registered voters, including 72 percent of Republicans and 68 percent of conservative Republicans, "support action to accelerate the development and use of clean energy," according to the report.  The largest gains in support for a carbon tax came from Republicans in recent polling, the report said. "Support was highest, 60 percent, when the revenues went to fund R&D for renewable energy programs."The revenue-neutral tax would mean the fees collected from carbon dioxide emitters, like power plant owners and refineries, would go directly to fund technological innovation, as opposed to going to the Treasury. "Both logic and scholarly research point in a clear direction: A carbon tax at reasonable levels, with the revenues dedicated to reducing the after-tax cost of research and capital investment, is likely to not only reduce carbon emissions but do it in a way that grows the overall economy," according to the report. The focus on using the money for innovation could crack the partisan divide on climate change, the report says. It says the debate has become "latched on to a number of scientific uncertainties to prevent much action."

Tesla And GM Close To Capping Out On Electric Vehicle Tax Incentives - Tesla and General Motors are seeing the beginning of the end for crucial U.S. federal tax incentives needed to transition interested car shoppers into electric vehicle owners.  The federal government years ago had placed a 200,000-vehicle cap, per automaker, on EV sales before tax incentives up to $7,500 would begin to be cut back. By the end of May, Tesla was estimated to be at about 194,000 EVs sold — including the Model S, Model X, Model 3, and Roadster — and GM was a little bit over 182,000, primarily through sales of the Chevrolet Bolt and Chevrolet Volt. Nissan was at about 120,000 through sales of the Leaf, and Ford finished May at nearly 108,000 EVs sold. Once a manufacturer hits the 200,000 EV mark, they’ll finish that quarter and will go one more quarter beyond at the $7,500 incentive level. A phase-out period begins with incentives cut in half at $3,750 for the next six months; it then goes down to $1,875 for the next six months before it goes away entirely. The tax credit started a decade ago under the George W. Bush administration and was expanded later under Barack Obama’s presidency. President Donald Trump has pulled away support for the tax incentives, and it was nearly terminated in the sweeping tax reform bill last year led by Congressional Republicans.Automakers would like to see legislators direct the Internal Revenue Service to extend the tax credits. As is the case in several industrial nations, tax cuts and other incentives are seen as absolutely essential to grow EV sales — to make them worth the huge investments automakers have been slapping down in recent years.  Lithium-ion battery prices will continue to come down, EV range will be extended to over 300 miles per charge, fast charging will become common, and the EV product lineup will make them more enticing to car shoppers. But that will be years from now, and generous government incentives have been essential for sales to see a slow and steady increase.

Where 3 million electric vehicle batteries will go when they retire    -The first batches of batteries from electric and hybrid vehicles are hitting retirement age, yet they aren’t bound for landfills. Instead, they’ll spend their golden years chilling beer at 7-Elevens in Japan, powering car-charging stations in California and storing energy for homes and grids in Europe. Lithium-ion car and bus batteries can collect and discharge electricity for another seven to 10 years after being taken off the roads and stripped from chassis—a shelf life with significant ramifications for global carmakers, electricity providers and raw-materials suppliers.Finding ways to reuse the technology is becoming more urgent as the global stockpile of EV batteries is forecast to exceed the equivalent of about 3.4 million packs by 2025, compared with about 55,000 this year, according to calculations based on Bloomberg NEF data.China, where about half the world’s EVs are sold, is implementing rules in August to make carmakers responsible for expired batteries and to keep them out of landfills. The European Union has regulations, and the industry expects the U.S. to follow. General Motors Co., BMW AG, Toyota Motor Corp., BYD Co. and a clutch of renewable-energy storage suppliers are among those trying to create an aftermarket and extra profits for a device that only recently coalesced into its own market. Second lives generate second revenue streams for the same product, and those could help lower prices for EVs. “The car manufacturers have an upcoming problem, and one that we are already starting to see: this massive volume of batteries,” said Johan Stjernberg, chief executive officer of Box of Energy AB, a Swedish company working with Porsche and Volvo Cars. “The market will be enormous for second-life applications with storage.”

Major automakers urge Trump not to freeze fuel economy targets (Reuters) - Major automakers are telling the Trump administration they want to reach an agreement with California to avoid a legal battle over fuel efficiency standards, and support continued increases in mileage standards through 2025. “We support standards that increase year over year that also are consistent with marketplace realities,” Mitch Bainwol, chief executive of the Alliance of Automobile Manufacturers, a trade group representing major automakers, will tell a U.S. House of Representatives panel on Tuesday, according to written testimony released on Monday. The Trump administration is weighing how to revise fuel economy standards through at least the 2025 model year, and one option is to propose freezing the standards through 2026, effectively allowing automakers to delay investments in technology to cut greenhouse gas emissions from burning petroleum. The National Highway Traffic Safety Administration has not formally submitted its joint proposal with the Environmental Protection Agency to the White House Office of Management and Budget for review. Even so, last week, California and 16 other states sued to challenge the Trump administration’s decision to revise U.S. vehicle rules. Auto industry executives have held meetings with the Trump administration for months and have urged the administration to try to reach a deal with California even as they support slowing the pace of reduction in carbon dioxide emissions that the Obama administration rules outlined. One automaker official said part of the message to President Donald Trump at a meeting on Friday will be to consider California like a foreign trade deal that needs to be renegotiated. Automakers want to urge him to get automakers a “better deal” – as opposed to potentially years of litigation between major states and federal regulators. 

Dry weather to cut Norway’s hydro output - Norway faces higher energy costs this summer as much of the snow accumulating in its mountains evaporated or melted into the ground during a heat wave. Power companies had been relying on a gradual spring melt to replenish dams, but projections showed this was unlikely to happen. From mid-May to early June, temperatures in southern Norway hit records for that time of the year, exceeding 30 degrees Celsius (86 Fahrenheit) and leading many municipalities to ban outdoor barbecuing to prevent fires. This was the driest three-week period ever recorded, with measurements from 1958 until today, an NVE spokesman said. By June 3, the remaining snow that had yet to melt in mountain regions corresponded to an estimated future power output of 10 Terawatt hours, as opposed to 32 TWh in a normal year. By June 11, Norway’s reservoirs were 56.8 percent full, still higher than last year’s 54.7 percent, but with much less snow left to melt it was only rain that could significantly increase it.

How a populist Europe in thrall to Russia threatens climate change action -  As a growing number of European countries tip toward the far right politically, attempts to curb climate change are coming under pressure. The region’s race to cut planet-warming greenhouse gases is generating friction, and some Members of European Parliament and experts point the finger of blame at Russian big energy interests and populist governments in thrall to them.This month, a bid to raise the European Union’s supply of renewable energy to 35 percent of the electricity mix by 2030 was stymied by a bloc of EU states led by populist governments in the Visegrad countries ― Hungary, Poland, the Czech Republic and Slovakia ― even though it had the support of the European Parliament and European Commission.The same bloc of countries helped whittle down proposals for a binding 40 percent energy conservation target, despite signs of accelerating climate change from the Antarctic to the African savannah.“We see a pattern of populist governments clearly opposing ambitious climate and energy regulations, which is in line with the primary Russian economic interest: exporting fossil fuels and nuclear technology,” Benedek Jávor, the vice-chair of the European parliament’s environment committee and a Hungarian Green MEP, told HuffPost.Russia supplies more than a third of Europe’s gas but this could be reduced to nothing by an ambitious energy saving target, according to analyses by several think tanks and consultancies.The European Commission itself calculates that every 1 percent of energy savings is accompanied by a 2.6 percent reduction in the gas imports. While Russia is a signatory to the Paris climate agreement and has not spoken against climate targets, the eastern European populist governments it supports have taken a hard line in EU negotiations.

China’s plastic waste ban will leave 111 million tons of trash with nowhere to go - China’s recent crackdown on the import of plastic waste will result in millions of tons of displaced plastic trash, according to new research. The ban will force countries like the US to find new ways to deal with their own trash.  On December 31st, 2017, China put a halt to a lot of the plastic waste that foreign countries like the US sent to its shores for disposal. To calculate the impact of that ban, researchers at the University of Georgia looked at how much plastic waste China imported from 1988 to 2016. They then used that information to calculate that by 2030, the ban might leave 111 million metric tons of plastic trash with nowhere to go, according to a study published in Science Advances. Since 1988, nearly half of the planet’s plastic trash — like single-use soda bottles, food wrappers, and plastic bags — has been sent to China, where the material is recycled to make more plastic goods. The 2017 ban, however, has left countries like the US scrambling for what to do with all the extra plastic waste. In the US, a lot of it is already piling up in landfills, according to The New York Times. Today’s study is the first one to tally what the consequences of China’s trash ban will be. It also highlights the need for countries that have traditionally exported their plastic waste to rethink how they dispose of it. “You can screw up a lot of the global trade system just by stopping a few things — and the movement of trash is one of them,” says Daniel Hoornweg, associate professor of energy systems and nuclear science at the University of Ontario Institute of Technology, who was not involved in the research. “Plastic’s heavily embedded in our society.” Countries like the US have sent more than 10 million metric tons of plastic waste China’s way over the past three decades. Plastic waste is often mixed in with other materials, since many countries ask residents to recycle plastic, glass, and paper all together. Sorting through and breaking down that jumbled litter takes energy, and that energy costs money that countries, like the US, aren’t willing to spend,  “It was cheaper to throw [the trash] onto a boat and send it abroad than deal with it here,”

Mumbai Becomes Largest City in India to Ban Single-Use Plastics --The Indian state of Maharashtra—which encompasses the fast-paced and densely populated city capital of Mumbai—imposed a statewide ban on single-use plastics over the weekend.The protocol, first introduced on March 23, prohibits the manufacturing, use, sale, distribution and storage of materials such as plastic grocery bags, cutlery, plates, PET and PETE bottles and foam takeaway containers. The state government gave establishments three months to dispose of existing stocks. Repeat offenders can face a maximum punishment of up to Rs. 25,000 ($367) and three months in jail. Aditya Thackeray, the leader of the Shiv Sena party who was key in pushing the ban through, called the new policy a "historic step" in protecting the environment.

Moody’s Gives Regulated Utilities a Negative Outlook for the First Time -- For the first time since it began rating sectors, Moody’s Investors Service has downgraded its overall outlook of the U.S. utility sector. The rating agency dropped credit from stable to negative for 24 utilities and from positive to stable for one utility, American Electric Power Company.   Moody’s said the change reflects uncertainties from the tax law changes passed in late December. Jim Hempstead, a managing director at Moody's, said the “action primarily applies to companies that already had limited cushion in their rating for deterioration in financial performance, will be incrementally impacted by changes in the tax law and where we now expect key credit metrics to be lower for longer." But the downgrade also indicates the challenges besetting the utility industry, which is coping with a swiftly changing electricity sector and falling demand in the U.S. Moody's noted that utilities are spending more on resilience, "carbon transition" efforts and smart-grid changes than in the past.Pacific Gas & Electric, which is at risk of bankruptcy because of liability for this year’s California wildfires, has also framed climate change as an obstacle for the utility’s future. The January tax law changed the corporate tax rate from 35 percent to 21 percent, which has meant an influx of cash for most corporations. The cuts look like they give more money to utilities as well. But because of the lower tax rate, utilities will actually be collecting less money from customers and holding less money at a time. Moody's noted that since 2010, deferred taxes collected from customers has made up an average of 14 percent of funds from operations, or a utility’s incoming money. Moody's now expects that through 2019 that amount will fall to 8 percent, leaving utilities with less immediate funds. Utilities’ ratio of cash flow to debt will also fall, which to financial rating institutions indicates less ability to pay off debt.   In its release on the downgrade, Moody’s said “this rating action primarily reflects the incremental cash flow shortfall caused by tax reform on projected financial metrics that were already weak, or were expected to become weak, given the existing rating for those companies.”

EPA to Withdraw Power Plant Rules – WSJ - The Trump administration is formally withdrawing federal limits on carbon emissions at power plants, triggering the next stage of what is likely to be a yearslong fight over the government’s centerpiece regulation for slowing climate change.  The move pushes forward on a central pledge of President Donald Trump: a rollback of Obama -era environmental rules he has criticized for harming businesses and coal miners in particular. And it pushes the federal government further away from any effort to combat global warming, following Mr. Trump’s June announcement that he intends to withdraw the U.S. from the Paris climate accord.  Environmental Protection Agency Administrator Scott Pruitt announced in Kentucky that he would sign a proposal Tuesday to reverse the rules. The announcement, made at an event organized by Senate Majority Leader Mitch McConnell (R., Ky.) in the coal-mining town of Hazard, Ky., confirmed what many had expected for weeks.

Ryan Zinke’s Interior Department gives law-breaking coal company a pass - When Allen King allowed the Farrell-Cooper Mining Company to mine coal from his land in 2003, he didn’t expect his 30 acres would end up looking more like the moon’s cratered surface than Oklahoma prairie. “I used to have flat grassland. Now I’ve got a mountain so steep you can’t even drive around to keep brush off, and a ditch so deep if a cow fell in you couldn’t get them out of it.” He was promised his land would be returned to its original state but instead, like many landowners in the southeastern corner of Oklahoma, his property was left ruined by mines dug and abandoned by Farrell-Cooper. The Arkansas-based company has mined coal in the area for decades, running up numerous violations of federal reclamation laws in the process.  Now the landowners in this region who voted for President Trump overwhelmingly in 2016 must swallow the fact that the Trump administration—specifically, the Interior Department run by Ryan Zinke, represented in court by the Justice Department led by Jeff Sessions—has quietly dismissed violations that the last administration had levied against three of the company’s mines. The agreement comes after meetings involving several top Interior political appointees held specifically on the litigation in 2017, according to official calendars. The involvement of a number of political appointees, including many not in the department’s legal shop, in a long-standing, fairly low-profile legal dispute with a company is unusual, said former department insiders.

Energy Sec Rick Perry says 'stubborn opposition' to fossil fuels risks keeping billions in poverty - "Stubborn opposition" to fossil fuels is standing in the way of lifting billions of people out of poverty, U.S. Energy Secretary Rick Perry told a major gathering of natural gas professionals on Tuesday. Perry is spearheading President Donald Trump's goal of making the United States the dominant player in the global energy market. On Tuesday, he touted the nation's rank as the world's biggest natural gas producer and second-biggest crude oil driller in a keynote speech at the triennial World Gas Conference in Washington, D.C.He added, however, that some domestic and foreign forces are working against the Trump administration's goal of promoting prosperity through energy security."I wish I could tell you that the entire developed world is on board with our vision. I wish I could, but I cannot," he said. "In some quarters, at home and abroad, there is still this stubborn opposition to natural gas and other fossil fuels.""The opposition exists even as fossil fuels become cleaner and low-emission natural gas increases its share of total fossil production and use. These opponents flatly reject the all-of-the-above strategy, the innovation-driven strategy that's helping us achieve energy security," Perry told the conference.Surging natural gas production, along with renewable energy, has indeed pushed dirtier fuels like coal out of the energy mix. Technologies designed to scrub emissions from coal-burning plants have made little commercial progress, however, and many developing nations have plans to build coal-fired facilities. Much of the opposition to fossil fuels centers around concerns over global warming, as well as the potential impact on vulnerable communities from sea level rise and other consequences of the world's changing climate. Perry has publicly denied the scientific consensusthat carbon dioxide emissions from human activity, including burning fossil fuels, are the primary cause of climate change.

Canada's next salvo in the trade war should hit Trump where it really hurts — coal --Canada’s retaliatory tariffs on U.S. imports are planned for July 1, and while the target list includes items such as steel and aluminum products and maple syrup, if Prime Minister Justin Trudeau really wants to hit President Trump where it hurts, it should target coal. Ottawa should consider imposing its carbon tax on the trainloads of U.S. thermal coal that are shipped out from Vancouver’s Westshore Terminals. Given how critical the terminal is to U.S. thermal coal exports, such a move would be a death knell to President Trump’s off-stated promise of resuscitating a badly crippled coal industry and might be the motivation needed to reconsider the tariffs against Canada. As part of President Trump’s election campaign, he promised to end “the war on coal.” Yet as much as President Trump would like to think otherwise, there’s little question that the U.S. thermal coal industry is in serious, possibly terminal, decline. More than 200 coal-fired power plants, the number one source of carbon pollution in the United States, have closed over the last decade, including almost 30 plants during President Trump’s first full year in office. While the president blames his predecessor’s clean air policies, the real culprit is George Mitchell, the Texan wildcatter who first married the principles of hydraulic fracturing and horizontal drilling. Mitchell’s offspring, the shale revolution, has cut natural gas prices by two-thirds, which has allowed natural gas to unseat the century-long reign of king coal in the U.S. power industry. A carbon tax on American thermal coal shipments through Canada would further hit an already imploding coal industry and has the potential to embarrass Trump with a failed promise to his supporters.

Delhi May Face Blackout Due to Coal Shortage - The National Capital Region may face a blackout as the coal reserves with the Delhi government were only for a-day-and-a-half, said Power Minister Satyendar Jain who has written to Union Power Minister R. K. Singh regarding the same. In the letter, Jain informed the minister about the coal supply shortage to the NCR power plants — Dadri, Jhajjar and Badarpur. "Since June 19, the coal stock is continuously declining and has reached approximate 90,000 MT on Wednesday, which is only one and a half days requirement," Jain wrote adding that the "situation is extremely critical". The reason he gave for the shortage is the non-availability of transportation rakes with the railways.Jain requested Singh to "intervene personally and take up the matter with the Railways for providing rakes on priority for transportation of coal to these power plants to avoid blackout in Delhi". While addressing the media on Wednesday, Jain said that ideally power plants should have a reserve coal stock for 15 days. He also said that the power demand was high during this season.It was the second time in the season that such a warning was issued. In May also, the issue had arisen as the coal reserves of the national capital had been reduced to a day. 

Weatherwatch: the nuclear option and rising levels of anxiety - Back in 2012 a document obtained under the Freedom of Information Act showed that the Environment Agency was warning that 12 out of the UK’s 19 nuclear sites were in danger of coastal flooding and erosion because of climate change. Among them was Hinkley Point in Somerset, one of the eight proposed sites for new nuclear power stations around the coasts. That was before the increasing volume of melting of the Greenland ice cap was properly understood and when most experts thought there was no net melting in the Antarctic.  Satellite measurements released earlier this month and other recent observations of how warmer seas are eroding ice shelves and glaciers have removed uncertainty.Estimates of sea level rise in the next 50 years have gone up from less than 30cm to more than a metre, well within the lifespan of the nuclear stations the UK government has planned.  The extra coastal erosion and threat of storm surges that this increase in sea level will bring to our shores might make sensible people think twice about siting any buildings in vulnerable places, let alone nuclear power stations.  So far, however, the government has yet to respond and is pressing ahead with its plans.

Ohio bill would relax wind setbacks — and clean energy standards - The bill drew criticism in latest hearings to change Ohio’s clean energy standards after they resumed last year. Ohio lawmakers are considering a bill that would relax the state’s strict wind turbine setbacks rules but again weaken renewable and energy efficiency standards. The Ohio Senate Energy and Natural Resources Committee is scheduled Wednesday to discuss House Bill 114, which threatens to roll back the state’s on-again, off-again clean energy standards, which resumed 18 months ago after a 2014 law suspended them for two years. The bill has drawn criticism from both wind energy opponents and clean energy advocates. It stops short of making renewable energy standards purely voluntary, as in the Ohio House version passed last year. Instead, it would set the top renewable energy standard target at 8.5 percent in 2022, down from the current law’s requirement of 12.5 percent in 2026. The top energy efficiency target would fall from 22.2 percent to 17.2 percent, with more opt-outs and profits for utilities. An attempted trade-off in the bill would also loosen the state’s strict restrictions on wind turbine placement similar to reforms proposed in a stand-alone bill introduced several months ago by Ohio Sen. Matt Dolan (R-Chagrin Falls). HB 114 is the latest in an ongoing, six-year saga of efforts to weaken Ohio’s clean energy standards, all of which “make it difficult to plan for long-term markets and investments,” said Becky Campbell, manager of regulatory and public affairs for First Solar. In her view, “HB 114 represents a step backward,” compared to other states.

Ohio approves 1050 MW, gas-fired power plant in Cadiz - The Ohio Power Siting Board has approved a $900 million natural gas-fired power plant in Harrison County in the heart of the state's Utica Shale play, Kallanish Energy reports. Texas-based EmberClear Corp and its subsidiary, Harrison Power LLC, plan to construct a 1,050-megawatt, combined-cycle electric generation facility in Cadiz. Construction would begin in October and commercial service would begin by June 2021. The plant would be located on 90 acres in the Harrison County Industrial Park. The plant would be connected by pipeline to MarkWest’s Cadiz natural gas processing plant and to Energy Transfer’s Ohio River pipeline system. The electricity generated would be moved to American Electric Power’s transmission system. The plant would produce enough electricity to power 1 million homes. The project would create 500 construction jobs for about three years and 30 permanent jobs. It is among a dozen gas-fired power plants being developed in Ohio. 

Hess unloads Utica shale to fund work in Guyana, Bakken (UPI) -- U.S. energy company Hess Corp. said it would use the $400 million from the sale of assets in the Utica shale basin to fund work in Guyana and North Dakota.Hess said Friday it reached an agreement with Ascent Resources to sell off its joint venture interests in the Utica shale basin in eastern Ohio. The divestment of 39,000 net acres is expected to produce an average of 14,000 barrels of oil equivalent per day this year, of which 70 percent is natural gas. CEO John Hess said the funds would support growth across other segments of the company's portfolio."Proceeds from this transaction will be used to invest in our higher return growth opportunities in Guyana and the Bakken and to fund the company's previously announced share repurchase program," he said in a statement.Exxon Mobil Corp. and partner Hess announced their eighth oil discovery off the coast of Guyana earlier last week. Analysis sent from consultant group Wood Mackenzie to UPI in response to questions found reservoirs offshore Guyana are transformative, even for big companies like Exxon and Hess.   Dubbed Longtail, the latest discovery was made near the giant Liza field, which could be producing about 500,000 barrels per day by late 2023. Hess estimated it would cost at least $3.2 billion to fully develop the broader offshore Liza field. North Dakota reported an average crude oil production rate for April, the last full month for which data are available, at 1.22 million barrels per day, just shy of the all-time high from December 2014 of 1.23 million barrels per day. More than 90 percent of that came from the Bakken shale formation, which set a record in April for gas production.  Hess reported a net loss of $106 million in the first quarter, compared with a loss of $324 million in the same period in 2017. The company attributed the improvement to higher crude oil prices and lower operating costs.

​Methane-producing microbial communities found in fracking wells   - The Ohio State University News – Deep in the rocky earth, in the liquid-filled cracks created by fracking, lives a community of highly interactive microbes – one that could at once have serious implications for energy companies, human health and scientists investigating the potential for life on Mars.New research has uncovered the genetic details of microbes found in fracking wells. Not only do a wide array of bacteria and viruses thrive in these crevices created by hydraulic fracturing – they also have the power to produce methane, according to a study led by scientists at The Ohio State University and published in the journal Proceedings of the National Academy of Sciences. That means it’s possible that the tiny life forms could create more energy – and from a different source – than the fracking companies are going after in the first place.On the other hand, the microbes found in samples from wells in Ohio, West Virginia and Pennsylvania could point to potential problems from an industry standpoint – they could prove corrosive, toxic or otherwise problematic, said the study’s lead author, Kelly Wrighton, an assistant professor of microbiology at Ohio State.“Energy companies spend a lot of money and resources trying to get rid of life in these systems,” she said.  . Chemicals, stabilizers and water injected into the wells are undoubtedly contributing to the microbial diversity within them, the researchers said. This was the first study to look at microbes from multiple sites in a controlled environment, and presented a rare scientific opportunity, said study co-author Michael Wilkins, an assistant professor of earth sciences at Ohio State.

Marcellus, Utica Shale Plays Account for 41 Percent of US Natural Gas Output - – The law firm of Babst Calland released its annual energy industry report: The 2018 Babst Calland Report – Appalachian Basin Oil & Gas Industry: Forging Ahead Despite Obstacles; Legal and Regulatory Perspective for Producers and Midstream Operators.  This annual review of shale gas development activity in the Appalachian Basin acknowledges an ongoing rebound despite obstacles presented by regulatory agencies, the courts, activists, and the market.  According to the U.S. Energy Information Administration’s May 2018 report, the Appalachian Marcellus and Utica shale plays account for more than 40 percent of U.S. natural gas output, compared to only three percent a decade ago. Since then, the Appalachian Basin has become recognized in the U.S. and around the world as a major source of natural gas and natural gas liquids. The industry has been forging ahead amidst relatively low natural gas prices, infrastructure building, acreage rationalization and drilling plans that align with business expectations. The policy landscape continues to evolve with ever-changing federal and state environmental and safety regulations and tax structures along with a patchwork of local government requirements across the multi-state region. Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “This Report provides perspective on the challenges and opportunities of a shale gas industry in the Appalachian Basin that continues to enjoy a modest rebound. While more business-friendly policies and procedures are emanating from Washington, D.C., threats of trade wars are raising concerns about the U.S. energy industry’s ability to fully capitalize on planned exports to foreign markets.”  The 84-page Report contains five sections, highlighted below, each addressing key challenges for oil and gas producers and midstream operators.

CNX Sees Stacked Pay Well Pads as Appalachia's Next 'Basin Disruptor' - The super-sized well pads targeting multiple horizons that CNX Resources Corp. plans to increasingly develop in the coming years will “disrupt” the Appalachian Basin, a company executive said this month at an industry conference in Pittsburgh.  In recent years, the company has been focused on building its Utica Shale program in Ohio and Pennsylvania, while the Marcellus Shale has anchored sales volumes. But lately, CNX management has been talking about the “stacked pay factory” it envisions for the future. In particular, CNX has discussed how well pads that target both the Marcellus and Utica, or even the Upper Devonian shales and the Point Pleasant formation in places like southwest Pennsylvania, may redefine field economics and its priorities.   While many operators have been promoting Appalachia’s stacked pay potential for years, few have ramped into full development and consistently drilled pads with multiple wells targeting the basin’s various unconventional resource plays.  Calling it “key to the southwest Pennsylvania strategy and economics,” COO Tim Dugan told a crowd at Hart Energy’s Dug East Conference and Exhibition that among the benefits of stacked pay development is the ability to blend wet and dry gas to reduce processing costs and enhance returns.  “The dry volumes from the Utica, blended with the damp Marcellus, allows us to avoid uneconomic processing of the damp Marcellus gas,” Dugan said. “One Utica well will blend down three to four Marcellus wells, and it’s all within the same gathering system, much more economic than separate wet and dry systems.”  The company is applying completion design and spacing lessons from its Utica program in Monroe County, OH, and other results from newer wells in Pennsylvania as it continues to delineate the deep, dry Utica core in the southwest part of the state.

Appalachian producers finally fulfilled: Pipelines a comin' -- It finally happens by 2022: The Appalachian Basin, whose Marcellus and Utica Shale producers have been begging for more pipeline capacity to get their product to market for years, will get their wish.However, as is the case when trying to match production with takeaway capacity, pipeline owners will offer more capacity than producers are producing – at least for a period of time.“By the end of 2022, the Northeast will have experienced 71% growth in takeaway capacity – 17.3 billion cubic feet per day (Bcf/d) increase,” according to Glenn Koch, vice president, Engineering and Construction, for pipeline giant Williams.Speaking as part of a pipeline development panel during Day Two of the Northeast U.S. Petrochemical Construction conference last week in Pittsburgh, Koch said despite the mind-boggling production leap in the Northeast, new capacity and regional demand for natural gas and natural gas liquids will increase over the same timeframe by 18.2 Bcf/d.The conference was presented for the third consecutive year by Petrochemical Update. Kallanish Energy was in attendance.Production of natural gas liquids, NGLs, will jump by 57% by 2022, to 840,000 barrels per day, from 535,000 BPD, Koch projects.Another pipeline panelist, Doug Scott, projects manager for Shell Pipeline, said the Falcon Pipeline, a 97-mile, primarily 12-inch line that will connect three major ethane source points: Houston, Pa., Scio, Ohio and Cadiz, Ohio, in the rich gas portions of the Marcellus and Utica shale plays, to Shell Polymers under-construction ethane cracker in Monaca, Beaver County, Pa.Scott said the ethane provider line in on time and, provided all needed regulatory permits are secured,  right-of-way preparation will start in the winter of 2018-19, with mainline construction next spring.

Still Searching for New York Water Permit, Constitution Pipeline Delays Completion Until 2020 -- New York state's denial of a Clean Water Act (CWA) permit for the proposed Constitution Pipeline has killed any chance of the project meeting it's scheduled Dec. 2, 2018 construction deadline, the company said in a filing at FERC Monday.Constitution Pipeline Co. LLC asked for an extension until Dec. 2, 2020 for construction of the project.Constitution filed at the Federal Energy Regulatory Commission for its project five years ago, and received a FERC certificate authorizing the project in 2014. The 125-mile pipeline would carry Marcellus Shale gas from Susquehanna County, PA, interconnecting with the Iroquois Gas Transmission and Tennessee Gas Pipeline (TGP) systems in Schoharie County, NY. Besides Williams, the project is backed by Cabot Oil & Gas Corp., Piedmont Natural Gas Co. Inc. and WGL Holdings Inc. The project’s sponsors have battled the New York State Department of Environmental Conservation (DEC) since 2016, when after nearly three years of regulatory review the agency denied the pipeline's application for a section 401 water quality certificate (WQC) required under the CWA. Eight weeks ago, the U.S. Supreme Court denied a petition filed by Constitution to challenge New York's regulatory authority and let stand an appeals court ruling that upheld the state's decision to deny the project a WQC.

ETP investigating pipelines for possible leak in Philadelphia area (Reuters) - Energy Transfer Partners LP is investigating one of its Philadelphia-area product pipelines after gasoline was discovered last week in a nearby creek, ETP said on Tuesday. ETP on Friday shut the 12-inch pipeline, in addition to an eight-inch pipeline in the area, as a precaution. The lines help carry refined products from the region’s refineries to New York Harbor and Western Pennsylvania. The company reopened the eight-inch line on Monday, but the larger line remained shut. “We have determined that the source of the petroleum products identified in the area is not our 8-inch line,” Lisa Dillinger, an ETP spokeswoman, said in an email to Reuters. “The integrity of that line was verified and has been returned to service.” The investigation has shifted to the 12-inch line, she added. Deliveries from Point Breeze in Philadelphia to Montello, Pennsylvania, may be affected, the company said in a customer notice seen by Reuters. The Pennsylvania Department of Environmental Protection issued an emergency permit to ETP to excavate ground around the lines in the area, a DEP spokesman said on Monday. The Pennsylvania Public Utility Commission is investigating the source of the leak, said Nils Hagen-Frederiksen, a spokesman for the Pennsylvania Public Utility Commission. 

As Trump Doubles Down on Coal, West Virginia Lawmakers Are Eyeing Natural Gas; Massive storage and trading hub could be on state’s horizon if Manchin and Capito get their way -- As President Donald Trump readies a strategy to bail out coal and nuclear power plants in part to help reinvigorate Appalachia’s struggling coal industry, West Virginia lawmakers are working to up the state’s participation in the natural gas business.Their effort to clear a path for the federal government’s financial participation in a massive storage and trading hub for liquids extracted from natural gas could bring more than 100,000 jobs to the state, advocates say. Those liquids are used as feedstock for plastic manufacturing, so it could also turn the state into a major chemical and industrial center as manufacturers look for a steady supply of low-cost raw materials.To achieve that, the lawmakers have launched a series of bills and administration lobbying to protect a Department of Energy loan guarantee program primed for the chopping block by conservatives who want to get the federal government out of the energy financing game.  But there’s no small irony in the approach: Such a hub is likely to bolster an industry that has been a source of woe for West Virginia coal miners. But jobs are jobs, and for West Virginia, natural gas would represent a new chapter in its storied energy resource production history. “When natural gas development started, there was a lot of competition [with] coal. But you know they are both energy resources,” said Republican Sen. Shelley Moore Capito. “We know how to do energy in our state. And natural gas is more versatile than coal obviously, so all those rivalries have gone by the wayside.”The proposed $3.3 billion Appalachian Storage and Trading Hub would centralize the burgeoning natural gas liquid extraction industry in the Utica and Marcellus shale formations. A network of pipelines extending into southeastern Ohio and Pennsylvania would lead to a central storage center at a to-be-determined location in the four-state area.

$83 Billion West Virginia Petrochemical Deal with China on Skids Due to Trade War, Corruption Probe – Steve Horn - Last November, China and West Virginia signed an $83.7 billion dollar, 20-year agreement to build a massive petrochemical hub in the state but that deal may be on hiatus in the midst of a de facto trade war spurred by President Donald Trump and a corruption investigation unfolding in the Mountain State.  The deal would be worth more than the total gross domestic product of West Virginia, which was $76.8 billion in 2017. China's sizable investment would create a sprawling petrochemical center in West Virginia, focused on storing and refining natural gas obtained via hydraulic fracturing (“fracking”) in the Marcellus Shale. Full details are sealed in a yet-to-be-released Memorandum of Understanding (MOU), which was inked during a trade mission attended by Trump and Chinese President Xi Jinping last fall in Beijing, China. While the Chinese side has cited the billions in trade tariffs imposed by Trump as the impetus for at least temporarily stepping away from the deal, in West Virginia an ongoing state- and federal-level official corruption investigation involving individuals who were part of the MOU signing has also slowed progress. Some of those individuals were named in a February investigation DeSmog published on the petrochemical hub. In total, China had pledged to invest $250 billion in the U.S. market at the November summit. Several fossil fuel industry executives attended the Chinese trade mission, including the CEOs of liquefied natural gas (LNG) exporting companies Cheniere, Delfin, and Texas LNG. The first domino to fall in the investigation surrounding the MOU was Woody Thrasher, West Virginia's Secretary of Commerce. As the main regulator and promoter of business in the state, Thrasher was tasked by Governor Jim Justice with oversight of the China-West Virginia deal. (Thrasher is a former Democrat with a business background who converted to a Republican at an August 2017 Trump rally.) However, Thrasher was forced to resign on June 14 at the governor's request for reported mishandling and misreporting of money for a state flood recovery program.  But these incriminating details only came to light as a result of a broader investigation by Justice's office, when it discovered what it considered ethically dubious activities, centering around self-dealing, related to the MOU, according to the publication MetroNews.

Department of Energy Publishes Natural Gas Liquids Primer - Today, the U.S. Department of Energy (DOE) published the 2018 Natural Gas Liquids (NGLs) primer that highlights the resource potential of NGLs, with a focus on the Appalachian region.  This publication provides an important update of a previous version from 2017, reporting even larger projections for ethane production from the Marcellus and Utica shale plays than previously estimated.  The 2018 primer includes new data from the reference case for the U.S. Energy Information Administration’s (EIA) 2018 Annual Energy Outlook as well as forecasts from a recent EIA Short-term Energy Outlook. The new data includes updated information regarding infrastructure developments in the Appalachian region, and a new section identifying research and development opportunities related to natural gas and NGLs production, conversion, and storage. This primer shows that the Appalachian region has experienced near-exponential growth in natural gas production, and that production is expected to increase for decades to come.  EIA now projects that natural gas production in the East region, where the Appalachian Basin is the principal contributor, will quadruple from 2013 to 2050. Natural gas produced in Appalachia contains valuable resources in the form of NGLs, including ethane and propane.  The region is endowed with significant NGL resources projected to be economically recoverable over the next three decades.  Specifically, Appalachian NGLs production is projected to increase over 700 percent from 2013 to 2023.  To access the primer in full click here.

America's "Shale Crescent" Is Enjoying A Permian-Like Energy Boom Of Its Own --The energy segment of the U.S. news media has dedicated a lot of time in recent months to discussing the current boom in oil and natural gas production, exports and consumption, and the benefits the country derives from these crucial natural energy resources.  All too often, though, we completely miss the third leg of this petroleum-based stool, which is our equally amazing abundance of natural gas liquids (NGLs) and the similar boom taking place in that segment of the industry.A new report published yesterday by the U.S. Department of Energy (DOE) puts the scale of this boom in somewhat amazing detail.  But before we get into those details, let's review what NGLs - the component petroleum liquids that are separated out of most natural gas production streams - actually are. Put simply, there are five such liquid components contained in any typical "wet" natural gas stream: Ethane,  Propane, Normal Butane, Iso-Butane and Natural GasolineThese NGLs are separated out at natural gas processing plants and then moved to various markets centers where they are applied to a broad variety of energy and manufacturing uses, including:

  • Plastics
  • Synthetic Rubber
  • Home heating
  • Cooking
  • Fertilizers

This list could go on and on.  Once the liquids are removed from a gas stream, what remains is a pure Methane stream, and that is the "natural gas" that is commonly used for power generation and home heating in communities that have local pipeline distribution infrastructure.As the DOE report unsurprisingly details, the major driver behind the current boom in natural gas and NGLs is the mammoth Marcellus Shale resource located across much of Pennsylvania, West Virginia and Ohio. (The Marcellus also lies underneath a broad swath of Southwestern New York, but the Cuomo Administration continues to prevent its citizens from sharing the massive economic wealth and lower utility bills this resource is bringing to these other states.)

Court Orders Controversial Pipeline to Halt Construction Over West Virginia Streams and Wetlands  - In a reprieve for the waterways of West Virginia and the communities that depend on them, the U.S. Federal Energy Regulatory Commission (FERC) said in a document on Monday that EQT Midstream Partners would halt work on the parts of its controversial Mountain Valley Pipeline (MVP) that cross 591 streams and wetlands in the state, Reuters reported.In December, the Army Corps of Engineers had issued the 303 mile pipeline, which would carry frackednatural gas through West Virginia and Virginia, a Nationwide Permit 12, a general permit for waterway disruption by utility line construction that does not require environmental review.But on Thursday, the 4th U.S. Court of Appeals sided with environmental groups including the Sierra Clubwho had argued for a halt in construction, saying that the construction timelines proposed by the pipeline's makers went beyond the time allowed by the general permit, West Virginia Public Broadcasting reported."Putting the breaks on in-stream construction activity for the Mountain Valley Pipeline while the court performs its full review not only makes sense, it is also the only just outcome for communities directly impacted by this destructive project," Appalachian Voices Virginia Program Manager Peter Anderson said in a statement published by the Sierra Club Thursday.Environmentalists also challenged the legitimacy of issuing sweeping permits like Nationwide Permit 12 to projects like the MVP. "Today's decision shows once again that the Nationwide Permit 12 cannot be used as a one size fits all approach for dirty and dangerous pipelines that pose serious threats to our communities and clean water," Sierra Club Beyond Dirty Fuels Campaign Director Kelly Martin said Thursday. Under section 404 of the Clean Air Act, general permits like Nationwide permit 12 can be granted, but states can also add additional regulations to those permits. The West Virginia Department of Environmental Protection requires that pipelines finishing building across streams within 72 hours. However, environmental groups argued that MVP's documents showed that construction over the Elk, Gauley, Greenbrier and Meadow rivers would take 4-6 weeks.

U.S. court order stops some work on Mountain Valley natural gas pipeline in West Virginia (Reuters) - EQT Midstream Partners will stop construction in West Virginia of parts of its $3.5 billion Mountain Valley natural gas pipeline after a U.S. federal appeals court issued an order last week against a permit, a U.S. regulator and the company said. The pipeline company will not proceed with construction in waters affected by the stay order in West Virginia, the U.S. Federal Energy Regulatory Commission said in a document on Monday. Mountain Valley Pipeline (MVP) told FERC it was consulting on the implications of the stay by the U.S. Court of Appeals for the Fourth Circuit with the U.S. Army Corps, which issued the permit in December 2017, FERC said in the notice. In May, the U.S. Army Corp of Engineers pulled a permit for the Mountain Valley natural gas pipeline from West Virginia to Virginia. In a statement on Friday EQT Midstream said it looking at options to have the permit reinstated. The Sierra Club and four other environmental groups had challenged permits the Army Corps of Engineers had issued for construction of the pipeline across streams in West Virginia. The order stops construction in 591 streams and wetlands in the state and “it may affect construction along the entire route of the pipeline,” the Sierra Club said in a statement. Katie Bays, energy analyst at Height Capital Markets in Washington, said in a commentary on Friday that if court rulings go against MVP, its in-service date could be pushed back to mid-2019 or require re-routing around three rivers. The 303-mile (488-kilometer) pipeline had been expected to be in service by late 2018. It was 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 power generation and other uses in the U.S. Southeast and Mid-Atlantic. 

Environmental advocates ask FERC to revoke mountain valley pipeline approval - Appalachian Mountain Advocates, on behalf of a coalition of environmental and citizen groups, sent a letter Tuesday to the Federal Energy Regulatory Commission (FERC) requesting the federal agency revoke its approval of the MVP.The 303-mile pipeline’s route crosses state lines as it travels from northern West Virginia down to Virginia, which gives FERC partial jurisdiction over construction activities.The request comes just days after the 4th U.S. Circuit Court of Appeals halted some construction of the natural gas pipeline in West Virginia, siding with conservation groups who challenged the pipeline’s water-crossings permit issued by the U.S. Army Corps of Engineers.Specifically, the court stayed the pipeline's federal Clean Water Act Section 404 permit that was issued by the Army Corps. The Corps granted the MVP a Nationwide Permit 12, a broader permit under the law.  It covers nearly 600 stream and wetland disruptions planned by the pipeline in the agency’s Huntington district, which covers all planned construction activity in West Virginia.  Environmental groups argued the MVP’s own planning documents showed river crossing for the Elk, Gauley, Greenbrier and Meadow rivers would take 4-6 weeks to complete and could not comply with the permit’s 72-hour deadline. The federal appeals court agreed.  In the letter to FERC, Appalachian Mountain Advocates stated that because of the federal appeals court decision last week, the pipeline no longer has all of the federal authorizations it needs and thus FERC’s approval, known as a Certificate Order, should be suspended.

Appeals Court Stays Crucial MVP Permit in West Virginia, Putting 2018 Startup in Jeopardy -- The U.S. Court of Appeals for the Fourth Circuit granted a motion to stay the Nationwide Permit (NWP) 12 issued by the Army Corps pending a ruling on a legal challenge brought by a coalition of environmental groups including the Sierra Club. The NWP 12 is issued under Section 404 of the U.S. Clean Water Act (CWA) and allows contractors to trench through the bottom of streams and rivers. The Sierra Club earlier this year challenged the validity of MVP’s NWP 12 permit, arguing that the project could not meet a special condition in West Virginia requiring all stream crossings be constructed within 72 hours.In response to the groups’ challenge, the Army Corps voluntarily issued a limited suspension of the NWP 12 for four river crossings in the state. But the Sierra Club and others successfully argued to the court that under Army Corps regulations, all portions of the NWP 12 permit must be stayed, putting nearly 600 MVP waterbody crossings in regulatory limbo.As part of its rationale for waiving a state-issued CWA Section 401 water quality certification, the West Virginia Department of Environmental Protection (WVDEP) had cited special state-specific conditions that had been added to the NWP 12 permit. WVDEP had earlier withdrawn the CWA 401 it issued to MVP after facing a court challenge.MVP spokeswoman Natalie Cox told NGI Friday that both the developers and WVDEP interpreted the 72-hour requirement included in the West Virginia-specific conditions of the NWP 12 permit as only applying to “wet-cut” crossings. “The Sierra Club argues that MVP cannot comply with the permit condition to complete four waterbody crossings (Elk, Gauley, Greenbrier, and Meadow Rivers) within 72 hours; however, this provision is intended to apply to water crossings that are constructed in an open trench while the river is flowing (wet-cut),” Cox said. “MVP plans to utilize a ‘dry-ditch’ coffer dam method to cross these four rivers as this technique is more protective of the environment because construction activity is not performed in a flowing river.“This crossing technique has been approved by both the FERC and the WVDEP,” Cox said. “While significantly more environmentally protective, the ‘dry-ditch’ technique also requires a longer completion time as compared to traditional ‘wet’ crossing methods to which the time limitation provision applies,”

Mountain Valley Pipeline foes file new legal challenge following last week's win - One week after an appeals court slowed down construction of a natural gas pipeline in West Virginia, it is being asked to do the same for the project’s path through Virginia.The request was made Tuesday in a petition filed with the 4th U.S. Circuit Court of Appeals by the Sierra Club and three other conservation groups.Last week, the appeals court issued a stay that prohibits developers of the Mountain Valley Pipeline from moving forward with plans to run the massive pipeline across rivers and streams in West Virginia. The stay put such work on hold pending a challenge of a key stream-crossing permit issued by the U.S. Army Corps of Engineers for the pipeline’s route through southern West Virginia.A similar permit — granted by the Army Corps for a section of the 303-mile pipeline that runs through the New River and Roanoke valleys — is now being questioned by a petition for review filed Tuesday. Joining the Sierra Club in the case are the New River Conservancy, Appalachian Voices and the Chesapeake Climate Action Network. In what was the first major court victory for pipeline opponents, a similar coalition persuaded a three-judge panel of the 4th Circuit last week to issue a stay that lawyers for Mountain Valley had strongly opposed, saying it would delay completion of the pipeline by up to eight months. The conservation groups are arguing that the Army Corps permit is deficient because it allowed the crossings of four rivers in West Virginia even though the work cannot be completed within the 72 hours required by that state’s environmental regulators.

TransCanada urges US to help gas pipelines beat green critics (Reuters) - The United States should help the natural gas industry overcome environmental challenges to new pipeline projects by adjusting regulations or adopting new laws favoring infrastructure, an executive at TransCanada Corp said at a conference this week. Suppliers in the United States, the world’s biggest natural gas producer, have had a harder time getting shipments to market as more environmental lawsuits by U.S. states, green groups and property owners have tied up pipeline construction. “It’s definitely not getting easier to build a new pipeline,” Stanley Chapman, executive vice president and president of U.S. natural gas pipelines at TransCanada Corp, told Reuters on the sidelines at the World Gas Conference in Washington. “I’m seeing more already-approved pipeline projects that are under construction get held up by a judge in lawsuits and this has to be addressed either by FERC or with legislation,” he said. FERC, or the U.S. Federal Energy Regulatory Commission, oversees construction of new pipelines. TransCanada owns about 30,000 miles of gas pipeline in the United States, making it one of the country’s biggest operators. It has been trying for more than a decade to build its Keystone XL oil pipeline project linking Canada’s oil sands to U.S. refineries amid ongoing environmental delays.

TransCanada, Whose Pipeline Just Exploded, Wants Feds' Help to Beat Green Groups -- Facing mounting protests and lawsuits from environmental groups and property owners, backers of the natural gas pipeline industry are seeking help from the U.S. government to help push their projects through,Reuters reported.  "It's definitely not getting easier to build a new pipeline," Stanley Chapman, executive vice president and president of U.S. natural gas pipelines at TransCanada Corp, told the news service at the World Gas Conference in Washington.  "I'm seeing more already-approved pipeline projects that are under construction get held up by a judge in lawsuits and this has to be addressed either by FERC or with legislation," he added, referring to the U.S. Federal Energy Regulatory Commission, which oversees construction of new pipelines. Followers of the Keep It In The Ground movement would say that the best means of fossil fuel transportation is none. Environmentalists oppose oil and natural gas pipelines over fears of air and water pollution, as well as its impact on climate-warming emissions.   Reuters further reported:In recent weeks, environmental groups like the Sierra Club have won court orders delaying construction on EQT Midstream Partners LP's Mountain Valley pipeline at several locations in West Virginia, and are now seeking a court order to also stop construction in Virginia. "We don't need these pipelines to meet our energy needs, so it makes no sense to lock us into generations of dependence on dirty fossil fuels," said Joan Walker, who helps lead the Sierra Club's Beyond Dirty Fuels Campaign.

Old growth forest in Bath to become encampment in pipeline fight -  Opponents of the Atlantic Coast Pipeline are setting up camp in the shadow of an old-growth forest in Bath County that could become a major battleground in the path of the pending $5.5 billion natural gas pipeline. Bill and Lynn Limpert, owners of a 120-acre property in Bath’s Little Valley, have invited the public to visit and camp on their land this summer to put a public spotlight on what they call “Miracle Ridge,” a 3,000-foot-long Allegheny Mountain ridge lined with trees up to 300 years old. “The pipeline would turn Miracle Ridge into a pile of rubble,” Bill Limpert said in a telephone news conference on Monday with the Chesapeake Climate Action Network, an environmental group that opposes the pipeline and the transportation of natural gas produced through fracking in the West Virginia shale fields. However, the Limperts and their allies stopped short of promising a stand in the treetops to stop the project, as Theresa “Red” Terry and other opponents did earlier this year in Roanoke and Franklin counties in a long standoff with construction crews for the Mountain Valley Pipeline that ended with their eventual surrender. “We’re peaceful folks,” said Limpert, a retired environmental regulator from Maryland. “We believe in the rule of law. We’ll cross that bridge when we come to it.” Bath County is west of Staunton along the state line with West Virginia. The earliest potential confrontation with tree-cutting crews would be mid-September, when the regulatory window reopens for the felling of trees in the 125-foot-wide corridor that Dominion Energy and its partners plan to create for the pipeline from West Virginia to the North Carolina border more than 300 miles away.

Blockade by Pipeline Opponents Disrupts Work Day at FERC -- Security at the Federal Energy Regulatory Commission seemed caught unawares Monday morning when anti-pipeline activists blockaded the staff parking garage at the agency headquarters. In the middle of First Street, two people climbed up and perched high on bamboo structures made to resemble hydraulic fracking well derricks. FERC is responsible for approving or denying proposed interstate gas pipelines, most of them supplied by fracking wells. “FERC greenlights all energy projects, paying no mind to how dirty or unsafe they are to the climate or community,” said derrick-sitter Jessica Sunflower Rechtschaffer of New York City. “We erected these towers in front of FERC to show how these towers are being placed all over the USA, disrupting people, their homes livelihoods and environment.”The FERC critics from Beyond Extreme Energy (BXE) and other groups, numbering about two dozen, also unfurled a long banner in front of the main entrance, blocking it as well. They say FERC should no longer be “a rubber stamping agency” and instead dedicate itself to facilitating “a just transition off fossil fuels.”FERC has long been accused of having a “cozy relationship” with industry with commissioners and staff enjoying a revolving door to and from gas industry jobs. Critics also say that it assists gas companies in breaking up projects into smaller ones which will more easily obtain approval, a practice known as segmentation. Meanwhile, communities must grapple with a complex and time-consuming permit process directed toward what seems like a predetermined outcome. FERC has also been accused of “cherry-picking” data to force pipelines through low-income areas and communities of color. There has been a sustained initiative to draw attention to the broad impact of the agency’s work, as gas companies seize private property and dig up forests, streams and mountaintops with a massive expansion of pipeline networks. For more than four years, BXE has held similar protests at FERC headquarters and disrupted the Commission’s monthly public meetings. Their efforts may be paying off.

Company plans to finish Louisiana oil pipeline by October -  A company building a crude oil pipeline in Louisiana expects to complete the construction project by October if a federal appeals court doesn’t order another halt to the work. Bayou Bridge Pipeline LLC’s attorneys said in a court filing Wednesday that construction of the entire 163-mile (260-kilometer) pipeline was nearly 76 percent complete as of Sunday. A three-judge panel of the 5th U.S. Circuit Court of Appeals is considering whether the company can continue building the pipeline through the environmentally fragile Atchafalaya Basin swamp. Last Friday, the panel asked for an update on the work. In February, U.S. District Judge Shelly Dick issued a preliminary injunction stopping pipeline construction in the basin until environmental groups’ lawsuit over the project is resolved. In March, however, a different 5th Circuit panel agreed to suspend Dick’s order pending a final decision by the appeals court. That ruling allowed the company to resume construction. During a hearing in April, company lawyers urged the New Orleans-based appeals court to throw out Dick’s order. The panel hasn’t ruled yet. In the meantime, workers are still cutting down trees in the basin to clear a path for the pipeline. As of Sunday, the company had cleared approximately 164 acres of trees (out of a total of 262 acres) and estimated it will finish that work by Aug. 8, according to Wednesday’s court filing. 

Big Oil eyes U.S. minority groups to build offshore drilling support (Reuters) - The largest U.S. oil and gas lobby group is seeking to convince Hispanic and black communities to support the Trump administration’s proposed expansion of offshore drilling, arguing it would create high paying jobs, including for storm-displaced Puerto Ricans. The American Petroleum Institute (API) launched its “Explore Offshore” campaign earlier this month to counter offshore drilling foes in coastal southeast states from Virginia to Florida, where lawmakers and governors on both sides of the aisle have expressed fear an oil spill could ruin tourism. “We want to build support in minority communities because the message that increasing the supply of affordable energy and good paying jobs will resonate,” said Erik Milito, API’s director of Upstream and Industry Operations. As part of the campaign, API has partnered with a number of black and Hispanic business groups, including the Virginia, Florida and North Carolina Hispanic Chambers of Commerce and the Florida Black Chamber of Commerce and South Carolina African American Chamber of Commerce. A Pew Research poll published in January showed that 56 percent of Hispanics and 54 percent of blacks opposed offshore drilling, compared to 48 percent of white people. The Interior Department in January announced a proposal to open up nearly all U.S. offshore waters to drilling, triggering a backlash from coastal states that rely on tourism. Interior Secretary Ryan Zinke told a Senate panel in April that he is likely to scale back the proposal following meetings with coastal governors. Shortly after he unveiled his offshore drilling proposal, Zinke offered an exemption for Florida after he held a private meeting with Republican Governor Rick Scott. The oil and gas industry is keen to pursue seismic testing in areas they believe hold the largest reserves along the southern Atlantic coast and to Florida’s eastern Gulf shorelines. The API campaign published op-eds in local newspapers this week, including one by Stephen Gilchrist, chair of South Carolina’s African American Chamber of Commerce. In it he touts API’s major talking point that oil and gas exploration jobs offer locals an average salary of $116,000 without requiring a college degree.

Gulf Of Mexico Production Expected To Hit Record High -- While the U.S. shale production in the Permian has been grabbing most of the market and media attention over the past two years, the Gulf of Mexico has been quietly staging a comeback. Big Oil firms, the main operators in the Gulf of Mexico, have been cutting costs and simplifying designs to make offshore projects viable in the lower-for-longer oil price world. Chevron, Shell, and BP continue with their deepwater developments offshore Louisiana and Texas and have brought down breakeven costs to $40 a barrel or less—comparable with the breakevens at some shale formations onshore. Now operators are vying for new exploration acreage close to existing production platforms that would bring development and production costs down even further. While the market and media have focused on the record Permian production, the Gulf of Mexico’s production is also expected to hit a record high this year. But there’s one huge difference between onshore and offshore in terms of resource development—for shale wells, production peaks in several months, while vast deepwater resources can pump oil for decades. Big Oil continues to bet on resources and projects that will last for decades, but companies have drastically changed their approach to development. Gone are the days in which the race was to have ‘the biggest, the most complex and most expensive’ bespoke project the industry has seen. It may have worked at oil prices at $100, but at half that price of oil, the focus is on leaner projects and more collaborative work to bring costs down. 

Environmentalists sue for report on how Gulf drilling affects endangered species -- Three conservation groups said in a lawsuit filed Thursday that federal wildlife agencies have failed for years to complete required consultations and reporting on the effects that oil drilling in the Gulf of Mexico could have on endangered species. The suit comes more than a decade since the last such report was done, and more than eight years since the huge 2010 BP oil spill, the groups said. The Gulf Restoration Network, the Sierra Club and the Center for Biological Diversity released a copy of their lawsuit as it was being filed in U.S. District Court in Florida. Defendants named are the National Marine Fisheries Service and the U.S. Fish and Wildlife Service. The suit says the Endangered Species Act requires those agencies since 2007 to consult with the agencies overseeing Gulf drilling and to publish an opinion on the possible effects of such drilling on endangered species, including various species of whales and sea turtles. Such consultations and reporting haven't been conducted since well before the 2010 explosion of the BP-operated Deepwater Horizon drilling rig, a disaster that spilled millions of gallons into the Gulf, the lawsuit says. It added that the result is that hundreds of offshore oil and gas projects have been approved based on outdated information.  . "It is now nearly eight years later, and the Fisheries Service and FWS have not completed consultation," the lawsuit says. "This despite the Fisheries Service's earlier assurance to a federal court that consultation would be completed by Oct. 31, 2014."

U.S. hydrocarbon gas liquids consumption increases as prices, expenditures decrease -- Consumption of hydrocarbon gas liquids (HGL) in the United States totaled 928 million barrels in 2016, up about 12% since 2010. During the same time, total U.S. HGL prices fell by 47% and, consequently, expenditures decreased by about 41%. In 2016, total U.S. HGL expenditures were $32 billion, the lowest since 2003.  The Texas and Louisiana industrial sectors dominate HGL consumption, expenditures, and price formation in the United States. The two states combined to account for about 75% of total U.S. HGL consumption and 58% of total U.S. HGL expenditures in 2016, almost all of which was in the industrial sector. The HGL pricing hub in Mont Belvieu, Texas, heavily influences the prices of HGL products across the nation.  EIA’s State Energy Data System (SEDS) recently published a new categorization of petroleum products with annual state-level estimates of HGL consumption, prices, and expenditures by end-use sector for 1960 through 2016. HGLs include natural gas liquids (ethane, propane, normal butane, isobutane, and natural gasoline) and refinery olefins (ethylene, propylene, normal butylene, and isobutylene). Almost all HGLs not used as refinery and blender inputs are consumed exclusively in the industrial sector, with the exception of propane, which is consumed in all sectors.

Analysis: Power burn set to break monthly gas-fired power generation demand record in Midwest -- Gas-fired power generation demand across the Midwest is on track to set a new high this month as warm weather and two coal retirements have offset an uptick in cash prices in the region. Strong power burn is likely to continue through the end of June with hot weather in the forecast. The higher demand is also causing storage fields in the region to refill at a sluggish rate. However, the futures market is predicting Chicago prices will fall throughout the summer. Midwest power burn demand has averaged 2.6 Bcf/d over the past 30 days, up 60% from the five-year average of 1.5 Bcf/d for this time, and 0.6 Bcf/d higher than this time last year, according to data from S&P Global Platts Analytics. The primary driver is warm weather. Population-weighted temperatures in the Midwest have been approximately 6 degrees above normal over the past 30 days, including eight days more than 10 degrees above normal and several days reaching almost 20 degrees above normal. Temperatures are expected to fall more in line with seasonal averages through the end of June but remain about even with the past 30 days. Platts Analytics is expecting strong demand to continue through the end of the month. If the forecast holds, total June power demand will average 2.4 Bcf/d, which would be a new record, topping both June 2016's record high of 2.36 Bcf/d and the June five-year average of 1.6 Bcf/d.

Factbox: Key natural gas supply/demand projections from IEA's Gas 2018 report - The International Energy Agency on Tuesday published its latest medium-term gas outlook containing forecasts for gas supply and demand to 2023.

  • Global gas demand to reach 4.1 Tcm by 2023
  • US gas production to soar to 922 Bcm
  • Chinese gas production set for big increase
Below are some of the key projections. (see tables) 

What a summer scorcher means for natural-gas prices - Low supplies of natural gas could lead to higher prices this summer, as Americans begin to flip on their air-conditioning units, boosting demand for the energy source. Stockpiles of natural gas—made plentiful by the U.S. shale boom—have become depleted after an extended winter this year increased demand for heating homes. Booming U.S. exports of gas also have absorbed excess inventories, and analysts say cheap prices have made it more popular for power generation, compared with more expensive sources like coal. Natural gas consumption generally rises in the summer months as cooling needs drive energy demand. But this year, the amount of natural gas in storage started June at the lowest level since 2014 for that time of year, and the second lowest level in a decade. .Now, with weather forecasts into July showing hotter-than-average temperatures across the U.S., consumers could see a pop in prices. Already, a significantly hot month of June has pushed natural gas futures near the closely watched level of $3 a million British thermal units, recently hitting the highest price since January. Extreme cold in January led to record natural gas consumption and withdrawals from storage extended into April due to unseasonably cool weather. Now the amount of energy required to cool buildings in June is on track for its second highest level since 1981, according to Bespoke Weather Services. It’s a far cry from two years ago when the relentless growth of U.S. shale and mild weather produced a glut that sent gas prices tumbling to a 17-year low. Traders are betting that the summer will end with significantly less natural gas in stock. On London’s Intercontinental Exchange, EIA end-of-storage index futures indicate bets that October will end with about 3.525 trillion cubic feet of natural gas, which would be the lowest for that time since 2008, before shale flooded the U.S. with cheap energy. 

Natgas CEOs say product can help curb climate change (Reuters) - Natural gas can be a permanent solution to reducing greenhouse gas emissions and curbing climate change, and not just a step toward full utilization of renewable energy technologies, industry executives said on Tuesday. Once thought of as a clean alternative to crude oil, natural gas has come under attack by environmentalists who want to curb the use of all fossil fuels in a bid to hasten the adoption of solar, wind and other green energies. “This idea of natural gas as a transition fuel to renewables is strange,” Total SA Chief Executive Patrick Pouyanne said Tuesday at the World Gas Conference in Washington. “Natural gas is a solution (to climate change). It’s been scientifically proven.” Pouyanne’s views were echoed by others who joined him on industry panel, including executives from ConocoPhillips, BP Plc, Equinor Asa and Qatar Petroleum. “We don’t believe the existential threat to our business is right around the corner,” Conoco CEO Ryan Lance said. “We see rising usage of natural gas.” Qatar Petroleum, which is undertaking a major project to expand its natural gas output by a third over the next decade, said it sees demand only growing for its product. “Human beings need energy. Gas should be seen as a destination fuel not just as a transport fuel or bridge fuel,” QP Chief Executive Saad Sherida Al-Kaabi said at the conference. Bob Dudley, the CEO of BP Plc, which is rapidly expanding its U.S. shale gas production, said the fuel is the best alternative to coal-fired power generation in many locations, with improving technologies helping to curb methane emissions. A study released last week from the Environmental Defense Fund found that oil and gas drilling gives off far more of the powerful greenhouse gas methane than the U.S. government estimates as leaky wells go unnoticed by federal regulators. Dudley acknowledged the industry should and is doing more to use better technologies to bolster methane collection. 

The argument for fracking as a climate solution just went down in flames -- A new, comprehensive study of methane leaks in the oil and gas industry is the final piece of evidence that natural gas is not part of the climate solution.  “Natural gas could warm the planet as much as coal in the short term,” as the  journal Science itself summed up the 24-author study it just published.   But that headline — and virtually all of the media coverage of the study — tells only a piece of the story: The findings confirm if a coal-fired plant is replaced with a gas-fired plant there is no net climate benefit for at least two decades.  The missing piece in both the study and the coverage, though, is that countless studies have made clear that natural gas does not just displace dirty coal in the power system —  it displaces many carbon-free sources of power, including nuclear and renewables.  Let’s briefly step back from this study to look the three essential reasons natural gas is not a “bridge” fuel to a carbon-free future. First, natural gas is mostly methane (CH4), a super-potent greenhouse gas, which traps 86 times as much heat as CO2 over a 20-year period.  That’s why many studies find that even a very small leakage rate of methane from the natural gas supply chain (production to delivery to combustion) can have a large climate impact — enough to gut the entire benefit of switching from coal-fired power to gas for a long, long time. Second, a great many studies have found that leakage rates are not small at all, especially as fracking has become more popular. “A review of more than 200 earlier studies confirms that U.S. emissions of methane are considerably higher than official estimates,” as one 2014 Stanford review research on methane leaks explained.  The study found methane emissions are so large, they “produce radiative forcing over a 20-year time horizon comparable to the CO2 from natural gas combustion.” That means the total warming from natural gas plants (leaks plus burning the gas) over a 20-year period is comparable to the total warming from coal plants over 20 year period.  And that brings us to the third crucial point about why natural gas isn’t a bridge fuel. Many other studies find that natural gas plants don’t replace only high-carbon coal plants. Gas plants commonly replace very low carbon power sources like solar, wind, nuclear, and even energy efficiency, which is often overlooked as a major alternative to fossil fuels.

A New Report Tying U.S. Natural Gas And Global LNG Markets -- As U.S. LNG exports play an increasing role in the global market, the U.S. will not only be exporting its vast natural gas supplies but also to a degree its market realities — namely, the risks, opportunities and, at times, volatility of a highly liquid, fungible and economically-driven spot market. The global LNG market also has shifted toward more flexible and spot-oriented trade, opening the window for some ad lib wheeling and dealing based on the prevailing economic conditions at any given time. These two factors together will come with significant implications across the supply chain — from the producing basins to the pipeline transport routes and from the export terminals to the destination markets they are serving. This month, with feedgas receipts at Sabine Pass LNG down and an explosion on a key supply route from Appalachia to Louisiana, we are starting to see how this integration of the U.S. and global markets is likely to play out. To help you keep up with this complicated dynamic and extrapolate the big-picture impacts, today we introduce RBN’s new LNG Voyager Report, featuring a comprehensive, pipe-to-port-to-destination approach to understanding how U.S. LNG fits into the global market. In the past three years, U.S. LNG exports have gone from being non-existent to an average of 3.0 Bcf/d. In that time, the new demand source — currently from just five liquefaction trains, four at Cheniere Energy’s Sabine Pass LNG (SPL) in Cameron Parish, LA, and one at Dominion’s Cove Point LNG in Maryland — already has reconfigured pipeline flows all the way from the Northeast and Midwest to the Gulf Coast, as Appalachian and other gas suppliers look for ways to get their gas south, where the lion’s share of the export demand is happening (see Toe Bone Connected to the Foot Bone, and our latest Drill Down report, Down Louisiana Way). In fact, gas flows along entire corridors of pipeline routes that used to flow south-to-north have flipped direction and are flowing gas north-to-south.

 Derailed Train Spills 230,000 Gallons of Crude Into Flooded Iowa River - A train derailment spilled 230,000 gallons of crude oil into an already-flooded Iowa river Friday, endangering downstream drinking water, the Des Moines Register reported Sunday.Thirty-two cars of a Burlington Northern Santa Fe (BNSF) train derailed, 14 of which leaked crude oil into the Rock River in Doon, Iowa. The cause of the derailment is unknown, but officials including Iowa Governor Kim Reynolds attributed it to heavy rain Wednesday and Thursday which led to flooding.To aid recovery from extreme weather and its consequences, including the derailment, Reynolds issued aproclamation of disaster emergency Saturday for Lyon County, where the train derailed, as well as Plymouth, Sioux and Woodbury counties.Workers so far have contained nearly half the spill—around 100,000 gallons—using booms, BNSF told Reuters.The oil spill hit the town of Rock Valley, Iowa, which was coping with its second flood in four years, especially hard."Our city administrator said to me, 'The only thing we need now is a plane crash,'" Rock Valley mayor Van Otterloo told the Des Moines Register. "Everything came at once."Rock Valley acted quickly to shut off water wells following the spill and plans to drain the wells and use rural water until the well water tests safe.There are also concerns that oil could contaminate drinking water in Omaha, Nebraska, 150 miles downstream, since the Rock River merges with the Big Sioux River, which then feeds into the Missouri. Omaha's Metropolitan Utilities District said they were monitoring water pulled from the Missouri, the Des Moines Register reported. The Metropolitan Utilities District said they could source water from unconnected rivers if needed, according to Reuters.  Reynolds told the Des Moines Register it was still unknown how many communities were affected by the oil spill and how it would impact the surrounding environment.

Derailed tank cars in Iowa were shipping Canadian crude to US Midwest - The 32 tank cars that derailed Friday in Iowa were shipping Canadian crude to the US Midwest, with the total spilled volumes estimated to be 230,000 gallons, or roughly 5,475 barrels, officials said over the weekend. A total of 14 tanks cars were "compromised" and a BNSF investigation is now underway, railroad spokeswoman Amy Casas said Sunday. Early Friday, 32 rail cars went off the track near Doon in Lyon County, Iowa, spilling crude into the nearby swollen Little Rock River, BNSF said then without giving any reason for the derailment. The train was carrying Canadian crude produced by ConocoPhillips and the cargo was destined for Stroud, Oklahoma, company spokesman Daren Beaudo said in an email Saturday. There were no reported injuries to the train crew and nearby residents, he said. BNSF has responsibility for clean-up and mitigation of the incident and ConocoPhillips is working with the railroad, local emergency officials and regulators, Beaudo said.  Hazardous materials and environmental experts are containing spilled oil with booms and recovering it with skimmers and vacuum trucks and at this point, an estimated 100,000 gallons (2,380 barrels) or 44% of the total volume was contained, BNSF said in its latest update Saturday at 4:30 pm CT (0930 GMT).  Additional booms have been placed five miles downstream the river and nearby water bodies and crude oil will be removed from the immediate derailment area with oil-water separators, the railroad said Saturday.

Cleanup Underway After Train Derailment Causes Oil Spill --  Floodwater has receded in northwest Iowa, where a train carrying crude oil derailed on Friday.The oil has now been contained, but removing all the oil from the water could take months. At least 200 people are now helping with cleanup efforts. BNSF Railroad is asking anyone with damage as a result of that derailment to contact them to get everything cleaned up and repaired."We have representatives from the EPA, state, local, regional, regulators are on site overseeing what we're doing and working with them to make sure that we clean up in the appropriate way as it relates to federal law and state law," said BSNF spokesperson Andy Williams. "Every plan that we come up with we're having approved by them before we move forward. The long-term cleanup will take a while, a matter of months, probably, and we will be working hand in hand with the EPA and other agencies."The sheriff's office is asking everyone to stay away from the area because of the heavy machinery being used.

 Nearly half of Iowa crude oil spill contained, BNSF says -  (Reuters) - Workers have contained nearly half of the crude oil spilled near Rock River in northwest Iowa over the weekend following a freight train derailment on Friday, BNSF Railway Co said.  About 100,000 gallons had been hemmed off using booms out of the estimated 230,000 gallons spilled, BNSF said in a statement on Saturday. The spill has raised concerns about drinking water downstream. The company did not respond to questions on Sunday about the progress of the cleanup.  No one was hurt in the derailment, in which 32 cars came off the rails, 14 of which leaked at least some of their contents, BNSF said. The derailment happened south of Doon, a city of a few hundred people. The cause has not been confirmed, although Iowa Governor Kim Reynolds attributed it to an intense storm and flash flooding in an emergency proclamation issued by her office on Saturday. The spill threatened to contaminate drinking water for residents about 150 miles (240 km) downstream in Omaha, Nebraska.  Metropolitan Utilities District, which provides the Omaha metro area’s drinking water, said it was monitoring the spill. If needed, it would shift water pumping to two other water treatment plants, which are supplied by another river not connected to the spill, the utility said in a statement on Friday. The utility did not respond to a request on Sunday for an update on its monitoring.  BNSF, a unit of Berkshire Hathaway Inc, said it was using skimmers and vacuum trucks to clean up the spill and minimize damage to the environment. The spill posed no risk to workers or nearby residents, BNSF said.

Work continues in U.S. Iowa to contain oil spill after train derailment (Xinhua) -- A U.S. railway company and Iowa State are continuing their joint efforts on Monday to contain the oil spill following a tanker train derailment. Fourteen cars of the derailed train have leaked some 230,000 gallons (about 870,000 liters) of crude oil into the flooded fields in Lyon County, northwestern Iowa since Friday, according to Burlington Northern Sante Fe (BNSF) officials. The train company has built a temporary road to the site along a flooded stretch of tracks, reported Iowa Radio, adding clean-up operations have been underway around the clock. BNSF spokesman Andy Williams said that at least ten of the 32 derailed cars have already been drained of oil, with another seven being moved to nearby field to be disassembled. Skimmers and booms have been placed near the derailment site to capture the spilled oil. Williams said the whole clean-up process will possibly take several weeks, if not months. The cause of the derailment is unknown but both the train company and local officials believe that flooding was a major factor leading to the accident early Friday. 

Minnesota regulators to decide this week on Enbridge Line 3  (AP) — State regulators reconvene this week to decide whether to approve or reject Enbridge Energy's proposal for replacing its Line 3 oil pipeline across northern Minnesota.The Public Utilities Commission meets Tuesday so its members can resume questioning Enbridge officials as well other supporters and opponents of the project. The panel could then deliberate as long as until Friday before making its decision.Line 3 was built in the 1960s. It runs from Alberta across North Dakota and Minnesota to Superior, Wisconsin. Enbridge says it needs replacing to ensure safety and restore capacity because the existing pipeline is increasingly subject to corrosion and cracking.  But climate change and tribal activists object because it would carry Canadian tar sands crude and risks spills in pristine waters where Native Americans harvest wild rice.

Possibility of civil unrest hangs over regulatory hearings on controversial Enbridge pipeline proposal (Minneapolis  The specter of civil unrest — like the protests that erupted over building the Dakota Access pipeline in 2016 — hung over the fourth day of regulatory hearings on a $2.6 billion proposal by Enbridge to build a new pipeline across northern Minnesota. Utility regulators spent the day talking about what the least-objectionable route for a replacement for Enbridge's 1960s-vintage Line 3 would be — or whether it should be built at all. The Minnesota Public Utilities Commission (PUC) is expected to decide Thursday or Friday at the latest whether to grant Enbridge a permit for the project and which route to endorse. It is one of the mostly highly charged issues before the PUC in many years. PUC Chairwoman Nancy Lange noted the possibility of unrest if Enbridge's proposal is approved. "One of the things that concern me is permitting something that could cause civic disruption," she said. Lange acknowledged the weaknesses in the route alternatives. But she also asked Enbridge about construction delays if the PUC chose an alternative route of some sort — one with less opposition. Christy Brusven, an attorney for Enbridge, said the delay would be more than two years. She also noted that alternative routes also would likely meet opposition. "There are a number of groups that are a 'hard no' on the project, whatever it is," she said. 

Minnesota regulator approves rebuild of Enbridge pipeline - (Reuters) - A Minnesota regulator on Thursday approved a certificate of need for Enbridge Inc to rebuild its Line 3 oil pipeline, angering environmentalists but offering hope to Western Canadian oil producers that have struggled to move crude oil to refiners. The Minnesota Public Utilities Commission’s decision clears the final major hurdle, pending possible appeals, in Enbridge’s three-year effort to rebuild its aging, corroded 1,031-mile (1,660-km) pipeline that runs from Alberta in western Canada to Wisconsin. Shares of Calgary, Alberta-based Enbridge closed up 3.7 percent in Toronto. The commission also approved a route that closely follows Enbridge’s preference and will take Line 3 over a new corridor for part of its path. The certificate of need has conditions, including that Enbridge make a financial guarantee to clean up any environmental damage and that it remove at landowners’ request pipeline that is no longer in use. Pipeline bottlenecks have steepened a price discount for Western Canadian heavy crude this year. Refiners in Minnesota and surrounding states say Line 3 is necessary to increase crude supplies. Shouts from Native Americans and environmental activists interrupted the meeting. “Shame on you, you cowards!” one woman shouted before breaking into tears. Environmental groups and some indigenous communities oppose the project over concerns about spills and impact on tribal wild rice harvesting areas. “What they have done to us today is egregious,” said Winona LaDuke, executive director of Honor the Earth activist group. “They have gotten their Standing Rock. We will do everything that is needed to stop this pipeline.”

Minnesota approves Enbridge Line 3 with route modifications -- Canada's Enbridge won approval Thursday to build its Line 3 replacement through the state of Minnesota, clearing a major hurdle for the 1,031-mile crude transportation project to run from Canadian province Alberta to Wisconsin. The Minnesota Public Utilities Commission voted 5-0 to issue a "certificate of need" for the project, according to a webcast of the hearing. The commission then voted 3-2 to approve a route for the pipeline mostly along a path Enbridge preferred, with some modifications, according to the webcast and local media reports. Indigenous and environmental groups had objected in the hearing to the route Enbridge preferred. An Enbridge spokesman said Thursday the company would issue a statement after the PUC finished its proceedings. The current pipeline ships some 380,000 b/d of light, medium and heavy crude barrels from Western Canada to refineries in the Midwest. The replacement, with new line pipes of larger diameter, would increase throughout on the line to 760,000 b/d. "It's a big deal," one Canadian market participant said ahead of the decision. It will add "400,000 b/d of new capacity across the border." While crude is not expected to move on the Line 3 replacement until 2020, the project will be the first of the three new pipelines that could give Western Canadian producers greater ability to export crude. The two other projects are Kinder Morgan's expansion of its Trans Mountain pipeline, which would provide 590,000 b/d of new capacity and the 830,000 b/d Keystone XL pipeline of TransCanada.

Minnesota Approves Enbridge Pipeline Rebuild, 'An Accident Waiting to Happen' - The Minnesota Public Utilities Commission (PUC) approved a controversial rebuild of Line 3 of the Enbridge Energy oil pipeline Thursday, as environmental activists and Native American groups vowed to keep fighting, The Associated Press reported.Opponents are concerned about the need for new fossil fuel infrastructure and the danger of an oil spill near vulnerable ecosystems in Minnesota, including areas where Native Americans harvest wild rice, which is sacred to the Ojibwe."You have just declared war on the Ojibwe!" Tania Aubid of the Mille Lacs Band of Ojibwe stood and said when the PUC's decision became apparent. "What they have done to us today is egregious," Honor the Earth executive director Winona LaDuke told Reuters. "They have gotten their Standing Rock. We will do everything that is needed to stop this pipeline." Enbridge Energy argued they needed to replace the existing Line 3, which was built in the 1960s and is subject to corrosion and cracking. They currently operate it at half-capacity due to safety reasons. The company said they would continue running the existing unsafe pipeline if a replacement was not approved, The Associated Press reported. Opponents, including the Minnesota Department of Commerce, said the Midwest didn't need the additional oil from a pipeline replacement since demand will likely fall with the rise of electric vehicles and renewable energy.The commissioners seemed to have a hard time making the decision―chairwoman Nancy Langue wiped away tears as she explained her reasoning―and emphasized concerns about the safety of the existing, older pipeline "It's irrefutable that that pipeline is an accident waiting to happen," Commissioner Dan Lipschultz said before the vote. "It feels like a gun to our head … All I can say is the gun is real and it's loaded."

Analysis: US natural gas production hits record high, propelled by Texas - US natural gas production edged up to a fresh record high this week, largely due to gains in Texas, the Southeast, and the Appalachia region. Modeled US production surpassed 79.8 Bcf/d on Sunday, setting the new record high, S&P Global Platts Analytics data shows. Over the past week, US production has been exceptionally strong, averaging 79.4 Bcf/d, with six of the highest output days on record. Texas has led that growth. Month-to-date, production in the state has averaged nearly 18.8 Bcf/d, outpacing May's average by roughly 340 MMcf/d on increases in the Permian Basin and East Texas Haynesville. Gains in the Southeast are playing a role, too. In June, production across the region has averaged 11.5 Bcf/d and is up about 150 MMcf/d compared to the prior-month average, with gains in the Haynesville and the Louisiana/Mississippi offshore being partially offset by declines from the Alabama offshore. In the dry basins of Appalachia, gas production has averaged 27.5 Bcf/d in June, a month-on-month increase of 300 MMcf/d and the highest monthly average there on record. After briefly touching modeled levels close to 28 Bcf/d earlier this month, Northeast production has since pulled back modestly, averaging just over 27.6 Bcf/d. Looking ahead, it's possible that Northeast production growth could flounder this summer, thanks to continued in-service /delays on Rover Pipeline's upstream supply laterals. While the Majorsville, Burgettstown and Sherwood laterals await an authorization from the US Federal Energy Regulatory Commission, flows on Rover's mainline have averaged just over 2.2 Bcf/d in June, or about 68% of the pipeline's designed 3.25 Bcf/d nameplate capacity.

Kinder Morgan Plans $2B Permian Gas Pipeline -- Kinder Morgan's Texas subsidiary has announced a $2 billion pipeline to transport natural gas from the oil-rich Permian Basin.  As the Houston Chronicle noted, this is Kinder Morgan's first major project announcement since the Canadian government's controversial $4.5 billion (U.S. $3.5 billion) buyout of the company's existing Trans Mountain pipeline and its expansion project. The Trans Mountain expansion is expected to triple the amount of tar sands transported from Alberta to the coast of British Columbia and has been at the center of widespread protests by environmentalists and some Indigenous groups.The proposed "Permian Highway Pipeline" is designed to transport up to 2 billion cubic feet of natural gas per day through approximately 430 miles of 42-inch pipeline from the Waha, Texas, area to the U.S. Gulf Coast and Mexico markets, a press release states. Partners include Blackstone Group-backed EagleClaw Midstream Ventures and the Apache Corporation. The pipeline is expected to be in service in late 2020 and is "subject to the execution of definitive agreements and the receipt of construction permits," the release says.

Report on Oil and Gas Fracking Impact on Local Aquifers - With a technical report in hand on anticipated impacts of oil and gas fracking, Sandoval County commissioners will hold a work-study session open to the public. County Commissioner Jay Block said June 13 that no date had been set. “I have the final report,” Block said in an e-mail. “The plan is to have a work session that is public to go over the report.”A draft ordinance based on the study by geologists at New Mexico Tech and other factors will be produced by the County Planning and Zoning Commission, which will submit its recommendation to the County Commission.“We are not being rushed. We’ve been working this for well over two years, and have had numerous citizens provide their input, the commission voted on a citizens’ working group [draft] as well, and we have also worked with the Oil Conservation Division of  the N.M. Natural Resources Department and New Mexico Tech for scientific data,” Block said.“So, as you can see, we have been extremely transparent, and we will not be rushed. I will make my decision based on a balanced approach based on data, needs of our county, safety, sciences and pater protection.” He noted that “our schools receive over $47 million a year from the [oil and gas] industry alone, not including  the other programs and sectors that receive tax dollars from that industry which is almost 40 percent of our state budget. That plays a part in this as well,” he added.

Zinke's Halliburton mess deepens – - Interior Secretary Ryan Zinke met at department headquarters in August with Halliburton Chairman David Lesar and other developers involved in a Montana real estate deal that relied on help from a foundation Zinke established, according to a participant in the meeting and records cited by House Democrats late Thursday.Zinke, Lesar and the others later discussed the development project over dinner that night, the participant in the meeting confirmed to POLITICO. The new details raise further questions about Zinke's involvement in the project, and whether his conversations with the developers — especially in Interior's office — violated federal conflict of interest laws given Halliburton’s extensive business before this department. POLITICO reported Tuesday that a foundation Zinke established a decade ago agreed to let the Lesar-backed development build a parking lot on foundation land.  Zinke has told POLITICO that he was no longer involved in the foundation’s operations since becoming secretary in March 2017, and that has he “resigned as president and board member” of the foundation when he joined President Donald Trump's Cabinet. But he has not said whether he continued holding discussions with the developers, who are pursuing a multi-use project in his hometown of Whitefish. Zinke was scheduled to meet at the Interior Department with Lesar and his son and lead project developer Casey Malmquist on Aug. 3, according to an email from his scheduler cited by the House Democrats. About six weeks later, he received an email from Malmquist with plans for the development, which is expected to include shops and a microbrewery — a project initially proposed by Zinke more than five years ago. A week after Zinke received Malmquist’s email, Zinke's wife, Lola, signed a letter of intent in her role as president of the foundation agreeing to let the developers use its land. “Ryan — our development plan and your park project are an absolute grand slam,” Malmquist wrote in one email to Zinke released via the Freedom of Information Act. “I have never been more excited about a development as I am about this one.”

 An Update On Natural Gas Flaring Challenges In North Dakota - Crude oil and natural gas production in the Bakken are at record highs, and with the surge in production has come infrastructure constraints and higher rates of flared gas, renewing concerns about possible production shut-ins. As gas production volumes exceeded gas processing capacity, the flaring rate in April 2018 rose to 15% of total monthly volumes –– precisely the current limit set by North Dakota’s gas capture plan and three percentage points above the 12% cap due to kick in this November. Rig counts, producers’ drilling plans and $70/bbl crude oil prices all point to further production growth, which means that without additional processing capacity — or a change in the gas-capture policy — it will be increasingly difficult for producers and processors to comply. Today, we look at the latest developments in Bakken gas production, gas-related infrastructure and the gas capture policy. As we discussed last fall in There’s a Fire in the Night, the Bakken oil and gas industry has been struggling with gas capture and flaring issues for the better part of the last decade. There was a time, going back to 2011, when as much as 37% of produced gas was being flared as oil and associated gas production was on a tear and gas gathering and processing were struggling to keep up. That prompted the North Dakota Industrial Commission (NDIC) to require exploration and production companies (E&Ps) to file a “gas capture plan” (GCP) with their drilling permits and put in place flaring limits.The new rules limit flaring to one year after first production from a well, after which time producers have to do one of the following:  connect the well to a gas gathering pipeline, cap it, or link it to an electrical generator or a compression or liquefaction system that consumes at least 75% of the gas onsite.

Fracking, Proppant, And Water - This is my 30-second "elevator talk" regarding completion strategies in the Bakken right now.

  • Length of laterals: the standard is a "long lateral"; some call it an "extended reach";  two sections "long", about 9,000 feet horizontally
  • Number of stages: 50; less than 40 catches my attention; suggests something out of the ordinary; I check the sundry forms to see if there might be an explanation; below 20, "definitely" a failed frack . over 60, catches my attention
  • Water (gallons, data from FracFocus):  8 million to 12 million gallons; generally 10 million gallons; up to 12 million gallons doesn't necessarily surprise me;  up to 20 million gallons definitely gets my attention
  • Sand/ceramic (by percent, weight, data from FracFocus): 14%; for all practical purposes, the difference between 100% and water volume by weight
    • a very small percent of overall mix is the proprietary "cocktail" to help "lubricate" the movement of oil to the well bore
    • above 16% gets my attention
    • below 10% really gets may attention
  • Sand/ceramic per stage: 10 million lbs / 50 stages = 200,000 lbs/stage
  • Sand/ceramic per foot (which most folks like to use): 10 million lbs / 9,000 feet = 1,100 lbs / foot (about half what they are using in the Permian, based on what Mike Filloon posts)
  • To determine amount of sand, until the official report comes out, using data from FracFocus: a gallon of water = 8.35 pounds  calculate amount of water in pounds (e.g., 10 million gallons x 8.35 pounds = 83.5 million lbs)  if weight of water in percentage is 86%, then 14% (by weight) is sand/ceramic
  • Checking my work:
    • in my example, total frack mix (water + sand/ceramic) = 97 million lbs
    • 86% of that was water, or 83 million lbs
    • 83 million lbs of water / 8.35 pounds (per gallon of water) = 10 million gallons, and that's where we started

State one step closer to gas pipeline, but not the one the Walker administration wants -  Alaska is one step closer to getting an in-state natural gas pipeline; though it’s not clear if the project will ever be built. The U.S. Army Corps of Engineers announced Friday that it had released the final supplement for its environmental review of the Alaska Stand Alone Pipeline project. The final permit in that process should be released sometime in the next three months. The in-state pipeline project has taken a backseat to the massive Alaska LNG export project. Both projects would pipe gas several hundred miles from the North Slope to market, but the standalone pipeline is designed for in-state use, while the Alaska LNG project is designed to sell that gas to Asian markets. Staff at the Alaska Gasline Development Corporation have repeatedly said that they are focused on building the larger project. Frank Richards is the senior vice president for both projects at the state’s gasline corporation. He said the in-state pipeline project is basically on hold, now that it has the permits it needs. “It’s truly the backup plan,” Richards said. “It means we will have the permits and authorization to construct, should the need arise.” Even though the in-state pipeline project is on hold, Richards said it can still help the state develop the Alaska LNG project. The pipeline projects are similar enough that federal regulators could use work done on one to guide permitting for the other. Also, Richards said there is about $11 million left over from developing the in-state project that can now be used to fund the export project. 

Alaska Native corporations wildcatting in big unexplored interior basins - Alaska Native-owned oil service contractors are exploring the state's large, mostly untested interior sedimentary basins, areas long thought to be natural gas-prone but now known to also have crude oil potential. The Trans Alaska Pipeline System runs through several of the basins being tested, which includes state-owned as well as lands owned by the Native corporations. Doyon, which has large landholdings in Interior Alaska, has now started drilling its fourth well in the Nenana Basin west of Fairbanks with another Native American company, Cook Inlet Region, of Anchorage, as a partner. The primary target is oil, says Jim Mery, Doyon's senior vice president for lands and natural resources. But the basin has gas potential and could supply Fairbanks, the state's second largest community about 50 miles east of the drilling location, he added. Further south, Ahtna, which owns lands in the Copper River Basin in eastern Interior, completed a third exploration well in late spring in that area and is planning a fourth prospect, according to Ahtna's COO, Tom Maloney. Success has been elusive so far, but this is rank wildcat country where persistence and patient capital is needed, the Native corporations say. Both Doyon and Ahtna own oil support companies active on the North Slope. Doyon Drilling, a Doyon subsidiary, is one of the state's major drilling contractors. 

Sleepy U.S.-Canada Border Post Reveals Diverging Oil Fortunes -  In a rural patch of prairie along the U.S.-Canadian border, the towns of Portal, North Dakota, and North Portal, Saskatchewan, couldn’t be closer. They share a fire department, and the first eight holes of the local golf course are in Canada, while the ninth and the club house are in the U.S.  But here in the Bakken shale patch, one of North America’s most-prolific oil fields, the U.S.-Canada border represents a drillers’ divide. Spurred by a surge in crude prices, North Dakota’s production is rising more than three times faster than its counterpart in the Bakken region of Saskatchewan. The output difference between the two countries runs deeper than the shared field.  While U.S. drillers deploy more rigs than any time since 2015 amid a fracking surge in the Permian Basin, companies including ConocoPhillips, Royal Dutch Shell Plc and Equinor ASA have sold operations or pulled out of Canada’s oil sands, the world’s third largest source of crude reserves. A shortage of pipelines and a regulatory environment that’s often slower and less certain than in the U.S. has helped spark the flight of capital southward, said Tom Whalen, chief executive officer of the Petroleum Services Association of Canada, a trade association representing oil servicing companies.  “We [Canadians] are kind of dying by our own sword,” Whalen said in a phone interview. “We are making it very difficult to do business.” A new tax law in the U.S. has helped oil companies by reducing the corporate rate and allowing companies to write off some assets sooner than in the past.  Routine licensing for a well in Alberta takes 79 to 119 days versus 30 to 60 days in Texas, according to a report last year by the Canadian Association of Petroleum Producers.  Enerplus Corp. Chief Executive Officer Ian Dundas estimates that 10 years ago, his company allocated 90 percent of its capital spending to properties in Canada and 10 percent to its U.S. holdings. Those percentages have been reversed, he said in an interview.

Oil Investment In Canada To Drop Despite Rallying Prices - Canada has the world’s third-largest crude oil reserves, but the country seems determined to pretty literally keep these in the ground. This determination becomes strikingly obvious when Canada is compared with its southern neighbor, which is just what Bloomberg’s Robert Tuttle and Kevin Orland did in a recent story.In the United States, they write, the number of oil and gas rigs are increasing—currently at its highest level since 2015, the height of the oil price crisis. In Canada, on the other hand, there has been an exodus of oil majors including Shell, ConocoPhillips, and Equinor, among others.In the United States, capex in the oil industry is forecast by an Oil and Gas Journal poll to rise by 9.1 percent to US$132.5 billion this year alone. In Canada, total oil investment is seen falling by 2 percent to US$30.11 billion (C$40.1 billion).Of course, there is a clear difference between the energy policies that the two neighbors’ governments are pursuing. Washington is all about energy independence, even energy dominance. Trump’s administration has been working consistently towards ensuring the best possible investment climate for oil and gas producers, much to the chagrin of environmentalists and the renewable energy industry.Ottawa, conversely, has been clearly in favor of what might very loosely be called the green lobby. This has proven a challenge recently, as the federal government had to step in and buy the Trans Mountain pipeline expansion project from Kinder Morgan after the company refused to move forward with it in the face of strong provincial government opposition from British Columbia. Despite this move, caused as much by desperation as by any desire to have the pipeline built, Ottawa has on the whole been playing against oil. Industry insiders interviewed by Bloomberg’s Tuttle and Orland note the regulatory regime that is slowing down investments, dampening the willingness of companies to do business in Canada. The average well-licensing procedure in Canada takes between 79 and 119 days. This compares with just 30 to 60 days for a well in Texas.

Western Canadian Crude takeaway constraints to ease, but only temporarily. -  The weeks-long shutdown at Syncrude Canada’s oil sands production facility in northeastern Alberta will alleviate pipeline takeaway constraints that have significantly widened the price spread between Western Canadian Select (WCS) and West Texas Intermediate (WTI) crude oil. But when Syncrude returns later this summer, there’s every reason to believe that the constraints will too, as will the need for significantly more crude-by-rail shipments. Railed volumes out of Western Canada have been increasing in recent months, but not by enough to avert WCS-WTI differential blowouts to $25 and even $30/bbl. The catch is that most of the rail-terminal capacity built a few years ago is mothballed, and that railroads are reluctant to dedicate more locomotives and personnel unless shippers make one-, two- or even three-year commitments to take-or-pay for that logistical support. Today, we consider the ongoing challenges Western Canadian producers face in moving their crude to market. The biggest news in the crude oil business the past few days was OPEC’s June 23 announcement that its members will be increasing their output by as much as 1 MMb/d. But the runner-up was likely the news that Syncrude’s 360-Mb/d operation may be offline through the end of July — a shutdown triggered by a power outage. Syncrude accounts for nearly 10% of Western Canadian production, and the suspension of flows from its production facility north of Fort McMurray, AB, opens up a lot of space on the region’s takeaway pipelines — pipelines that have been running at or very near capacity for months. Syncrude’s troubles and their effects on Western Canada’s takeaway constraints are very likely to be only temporary, though. The underlying problem — insufficient pipeline capacity and profit-sapping differentials — isn’t going away.

Oil company additions to proved reserves in 2017 were the highest since 2013 -- In 2017, a group of the world’s largest publicly traded oil and natural gas producers added more hydrocarbons to their resource base than in any year since 2013, according to the annual reports of 83 exploration and production companies. Collectively, these companies added a net 8.2 billion barrels of oil equivalent (BOE) to their proved reserves during 2017, which totaled 277 billion BOE at the end of the year. Exploration and development (E&D) spending in 2017 increased 11% from 2016 levels but remained 47% lower than 2013 levels.Of the 83 companies, 18 held more than 80% of the 277 billion BOE in proved reserves at the end of 2017. Although many of these companies have global operations, some are national oil companies with reserves concentrated in their home countries, including Russia, China, and Brazil. Proved reserves change from year to year because of revisions to existing reserves, extensions and discoveries of new resources, purchases and sales of proved reserves, and production.Organic additions to proved reserves, or reserves added through improved recovery and extensions and discoveries, are linked directly with capital expenditures in E&D. Proved reserves acquired through purchases do not represent E&D capital investment but rather reflect transfers of assets between companies. Revisions to proved reserves are usually more significantly influenced by changes in crude oil and natural gas prices than by E&D investment.  Of the 17.7 billion BOE in organic proved reserves added in 2017, slightly less than half (8.5 billion BOE) were in the United States, while Russia, Central Asia, and the Asia-Pacific region accounted for 24% (4.3 billion BOE). Canada (which includes oil sands and synthetic crude oil), Latin America, and the Middle East and Africa regions each added more than 1.1 billion BOE. Regionally, Europe accounted for the fewest organically added proved reserves for the sixth consecutive year, adding 0.3 billion BOE (2% of world total) of proved reserves in 2017.

Top GOP lawmaker not persuaded by green groups’ promises that they aren’t foreign agents | TheHill: A top House Republican says he isn’t convinced that two leading green groups aren’t in cahoots with China and Japan to influence United States environmental policy, despite their ardent denial. Rep. Rob Bishop (R-Utah) said Thursday he still suspects that two groups — Natural Resources Defense Council (NRDC) and the Center for Biological Diversity (CBD) — could be acting as foreign agents, based on lawsuits they’ve filed against U.S. military actions in Asia and the Pacific Ocean. “Based on the committee's investigation to date, we are concerned that environmental groups that bring such lawsuits may be knowingly or vulnerable to unwittingly serving as proxies for our foreign adversaries,” Bishop said in a statement Thursday, referring to the House Committee on Natural Resources, which he chairs.“The Foreign Agents Registration Act is an important mechanism for ensuring that the American people and U.S. government know the source of information and the identity of foreign entities attempting to influence U.S. public opinion, policy, and laws.” Both the NRDC and CBD sent initial responses to the panel this month, following letters from Bishop and Rep. Bruce Westerman (R-Ark.) asking for documents related to potential foreign influence or control of the groups. In their responses, both groups denied that they are acting as foreign agents or that they must register with the federal government under the Foreign Agents Registration Act. 

Court rules fracking is not banned, despite SNP rhetoric -- FRACKING has not been banned in Scotland, despite numerous “mistaken” statements by SNP ministers to the contrary, the country’s highest court has ruled.   Rejecting a bid to overturn the ‘ban’, the Court of Session ruled there was no prohibition against the controversial gas extraction technique, merely an evolving planning policy.  Lord Pentland said statements by ministers, including Nicola Sturgeon, that there was a ban “did not accurately express the legal effect of the decisions” involved.   Indeed, “the Lord Advocate, on behalf of the Scottish Ministers, made it clear to the court that such statements were mistaken and did not accurately reflect the legal position”.  Lord Pentland concluded that “as a matter of law, there is no prohibition against fracking in Scotland”.  The ruling followed the SNP government telling parliament in October that fracking had effectively been banned through the use of planning powers.

As North Sea oil wanes, removing abandoned rigs stirs controversy - One of the world’s largest areas of offshore oil and gas exploitation, in Europe’s North Sea, is closing down. Over the next few years, thousands of wells will be plugged and hundreds of giant production platforms removed from the storm-tossed sea, in one of the world’s largest and most expensive exercises in industrial decommissioning.  Good riddance? Not so fast. Some ecologists are pleading for the rigs to be left behind, at least in part, to support the marine life that has grown up around them. And they fear the dismantling could disturb toxic drilling waste on the seabed that nobody plans to remove.  How this plays out could yield important lessons for the decommissioning of other offshore oilfields from the coasts of California and Brazil to the South China Sea and, potentially, the Arctic.  Two decades ago, the North Sea was one of the world’s largest sources of oil, pumping up 6 million barrels a day. That figure is now down to 1.5 million barrels, and the industry is turning to the task of decommissioning the estimated 600 production platforms in the North Sea. The British sector alone contains 470 of them, along with roughly as many other offshore installations, plus 10,000 kilometers of pipelines and 5,000 wells. The British industry expects to carry out more than 200 decommissions between now and 2025.   Many steel rigs will be cut off just below the seabed, and either dragged ashore in one piece or dismantled offshore. A handful of early giant concrete structures, which can weigh as much as 400,000 tons, may have to stay put because there is no way of moving them. The British industry estimates the final bill at $51 billion, though some analysts say it will be double that. Whatever the price, since decommissioning is tax deductible, the cost will be largely born by taxpayers.

Major Oil Spill Contaminates 1,000 Birds in Rotterdam Harbor - Environmental groups and volunteers are working to save about 1,000 oil-covered birds after a freighter spilled heavy fuel oil into a Rotterdam harbor on Saturday, the Netherlands' Sea Creatures Rescue Team estimated to Reuters.Odfjell, the owner of the freighter Bow Jubail, said the vessel crashed into a jetty while mooring and accidentally ruptured its hull, releasing 217 tons of heavy fuel oil into the water.Swans, gulls, geese and cormorants were contaminated by the oil, according to BBC News. Emergency workers trying to rescue the animals were said to be overwhelmed by the numbers.The slick has covered a six-mile radius in the harbor, BBC News reported, citing local media. Hundreds of birds are still thought to be in the water."I haven't yet seen a swan untouched by the oil. It's a real catastrophe," adviser Claude Velter told Dutch TV.About 250 oil-stained swans were taken to the animal shelter Vogelklas Karel Schot in Rotterdam on Sunday."The birds are now stabilized," the rescue center said in a Facebook post. "In addition to food and water, they need rest. It is e xpected that the first birds in the next few days will be stable enough to be washed."

Dutch regulator estimates Groningen natural gas output at 19-20 Bcm in Gas Year 17 - The Dutch gas regulator has estimated that gas production from the giant Groningen field onshore the Netherlands will be in the range of 19-20 Bcm in the current Gas Year (October 2017-September 2018), below the official quota of 21.6 Bcm/year. In its latest report on Groningen safety published Wednesday, the regulator (Staatstoezicht op de Mijnen -- SodM), also said it expected the quota for Gas Year 18 starting in October to be 19.4 Bcm. An official decision on the quota for the year has yet to be taken. A spokesman for Groningen operator NAM -- a joint venture between Shell and ExxonMobil ?- said that it was "for the minister of economic affairs to comment on the regulator's estimates." The gas market failed to react to the news. "In my view the upward move is not really linked to Groningen, it is purely oil, and small movement in the FX," one European gas trader said.

Italy Threatens to Throw Spanner in European Alternative to Russian Gas -- No fewer than Turkish President Recep Tayyip Erdogan, Azerbaijani President Ilham Aliyev, Serbian President Aleksandar Vucic, Ukrainian President Petro Poroshenko and Turkish Cypriot President Mustafa Akinci attended a gathering in Central Turkey on 12 June. The amount and variety of attendees of this meeting reveal a common interest in one field of geopolitical developments: energy and more specifically natural gas. The opening ceremony of the 1.850 kilometers long Trans Anatolian Pipeline, TANAP, starting at the Shah Deniz gas field in Azerbaijan and ending in Turkey, is the last step before connecting to the European grid in Greece and Italy. TANAP is part of the Southern Gas Corridor, which was the dream of many European leaders and officials to create an alternative to Russian gas. The attendance of several high-level dignitaries shows the interest in the pipeline and the geopolitical developments of the region. More specifically, Russia’s dominant position in the natural gas market of southeast Europe has set leaders scrambling to find alternatives or at least competition of producers. The fraught relations between Russia and Ukraine brought these countries on a collision course. However, due to historical reasons the energy industries of Moscow and Kiev have been closely intertwined. Russia has set itself an ambitious goal of circumventing Ukraine as its main transit country for gas exports. The Turk Stream and Nord Stream 2 pipelines, which are either planned or under construction, will carry much of the needed gas to Europe starting in 2019 when a new transit contract has to be signed with Kiev. Ukraine intends to diversify away from and ultimately stop buying gas from Russia. The Southern Gas Corridor, therefore, is a highly anticipated alternative. The attending of Petro Poroshenko at the opening ceremony is a testament to this goal. Already Ukraine importing gas from neighbouring European countries with plans to increase domestic production of natural gas. The election of a new government in Italy has brought change to the strategic energy map, which for a decade seemed to be fixed. The €40 billion Southern Gas Corridor pipeline bringing Azeri gas to Europe was intended to be linked to Italy’s by a yet-to-be-built Trans Adriatic Pipeline, TAP. However, the coalition government of the Five Star Movement and the League has created much uncertainty. Environment Minister Sergio Costa has dubbed TAP as “pointless” and has ordered the launch of a formal review. The coalition partners have made fighting corruption one of their election promises. Furthermore, decreasing gas consumption is used as another argument not to construct an additional pipeline. Although demand has risen over the years, it is nowhere near the peak of a decade ago. Italy imports 90 percent of its needs from Russia, Libya, Algeria, and Holland while there is spare capacity.

Meanwhile, In The Arctic... In a development that could further advantage OPEC members as they step up production to compensate for falling exports out of Venezuela and (potentially) Iran, the Barents Observer is reporting that two of Russia's largest Arctic out-shipment points for oil and LNG have become "packed with ice" leaving tankers and carriers stranded in the "paralyzed" area, which hasn't been this packed with ice at midsummer in four years. Experts had expected that ice clogging up the Gulf of Ob would melt with the summer months, allowing Rosatomflots, the state-owned energy company responsible for the region, to avoid relying on their nuclear-powered icebreakers to clear the area. According to Rosatomflot, its icebreakers will be working at least through the first week of July to free stranded ships from the ice. Two icebreakers, the Taymyr and the Vaygach, are working overtime. There are also several smaller tugs and icebreakers working in the waters around the Sabetta port.One Rosatomflot representative pointed out that the climate change fears which had analysts worried about rapid melting of ice caps in the Arctic have apparently receded. The global warming, which there has been so much talk about for such a long time, seems to have receded a little and we are returning to the standards of the 1980s and 1990s, says company representative Andrey Smirnov. Companies shipping from the area have in recent years invested in building more powerful tankers capable of breaking up the ice on their own. The projects are expected to ratchet up exports from the region by the equivalent of millions of barrels of oil per year. The Yamal LNG plant is fully dependent on smooth shipping to and from the port of Sabetta. A fleet of 15 powerful top ice-class carriers are being built for the project. The ships are capable of independently breaking through more than two meter thick ice. Commercial shipments from Sabetta started in early December 2017.

Radioactive water reignites concerns over fracking for gas - High levels of a radioactive material and other contaminants have been found in water from a West Australian fracking site but operators say it could be diluted and fed to beef cattle. The findings were contained in a report by oil and gas company Buru Energy that has not been made public. It shows the company also plans to reinject wastewater underground – a practice that has brought on seismic events when used in the United States. Buru Energy has been exploring the potentially vast “tight gas” resources of the Kimberly region’s Canning Basin. The work was suspended when the WA government last year introduced a fracking moratorium, subject to the findings of a scientific inquiry.In a submission to the inquiry obtained by the Lock the Gate Alliance, Buru Energy said a “relatively high concentration” of Radium-228, a radioactive element, was found in two water samples from a well in 2015 and 2016. The so-called “flowback water” contains fracking fluids, and water released from rock in which naturally-occurring radioactive materials can be concentrated.The samples exceeded drinking water guidelines for radionuclides. However Buru Energy said samples collected from retention ponds were below guideline levels and the water posed “no risk to humans or animals”. Buru Energy said while the water was not suitable for human consumption, the “reuse of flowback water for beef cattle may also be considered”. The water did not meet stockwater guidelines but this could be addressed “through dilution with bore water”.

Gazprom resumes talks on natural gas pipeline to South Korea via North Korea - Gazprom has renewed talks with South Korea on a potential natural gas pipeline from Russia’s Far East via North Korea in light of the improved political situation in the region, while it also expects talks with China on gas supplies to be completed by the end of the year, company officials said Friday. Following the talks between US President Donald Trump and North Korean leader Kim Jong-un and improving relations between North and South Korea, the discussions about a potential pipeline through both Koreas are back on the table after years of being suspended. South Korea is the second-largest buyer after Japan of LNG from the Gazprom-led Sakhalin-2 LNG plant on the Pacific coast.

US wants allies to cease oil imports from Iran by Nov. 4 | TheHill: The U.S. is pressing its allies to cut all oil imports from Iran by Nov. 4, a senior State Department official said Tuesday. Teams of State and Treasury Department officials have been dispatched to Europe and Asia in recent weeks to garner support for the Trump administration's Iran strategy, telling allies that they are expected to cease oil imports from the country, the official said.The diplomatic efforts will affect several key U.S. allies that import significant amounts of Iranian oil, including Japan, South Korea and Turkey. The Trump administration is not planning to issue waivers that would allow allies to continue importing oil from Iran, according to the State Department official. "I think the predisposition would be no, we’re not granting waivers," the official said during a background briefing with reporters. U.S. crude prices shot up Tuesday to more than $70 per barrel – their highest point since May – after it was revealed that the Trump administration is urging allies to end oil imports from Iran. The State Department official said the U.S. plans to engage with other countries in the Middle Easter to "ensure that the global supply of oil is not adversely affected by these sanctions." 

US presses Iran's oil customers to cut imports to zero by November 4: State Department - Iran's oil buyers should not expect any waivers to US sanctions that snap back in November, after the State Department confirmed Tuesday it was taking a hard line on sanctions enforcement and working with Mideast allies to prevent an oil supply shock. "We will certainly be requesting that their [Iranian] oil imports go to zero, without question," a senior State Department official told reporters during a background briefing. Oil prices climbed after the statement, and analysts raised their projections for how much Iranian crude would leave the market this fall. Iran exported an estimated 2.45 million b/d of crude in April, a surge from recent levels of about 2 million b/d as the country and its customers prepared for US President Donald Trump's expected decision to exit the Iran nuclear deal, which he announced May 8. "If the US succeeds at zeroing out Iran's exports, it will have a big price problem at the pump around election time that Saudi Arabia cannot fix," said Bob McNally, president of Rapidan Energy Group and former energy adviser to President George W. Bush. McNally was referring to US midterm elections in November that will determine which party controls Congress. Joe McMonigle, an analyst for Hedgeye Risk Management, said he now expects the November resumption of Iran sanctions to disrupt 1 million b/d, up from a range of 500,000-800,000 b/d he predicted last month. "The administration's message today is that the oil market should get ready for a larger amount of Iranian crude getting removed from the market," said McMonigle, a former Department of Energy chief of staff.

U.S. Toughens Stance on Future Iran Oil Exports – WSJ —The U.S. threatened to slap sanctions on countries that don’t cut oil imports from Iran to “zero” by Nov. 4, part of the Trump administration’s push to further isolate Tehran both politically and economically, a senior U.S. State Department official said. Buyers of Iranian crude had expected the U.S. would allow them time to reduce their oil imports over a much longer period, by issuing sanctions waivers for nations that made significant efforts to cut their purchases. That expectation was partly based on previous comments from top Trump officials, as well as the Obama administration’s earlier effort to wean the world off Iranian oil over several years. But the senior State Department official said on Tuesday that President Donald Trump’s administration doesn’t plan to issue any waivers and would instead be asking other Middle Eastern crude exporters over the coming days to ensure oil supply to global markets. The tactic is likely to further escalate geopolitical tensions between the U.S. and other nations as the Trump administration pits itself against its allies and other major economies over its nearly unilateral policy toward Iran and a host of challenges on trade. Oil prices immediately jumped on the news, with West Texas Intermediate crude for August delivery ending 3.6% higher at $70.53 a barrel on the New York Mercantile Exchange. That marked the highest level since May, when the White House said it would pull out of the 2015 Iran nuclear accord—which the U.S. and other major countries reached with Tehran to curb its nuclear development—and would reimpose crushing sanctions on one of the world’s largest oil suppliers. “We will certainly be requesting that their oil imports go to zero without question by Nov. 4th,” the official said of other countries’ purchases of Iranian oil. While the administration won’t rule out issuing sanctions waivers in the future, the official said, its predisposition is: “No, we’re not going to do waivers.” “We view this as one of our top national-security priorities,” the official said. The move is likely designed to spur greater global compliance with U.S. sanctions. Most major importers of Iranian crude have balked at Washington’s new economic offensive against Tehran. 

US Wants India To Stop Importing Oil From Iran By November - The US has asked all countries, including India, to stop all oil imports from Iran by November as it ruled out any exemption to India and Indian companies from its reimposed Iranian sanctions regime for them carrying out any transaction with Iran."On China and India, yes, certainly," a state department official told reporters when asked if the US has told all countries, including India and China, to stop all their imports of Iranian oil by November 4.He said Indian and Chinese companies would be subject to the same sanctions as those in other countries. Given the huge energy needs, India and China are major importers of Iranian oil."Their (India and China) companies will be subject to the same sanctions that everybody else's are if they engage in those sectors of the economy that are sanctionable, where there were sanctions imposed prior to 2015. And yes, we will certainly be requesting that their oil imports go to zero. Without question," the state department official said on condition of anonymity.Responding to questions, the official said these countries should start reducing the import of oil from Iran now and bring it to zero by November 4. "Without question, they should be reduced. That's what we've been telling them in our bilateral meetings. They should be preparing, now, to go to zero (by November 4)," the official said. The official said this is part of the Trump administration's effort to isolate streams of Iranian funding and are looking to highlight the totality of Iran's malign behaviour across the region.

Iran: India may ignore US demands to halt oil imports: India said Wednesday it did not recognize sanctions the United States has threatened to impose on countries that continue to buy Iranian oil after November 4. "India does not recognize unilateral sanctions, but only sanctions by the United Nations," Sunjay Sudhir, joint secretary for international cooperation at India's petroleum ministry, told CNNMoney when asked whether India would reduce oil imports from Iran. The US demand was made by a senior State Department official on Tuesday. It reflects the hard line President Donald Trump is holding after he decided to withdraw from an international nuclear agreement and reimpose sanctions on Iran. Iran is India's third-largest oil supplier after Iraq and Saudi Arabia, according to Indian government data. And India buys more Iranian oil than any country except China. Analysts say the Indian government is unlikely to heed the US call. "More than China, India is unlikely to capitulate to the US demand," analysts at the Eurasia Group wrote in a note on Tuesday. They estimate that India is currently buying about 700,000 barrels per day from Iran, a critical and strategic source of supply to meet India's growing demand for energy. "India's state-owned refiners will likely continue to import Iranian crude," they said. India's top state-owned oil companies — Hindustan Petroleum, Bharat Petroleum and Indian Oil — did not immediately respond to requests for comment.

Iranian President Reopens Nuclear Plant: "We Will Bring The US To Its Knees" - Iranian president Hassan Rouhani said on Wednesday: “We will bring the US to its knees in this battle of wills.” The Iranian government is continuing to warn of harsh retaliation against the United States after the Trump administration pulled out of the 2015 nuclear agreement.  According to PressTV, the threat comes as Washington continues to attempt to bully its allies into halting imports of Iranian oil after Donald Trump unilaterally quit the cornerstone international nuclear agreement instituted by his predecessor, Barack Obama.  Iran has previously said there would be consequences should the US decide to withdraw from the agreement. The United States, meanwhile, has continued to push Iran. After withdrawing from the 2015 Iran nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), in May the US vowed to reinforce economic pressure and sanctions against Tehran, reported RT.  While the European capitals have so far refused to leave the cornerstone security accord, on Tuesday the State Department threatened private companies with sanctions unless they completely cut Iranian crude oil imports by November. Rouhani also seeks to unify all Iranians. “We will take problems. We will take pressure. But we will not sacrifice our independence,” Rouhani vowed. “Even in the worst case, I promise that the basic needs of Iranians will be provided,” the Jerusalem Post quoted Rouhani saying live on national television. Rouhani additionally noted that his administration will continue to defend Iran’s interests and focus on strengthening the economy.  “We have enough foreign currency to inject into the market.”

Kazakhstan to maintain oil output at current level of 1.8 mil b/d throughout 2018: report - Kazakhstan is planning to maintain oil output at the current level of 1.8 million b/d until the end of the year, energy minister Kanat Bozumbayev said Tuesday, according to the Prime news agency. "Our daily production is 1.8 million barrels, we are not planning to reduce it, the average rate of production will remain around this level until the end of the year," Bozumbayev said according to the report. Kazakhstan is participating in the OPEC/non-OPEC agreement to cut oil production that came into force at the beginning of 2017. It committed to cut its liquids production by 20,000 b/d from November 2016 volumes of 1.7 million b/d under this deal, but has met its target just once, in August 2017, due to planned maintenance at one of the country's major projects, Tengiz. The latest statistics released in mid-June showed that Kazakhstan's oil and gas condensate output was 7.825 million mt, or around 1.85 million b/d in May. Bozumbayev attended a meeting on Saturday during which changes to the deal to allow additional barrels to come to market were agreed. Bozumbayev also said Tuesday that Kazakhstan hopes that output at its major Kashagan project will increase by the end of this year. "Currently we have reached production of 300,000-320,000 b/d. By the end of the year I hope it will be a bit higher," he said. 

A Storm Is Brewing In The Southern Gas Corridor - No less than Turkish President Recep Tayyip Erdogan, Azerbaijani President Ilham Aliyev, Serbian President Aleksandar Vucic, Ukrainian President Petro Poroshenko and Turkish Cypriot President Mustafa Akinci attended a gathering in Central Turkey on 12 June. The amount and variety of attendees of this meeting reveal a common interest in one field of geopolitical developments: energy and more specifically natural gas.    The opening ceremony of the 1.850 kilometers long Trans Anatolian Pipeline, TANAP, starting at the Shah Deniz gas field in Azerbaijan and ending in Turkey, is the last step before connecting to the European grid in Greece and Italy. TANAP is part of the Southern Gas Corridor, which was the dream of many European leaders and officials to create an alternative to Russian gas.The attendance of several high-level dignitaries shows the interest in the pipeline and the geopolitical developments of the region. More specifically, Russia’s dominant position in the natural gas market of southeast Europe has set leaders scrambling to find alternatives or at least competition of producers.The fraught relations between Russia and Ukraine brought these countries on a collision course. However, due to historical reasons the energy industries of Moscow and Kiev have been closely intertwined. Russia has set itself an ambitious goal of circumventing Ukraine as its main transit country for gas exports. The Turk Stream and Nord Stream 2 pipelines, which are either planned or under construction, will carry much of the needed gas to Europe starting in 2019 when a new transit contract has to be signed with Kiev.Ukraine intends to diversify away from and ultimately stop buying gas from Russia. The Southern Gas Corridor, therefore, is a highly anticipated alternative. The attending of Petro Poroshenko at the opening ceremony is a testament to this goal. Already Ukraine importing gas from neighbouring European countries with plans to increase domestic production of natural gas.   The election of a new government in Italy has brought change to the strategic energy map, which for a decade seemed to be fixed. The €40 billion Southern Gas Corridor pipeline bringing Azeri gas to Europe was intended to be linked to Italy’s by a yet-to-be-built Trans Adriatic Pipeline, TAP. Environment Minister Sergio Costa has dubbed TAP as “pointless” and has ordered the launch of a formal review. The TAP consortium, which includes British oil group BP, Italy's Snam and Spain’s Enagas, has said re-routing the pipeline away from Italy is not an option.

U.S., allies express concern over transfer of Libyan oil facilities (Reuters) - The United States, France, Britain and Italy said on Wednesday they were deeply concerned by an announcement that east Libyan oil fields and ports would be handed over to a parallel National Oil Corporation (NOC) based in Libya’s east. “These vital Libyan resources must remain under the exclusive control of the legitimate National Oil Corporation and the sole oversight of the Government of National Accord,” the countries said in a joint statement, referring to the NOC and U.N.-backed government in the capital, Tripoli. “We call for all armed actors to cease hostilities and withdraw immediately from oil installations without conditions before further damage occurs.” The statement responded to an announcement on Monday by forces loyal to Khalifa Haftar’s Libyan National Army (LNA) that they would hand eastern ports to a parallel NOC based in the eastern city of Benghazi. The announcement followed a week of fighting over the ports of Ras Lanuf and Es Sider, which have been controlled along with other ports in Libya’s oil crescent by the LNA since September 2016. The LNA had previously let the internationally recognized Tripoli NOC operate the ports, boosting Libya’s oil production. But after Ras Lanuf and Es Sider were attacked this month, it said oil revenues paid into the central bank in Tripoli were being used to fund its rivals. Past attempts by eastern-based factions to sell oil independently of Tripoli have been thwarted by U.N. Security Council resolutions. “Any attempts to circumvent the...Security Council’s Libya sanctions regime will cause deep harm to Libya’s economy, exacerbate its humanitarian crisis, and undermine its broader stability,” Wednesday’s joint statement said.  

Shell Exits Majnoon Oil Field In Iraq | OilPrice.com - Shell has handed over the operations of the Majnoon oilfield in Iraq to Iraqi state-run Basra Oil Company, exiting the field as it said last year it would do, Reuters reported on Wednesday, citing two Iraqi oil officials close to the deal.Last year, Shell said that it would sell its interest in the Majnoon oilfield after the oil major and Iraq failed to agree on future production plans and investment budgets. After months of negotiations, Shell agreed at the end of 2017 to exit the venture and hand over its operation to Basra Oil Company (BOC) by the end of June 2018. Shell was the operator and holder of 45 percent at Majnoon, with Malaysia’s Petronas owning 30 percent, and Iraq’s Missan Oil Company holding the remaining 25 percent.At the end of December, Iraq said that it had formed a management team to take overoperations from Shell after the oil major exits the field by the end of June. Iraq wants to raise production at Majnoon from the current 235,000 bpd to around 400,000 bpd in the “coming years”.Today, officials from Shell and Basra Oil Company met to mark the handing over of the operations of the field.“The handing over process was smooth and without any issues,” one Iraqi oil official told Reuters after the meeting.In April, Anton Oilfield Services and Petrofac signed a two-year deal with Iraq’s oil ministry to operate the Majnoon field on behalf of Basra Oil Company. “Shell’s exit will not have any effect on production operations and we can increase output without any hurdles,” another Iraqi official told Reuters, commenting on the handover. Shell, for its part, is focusing on its gas operations and joint ventures in Iraq, and sold in March its 19.6-percent stake in the West Qurna 1 oil field to a subsidiary of Japan’s Itochu Corporation for US$406 million.

Kuwait says Neutral Zone oil production halted until deal reached with Saudi - Oil production at the Neutral Zone between Saudi Arabia and Kuwait will resume when the two sides reach a deal, Kuwait’s oil minister said on Tuesday.Bhakeet Al-Rashidi told parliament production was stalled “due to technical reasons”, according to Kuwait news agency KUNA.He said the two sides were “tackling the matter” and production would resume “as soon” as they reached an agreement.Kuwait said in late 2016 it was preparing to restart production at oilfields in the zone after production was previously halted. At the time the closure of the fields, mainly Khafji and Wafra, had become a political sticking point.Khafji was shut in October 2014 for environmental reasons and Wafra has been shut since May 2015 due to operating difficulties.Before its closure Khafji, operated by Kuwait Gulf Oil Company and a Saudi Aramco subsidiary, was producing between 280,000 and 300,000 barrels per day, according to Reuters. The Wafra field has an output capacity of about 220,000bpd of Arabian Heavy crude. US oil major Chevron operates the field on behalf of the Saudi government.

OPEC’s Agreement Sends Oil Prices Soaring - OPEC issued a communique on Friday that called on a return to 100 percent compliance for the group, down from 152 percent in May. The announcement deferred country-specific allocations, likely because they could not agree on the details. The decision likely means that any country with spare capacity will be able to boost production. In practice, Saudi Arabia and Russia will carry the lion’s share. How individual countries make decisions about how much to produce, while still trying to stay below a collective cap, opens up a lot of uncertainty.  Oil prices moved up on Friday morning, on expectations that the result from the OPEC+ meeting won’t lead to a supply glut. In recent days, there seemed to be a bit of convergence on a plan to boost production, perhaps by around 600,000 bpd. That amount would merely offset the declines from Venezuela over the past year, and would not plug the entire supply deficit facing the market. “The market caught up a little in terms of realizing that the rumored increase was less than what is necessary to balance the market,” Emily Ashford, director of energy research at Standard Chartered, told the WSJ. “Any increase in production will come at the expense of spare capacity so that leaves the market much more vulnerable to future supply shocks,” she added.   OPEC’s technical committee recommended a supply increase of about 1 million barrels per day, although press reports widely noted that such an increase would likely only be nominal, and actual barrels put onto the market would reach only about 600,000 bpd because several countries have no ability to boost output. The recommendation came even as Iranian oil minister Bijan Zanganeh walked out of a meeting on Thursday night, although he met with his Saudi counterpart Friday morning. The discord likely led to the vague decision on 100 percent compliance, rather than on country-specific increases.

U.S. Shale Companies Motor Ahead Despite OPEC - WSJ - OPEC’s decision last week to increase production modestly is seen as an attempt to keep prices elevated without creating a spike. The move eased concerns among the member countries about tightening supply and the potential for a price spike, but it also lifted the stock prices of U.S. oil producers, which have learned to survive at whichever price OPEC pursues.“We’re not running our business based on what OPEC does regarding supply,” said Doug Lawler, chief executive of Chesapeake Energy Corp. , a pioneer of shale drilling. “We just have to respond accordingly and focus on the technology and the innovation that helps us be efficient regardless of the price.”U.S. production has grown at a record-setting pace this year, hitting 10.9 million barrels a day this month after oil prices exceeded $70 a barrel for the first time since 2014. That makes the U.S. the world’s No. 2 oil producer behind Russia, but ahead of Saudi Arabia.  OPEC members, plus Russia, came to an agreement two years ago to cut production to shrink excess supply and prop up prices. At the meeting last week in Vienna, OPEC ministers cobbled together a deal to reverse course and boost oil output by an effective 600,000 barrels a day to head off a possible run to $100-a-barrel oil. Russia said over the weekend that it would support OPEC’s efforts.  Now U.S. shale companies are again in position to benefit from OPEC’s market-balancing actions.  Speaking at the meeting in Vienna, Scott Sheffield, chairman of Pioneer Natural Resources Co. , said the company has a shared interest with OPEC in preventing overheated prices. High prices generate a short burst of profits but can undermine economic growth and tamp down demand.   Mr. Sheffield said: “$100 is not going to help OPEC. It’s not going to help us in the Permian.” His company is one of the top drillers in the Permian Basin of West Texas and New Mexico. OPEC’s new barrels also come at an opportune time for shale companies, which are facing production-threatening infrastructure constraints in the Permian, the country’s most active drilling region. Analysts say Permian producers might have to scale back drilling until new pipelines come online in 2019.

5 things investors need to know about OPEC's decision to lift oil output  The Organization of the Petroleum Exporting Countries agreed on Friday to rein in member production cuts, essentially lifting output to help make up for an expected shortfall in global supplies. The expected output increase, however, appears likely to be smaller than market participants had expected.  In a statement, OPEC said it has “decided that countries will strive to adhere to the overall conformity level of OPEC-12, down to 100%, as of 1 July 2018 for the remaining duration of the above mentioned resolution and for the JMMC to monitor and report back to the President of the Conference.” OPEC also granted membership to Congo and set its next regular meeting for Dec. 3. Doing the math from the figures offered in the official OPEC statement from the conference, OPEC members agreed to add back 624,000 barrels a day into the global market, according to one analyst’s estimates.In a meeting on Friday, the Joint Ministerial Monitoring Committee pegged member compliance with production-cut agreement reached in late 2016 and implemented in 2017 at 152% in May of this year. The original deal called for output reductions of 1.2 million barrels a day from late 2016 levels from 12 of the 14 OPEC members at that time. With compliance at 52% above the agreed upon reductions, OPEC was essentially over complying—cutting roughly 1.8 million barrels a day. To get back to 100% compliance, OPEC members would have to add 624,000 barrels a day in output.As Khalid al-Falih, Saudi Arabia’s energy minister, left Friday’s meeting, he said the agreement was to increase oil production by 1 million barrels a day, according to various news reports.That 1 million-barrel figure was not mentioned in the official statement. That suggests a possible concession to Iran, according to the Financial Times, which faces renewed U.S. sanctions after President Donald Trump abandoned the 2015 nuclear deal with Tehran. The sanctions threaten oil supplies from Iran. Iran had opposed the calls for an output increase, but appeared to smooth over differences with Saudi Arabia just ahead of the Friday meeting. Nigerian oil minister Ibe Kachikwu said the 1 million-barrel agreement would see OPEC members raise output by at least 700,000 barrels a day, with non-OPEC countries, led by Russia, adding the rest, according to the Financial Times report.

OPEC "Deal" Ends With Output Confusion, Sets Stage For "Deal Unraveling" -- Just 24 hours after OPEC appeared on the edge of splintering, Iran seemed to cave and in a deal that was described as a victory for everyone, OPEC member states and Russia provided a vague assurance they would boost output by striving to return to full compliance of the original production quotas as set in the 2016 Vienna production cut agreement.  As Goldman summarized in its post-mortem, "no further details were provided, including no country level allocation, no guidance for non-OPEC participants or timeline for the increase." Furthermore, during the press conference following Friday's deal, the one question which never got an explicit answer is how much output would be boosted by, with little clarity shed beyond “targeting full compliance at the group level”. This suggests that there is room for countries with spare capacity to increase production above the individual quotas but also that such adjustments could not be resolved. As a result, Goldman's energy analyst Damien Courvalin said that he views today’s agreement "as masking disagreements within the group and a potential start to the unraveling of the deal, with core-OPEC and Russia looking to increase production but Iran opposing such an increase." Bloomberg's Javier Blas confirmed as much, noting that Friday’s agreement was a "fudge in the time-honored tradition of OPEC, committing to boost output without saying which countries would increase or by how much" a fudge which gave every member - especially Iran which by endorsing a production boost would have been seen as effectively approving of Trump's sanctions and allowing other states to take its market share - an "out" to save face, by sufficiently masking up the details so no explicit accusations of backtracking can be made. Importantly, "it gives Saudi Arabia the flexibility to respond to disruptions at a time when U.S. sanctions on Iran and Venezuela threaten to throw the oil market into turmoil."  So what is the actual production boost? This is where the confusion really sets in. First, here is Goldman's take: Several ministers suggested that this would correspond to a 0.7 mb/d increase in production, which would represent OPEC returning to its aggregate production quota. Such an increase in production would likely only be gradual, leaving it on a path close to our base case 550 kb/d increase in 3Q18. While production could exceed our 550 kb/d expectation for 4Q18, we see risks that Iran production may be even lower than we assume. Bloomberg referenced a similar number, noting that the deal could add about 700,000 barrels of daily supply from OPEC and non-OPEC producers. On Saturday morning, however, the discrepancy grew, with various soundbites estimating the boost based more on political tensions than actual production dynamics, and ranging from under 500kb/d to over 1 million:

What Saudi Arabia does now is key for global crude oil markets (Reuters) - If it were possible to boil the crude oil market down to just one determining factor for the coming months, it would be this: What will Saudi Arabia actually do? The Saudis appear to have emerged as the winners from last week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC), and the subsequent talks between OPEC and its allies in the deal to restrict output. The outcome of the meetings would seem to indicate that crude oil supply should rise by as much as 1 million barrels per day (bpd). That’s based on the assumption that OPEC and allies will return to 100 percent compliance with the November 2016 cut of 1.8 million bpd from a current situation of over-compliance. However, the reality on the ground is that many OPEC countries lack the ability to pump their full quotas. Saudi Arabia is the only producer that can ramp out output significantly within a short period of time. The market consensus after the OPEC meeting in Vienna on June 22, and the talks with non-OPEC allies the following day, was that the agreements reached wouldn’t actually result in an extra 1 million bpd reaching global markets. While there is some debate on the likely increase in supply, the upper end of the range is around 600,000 bpd. The question is whether this would be enough to prevent prices from rallying again. Given that the Saudi Arabia, the world’s largest crude exporter, is going to have to provide the lion’s share of any increase in output, watching its export numbers and price signals in the coming months will be key. In fact, the Saudis already are supplying more crude, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts. Saudi seaborne crude exports were 7.06 million bpd in May, the most in a year, the data shows.

Saudi pledges 'measurable' oil supply boost as OPEC, Russia agree deal (Reuters) - OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers. The Organization of the Petroleum Exporting Countries had announced an OPEC-only production agreement on Friday, also without clear output targets. Benchmark Brent oil rose by $2.5 or 3.4 percent on the day to $75.55 a barrel. On Saturday, non-OPEC oil producers agreed to participate in the pact but a communique issued after their talks with the Vienna-based group provided no concrete numbers amid deep disagreements between OPEC arch-rivals Saudi Arabia and Iran. U.S. President Donald Trump was among those wondering how much more oil OPEC would deliver. “Hope OPEC will increase output substantially. Need to keep prices down!” Trump wrote on Twitter after OPEC announced its Friday decision. The United States, China and India had urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth. OPEC and non-OPEC said in their statement that they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction. Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC combined would pump roughly an extra 1 million barrels per day (bpd) in coming months, equal to 1 percent of global supply. Top global exporter Saudi Arabia will increase output by hundreds of thousands of barrels, he said, with exact figures to be decided later. “We already mobilized the Aramco machinery, before coming to Vienna, pre-empting this meeting,” Falih said, referring to the Saudi state oil company. Russian Energy Minister Alexander Novak said his country would add 200,000 bpd in the second half of this year. Asked to what extent the decision to increase supply had been driven by pressure from Trump, Novak said: “It is obvious that we are not being driven by tweets but base our actions on deep market analysis.” 

 Oil prices settle lower, with Brent leading the drop, in the wake of OPEC’s gathering - Oil prices settled lower on Monday, with global benchmark Brent crude leading the decline, amid some uncertainty in the wake of an agreement by the Organization of the Petroleum Exporting Countries to ramp up production that was backed by nonmember Russia.August West Texas Intermediate crude on the New York Mercantile Exchangegave up an earlier climb to lose 50 cents, or 0.7%, to settle at $68.08 a barrel, returning a small portion of Friday’s 4.6% climb. August Brent crude fell 82 cents, or 1.1%, to $74.73 a barrel on the ICE Futures Europe exchange.The spread between the two benchmarks has narrowed in recent days, with analysts attributed at least part of the better performance in WTI prices on a crude production outage in Canada that is expected to tighten the U.S. market.   The “OPEC meeting ended with the existing deal being left unchanged but the group aiming to reduce over-compliance and to get output back to the originally-intended levels,” said analysts at JBC Energy Research Centre, in a note dated Monday. “But members clearly differ in their interpretation of the deal as the actual wording of the communiqué is not exactly clear enough.” “Saudi Arabia has essentially argued that those who have spare capacity can now produce more to make up for producers who cannot meet their quota,” they said. “On the other hand, Iran sees such a quota reallocation as a breach of the deal and thus expects the real supply response to be rather small.”

WTI Extends Gains After Biggest Crude Draw Since Sept 2016 - WTI/RBOB prices soared today on the heels of Iran oil sanction threats from Washington. With expectations of further draws (after last week's big surprise draw), API reported a massive 9.22mm barrel draw - the biggest since Sept 2016. API:

  • Crude -9.22mm (-3mm exp) - biggest draw since Sept 2016
  • Cushing -1.741mm (-1.3mm exp)
  • Gasoline +1.152mm
  • Distillates +1.75mm

Following last week's surprising large crude draw (but product builds) API reported a 9.22mm crude draw - which if it holds for EIA, will be the biggest draw since Sept 2016... WTI topped $70 - highest in a month - after US sanction threats against Iran trumped Saudi output increase headlines. Heading into the API print, WTI was flatlined at around $70.50, before kneejerking higher on the API print

Oil Prices Rise After API Reports Major Crude Draw -- As oil prices continues to fall, the American Petroleum Institute (API) reported a major draw of 9.228 million barrels of United States crude oil inventories for the week ending June 22 compared to analyst expectations that this week would see a much smaller draw in crude oil inventories of 2.572 million barrels. Last week, the American Petroleum Institute (API) reported a draw of 3.016 million barrels of crude oil. The API reported another buildup in gasoline inventories for week ending June 22, this week in the amount of 1.152 million barrels. This was close to analyst expectations of a build of 1.313 million barrels. Crude oil prices spiked today on the back of anticipated oil export disruptions in Libya after the Libyan National Army said it had passed control of the country’s oil ports to a non-officially recognized National Oil Corporation affiliated with the eastern government of the country based in Benghazi. Further support to oil prices come as the United States continues to pressure countries to cease buying oil from Iran. By 3:40pm EDT, WTI was trading at $70.43, up $2.35 (+3.45%). Brent crude was trading at $76.15, up $1.60 (+2.15%). US crude oil production stagnated for the first week in many months, reaching 10.9 million bpd in the week ending June 08, holding fast for the week ending June 15, according to the EIA. Distillate inventories saw a build this week of 1.785 million barrels, compared to an expected build of 774,000 barrels, while inventories at the Cushing, Oklahoma, site fell again this week, by 1.741 million barrels. The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30am EDT. By 4:36pm EST, oil prices held steady, with the WTI benchmark trading up 3.61% on the day to $70.54 and Brent trading up 2.31% at $76.27.

WTI-Brent Spread Narrows On Canada Oil Crisis -- The difference between WTI and Brent narrowed significantly over the past few days, as the forces driving the two benchmarks apart seemed to have reversed course.For the past few weeks and months, WTI suffered a steep discount relative to Brent, a reflection of a series of factors that made North America well supplied with oil, while the rest of the world saw supplies tighten significantly. U.S. shale production has soared over the past few years, but really accelerated at a blistering pace in 2018. North America has been overflowing with oil, and much of the additional supply has been routed through Gulf Coast export terminals, if producers can get their oil out of West Texas.  The result was a sort of two-speed oil market – ample supplies in the U.S., and an increasingly tight market everywhere else.The discount widened to nearly $10 per barrel in June, a staggering differential.But in a surprising turn of events, the two benchmarks converged significantly in the past few days. A week ago, the price differential topped $9 per barrel, but the gap narrowed to $6 per barrel as of Monday. The reasons for this are multiple, but they largely come down to the fact that the fortunes of both benchmarks suddenly flipped. OPEC+ decided to add more oil onto the market last week – nominally 1 million barrels per day, but in reality something more akin to 600,000 bpd. That has eased fears about a supply crunch. Meanwhile, the supply/demand balance in North America suddenly looks a bit tighter than it did earlier this month. The pipeline constraints in the Permian are starting to bite, and there are growing expectations that shale drillers will have to curb output growth because available takeaway capacity has all but vanished. More importantly, at least in the near run, was the unexpected outage from an oil sands project in Canada. Syncrude Canada saw an equipment malfunction that could reduce flows from Canada by 360,000 bpd for the month of July, “putting Cushing potentially on a path to an inventory stockout,” according to a note from Goldman Sachs. “With the global market pricing to pull crude out of the U.S., this loss of U.S. supplies will exacerbate the current global de?cit, making the increase in OPEC production all the more required.” The expected loss could translate into a reduction in inventories by around 14 million barrels. The outage in Canada led to a “sharp repricing of North American crudes with sharply stronger WTI timespreads and tighter differentials,” Goldman wrote. The cash vs. front-month WTI differential went from essentially nothing to nearly $3 per barrel immediately after Syncrude Canada’s announcement. In other words, investors became worried about the immediate availability of supply.

Analysis: US exports in focus as Brent/WTI spread converges -- With stocks at Cushing, Oklahoma, falling steadily of late, the ICE Brent/WTI spread has closed sharply, lessening the incentive for US producers to ship crude overseas in pursuit of higher prices. Market observers will be watching US export figures in the coming weeks to gauge whether the price signals have had an impact. While ICE Brent's premium to WTI has nearly halved since late May, it remains within the $3/b-$7/b range seen from August until mid-May, when US crude exports hit record highs on several occasions. Greater exports have helped tighten US crude inventories, offsetting the fact that domestic production has climbed to 10.9 million b/d. US crude stocks were 1.2% below the five-year average at 426.527 million barrels the week ending June 15. Analysts surveyed Monday by S&P Global Platts expect crude stocks fell 2.3 million barrels last week. If confirmed, that would further grow the size of the deficit to the five-year average. Stocks actually saw a slight build of around 40,000 barrels on average for the same period from 2013-17, according to Energy Information Administration weekly inventory data. US crude exports have averaged 2.074 million b/d over the last four weeks, versus 775,000 b/d over the same period a year ago. That is not surprising in light of the ICE Brent/WTI spread blowing open from less than $6/b in early May to more than $11/b a month later. S&P Global Platts Analytics estimated US crude exports averaged 1.959 million b/d last week. That forecast is derived using cFlow ship tracking data. EIA pegged exports at 2.374 million b/d the week ending June 15. 

Oil Bulls Are Back On Outages -- Oil prices moved up on Tuesday after reports of outages in Canada and ongoing uncertainty in Libya. The market seems to have digested the news of higher OPEC+ production, and is now moving on. The increase from OPEC+ may only reach 600,000 bpd or so, while the outages in a series of countries are accumulating. The fears of another downturn in prices in the lead up to the OPEC meeting are now in the rearview mirror. Syncrude Canada suffered an equipment malfunction at one of its oil sands facilities, which could disrupt as much as 360,000 bpd for the month of July. The outage significantly narrowed the WTI-Brent discount, pushing up WTI on expectations of much tighter supplies in North America. Lower flows from Canada could drain inventories at the Cushing hub in Oklahoma, a closely-watched metric that helps determine WTI prices. “With the global market pricing to pull crude out of the U.S., this loss of U.S. supplies will exacerbate the current global deficit, making the increase in OPEC production all the more required,” Goldman Sachs analysts wrote. . Royal Dutch Shell gave the greenlight to a project in the North Sea, the second for Shell in the region in the past six months. The natural gas project was deemed uneconomical six years ago, but Shell has dramatically reduced costs. Shell will produce from two wells in the Fram field in the central North Sea by 2020. The project is not a massive one, but it illustrates how Shell and other companies have boosted the viability of the North Sea. . A group of companies including Kinder Morgan Texas Pipeline LLC, a subsidiary of Kinder Morgan, EagleClaw Midstream Ventures LLC and Apache Corp. announced they have signed a letter of intent to develop the Permian Highway Pipeline Project, which would carry natural gas from the Permian to the Gulf Coast. The $2 billion PHP project would move 2 billion cubic feet of natural gas per day (bcf/d) from Waha, Texas to the Texas Coast and to Mexico, and the companies aim to bring it online in late 2020.

Oil Surges Above $70 On Concerns Of Iran Output Cut -  So much for the Saudi "record production" intervention in pushing the price of oil lower: while the news did briefly send crude down, it immediately spiked following news that the US would also press allies to cut Iran oil imports to zero, effectively removing up to a million barrels from the market, and the result has been a sharp spike higher in the price of WTI, which has jumped above $70 for the first time since May 25. The Iran announcement was expected, and followed President Trump’s warnings that European nations should scale back their trade with the Islamic Republic or face sanctions after the US withdrawal in May from the Iran nuclear deal and administration.  In the Tuesday briefing, the State Department official said that while the administration wouldn’t rule out waivers or extensions to the November deadline, which was previously announced, it isn’t discussing them either. The official, who spoke on condition of anonymity, said the U.S. was planning conversations with the governments of Turkey, India and China, all of which import Iranian oil, about finding other supplies. The official said an important part of those discussions was making sure countries aren’t “adversely affected” by cutting Iranian oil imports.According to Bloomberg, in 2017 Iran shipped 755,000 barrels a day to European customers on average, and 1.37 million barrels a day to Asia-Pacific buyers, according to data from the Organization of Petroleum Exporting Countries.As Bloomberg's Javier Blas shows, here is a list of Iran's top energy clients.CHART OF THE DAY: With U.S. asking allies to cut imports of Iranian oil to ZERO by November, here who's who among Tehran energy clients -- via @EIAgov  Full story here: https://t.co/pNWFJXxXxq #OOTT pic.twitter.com/dZEinH6cuC — Javier Blas (@JavierBlas2) June 26, 2018

    Saudis Plan Record Oil Production As US Tells Allies To Cut Iran Oil Imports To Zero -- Just hours after the US Energy Secretary Rick Perry told reporters that deal between OPEC and Non-OPEC countries may "not be enough" to relieve supply constraint stress in global oil markets, Saudi Arabia has reportedly decided to take matters into its own hands, and according to Bloomberg the kingdom is planning to pump a "record amount of crude in July, embarking on one of its biggest-ever export surges to cool down oil prices."Effectively Saudi Arabia is doing unilaterally what last week's OPEC meeting failed to collectively by assuring the world of a major production boost, thereby pushing the price of oil lower, as Trump had been demanding.According to Bloomberg reports, Saudi state oil giant Aramco plans to boost production next month to about 10.8 million barrels a day, the people said, in the process surpassing the previous record high of 10.72 million barrels a day in November 2016.The move, as Bloomberg adds illustrates the "unprecedented response to the pressure U.S. President Donald Trump has put on OPEC to supply more oil."  The monthly increase would mark an unprecedented monthly surge in output from a nation which in May told OPEC it pumped 10.03 million barrels a day. The actual production level in July will depend on demand for exports and domestic consumption, so could end up ranging between 10.6 million and 11 million barrels a day, the people said. Domestic oil use surges during summer months as the kingdom burns crude to generate electricity for air conditioning. The Saudis have been under growing pressure from Trump to pump more oil ahead of the U.S. midterm elections in November, and to lower prices which have threatened to undo the economic boost from Trump's tax cuts Coincidentally, as Bloomberg broke the news about the imminent Saudi boost, a State Department official said that the U.S. is pushing allies to cut oil imports from Iran to zero by Nov. 4, adding that the U.S. isn’t granting waivers on Iranian oil imports ban.If fully complied, the actions may remove as much as 1 million barrels of oil from the market.The irony, however, is that the confluence of these two reports, first sent the price of oil sliding on the Saudi report, followed by a modest boost on the Iran news, thereby perhaps assuring more angry tweets from the president.

    Oil rises as outages balance trade dispute, OPEC (Reuters) - Oil prices rose on Tuesday, supported by Canadian production losses and uncertainty over Libyan exports, but under pressure from climbing OPEC supply and intensifying trade conflicts between the United States and other major economies. Benchmark Brent crude (LCOc1) was up 35 cents at $75.08 a barrel by 0720 GMT. U.S. light crude (CLc1) was 35 cents higher at $68.43 a barrel. Brent, which tends to reflect global supply and demand, was driven up by uncertainty around oil exports by Libya, a member of the Organization of the Petroleum Exporting Countries. Eastern Libyan commander Khalifa Haftar's forces have given control of oil ports to a separate National Oil Corporation (NOC) based in the country’s east. The official state-owned oil company from the capital Tripoli, also called NOC, will no longer be allowed to handle that oil, he said. "The move increases the risk that Libyan oil output will be shut in as the NOC in Tripoli is the only legal entity with the right to sell oil,"  Production problems at one of Canada’s largest oil sands facilities drove front-month U.S. crude to its highest premium above second-month futures since 2014. Higher feedstock crude oil prices, as well as surging fuel exports from China, have pulled down Asian refinery product margins to two-year lows.Uncertainty over Libya's exports follows a move by OPEC and other oil producers to increase supply by around 1 million barrels per day (bpd). Oil markets have tightened significantly since 2017, when OPEC and its partners started withholding supply to prop up slumping prices at the time. But some analysts think oil markets will stay tight. "Despite the OPEC agreement (last week) we believe that tight supply is likely to drive oil prices higher during 2018,"

    After OPEC, oil market enters a new era: Kemp (Reuters) - OPEC is changing fundamentally as power in the oil market shifts towards Saudi Arabia, acting in concert with Russia, while the other members of the organisation are increasingly marginalised. In theory, all members of the Organization of the Petroleum Countries are equal, and the group has always taken decisions by consensus ("Statute of the Organization of the Petroleum Exporting Countries", 1961 and 2012). OPEC's founding statute stipulates that it “shall be guided by the principle of sovereign equality of its member countries" (Article 3). In practice, some members of OPEC have always been more powerful than others, but that imbalance has been widening, with Saudi Arabia becoming the dominant decision-maker. Saudi Arabia's oil production overtook Iran's in the 1970s, and the gap has grown steadily wider as a result of the Iranian revolution, the Iran-Iraq war and multiple rounds of sanctions. Saudi Arabia is the only member of the organisation with a large enough share of output to have a measurable influence prices and the budgetary flexibility to adjust its production significantly. In reality, Saudi Arabia decides how much to produce given market conditions, playing the role of swing producer, while the other members of the organisation essentially produce as much as they are technically able. 

    Oil rallies to fresh high as US crude inventories see biggest drop since 2016 – Oil rallied more than 3% on Wednesday to its highest level this year as data showed US crude inventories last week saw the largest drawdown since 2016. West Texas Intermediate climbed as much as 3.3% to $73.04 a barrel. Brent, the international benchmark, was up 1.9% to $78.16 a barrel around 12:45 p.m. ET. A report by the Energy Information Administration showed US crude inventories dropped by 9.9 million barrels in the week ending June 22, the largest decline since September 2016. Analysts had expected a drawdown of less than half that. Prices had already been rallying this week after the US said all countries must stop buying oil from the Islamic Republic by November or face sanctions, as part of Trump's withdrawal from the Iran nuclear deal. The international community had expected sanctions waivers for some countries, a tactic used in the Obama era to avoid supply shocks.Supply disruptions in Canada have also offered support to crude. An outage at Syncrude has threatened to withdraw about 350,000 barrels per day from the market through at least July, adding to a mounting list of major producers where output is at risk, including in Venezuela and in Libya. "With renewed geopolitical risk factors likely to stimulate concerns of supply disruptions, oil prices have scope to extend gains in the near term," . The rally comes days after OPEC and other supply-cutting countries led by Russia reached a deal officials said was partly designed to prevent market overheating. As part of a 2015 agreement to coordinate production levels, the cartel said it would increase output beginning in July.  WTI is up nearly 60% over the year.

    Oil stocks drop by nearly 10 million barrels: EIA (Reuters) - U.S. crude stocks fell by nearly 10 million barrels last week as refineries hiked output, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday.  Crude inventories fell by 9.9 million barrels in the last week, compared with analysts’ expectations for a decrease of 2.6 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.7 million barrels, EIA said. Refinery crude runs rose by 115,000 barrels per day, EIA data showed. Refinery utilization rates rose by 0.8 percentage points. Gasoline stocks rose by 1.2 million barrels, compared with analyst expectations in a Reuters poll for a 1.3 million-barrel gain. Distillate stockpiles, which include diesel and heating oil, were up by 15,000 barrels, versus expectations for a 774,000-barrel increase, the EIA data showed.  Net U.S. crude imports fell last week by 512,000 barrels per day.

    Hefty Inventory Draw Boosts Oil Prices -- A day after the American Petroleum Institute helped push crude prices even higher by estimating a 9.228-million-barrel draw in U.S. crude oil inventories, the EIA confirmed the draw, at 9.9 million barrels for the week to June 22.This compares with a draw of 5.9 million barrels reported for the prior week and analyst expectations for a draw of 5.1 million barrels. Amid stubbornly rising oil prices despite the OPEC+ decision to add close to 1 million bpd to global supply, the EIA also reported an increase in gasoline inventories of 1.2 million barrels. That compares with a 3.3-million-barrel increase in gasoline inventories reported for the previous week. Refineries processed 17.8 million barrels daily last week, with gasoline production at an average 10.1 million bpd, slightly higher than a week earlier. Distillate inventories remained unchanged, compared with a 2.7-million-barrel increase a week earlier. Production averaged 5.4 million barrels daily, down slightly from 5.5 million barrels daily a week earlier.  Oil prices have remained highly volatile after OPEC’s meeting in Vienna, not least because traders expected a bigger cut but also because the U.S. State Department has increased the pressure on its international allies to stop importing crude oil from Iran.  Despite President Trump’s tweet campaign against OPEC, in which he accused the cartel of “artificially” keeping prices high, it is now Washington’s determination to cut Iran’s access to international oil markets that is adding fuel to the price rally. Analysts are already revising their estimates of the supply outage that will result from the entry into force of U.S. sanctions in November, and refiners from Asia are starting to reduce their shipments from Iran. Additionally, a power outage at a Syncrude oil sands mine in Canada and a spike in oil export uncertainty in Libya have contributed to the higher prices, basically erasing the knee-jerk price decline from last week as the market anticipated OPEC’s decision.

    Saudi Arabia plans to pump up to 11 mln bpd in July, all-time record high – source (Reuters) - Saudi Arabia plans to pump up to 11 million barrels of oil in July, the highest in its history, up from about 10.8 million bpd in June, an industry source familiar with Saudi oil production plans told Reuters on Tuesday.  OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July by about 1 million bpd, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers.

    WTI Spikes Above $72 After Biggest Crude Draw Since Sept 2016 -- WTI continues to soar this morning, near $72, after API reported a huge crude draw, and DOE confirmed it with a 9.891mm draw - the biggest since Sept 2016. WTI spiked above $72, helped by the second week in a row of no production increase. Bloomberg Intelligence Senior Energy Analyst Vince Piazza explains that unplanned downtime at a Canadian syncrude upgrading facility may be contributing to an uplift in domestic crude demand. Refining utilization is expected to remain elevated after hitting 96.7% in the previous reporting period, while crude oil exports are well-entrenched above 2 million barrels a day.  DOE:

    • Crude -9.891mm (-3mm exp) - biggest draw since Sept 2016
    • Cushing -2.713mm (-1.3mm exp)
    • Gasoline +1.156mm
    • Distillates +15k

    DOE confirmed the massive crude draw this week - even bigger than API's - the biggest since Sept 2016  Crude exports soared to a record 3mm barrels last week... Crude oil production is just 100,000 barrels a day shy of the 11 million bpd mark, as drillers have been running at full speed ahead. With U.S. prices back above $70 a barrel, we expected continued growth in production, but instead it flatlined at 10.90mm bpd as perhaps the Permian bottleneck is starting to impact production explicitly.

    U.S. oil prices settle at highest since 2014 as crude supplies notch biggest weekly drop of the year - Oil prices rallied Wednesday, with the U.S. benchmark settling at its highest since 2014 as domestic crude supplies notched their biggest weekly drop of the year so far.Traders also showed concerns over U.S. threats to sanction countries that don’t stop importing oil from Iran by Nov. 4. On the New York Mercantile Exchange, August West Texas Intermediate crude  tacked on $2.23, or 3.2%, to settle at $72.76 a barrel. That was the highest finish since Nov. 26, 2014. August Brent crude, the global benchmark, settled $1.31, or 1.7%, at $77.62 a barrel on ICE Futures Europe, for the highest finish since May.The U.S. Energy Information Administration reported Wednesday that crude supplies declined by 9.9 million barrels for the week ended June 22—the largest weekly decline so far this year. Analysts surveyed by S&P Global Platts had forecast a fall of 2.3 million barrels, while the American Petroleum Institute on Tuesday reported a drop of 9.2 million barrels.“Record crude exports and record refinery runs have combined to yield the biggest draw to crude stocks so far this year,” said Matt Smith, director of commodity research at ClipperData. “Even crude production holding at a record level has been unable to offset strong domestic and international demand.” The EIA pegged last week’s total domestic crude output at 10.9 million barrels a day, unchanged from the previous week.Gasoline stockpiles rose by 1.2 million barrels for the week, while distillate stockpiles were unchanged for the week, according to the EIA. The S&P Global Platts survey forecast supply increases of 160,000 barrels for gasoline, and 500,000 barrels for distillate stocks.On Nymex Wednesday, July gasoline RBN8, +0.65%  rose 2.8% at $2.134 a gallon and July heating oil RBN8, +0.65%  ended at $2.177 a gallon, up 2.3%.  July natural gas rose 1.9% to $2.996 per million British thermal units. The contract expired at the end of the trading session. “We would have seen gasoline prices go up much further today if it were not for gasoline imports that approached 1 million barrels per day,”  The oil-price gains came after Brent and WTI closed up Tuesday by more than 2% and nearly 4%, respectively, following threats by the U.S. to sanction countries that don’t cut their imports of Iranian crude to “zero” by Nov. 4. Tuesday’s announcement by the U.S. State Department “may well have been designed to ramp up the pressure on the Iranian regime, but it is also likely to exert further upward pressure on U.S. prices,”

     Analysis: US crude differentials swing sharply on undulating Brent-WTI spread - Spot price differentials for US crude grades soared in recent weeks to multiyear highs amid widening Brent-WTI spreads, with June on track to be the strongest month in four years for many grades. But market reaction to Friday's OPEC/non-OPEC coalition agreement to increase production put a quick and steep reversal to this upward trend, along with tightening supply at the Cushing, Oklahoma, hub. The Brent-WTI spread had risen sharply in May through much of June as oil production outpaced takeaway capacity from the prolific Permian Basin in West Texas, creating a localized glut that put downward pressure on WTI in the key Cushing hub, the delivery point for NYMEX light sweet crude. The front-month Brent premium over WTI averaged at nearly $7.05/b during the trading days in May, more than $2.16 higher month on month, and more than $4.30 wider compared with May last year. The discrepancy between the two benchmark crude contracts further widened in June, peaking at $11.15/b on June 7, the highest since February 2015, and was averaging at nearly $9.54/b through Friday, June 22. The widened Brent-WTI spread made WTI-linked US crude grades more attractive to domestic and international buyers compared with their counterparts that are priced off of Brent, pushing price differentials up to multiyear highs. June was on its way to reach the highest Brent-WTI spread monthly average since early 2014, but the recent OPEC/non-OPEC meeting in Vienna held Friday, where the 24 cooperating countries agreed to increase production by 1 million b/d through 2018, has changed Brent and WTI's course to a converging path. S&P Global Platts assessed the July Brent-WTI swap spread Monday at $6.78/b, nearly $2.76 lower than the average during the prior trading days in June.

    Analysis: US crude exports, refinery runs set records - Inventories dropped 9.891 million barrels to 416.636 million barrels for the week ended June 22, representing the biggest week-on-week draw since September 2016, EIA data showed. Analysts surveyed Monday by S&P Global Platts were looking for a decline of 2.3 million barrels. Crude exports rose 626,000 b/d last week to 3 million b/d, breaking the previous record of 2.566 million b/d set the week ending May 11. The amount of crude processed by refineries increased 115,000 b/d to 17.816 million b/d, the highest level on record, according to EIA data going back to 1982. Crude stocks now sit 3.57% below the five-year average for the same period; that figure equaled a 26.73% surplus a year ago. The EIA weekly data helped lift oil futures. As of Wednesday afternoon, NYMEX August crude was $2.24 higher at $72.77/b. ICE August Brent was $1.69 higher at $78/b. NYMEX crude's strength relative to ICE Brent on Wednesday extended a trend that began last week. As a result, the gap between the two crude benchmarks has narrowed sharply. The ICE Brent/WTI spread has been less than $6/b since Tuesday, in from more than $10/b early last week. A trigger behind the narrowing spread has been the shutdown of Canada's Syncrude following a power outage last week. Syncrude production could be lost through July or even later. The subsequent market reaction suggests some concern over supply around the NYMEX crude delivery point in Cushing, Oklahoma. Prompt NYMEX crude has outperformed the rest of the oil complex, which explains the narrower Brent/WTI spread along with the steeper backwardation.

    US oil exports boom to record level - U.S. oil exports reached a record 3 million barrels a day last week— a greater amount than is pumped each day by all but three OPEC countries.  When combined with fuel products, like diesel and gasoline, U.S. oil and related products exports totaled 8.5 million barrels a day last week, the most ever, according to U.S. Energy Information Administration weekly data.U.S. oil production also continued at a record pace of 10.9 million barrels a day, a level first reached this month. That is more oil than produced by every other country in the world, except for Russia, which does not belong to OPEC and pumps just over 11 million barrels a day. U.S. refineries also took in a record 18 million barrels of oil.To put U.S. exports in context, the U.S. was able to export more oil per day last week than most OPEC countries drilled. But of the largest producing OPEC countries, only Saudi Arabia and Iraq are exporting more oil than the U.S. did last week, according to John Kilduff, partner with Again Capital. In June, he said Saudi Arabia exported about 7.5 million barrels a day and southern Iraq exported 3.6 million. Iran exports about 2.4 million barrels a day, and the U.S. is seeking to remove those barrels from the market through sanctions. "The fact is we're loading crude oil for export across the Texas Gulf Coast. The biggest issue that exporters are facing is getting oil from the Permian basin to the Gulf Coast because of the lack of pipeline capacity," said Andrew Lipow, president of Lipow Oil Associates.The U.S. weekly exports fluctuate dramatically, but if they stay at this level, the U.S. would be just behind Canada, which sends about 3.5 million barrels to the U.S. each day, the bulk of of its exports. As U.S. production has grown, U.S. imports have decreased. The U.S. imported a relatively high 8.4 million barrels per day last week.The 3 million barrel level may not be sustainable just yet. Analysts said some of the oil appears to have been pulled from inventories, which fell an unusually large amount last week. “We’ve gone from zero to 3 million barrels a day in terms of crude oil exports in just over a year. It’s been a steady climb. This puts tremendous pressure on U.S. crude oil supplies despite the shale boom if this is going to persist,” said Kilduff. “The exports and the record refinery run combined created a massive draw down of nearly 10 million barrels.”

    Oil futures dip on continued record-high US production - Crude oil futures were lower in mid-afternoon trade Asia Thursday as the US continues to produce record-high crude amid higher expected output from OPEC and its allies. Despite this, market sentiments remained positive on supply disruptions from Syncrude in Canada, possible sanctions on Venezuela, staggering drawdown in US crude inventory and record-high exports. At 1:55 pm Singapore time (0555 GMT), the August ICE Brent crude futures dipped 21 cents/b (0.27%) from Wednesday's settle to $77.41/b, while the NYMEX August light sweet crude contract fell 31 cents/b (0.43%) to $72.45/b. Market participants said that production from OPEC, led by Saudi Arabia, and non-OPEC allies, led by Russia, is expected to rise after the OPEC meeting that took place in Vienna on June 22, leading to lower crude futures. Meanwhile, US domestic crude oil production remained flat week on week, albeit at a record pace of 10.9 million b/d. "Supply of crude oil in the US remains high and we expect it to increase further,"

    Oil prices diverge but U.S. benchmark holds near highest since 2014 - Oil prices climbed Thursday, with the U.S. benchmark again marking its highest level since 2014 in the wake of the biggest weekly decline of the year for domestic crude supplies and ongoing global output risks.  Traders also showed concerns that U.S. sanctions on Iranian oil and production issues at a Canadian oil sands facility will contribute to tighter global supplies.  Natural-gas prices, meanwhile, finished lower after a U.S. government report revealed an upward revision to previously reported weekly stockpiles of the fuel. On the New York Mercantile Exchange, August West Texas Intermediate crude  added 69 cents, or nearly 1%, to settle at $73.45 a barrel, for its highest finish since Nov. 26, 2014.August Brent crude the global benchmark, rose 23 cents, or 0.3%, to $77.85 a barrel, with prices settling at the highest since May. The August contract expires at the end of Friday’s session.Brent and WTI crude prices finished well off the session’s best levels. The market had been digesting threats by the Trump administration this week to sanction countries that don’t reduce their imports of Iranian crude to “zero” by Nov. 4.But CNBC reported Thursday that the U.S. State Department has clarified those comments, with an official saying that the Trump administration is “willing to work with countries that are reducing their imports on a case-by-case basis”—suggesting that imports of Iranian oil may not reach zero.President Trump last month pulled the U.S. out of a 2015 international agreement to curb Iran’s nuclear program, setting the stage for the reimposition of economic sanctions on the Islamic Republic that were already expected to hinder its oil exports. Iran currently exports around 2.4 million barrels a day of crude. Analysts had estimated that anywhere between 400,000 to one million barrels could be at risk once sanctions are fully reinstated in six months.

    Oil prices spike 13% in a week. What the heck is going on?  - The oil market is on fire once again. On Thursday, crude spiked above $74 a barrel for the first time since late 2014.The 13% surge over the past week has been driven by a confluence of bullish factors that will make American drivers cringe when they fill up their gas tanks.

    • Saudi Arabia agreed last week to go all in with production. Investors are betting the OPEC leader has little room to respond to a future crisis.
    • A major oil producer in Canada suffered a power outage, disrupting the flow of crude to the United States.
    • And President Trump stepped up his crackdown on Iran, the world's fifth biggest oil producer. The State Department is now insisting that other countries stop importing Iranian oil -- or face sanctions from Washington.

    The end result: US crude jumped another 1.5% on Thursday and topped $74 a barrel.   "You can't tweet about high oil prices and then apply sanctions on Iran and not expect prices to go higher," said Ben Cook, portfolio manager at BP Capital Fund Advisors. "The oil has to come from somewhere." It's been a wild stretch for crude. Oil prices rose sharply through the spring, as production collapsed in crisis-riddled Venezuela and traders anticipated Trump's withdrawal of the United States from the Iran nuclear deal. But crude hit a wall in late May after Saudi Arabia vowed to pump more.

    US sanctions against Iran aimed at regime change -- The Trump administration further spelled out this week the draconian sanctions it intends to enforce on Iran. A senior State Department official told the media the US would take measures against any country that failed to reduce its oil imports from Iran to “zero” by November 4. Companies that fail to meet the deadline face the prospect of being excluded from the US financial system. While not completely ruling out waivers, the US official said there were unlikely to be any exemptions for corporations buying oil from Iran. The predisposition of the Trump administration, the official said, is: “No, we’re not going to do waivers.”The announcement follows Trump’s decision on May 8 to unilaterally pull out of the 2015 nuclear deal with Iran. Known as the Joint Comprehensive Plan of Action (JCPOA), it was signed with the US, Britain, France, Germany, China and Russia. Under the JCPOA, Tehran agreed to drastic curbs on its nuclear programs in return for a step-by-step easing of international sanctions.  Despite the International Atomic Energy Agency (IAEA) repeatedly verifying that Iran kept its side of the bargain, the Trump administration tore up the deal. Washington wants to force Iran to fall into line with US policy throughout the Middle East, and end its nuclear and missile programs.  US Secretary of State Mike Pompeo warned last month that Iran would face “the strongest sanctions in history” if it did not bow to Washington’s demands. He also strongly hinted at regime change, suggesting that the Iranian public could take matters into its own hands.

    Perry: Iran sanctions will stress oil markets - Energy Secretary Rick Perry predicted Thursday that the restoration of sanctions on Iran will stress worldwide oil markets, but called on other oil-producing nations to increase their output. “The market is going to be stressed,” Perry said at a news conference at the World Gas Conference. “We look at this as an opportunity for the [Organization of Petroleum Exporting Countries] members to fill this gap."He predicted some short-term spikes in oil prices, due both to Iran sanctions and other factors. “I think there will be some spikes in prices from time to time. But ... I think that the markets are going to become calmer and calmer as we go forward, realizing that the supply is going to be there to meet the demand.” President Trump last month withdrew the United States from the Iran nuclear deal, in which Tehran agreed to restrict its nuclear weapons program in exchange for a loosening of economic sanctions by the United States and other countries. The State Department said this week that it is asking Western countries to completely stop importing Iranian oil by Nov. 4. Analysts have predicted that oil prices will spike when that deadline hits, since Iran is a significant exporter worldwide. Perry said that is likely, but didn't express much worry. “I’m quite comfortable that the world’s producers of crude are going to meet the demands that’s out there,” he said. Perry also ruled out ordering releases from the United States’ Strategic Petroleum Reserve if such price spikes occur. “From my perspective, the Strategic Petroleum Reserve is in place for an emergency, natural disasters,” he said. 

    Oil Rallies Towards $80 - Brent rose more than 1 percent in early trading on Friday, and is not far off of $80 per barrel. This week saw prices gain about 10 percent compared to last week after a combination of fears of Iran production outages, disruptions in Libya and a bullish stock draw in the U.S. It was only a week ago that OPEC+ promised to add 1 million barrels per day (mb/d) to the market, but it already feels like a distant memory with the oil bulls back on the march.  Earlier this week, a State Department official laid out what sounded like a “zero tolerance” policy for nations cutting oil imports from Iran. The official said that countries need to “zero” out their imports by November, and that it would be unlikely anyone would receive a waiver. The statement led to a spike in oil prices because the market had to dramatically revise up the assumed outage from Iran. On Thursday, a State Department official appeared to soften the line. “Our focus is to work with those countries importing Iranian crude oil to get as many of them as possible down to zero by Nov. 4,” the official said Thursday. “We are prepared to work with countries that are reducing their imports on a case-by-case basis. We are serious about our efforts to pressure Iran to change its threatening behavior.” The walking back of the “zero” imports mantra suggests the U.S. fears the fallout of pushing oil prices too high.  India’s oil minister advised its refiners to prepare for a “drastic reduction or zero” oil imports from Iran by November, due to the threat of U.S. sanctions. India, as a close neighbor and significant purchaser of oil from Iran, appears willing to wind down oil imports from Iran even as it does not recognize the sanctions as legitimate. India’s actions are an indication that Washington could wield far-reaching influence over Iran’s oil exports, even though much of the world is not lined up with the U.S. position.   Saudi Arabia reportedly will ramp up oil production to 10.8 mb/d in July, perhaps as high as 11.0 mb/d. The plans come as a series of outages around the world have pushed oil prices and left the market in a deficit. The increase in production, however, could eliminate as much as 40 percent of Saudi Arabia’s spare capacity, taking available capacity down to around 1.5 mb/d, a rather small buffer. “It basically leaves us with no spare capacity, at a time when Iran isn’t the only issue,”

    Oil Rig Count Falls Amid Stagnating Production - Baker Hughes reported another dip in the number of active oil and gas rigs in the United States today. Oil and gas rigs decreased by 5 rigs, according to the report, with the number of oil rigs decreasing by 4, and the number of gas rigs decreasing by 1.The oil and gas rig count now stands at 1,047—up 107 from this time last year.Canada, for its part, gained 12 oil rigs for the week—after last week’s gain of 21 oil and gas rigs. Despite weeks of significant gains, Canada’s oil and gas rig count is still down by 17 year over year. Oil benchmarks were up again on Friday afternoon as the market braced for the impact of multiple supply disruptions—or possible supply disruptions, rather—in Libya, Iran, Venezuela, and Canada. While oil supply disruptions in Libya, Canada, and Venezuela are already underway and expected to be either moderately long-term (Libya) in some cases, or infinite in others (Venezuela), Iran’s supply disruptions, or export disruptions, have not yet materialized, although the general consensus is that approximately 1 million barrels per day will be taken out of the market as the US squeezes Iran.At 10:57am EDT, the WTI benchmark was trading up 1.05% (+$0.77) to $74.22, with Brent up1.61% (+$1.25) to $78.86. Both benchmarks are up by multiple dollars per barrel week over week, as traders disregard Saudi Arabia’s promise to increase production to meet demand.Even US oil production is unable to keep oil prices in check, and for the third week in a row, US production stagnated at 10.9 million bpd—close to the 11 million bpd production that many had forecast for the year. At 6 minutes after the hour, WTI was trading up 1.06% at $74.23, with Brent trading up1.92% at $79.10.

    WTI rallies to fresh multi-year highs above $74 - Following a consolidation phase during the first half of the day, crude oil extended its rally in the NA session with the barrel of West Texas Intermediate rising above $74 for the first time since November 2014. As of writing, the barrel of WTI was trading at $74.30, adding 85 cents, or 1.15% on the day. Earlier today, Reuters published the results of a recent survey that it conducted with 35 economists and analysts. According to Reuters, Brent is expected to average $72.58 a barrel in 2018, 90 cents higher than the $71.68 forecast in last month's poll while the WTI is now seen averaging $66.79 a barrel in 2018, compared with $66.47 forecast last month. “A number of other geopolitical risks weigh on the global outlook, and these are likely to have a larger impact on prices than in previous years, when oil stocks were comfortable," Cailin Birch, an analyst at the Economist Intelligence Unit, told Reuters. In the meantime, supply disruptions in Libya, Venezuela, and Canada, in addition to the larger-than-expected decrease in crude stocks in the U.S., provided extra fuel to crude oil throughout the week. Furthermore, investors continue to price the expectations of Iran's supply getting cut from the markets on the U.S. & its allies sanctions.

    Weekly Natural Gas Storage Report: Surplus Should Be Obvious -- EIA reported a storage build of 66 Bcf for the week ending June 22. This compares to the +71 Bcf we projected and consensus average of +71 Bcf. The +66 Bcf also was 6 Bcf lower than the five-year average of +72 Bcf, and 20 Bcf higher than last year's. One thing to note in this report is that EIA revised higher the storage build last week, from 91 to 95 Bcf. We have made changes to our prior tracking error as a result. The natural gas bulls and bears both have ample ammunition to fire at each other.On one end, natural gas bulls contend that with natural gas storage expected to enter withdrawal season 350-plus Bcf below the five-year average, natural gas prices over the winter could really surprise to the upside. Natural gas storage levels also are low today so even if injections come in higher than the five-year average, storage will still be in deficit.On the other end, natural gas bulls contend that with Lower 48 production rising, storage becomes a more meaningless measurement of the surplus or deficit in the market. If supply is 4+ Bcf/d over demand today, then the relevance of the five-year average is meaningless. And if production keeps increasing, then natural gas prices will remain under pressure. As our readers will know, our view is toward the bearish side. We have documented in the past that even if this summer turns out to be bullish (warmer than normal), we will still have enough natural gas storage by April 2019 because Lower 48 production continues to increase. Take for example that Lower 48 production reached another all-time high yesterday at ~81.2 Bcf/d: This is on pace to reach the ~83 Bcf/d we had projected for year-end, and this will calm the market even if storage levels move lower.

    NYMEX August gas settles at $2.94/MMBtu, down 4.1 cents on weak build - NYMEX August natural gas futures slid on its debut as the front-month contract Thursday, settling at $2.94/MMBtu, down 4.1 cents, despite a low 66-Bcf build to storage stocks that the Energy Information Administration posted earlier Thursday. The front-month contract was trading in the range of $2.93/MMBtu-$3.021/MMBtu so far in the session. The same pattern was seen for several other contracts. September was down 3.2 cents, closing at $2.919/MMBtu, while the October contract was down 2.8 cents to settle at $2.927/MMBtu. The 66-Bcf build for the week ending June 22 trailed the five-year average injection of 72 Bcf for the same period and was below the 74-Bcf build forecast by a consensus of analysts surveyed by S&P Global Platts Analytics. The net increase in storage put current national stocks at 2.074 Tcf, nearly 26% below the 2.809 Tcf level during the same time last year and at a deficit of 19.5% to the five-year average of 2.575 Tcf. The market moved south and shed value due to "competing factors," said Phil Flynn, senior market analyst Price Futures Group. "Record production and upward revision of last week's [storage] number" kept the market from reacting to the bullishness of the report, he said. The EIA revised the storage report for the week ended June 15 from 91 Bcf to 95 Bcf, which offset the bullishness of Thursday's report. The reported revision Thursday caused inventory for the same week to change from 2.004 Tcf to 2.008 Tcf.

    Surging Production Trips Up Natural Gas Futures Despite Heat - Natural gas futures lost ground during an uneventful session Friday as strong production limited the impact of sizzling temperatures forecast for key demand markets into the first week of July. In the spot market, prices for weekend and Monday delivery slipped throughout the Gulf Coast, Midwest and East as traders in those regions apparently felt prepared to beat the heat; the NGI National Spot Gas Average fell 6 cents to $2.69/MMBtu. Nymex August Henry Hub futures settled at $2.924 Friday, down 1.6 cents on the day after trading as high as $2.954 and as low as $2.910. The September contract dropped 1.8 cents to settle at $2.901. “Natural gas prices traded within a narrow range as expected” Friday, “sitting lower through the day as dry production continued to hit record levels,” Bespoke Weather Services told clients. “Prices sit near the bottom of a long-term rising channel, yet the winter strip lagged into the settle and prices struggled to show many signs of firming up. “Weather through the short-term will be very hot, and we expect forecasts for next week to stay about equally as hot over the weekend, yet even so cash prices struggled to rally significantly on the day,” the firm said. Potentially weighing on prices, forecasts Friday showed heat in the short- and medium-term easing off by mid-July, Bespoke said. Even with strong cooling demand, record-level production has kept natural gas on the wrong side of $3 from the bulls’ perspective. Government data released Friday corroborates the growth trends observed by traders and analysts. The Energy Information Administration (EIA), in its monthly natural gas update Friday, said April 2018 dry gas production totaled 2.39 Tcf, or 79.7 Bcf/d, 8.0 Bcf/d (11%) higher year/year (y/y). That marks the eleventh straight month that production has surpassed the corresponding year-ago period, according to EIA.

    China Becomes World's Biggest Natural Gas Importer - China has outpaced Japan to become the world's largest importer of natural gas, a welcome sign for the developers of liquefaction plants in the Pacific Basin and beyond. Chinese buyers purchased 34.9 million tons of imported gas for the year through May, edging past the 34.5 million tons purchased by Japan. For now, China gets just over half of its gas import volume from LNG shipments, and its demand for liquefied gas has been accelerating rapidly. It imported about 38 mtpa in LNG last year, up from about 10 mtpa in 2010. Half of that increase came in the last two years alone, and China achieved second-largest-importer status just last year. A portion of the new volume is shipped from recently-built liquefaction plants in the United States. The U.S. supplied four percent of China's LNG demand last year, making it the nation's fifth-largest supplier. Despite growing signs of a potential trade war with the U.S., China has excluded LNG from a list of proposed retaliatory tariffs that it seeks to impose on American goods - a reflection of the priority that Beijing places on maintaining acccess to LNG. Under Chinese President Xi Jinping, China has begun a large-scale push to shift from coal-fired power to gas, a measure that will significantly reduce smog-creating emissions of particulate matter and SOx. Beijing hopes to power 15 percent of the Chinese economy by 2030, according to its National Development and Reform Commission, an amount that outstrips the domestic supply. The changeover policy led to widespread gas shortages last December as temperatures dropped and heating demand outpaced the supply, and China is eager to avoid a recurrence next winter. Hebei, the province surrounding Beijing, has decided to forego further work on its coal-to-gas conversion projects until Gazprom's massive "Power of Siberia" pipeline is completed. Once operational, the line will deliver up to 60 billion cubic meters per year from Russia to China, an amount equal to about 45 mtpa of LNG - more than the total that China imported in 2017 - and the parties are already in negotiations over a second, parallel pipeline with equivalent capacity. 

    Analysis: China's fuel oil imports may feel the pinch from US trade war - China's fuel oil imports may ease in the coming months amid fears that bunker fuel demand might fall after US tariffs come into effect next month, curbing shipment of some commodities from China to the United States. As markets keep a close watch on how trade flows might be affected after July 6 when some duties come into effect, traders in China said fuel oil importers are adopting a cautious approach, and are not rushing to finalize import deals. "Until now, we have not seen demand for container cargoes and dry bulk cargoes shrinking," a source with Chimbusco in Beijing said. "But once the tariffs are effective, it is likely that demand for container cargoes will drop, leading to less demand for bunker fuel." A drop in bunker fuel demand could further slow China's imports of fuel oil, which fell 3.4% month on month to 1.46 million mt in May, the General Administration of Customs' latest data showed. This is despite higher demand from independent refineries, which account for a relatively small portion of the fuel oil demand. The bulk of the imported cargoes are resold in the domestic market as bonded bunker fuel to ships plying international waters. "Demand for bunker fuel has been relatively stable recently, but supplies have been tight," a source with Chinaoil Shanghai said. Chinaoil imports fuel oil to sell to bunker fuel distributors. As the latest custom data did not show imports by destination, it was not clear imports from which regions had fallen.

    World Trade War: Canada Prepares Steel Quotas, Tariffs On China To Prevent Dumping - It's not just the US that is locked in an escalating trade war with China: according to Bloomberg, Canada is also preparing steel quotas and tariffs targeting Beijing meant to prevent dumping of steel imports from global producers seeking to avoid U.S. tariffs.Implicitly confirming that Trump was right to launch protectionist measures against China, and that others would have done it if they had the stomach to disturb the global trade order, the Canadian measures are said to be "a combination of quotas and tariffs aimed at certain countries including China" and follow similar “safeguard” measures being considered by the European Union aimed at warding off steel that might otherwise have been sent to the U.S. It comes alongside Canadian counter-tariffs on U.S. steel, aluminum and other products set to kick in on July 1.As Bloomberg further adds, the Canadian measures are expected to include new quotas on certain steel imports to prevent dumping, with tariffs applied above that threshold.The announcement could come as early as next week, though the government hasn’t finalized its plans, the people said. A spokesman for Finance Minister Bill Morneau declined to comment. Representatives for Foreign Minister Chrystia Freeland, who handles U.S. trade issues, didn’t immediately return requests for comment. The USDCAD spiked higher on the headline rising to 1.3312 amid concerns that a new front in the global trade war is opening.

    China’s central bank frees up US$100 billion in funding as trade war looms | South China Morning Post: China’s central bank said on Sunday it would unlock at least US$100 billion for the country’s lenders to bail out troubled state firms and to help small businesses, as Beijing tries to shore up growth under the shadow of a trade war with the United States. The People’s Bank of China (PBOC) said in a statement it would cut the reserve requirement ratio, the share of deposits lenders must put aside with the central lender, for commercial banks by half a percentage point from July 5. The cut would free up 500 billion yuan (US$76.86 billion) in funds for the big banks, including Industrial and Commercial Bank of China and China Construction Bank, to finance debt-to-equity swaps, a measure often used for troubled state enterprises. It would also free up 200 billion yuan for smaller banks to boost lending to small businesses across the country, the central bank said. The move is a “targeted operation” aimed at supporting the weak links in the economy and not a change to the country’s “neutral and prudent” monetary policy stance, the PBOC said. Although the statement did not mention China’s trade row with the United States, or its recently released weaker economic indicators, the reduction in the reserve ratio will come into effect a day before the first of US President Donald Trump’s additional tariffs on Chinese products are due to be implemented. Deng Haiqing, a visiting scholar at Renmin University of China, wrote in a note that the PBOC’s move represented a significant shift in China’s policy, and was not just fine-tuning. “The authorities have started to see the pain inflicted on the real economy from deleveraging, and they are trying to reduce it,” he said. 

    China Cuts Reserve Ratio, Unlocks 700BN Yuan Amid Rising Trade War, Mass Defaults And Margin Calls --As widely expected, China's central bank announced it would cut the Required Reserve Ratio (RRR) for some banks by 0.5% effective July 5, just over two months after the PBOC did a similar cut on April 17, the first such easing since the start of 2016.  The move is expected to unlock 700 billion yuan ($108 billion) in liquidity amid growing trade war tensions, a sharp slowdown in the Chinese economy, a tumbling stock market, rising forced margin call, and a spike in corporate defaults. According to the central bank, the aim of the cut is" to support small and micro enterprises, and to further promote the debt-to-equity swap program." The cut will apply to major state-run commercial banks, joint-stock commercial lenders, postal banks, city commercial lenders, rural banks and foreign banks, in other words: virtually everyone. The RRR cut was also widely expected following the publication of a central bank working paper on Tuesday calling for such a cut. According to Bloomberg, the cut is designed to achieve two things:

    • The 500 billion yuan unlocked for the nation’s five biggest state-run banks and 12 joint-stock commercial lenders will be channeled to debt-to-equity swaps, which can reduce companies’ debt burdens and help cleaning up banks’ balance sheets. It comes following no less than 20 corporate bond defaults in 2018, and ahead of a wave of corporate repayments that has prompted analysts to express fears about a default avalanche. Chinese companies have to repay a total of 2.7 trillion yuan of bonds in the onshore and offshore market in the second half of this year, and together with another 3.3 trillion yuan of trust products set to mature in the second half.
    • Separately, the 200 billion yuan freed for smaller lenders such as the postal bank and city commercial lenders will be used to support funding for smaller businesses. It comes amid concerns that the growing trade war between the US and China could further impair the already sharply slowing down Chinese economy which earlier this month reported "shockingly weak" economic data...

     Chinese warships drill in waters near Taiwan  (Reuters) - A formation of Chinese warships has been holding daily combat drills for more than a week in waters near Taiwan, China’s state media said on Tuesday, amid heightened tension between Beijing and the self-ruled island. The news comes as U.S. Defense Secretary Jim Mattis was set to arrive in the Chinese capital for an official visit. Since June 17, a group of navy warships, including a Type 054A frigate and a Type 052C destroyer, have been conducting exercises near Taiwan, including in the Bashi Channel and the Taiwan Strait, said 81.cn, an official publication of the Chinese army. “The drills tested the military and training abilities of warship, aviation and coastal defense troops, via organizing real combat training in multiple areas of the ocean,” it said. It was not clear if the drills had ended. Taiwan’s defense ministry said in a statement the vessels were monitored continuously and there was no cause for alarm. China claims Taiwan as its own and has never renounced the use of force to bring under its control what it sees as a wayward province. Taiwan has shown no interest in being governed by the ruling Communist Party in Beijing. United States overtures towards Taiwan, from unveiling a new de facto embassy to passing the Taiwan Travel Act, which encourages U.S. officials to visit, have further escalated tension between Beijing and Taipei. Sino-U.S. ties are under growing pressure over burgeoning trade friction, the North Korean nuclear crisis and escalating activity in the disputed waterway of the South China Sea. Early in June, Mattis, in a strongly worded speech at the annual Shangri-La Dialogue in Singapore, warned of Chinese intimidation in the South China Sea, adding that the United States was ready to “compete vigorously” if needed. 

    These Chinese workers’ brain waves are being monitored - Employees' brain waves are reportedly being monitored in factories, state-owned enterprises, and the military across China. The technology works by placing wireless sensors in employees' caps or hats which, combined with artificial intelligence algorithms, spot incidents of workplace rage, anxiety, or sadness. Employers use this "emotional surveillance technology" by then tweaking workflows, including employee placement and breaks, to increase productivity and profits. At State Grid Zhejiang Electric Power in the southeast city of Hangzhou, company profits jumped by $315 million since the technology was introduced in 2014, an official told the South China Morning Post. Cheng Jingzhou, the official who oversees the company's program, said "there is no doubt about its effect," and brain data helps the 40,000-strong firm work to higher standards. According to the SCMP, more than a dozen businesses and China's military have used a different programme developed by the government-funded brain surveillance project Neuro Cap, based out of Ningbo University. "They thought we could read their mind. This caused some discomfort and resistance in the beginning," Jin Jia, a professor of brain science at Ningbo University told the Post. "After a while they got used to the device... They wore it all day at work." 

    The Belt and Road Bubble Is Starting to Burst - China’s mammoth firms frequently make massive losses on foreign investment ventures.  A recent Foreign Policy piece points out that individuals and firms have made up an increasingly large share of China’s total foreign asset purchases in recent years, from 12 percent in 2011 to nearly 40 percent in 2017, as the People’s Bank of China’s share of total foreign direct investment shrank. It turns out that these new investors are poor asset judges. As their share of China’s portfolio grew, its aggregate returns dwindled. In 2016, the total return on Chinese foreign investment was 0.4 percent, which is dramatically lower than the 4 percent earned by foreign reserves.Through the Go Out policy and the Belt and Road Initiative, China’s firms have been economically and politically incentivized to invest in countries where they have little to no experience. Chinese President Xi Jinping’s trillion-dollar Belt and Road Initiative has backed the Go Out policy’s economic incentives with a healthy dose of political pressure, reflecting China’s desire to have its economic rise matched by political clout. Chinese firms lack the experience of their Western counterparts when investing abroad; some Western investments date back to colonial times. Because of their late entry into new markets, Chinese firms may also be more likely to invest in lemons — projects deemed too unprofitable or risky by other investors. Chinese firms have also been taking on projects that are far outside their field of competence. The Sicomines deal is a case in point, resulting in two Chinese construction giants now sharing a controlling stake in a copper mine.The possibility has been raised that Chinese firms may be in a haste to invest in large projects, regardless of risk, because they aim to become too big to fail, with the expectation that they will be bailed out even if they throw money down the drain. They may also be seeking to transfer assets abroad to shield them from the state’s prying hands should their political fortunes turn.  Regardless of Chinese firms’ motives for undertaking such risky projects abroad, failed investments are now fixtures of China’s foreign investment portfolio. Furthermore, many of these projects are on the books of the Chinese policy banks that finance them. These banks expect all their loans to be repaid — and are unlikely to forgive them. However, they will likely be forced to renegotiate or even reschedule many loans down the line. The new rules the Chinese government has recently imposed on policy banks suggest that Beijing believes their lending poses a risk to the broader Chinese economy.

    China cuts tariffs on imports from South Korea, India and others as trade war with US looms | South China Morning Post: China on Tuesday announced a long list of tariff cuts on imports from South Korea, India, Bangladesh, Laos and Sri Lanka that will take effect on July 1, amid an ongoing trade skirmish with the United States. The cuts are part of China’s commitments under the Asia-Pacific Trade Agreement signed by the members of a small regional trade bloc that China joined in 2001, before its entry to the World Trade Organisation. The six members agreed to the reduced tariffs in 2016 after a decade of negotiations. Beijing’s decision to put the agreement into effect next week – five days before US President Donald Trump will impose 25 per cent tariffs on US$34 billion worth of imports from China – comes as the Chinese government tries to rally support to fight “trade protectionism”.Under the Asia-Pacific deal, member countries including China agreed to slash import duties on more than 10,000 items by a third on average, according to official documents. China’s cabinet decided to remove tariffs on soybeans from India, South Korea, Bangladesh, Laos and Sri Lanka that were previously 3 per cent, according to a list published by the finance ministry and customs. Soybean meal, which had been subject to 5 per cent tariffs, will also be exempted. Tariff cuts also apply to chemicals, agricultural products, medical supplies, clothing, steel, non-ferrous metals and liquefied petroleum gas – duties on LPG, for example, will be cut from 3 to 2.1 per cent. 

    Korea seeks to speed up ‘northern’ economic projects with Russia --As President Moon Jae-in began his four-day trip to Russia Thursday, expectations are heightening over trilateral economic cooperation plans linking the two Koreas with Russia. They are likely to start in sectors such as railways, pipelines and electricity grids."When the peaceful mood settles in the Korean Peninsula, North Korea can join in cooperation between South Korea and Russia. This will greatly help their economy and development," President Moon said in an interview with the Russian media Wednesday before leaving for Russia.The administration has eyes on cooperation with Eurasian countries including Russia, launching the Presidential Committee on Northern Economic Cooperation last December.  It is expected to come up with a more detailed roadmap amid thawing inter-Korean relations. Should North Korea denuclearize and international sanctions are lifted, economic cooperation involving the two Koreas as well as neighboring countries such as Russia and China will be possible in diverse sectors such as logistics, energy and special economic zone development. Korea in particular has expectations for connected railways. During the historic summit between President Moon and North Korea's leader Kim Jong-un in April, the two Koreas agreed to link railways. When they are further connected to the Trans-Siberian Railway, both cost and time will be greatly reduced as freight will reach even Europe by rail.

    North Korea to move artillery out of range of Seoul as part of peace talks, South Korea suggests -- The rival Koreas are discussing the possible relocation of North Korea’s long range artillery systems away from the tense Korean border, the South’s prime minister said, as the countries forge ahead with steps to lower tensions and extend a recent detente. North Korea has deployed an estimated 1,000 artillery pieces along the border, posing a significant threat to Seoul and the metropolitan area. In a speech marking the 68th anniversary of the outbreak of the 1950-53 Korean War, Lee Nak-yon said that “moving (North Korea’s) long range artillery to the rear is under discussion”, as he explained what types of goodwill steps between the sides have been taken in recent months. Mr Lee’s comments appear to be Seoul’s first official confirmation of media reports that South Korea demanded that the North reposition its forward-deployed artillery pieces during inter-Korean military talks this month. Seoul’s Defence Ministry, which has denied those reports, said it had no immediate comment on Mr Lee’s speech. A 2016 South Korean defence white paper described the North’s long range artillery as one of the country’s biggest threats, along with its nuclear and missile programmes. Seoul, a capital city with 10 million people, is about 40-50km from the border. 

    North Korea Is Rapidly Upgrading Nuclear Site Despite Summit Vow - —North Korea is upgrading its nuclear research center at a rapid pace, new satellite imagery analysis suggests, despite Pyongyang’s commitment to denuclearization at a summit with the U.S. this month.The analysis from 38 North, a North Korea-focused website published by the Stimson Center in Washington, found that Pyongyang, in recent weeks, appears to have modified the cooling system of its plutonium-production reactor and erected a new building near the cooling tower. New Construction could also be observed at the site’s experimental light-water reactor, the report said.The satellite pictures, captured on June 21, nine days after the Singapore summit meeting between President Donald Trump and North Korean leader Kim Jong Un, showed no immediate effort to begin denuclearization at North Korea’s key nuclear research site. Shortly after shaking hands with Mr. Kim on June 12, Mr. Trump said the North Korean leader would return home to begin dismantling his country’s nuclear program. “In fact, when he lands—which is going to be shortly—I think that he will start that process right away,” Mr. Trump told reporters.At a June 21 cabinet meeting, he said the two sides had agreed to “immediately begin total denuclearization of North Korea.”The statement signed by the two leaders, however, says only that North Korea “commits to work towards complete denuclearization of the Korean Peninsula.” Mr. Trump said the process could take many years, but, in a tweet posted after his return to the U.S. on June 13, he said: “There is no longer a Nuclear Threat from North Korea.”

    Vietnam Mass Protests Expose Hanoi’s China Dilemma - The Diplomat The huge nationwide protests that rocked Vietnam last week have highlighted Hanoi’s headaches in dealing with China, both as a hostile power in the South China Sea and as a key trading partner and economic investor. The history of Vietnam-China relations is steeped in a thousand years of Chinese colonization, conflict, and rebellion. The last Chinese invasion was a two-month border war in 1979. The recent protests centered on the Special Zone Act, a law that would create “special economic zones” (SEZs) with the goal of sparking investment and economic reform. However, the prospect of dodgy deals that allegedly would have handed land over to Chinese investors provoked a flood of angry demonstrations less than two weeks ago, with protesters holding placards that read “No Special Zone — No leasing land to China — Even for one day!” and “Down with those who sell our country.” The chants started in Ho Chi Minh City and Hanoi but soon spread to towns in six provinces, including Danang, Nha Trang, Binh Thuan, and Tai Ninh. Pham Chi Dung an ex-military officer, now chairman of the Independent Journalists of Vietnam, told The Diplomat, “The Special Zone Act is termed by the Vietnamese people as the law to sell the country. Many people are outraged. These [SEZ] concessions are only for poor and backward countries.” No doubt Dung had in mind two poorer neighbor countries, Laos and Cambodia, which already been lured into accepting Chinese investor deals with 99-year leases on the land. Vietnam’s prime minister, Nguyen Xuan Phuc, has backpedaled on offering special 99-year leases for the three controversial economic zones in strategic locations. The 99 percent clause could have permitted foreign ownership of the land, with Chinese investors as the most likely beneficiaries. The government probably intends to trim the lease period to the standard 70 years applied to the 18 economic zones already established 

    State of emergency declared following unrest in Papua New Guinea - The Papua New Guinea government has suspended the Southern Highlands provincial government and declared a nine-month state of emergency in the remote province. The Defence Force was called out to reinforce a heavy police presence, and a 6pm–6am curfew, imposed following an eruption of unrest in Mendi, the provincial capital, on June 14.The government of Prime Minister Peter O’Neill approved $US1.8 million in funding to enable the police-military mobilisation. A former policeman and acting provincial administrator, Thomas Eluh, has been given broad emergency powers. According to media outlet Loop PNG, more than 200 armed troops were flown to the area last weekend. Two mobile police squads of nearly 70 personnel are already there, with more due to be dispatched.Armed crowds, angered over a court ruling upholding Southern Highlands governor William Powi’s 2017 election win, burned an Air Niugini Dash-8 aircraft, looted a warehouse and torched buildings last week. The losing candidate, Joseph Kobol, alleges that the election was rigged.Radio NZ Pacific reporter Melvin Levongo said people were “very frustrated” at the court result. “They said they blamed the judiciary system … [that] it’s compromised, and it was clearly a corrupt way that Mr Powi won his election, but the court didn’t go [their] way so it was a rebellion against a corrupt governor, that’s what most people said,” he explained.  One witness said that Kobol’s supporters, including between 100 and 200 men armed with sticks and guns, arrived from surrounding villages in flatbed trucks. They set fire to the plane before moving into the township, setting ablaze houses and two court buildings. The Guardian reported that the protests escalated over the weekend as up to 400 people armed with machetes and guns marched on Mendi, calling for O’Neill’s resignation. During the disturbances, looters ransacked a warehouse with relief supplies that have been long-delayed following February’s devastating 7.5-magnitude earthquake. Barclay Tenza, a spokesman for the provincial disaster relief said all the foodstuffs were taken. Eighteen UN staff providing earthquake relief were relocated from Mendi.

    India Central Bank Intervenes As Rupee Crashes To Record Low Just weeks after Urjit Patel, Governor of the Reserve Bank of India, wrote an op-ed in the FT warning that should the US maintain its current pace of monetary policy tightening, it could have serious repercussions for the global economy, it is...It was the first time this tightening cycle that a prominent foreign central banker has accused the Fed of stirring trouble for emerging markets, with its ongoing tightening, and specifically, the balance sheet reduction coupled with the Treasury debt issuance surge, to wit:Global spillovers did not manifest themselves until October of last year. But they have been playing out vividly since the Fed started shrinking its balance sheet. This is because the Fed has not adjusted to, or even explicitly recognised, the previously unexpected rise in US government debt issuance. It must now do so. Patel's advice? Immediately taper the tapering, or rather, the Fed should "recalibrate its normalisation plan, adjusting for the impact of the deficit. A rough rule of thumb would be to reduce the pace of its balance-sheet contraction by enough to damp significantly, if not fully offset, the shortage of dollar liquidity caused by higher US government borrowing." Incidentally, the various pathways described by Patel were conveniently laid out by Deutsche Bank's Aleksandar Kocic two weeks ago, and which we explained in "Why The Soaring Dollar Will Lead To An "Explosive" Market Repricing."

    The Indian Crossroads: Will Modi Choose Putin Or Trump? --India just imposed reciprocal tariffs against the US in response to the ones that Trump just applied against steel and aluminum imports. According to a filing that the Indian government made to the World Trade Organization (WTO), the tariffs on almonds, apples, certain motorcycles, and walnuts are intended to compensate for the estimated $240 million a year that India is expected to lose because of Trump’s tariffs, which represents a stunningly independent move from the Great Power that’s hitherto been doing everything that it could to remain in the US’ “good graces”.India’s 2016 LEMOA logistics deal with the US unprecedentedly made the two countries military-strategic partners, and former Secretary of State Rex Tillerson even spoke about plans for them to remain so all throughout the 21st century. That said, the economic relationship between them has lagged far behind their military-strategic one, with India failing to attract US investors to its so-called “Make In India” domestic development program.New Delhi may have thought that it could woo American factories from neighboring China amidst the deteriorating trade ties between Beijing and Washington, but much to its surprise, Trump remained true to his campaign pledge that he wants US companies returning back to the homeland and not to simply “re-offshore” elsewhere.  As a result, India no longer considers itself to be as indispensable to the US’ 21st-century plans to “contain” China like it previously thought that it was, seeing as how the economic dimension of this grand partnership is being deliberately neglected in favor of focusing solely on its military-strategic aspects. India’s plans for becoming a world power are unsustainable without the strong growth that would be afforded by a 1990s China-like economic partnership with the US, and its decision makers are now beginning to fear the consequences of indefinitely remaining the US’ “junior partner” for the rest of the century.

    Thousands of refugees forced onto death march into Sahara desert  -- More than 13,000 refugees and migrants, including pregnant women and children, have been force-marched into the Sahara desert by Algerian security forces over the past 14 months, where many of them have died from hunger and exposure.The shocking revelation by the Associated Press was substantiated by videos showing hundreds of migrants stumbling through a sand storm and others being driven in massive convoys of overcrowded trucks to be dumped at Algeria’s southern border with Niger and forced into the desert at gunpoint.As the AP itself makes clear, the murderous policy of the Algerian government is being carried out at the behest of the countries of the European Union, which have increasingly sought to induce North African regimes to act as their border guards, impeding the flow of migrants by means of intimidation, violence and death.The refugees are being forced by Algerian security forces into the Sahara without food or water and, in many cases, after being robbed of their money and cellphones. They are pointed in the direction of the nearest settlement in Niger, over nine miles away, across empty sands where the temperature rises as high as 120 degrees Fahrenheit. The migrants told AP of “being rounded up hundreds at a time, crammed into open trucks headed southward for six to eight hours to what is known as Point Zero, then dropped in the desert and pointed in the direction of Niger. They are told to walk, sometimes at gunpoint.” Two dozen different migrants who survived the crossing told the news agency that in their groups a number were unable to go on and died in the desert. “Women were lying dead, men ... Other people got missing in the desert because they didn’t know the way,” said Janet Kamara of Liberia, who was pregnant when she was forced across the border. “Everybody was just on their own.” Kamara’s baby died at birth and she was forced to bury him in a shallow grave in the desert. “I lost my son, my child,” she said.

    New York Times: Virtuous McKinsey Defiled by Dark Continent -- The New York Times published a major story yesterday on how the consulting powerhouse McKinsey got itself eyeball-deep in a corruption scandal in South Africa that has become the focus of a major government investigation. It has led major multinationals operating in South Africa like Coca Cola to cease doing business with McKinsey there. Among other things, as the Times explains, the firm got about $100 million in performance payments for performance that may not have even occurred from a state-controlled energy company Eksom. It got the assignment in connection with a local partner that was controlled by an Indian family, the Guptas. The Guptas in turn used their connections with then South African president Jacob Zuma to loot various state-owned entities. Oh, and on top of everything else, McKinsey’s contract was illegal. McKinsey no doubt hoped the scandal would not get that much play outside Africa, despite its size and the fact that there is no way McKinsey can pretend to distance itself from what happened. The Financial Times has run some good pieces on the scandal as it unfolded, and if my recollection is correct, at least one was a lead story, but this is apparently the first account that covers the full terrain of the scandal and focuses hard on what decisions and actions various members of the firm took. At the end of this post, we’ve reproduced the text of an e-mail McKinsey sent to former partners right before the story went live. You can see how defensive and aggrieved it is. It insinuates that the famously business-friendly Times has an anti-globalist, anti-commerce agenda. It is also notable what this e-mail does not do: it does not discuss any reforms that McKinsey has put in place to prevent this sort of misconduct from happening again. It instead fixates on the progress the firm has made in “restoring our reputation.” The former partner harrumphed about the tone-deafness of the close, which was hand-wringing that the Times had the bad taste to release their expose “we approach Values Day in many parts of the world.” As he put it, “If you have values one day of the year, you don’t have values.”

    Canada visa: Canada speeds up student visa process for Indians --Canada has introduced a faster and simpler visa processing mechanism for students from India and three other countries. The number of Indian students opting for studies in Canada is on the rise + and this new program which cuts down the processing time for study permits (which are student visas) to within 45 days as opposed to within 60 days will be helpful. Students from India, China, Vietnam and Philippines who demonstrate upfront that they have the requisite financial resources and language skills to succeed academically in Canada are eligible to opt for the newly introduced ‘Student Direct Stream’ (SDS) program. The erstwhile Student Partners Program (SPP) that entailed less visa documentation and quicker processing was more narrow in scope and available only to students applying to 40 odd participating Canadian colleges. On the other hand, the SDS program, introduced in early June, is available to students opting for post-secondary courses (ie: college education) at all designated learning institutes, according to a statement issued by the Immigration, Refugees and Citizenship Canada (IRCC), which is the Canadian government’s immigration division.

    Mexican teachers union ends “indefinite strike” of 80,000 teachers on the eve of national elections - On June 20, the National Committee of Education Workers (CNTE), a dissident faction of the SNTE, the state-affiliated national teachers union, called off a two-week strike by tens of thousands of teachers in the poorer southern Mexican states of Oaxaca, Michoacán, Guerrero and Chiapas.The strike was launched to press once again for the teachers’ five-year-old demand for the repeal of President Enrique Peña Nieto’s national education “reform.”Despite the claims that it would improve school resources, the 2013 legislation failed to address the abysmal levels of poverty and lack of infrastructure in schools. Its thrust instead was to grant finance capital access to the lucrative education market, by starving schools of funds, firing teachers and setting the stage for the opening of new private schools.The legislation imposed a requirement that those seeking employment or promotions undergo a written test about teaching methods and academic subject matter. It granted the government control over the hiring and promotion of teachers, matters which were previously decided by the unions.The striking teachers demanded the reinstatement of the more than 500 educators who were fired for refusing to take the new exams, the release of union funds that are currently frozen by the government and justice for the 43 disappeared Ayotzinapa teaching students, as well as for the families of the Oaxaca demonstrators killed in confrontations with police in 2016. The strike this month affected over 1 million students. Union officials claim that in the state of Oaxaca alone, the strike closed 10,700 buildings, or 80 percent of the state’s schools.

    Scourge of Mexico establishment poised to capture presidency - Scourge of Mexico establishment poised to capture presidency (Reuters) - For 13 years, Mexico’s perennial political outsider Andres Manuel Lopez Obrador has covered tens of thousands of miles crisscrossing the nation in dogged pursuit of its highest office. Now the 64-year-old leftist is on the brink of winning Sunday’s presidential election, having spent his political career railing against Mexico’s establishment. Years of mounting drug violence, sluggish economic growth and corruption have gradually eroded the credibility of the political class, leaving Lopez Obrador as the last man standing. Pledging to clean up government, reduce inequality and subdue gang violence, he promises to “transform” a country he says has been debased by the few at the expense of the many. Commonly known as AMLO, Lopez Obrador has bounced back from two presidential election defeats, two gubernatorial losses and a 2013 heart attack to defy his critics with an unshakeable faith in his ability to tackle Mexico’s ills.  Few politicians have established such a connection with the millions of underprivileged families in Mexico as Lopez Obrador, a baseball fan who regularly campaigns festooned with garlands, flowers and gaudy sombreros from provincial rural communities. Like U.S. President Donald Trump, the headstrong Lopez Obrador has been the heart and soul of his movement, and victory for him on July 1 could heighten tensions between Mexico and the United States over trade and migration if the two men clash.  “There’s going to be a clash of vanities, a clash of egos, and who knows where it will end,” said Juan Jose Rodriguez Prats, a former party colleague, friend and later adversary of Lopez Obrador who has known him for 40 years. 

    Mexico’s election marred by deadly violence - As Mexico heads to the polls on July 1st for presidential elections, the country has seen a wave of unprecedented violence against politicians and the media.According to Etellekt, a risk analysis and crisis management firm, 534 politicians have been attacked since campaigning began in September and 130 politicians have been killed.Government statistics show there has been a total of 20,506 homicides this year, with the highest number of recorded in May with 4,381.Journalists are also a target. Reporters without Borders and its Mexican partner, Propuesta Cívica have registered 45 attacks against journalists between January and May. "It's very important for the Mexican authorities to sell specific measures of protection for journalists covering the electoral campaigns. As a reminder, Mexico is still one of the most dangerous countries in the world for the press. In 2017, 11 journalists were killed for direct connection to their activities. So far this year, we've had five cases of journalists killed in the country," said Emmanuel Colombié, the head of RSF's Latin America bureau.

    Turkey election: Erdogan claims victory with unofficial results - Turkey's long-standing leader Recep Tayyip Erdogan says unofficial results from the presidential elections show he has won outright in the first round.Mr Erdogan has 53%, while his closest rival, Muharrem Ince, is on 31%, state media report, with most votes counted.Mr Erdogan also said the governing alliance of his AK Party had secured a majority in parliament, and the polls were a successful test of democracy.But the opposition claim that it is too early to announce the outcome.They say many votes remain uncounted.Under Turkey's new constitution, due to come into force after the election, the president will hold considerable power.Some critics argue the enhanced role will see too much power accumulated in one person's hands, and that Turkey lacks the checks and balances of other executive presidencies such as France or the United States.  With 96% of the votes for parliament counted, the president's AK Party leads with 42% of the votes, the state news agency Anadolu reports. The main opposition CHP is on 23%. The pro-Kurdish HDP looks set to reach the 10% threshold and enter parliament. This might have made it harder for Mr Erdogan's party and its ally the MHP to reach a majority, although currently they are on course to do so.

    Turkey's Elections: Partially Free, Fair, and Fake -- It should not be a surprise except to the most hopeful that Recep Tayyip Erdogan is once again president of Turkey and his Justice and Development Party (AKP) will enjoy an effective parliamentary majority with its partner, the Nationalist Movement Party (MHP). Erdogan supporters are rejoicing while his opposition, which many Turks believe was revitalized even in defeat, licks its wounds. It is an outcome that sounds familiar and was likely never in doubt. President Erdogan has worked hard over seven long years to get to this point; he can now put what Turks refer to as the “executive presidency” into action. As a result, he will enjoy significant new powers with little oversight, allowing Erdogan to pursue the transformation of Turkey into a powerful, prosperous, and pious society unencumbered. The extraordinary aspect of Turkey’s elections was obviously not the outcome, but rather the way it was conducted. The entire process was somewhere on the spectrum between free and unfree and fair and unfair, bewildering participants and observers alike. The confusion helped Erdogan win with a veneer of democratic legitimacy. It seems to be the perfect template for future elections in Turkey and other countries with populist and authoritarian leaders. When the polling stations closed and the ballots were counted, Erdogan won 52.5 percent of the vote, soundly defeating his closest competitor, Muharrem Ince of the Republican Peoples’ Party (CHP) who garnered 30.7 percent of the vote after a spirited campaign. In the parliamentary elections, the AKP lost 7 percent of its vote total from the controversial November 2015 election. Even though it can claim 42.5 percent electoral support, it lost its parliamentary majority. However, its partner, the MHP, won 11 percent of the vote, meaning that as long as the two parties stick together they will effectively control the parliament. The CHP won 22.6 percent of the vote while a new party called Iyi (Good) Party attracted 9.95 percent of Turkish voters. The Kurdish-based People’s Democratic Party (HDP) won the requisite minimum 11.7 percent to earn mandates in the Grand National Assembly.

    Turkey's European Dream May Be Over; Is The Sultan Ready For Eurasia? - Erdogan has lost his parliamentary majority and must now establish a coalition with the far-right Nationalist Action Party; given the latter is anti-Western, the road ahead points in only one direction: Eurasian integration To the utter despair of stoic defenders of “Western values,” Europe is now condemned to suffer two populist autocracies on its eastern borders: Putin’s Russia and Erdogan’s Turkey. For the EU’s political leaders, the only accepted narrative is blanket, hysterical condemnation of “illiberal democracies” distorted by personal rule, xenophobia and suppression of free speech. And that also applies to the strongmen in Hungary, Austria, Serbia, Slovakia and the Czech Republic. These EU leaders and the institutions that support them – political parties, academia, mainstream media – simply can’t understand how and why their bubble does not reflect what voters really think and feel. Instead, we have irrelevant intellectuals mourning the erosion of the lofty Western mission civilisatrice (civilizing mission), investing in a philosophical maelstrom of historical and even biblical references to catalog their angst. They are terrified by so many Darth Vaders – from Putin and Erdogan to Xi and Khamenei. Instead of understanding the new remix to Arnold Toynbee’s original intuition – History is again on the move – they wallow in the mire of The West against The Rest. They cannot possibly understand the mighty process of Eurasia reconfiguration. And that includes not being able to understand why Recep Tayipp Erdogan is so popular in Turkey. 

    German banks stand by Iran despite ‘strongest sanctions in history’ - While Germany’s big banks are studiously avoiding Iran-related deals for fear of US reprisals, six credit unions, or Volksbanken, from southern Germany are appear unafraid and are continuing to provide trade finance. Patrizia Melfi, head of the International Competence Center, which was set up by the banks to handle foreign business, said the supervisory board “gave us the green light on Thursday.” Days later, the US’ Secretary of State Mike Pompeo threatened to impose “the strongest sanctions in history” after the United States pulled out of the 2015 nuclear deal this month.Despite Washington’s hard line on Tehran, the center will keep handling transactions for companies that export goods and services to Iran. Their affairs will likely continue unimpeded until early August, when the United States’ new rules come into effect. For now, the US has yet to enact legally-binding sanctions. Basically, as long as companies and banks stick to the requirements and regulations of the current export controls of the EU and the US, nothing can happen to them, Ms. Melfi said. She added it was essential “to be well informed and conduct detailed checks of the companies’ deals.” The credit unions – Volksbank am Württemberg, Pforzheim, Heilbronn, Konstanz, Schwarzwald-Donau-Neckar and Vereinigte Volksbank – are showing considerably more guts than bigger players. Deutsche Bank, Commerzbank and DZ Bank are already giving Iran the cold shoulder. Deutsche Bank said it has always been “reticent” regarding the financing of Iranian deals. DZ Bank said it was now stopping all foreign payments relating to Iran. That is not surprising, as they face major fines if they fall foul of US sanctions. Back in 2015, Commerzbank had to pay $1.5 billion in 2015 to resolve a US investigation into its dealings with Iran and other sanctioned countries. France’s BNP Paribas was fined €9 billion ($10.6 billion).

    A German ‘Iran Bank’ could save the nuclear deal -- Since US President Donald Trump pulled out of the nuclear agreement with Iran, formally known as the JCPOA, the EU has been looking for ideas to prevent the worst: the exit of Iran from its obligations under the deal, including a nuclear “breakout.” The best way to prevent that is to keep private investment flowing from Europe to Iran. To finance such business, I am proposing a novel idea: Germany should start a bank, or convert an existing German bank, into an “Iran bank.”  The European Commission could force European businesses to ignore US secondary sanctions under the Blocking Statute of 1996, which it updated on June 6th. The statute has never been used and if the EU enforces it, now it risks being sued for damages by affected European businesses.Another option for maintaining economic ties with Iran is to finance important Iranian infrastructure projects through the European Investment Bank. But Tehran has already made it clear that it will not be content with the “crumbs” of publicly financed projects. The best option is to encourage major private-sector investment in Iran. This would, admittedly, be the most unusual path for the German government. Berlin could promote the establishment or conversion of a private bank designed to supply capital to corporations that remain interested in doing business with Iran.This institution should have experience in corporate finance. It should also be independent of the US financial sector and have no investment arm of its own in the America. One potential candidate would be the troubled Deutsche Bank, which has already largely wound down its investment banking activities in the United States. If the German government were forced to use tax revenues to rescue Deutsche, which is Germany’s largest bank, it would gain a say in running it. For Deutsche Bank this would be an opportunity to expand back into a market it had been forced to abandon due to earlier US sanctions.

    China’s Strategic Investments in Europe: The Case of Maritime Ports --The EU is currently working on a new framework for screening foreign direct investments (FDI). Maritime ports represent the cornerstone of the EU trade infrastructure, as 70% of goods crossing European borders travel by sea. This blog post seeks to inform this debate by looking at recent Chinese involvement in EU ports.In September 2017 Jean-Claude Juncker, president of the European Commission, proposed a new EU framework for screening foreign direct investments (FDI), arguing that ‘if a foreign, state-owned, company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen in transparency, with scrutiny and debate’.This proposal sparked a large debate in Europe over whether the EU should have the power to vet FDI and how this would work in practice.Earlier this year, European leaders called on the Council and the European Parliament to make further progress on this topic. The Council accordingly agreed on June 13th 2018 to start negotiations with the European Parliament, in the hope of reaching an agreement before the next elections.  In light of these events, we seek to inform this debate by looking at the figures of China’s involvement in EU maritime ports.

    Trump suggested to Macron that France should leave the EU: report | TheHill: President Trump reportedly asked French President Emmanuel Macron why he does not withdraw his country from the European Union and suggested that the U.S. could offer France a bilateral trade deal if he did so. According to a reported column published by The Washington Post on Thursday, Trump floated the idea of France's withdrawal from the European Union to Macron while the French president was visiting the White House in April. "Why don’t you leave the EU?" Trump reportedly asked.He then offered to extend a bilateral trade deal to France with better terms than those given to the EU if Macron did withdraw from the union, the Post's Josh Rogin reported. The White House declined to give comment to the Post on the reported interaction between Trump and Macron, but did not dispute the account. Macron is highly unlikely to withdraw from the EU, and France remains one of the union's key member states. But the reported episode is reflective of Trump's skepticism of international organizations and alliances more broadly. 

    Trade Brawls Get World's Top Central Bankers Worried for Growth - The world’s most-powerful central bankers warned that escalating international trade tensions have started damaging confidence among companies, threatening the global economic expansion. “Changes in trade policy could cause us to have to question the outlook,” Federal Reserve Chairman Jerome Powell said during a panel discussion at a European Central Bank conference in Sintra, Portugal. “For the first time, we’re hearing about decisions to postpone investment, postpone hiring.”His sentiment was echoed at Wednesday’s event by Bank of Japan Governor Haruhiko Kuroda, ECB President Mario Draghi and Reserve Bank of Australia Governor Philip Lowe. Those four central banks set monetary policy for more than a third of the world’s economy.A trade war would be a headache for central banks given it would likely deal stagflationary blows to their economies by forcing consumer prices up and demand down. The policy makers would then be forced to decide whether to act to support growth or cap the inflationary pressures, for example by hiking interest rates.U.S. President Donald Trump on Monday evening threatened to impose tariffs on another $200 billion of Chinese imports, prompting a response from Beijing warning of additional retaliation. The European Union also made good on a threat to hit American goods with retaliatory tariffs.Draghi said it was still too early to measure a significant economic impact, but that he had begun worrying about an erosion of confidence, among both businesses and consumers. “It’s not yet time, in a sense, to see what the consequences on monetary policy of all this can be,” he said. “There’s no ground to be optimistic on that.”He added that there are lessons to be learned about trade conflict and protectionism from history, and “they’re all very negative.” The burgeoning set of disputes was undermining “the multilateral framework that all of us have grown up with,” he said. While Japan is not yet a target for new tariffs from the Trump administration, Kuroda said the indirect impact of the dispute could be to disrupt the network across East Asia that acts to supply Chinese industry. “I really hope that this escalation could be rescinded, and a normal trading relationship between the U.S. and China would prevail,” he said. “This is a matter of great concern for Japan."

    When the next recession hits, central banks in the US, Japan and Europe simply won’t have the tools to fight it -   It was only in January that the International Monetary Fund was trumpeting “the broadest synchronised global growth upsurge since 2010”, accentuating the “upside surprises in Europe”. Fast forward six months, and the message from Christine Lagarde, the IMF’s managing director, is a much less rosy one. Speaking in Berlin last week, she warned that “the clouds on the horizon … are getting darker by the day”. To be sure, the global economy is still chugging along at a solid pace. In its latest outlook published at the end of last month, the Organisation for Economic Cooperation and Development forecast that growth would reach nearly 4 per cent this year and next, with America’s economy growing nearly 3 per cent. Yet while the OECD’s gross domestic product forecasts may be upbeat, it tellingly titled its outlook “Stronger growth, but risks loom large”. One of these vulnerabilities is the sudden end to the period of synchronised growth. The “upside surprise” in the euro zone has been supplanted by a marked slowdown in the past several months. IHS Markit, a data provider that produces monthly purchasing managers’ index surveys, notes that Europe’s single currency area is likely to have just suffered its worst quarter since 2016, with the deceleration proving broad-based. Other cracks in the global growth story are starting to show. The dramatic escalation in tensions over international trade is contributing to weakness in Germany’s export-led economy, where investor confidence has sunk to its lowest level since 2012, and threatens to exacerbate the recent slowdown in China where industrial output, retail sales and investment all rose less than expected in May. In a report published earlier this month, JPMorgan noted that the threat of a full-blown trade war “is happening during the most critical period of China’s deleveraging efforts”, adding to the uncertainty. Policymakers in advanced economies had plenty of weapons in their armouries to help revive growth in the wake of the 2008 financial crisis. Since then, however, they have been running out of ammunition due to the quantity and variety of non-conventional monetary policies introduced to stimulate demand and – just as importantly – the explosion in public indebtedness which, according to the IMF, has surged to its highest level since the second world war. On the monetary front, leading central banks are caught between a rock and a hard place. On the one hand, years of aggressive quantitative easing have severely distorted asset prices and led to overstretched valuations in bond and equity markets, adding impetus to recent measures to start unwinding quantitative easing.

    Italy Leaves Merkel Stunned, Demands Europe Rip Up Existing Migrant System - In our preview of Sunday's now-concluded emergency EU meeting on refugee policy which the FT dubbed "The summit to save Merkel", we said that the German chancellor fate could be decided as soon as today should a newly populist Italy present a set of insurmountable demands on how to deal with Europe's migrant problem. And judging by the opening salvo, the odds of Merkel's political career just slumped after Italy’s prime minister Giuseppe Conti demanded the EU rip up its system for dealing with migrants, laying bare seemingly insurmountable divisions in the bloc over migration policy.The hastily-gathered meeting, a segue to the formal EU summit scheduled for June 28 in which migration will be the key topic, was requested by Berlin as a chance for Ms Merkel to press for stronger powers for countries to send back asylum seekers already registered in another EU country: a key condition in an ultimatum that was handed to Merkel last week and which threatens her tenure as chancellor.In other words, Merkel was testing the water to see how much of a political case she can formally make at the international level on Thursday, one that supposedly saves her career domestically.She was, however, stunned after the Italian prime instead called for "radical change" in the EU’s so-called Dublin principle that makes frontline countries such as Italy responsible for dealing with asylum claims and allows for registered asylum seekers that move on to another country to be sent back to the state they landed in. As the FT first reported, in an eight-point plan presented to leaders on Sunday, Conte called for “severing” the link between the “safe port of disembarkation” and the “competency to examine asylum rights”. The reason why is simple: Italy, along with most other peripheral European nations, tends to be on the short-end of that trade, as Rome ends up stuck with any migrants that cross the Mediterranean to arrive in Italy. At the moment, when migrants arrive on Italian soil only Italian authorities can process their asylum application. Rome wants this to be broadened to other EU countries, a step that would in effect end a 25-year system for handling asylum claims. Needless to say, Italy's initial negotiating positions, assuming there is space for leeway, is a disaster for Merkel, who is facing precisely the opposite demand from her coalition partner, Horse Seehofer of the CSU, who has demanded that Germany push back more migrants to their original port of call, i.e. Italy.

    Italy Says "Arrogant" Macron Risks Becoming "Enemy #1" On Migration, Orders Ships To Halt Refugee Pickups - Italian officials are digging their heels in over EU migration after League leader and Interior Minister Matteo Salvini branded French President Emmanuel Macron "arrogant" for trying to downplay Europe's migration crisis, while Italian Deputy Prime Minister Luigi Di Maio said that Macron risks making France Italy's "number one enemy on this emergency" in a Saturday Facebook post. In Italy the immigration emergency exists, and it is also fueled by France with the continued rejections at the border. Macron is running his country to become the number one enemy of Italy on this emergency, the French people have always been supportive and friend of Italians. Listen to them, not who makes money on those people's skin.  Macron came under fire after stating that "Europe is not experiencing a migration crisis of the same magnitude as the one it experienced in 2015," and that EU nations which "massively voice their national selfishness when it comes to migrant issues" will be cut off from EU benefits - effectively threatening to sanction countries with populist policies. Salvini punched back, claiming that Italy faced 650,000 migrant arrivals by sea over the past four years, which included 430,000 requests for asylum. Salvini added that the country currently hosts 170,000 "alleged refugees" which costs €5 billion. "If for the arrogant President Macron this is not a problem, we invite him to stop insulting and to show instead some concrete generosity by opening up France's many ports and letting children, men and women through at Ventimiglia," Salvini stated, in reference to the Italian town which borders France. On Sunday, Italian Prime minister Guiseppe Conte - who rejected Macron's "hypocritical lessons" - said that he was "decidedly satisfied" after the emergency EU meeting  in Brussels over migration. Italy presented a document during the meeting calling on EU countries to accept their fair share of economic migrants entering the bloc - or receive less EU funding.

    Spanish rescuers ‘told by Italy to stay away from dinghy in distress’ - The crew of a Spanish rescue ship have said that Italian officials told them to let the Libyan coastguard respond to a distress call from a smuggling boat carrying migrants – only to hear shortly afterward that 100 migrants were missing and feared dead in the same area. The account by Proactiva Open Arms – a Spanish NGO – came as EU leaders in Brussels signed a deal aimed at controlling migration that steps up support for the Libyan coastguard and demands that humanitarian and other ships operating in the Mediterranean do not obstruct their operations. The moves are part of efforts to stop smugglers from operating out of the lawless north African nation. Open Arms founder Òscar Camps said such demands would cost the lives of people at sea. “The problem is there won’t be anyone to witness this and denounce it, that is what will happen, starting now,” he said. In the latest incident, the Open Arms head of mission, Ricardo Canardo, said the group’s crew intercepted a radio transmission at about 8am on Friday between European military officials and the Libyan coastguard giving details of a rubber dinghy in distress with at least 100 migrants onboard. But an official distress signal was only received by ships in the region on the Navtex navigation system 90 minutes later. When Open Arms called the maritime rescue coordination centre in Rome to offer help, officials there said the Libyan coastguard had the situation covered and that no assistance was needed. Shortly later, the group received the news that more than 100 people were missing at sea and feared dead in that same region. “We suspect it is the same people,” Canardo said. 

     Ilargi: Migration Blowback --There is no migration crisis, said an article in Toronto’s Globe and Mail a few days ago. French President Emmanuel Macron followed up over the weekend with “there is no migrant crisis”. Really? If this is not a crisis, what is? Yes, numbers of refugees landing in Europe are down from 2015. But it’s not a numbers game. It’s about people.If Angela Merkel’s political career is forced to a close next week because the EU cannot agree on a unified refugee policy, will they call it a crisis then? Oh wait, both Macron and the G&M agree that there is a crisis, just not a migration one. No, “the crisis is political opportunism”.But can the crisis be placed squarely on Trump and Italy’s Salvini, or is perhaps what led to their popularity partly to blame for that popularity? Salvini didn’t bomb Syria, Iraq, Afghanistan and Libya, nor did Trump cause the mayhem in Honduras, Guatemala and El Salvador, which is where most migrants come from. That was Bush, Obama, Billary, Blair, Cameron and their ilk. And before them Kissinger etc.So who are the political opportunists exactly? “We” have exploited all of Africa, the Middle East and South and Central America for so long and so disgustingly thoroughly that it’s today the zenith of misleading arrogance to blame the consequences on Salvini, Trump and other right wingers.You could see them coming from miles away. You created them. You literally built the space they occupy. What is happening is that the chaos we created in all these places is now boomeranging right back at us, on our own borders. And we’re not getting out of that chaos until we stop creating it in places where we don’t live. Until we allow people a future where they are born.No, you’re right, Trump is not going to do that. His role is to disrupt the existing system that has relied on creating chaos for decades (or even longer, if you will). Salvini will play that part in Europe, by blowing up the EU. And after they’ve gone, we must find better people than them, but also better than all the rest that today fill our political classes, if we’re to turn chaos into order. We have gathered our wealth through theft and murder. Untold millions have died and suffered for our riches. It’s time we acknowledge that. Just like it’s time that we acknowledge just how we choose our political “leaders”. Who all come from a tested model that relies on chaos and obfuscation. Because if we don’t, the chaos will continue and intensify.

    EU Council Cancels Summit Press Conference After Italy Threat To Veto -  The EU Council has cancelled the press conference at the end of Day 1 of the summit and in a very diplomatic statement, make it clear, it's Italy's fault...The European Council this afternoon had an exchange of views with EP President Tajani and NATO Secretary-General as well as discussions on security and defence, jobs, growth and competitiveness, innovation and digital and other issues such as enlargement, MH-17 and MFF.As one Member reserved their position on the entire conclusions, no conclusions have been agreed at this stage.For this reason, the press conference by the EU institutional representatives has been cancelled and will instead take place tomorrow after the end of the Euro Summit.Can you guess who the "one Member" was?  If you guessed Italy - you're right.As Bloomberg reports, Italian Prime Minister Giuseppe Conte issued a threat to veto the summit’s conclusions on Thursday during a two-day meeting of EU leaders in Brussels taking place under the cloud of a bloc-wide dispute over migration.Conte is demanding other EU members share the burden of refugees landing in Italy at a time when German Interior Minister Horst Seehofer has told Merkel to broker a deal that would allow migrants to be sent back to Italy. Conte and Merkel met on the sidelines before the summit began.Conte told reporters he had received many positive assurances from fellow leaders but “today we want these proposals to become fact.” He said he doesn’t want to consider the “possibility” of vetoing a final statement, but if Italy doesn’t get what it wants “we surely won’t reach common conclusions.”

    Migrant crisis: EU leaders plan secure migrant centres - Secure centres for migrants may be set up in EU states to process asylum claims under a deal reached after marathon talks at a summit in Brussels.The controlled centres would be set up by EU states on a voluntary basis and migrants whose claims were rejected would be "returned".Refugees could be resettled in EU states which agreed to take them.The deal follows weeks of diplomatic wrangling over migrant rescue ships, and which country should take them in.Coastguard officials said on Friday that around 100 people were thought to have drowned off the Libyan coast, with 14 rescued.They were found in waters to the east of the capital, Tripoli. There were no details on which countries might set up the secure centres or take in refugees, but French President Emmanuel Macron said they would be in countries where migrants first arrived in the EU.   "We have struck the right balance between responsibility and solidarity," he said.Numbers illegally entering the EU have dropped 96% since their 2015 peak, the European Council says. Italy - the entry point for thousands of migrants, mainly from Africa - had threatened to veto the summit's entire agenda if it did not receive help."After this European summit, Europe is more responsible and offers more solidarity," said Italian Prime Minister Giuseppe Conte. "Today Italy is no longer alone."Other leaders struck a more cautious note.German Chancellor Angela Merkel said more needed to be done to resolve disagreements.And European Council President Donald Tusk said it was "too early to talk about a success". "We have managed to reach an agreement in the European Council. But this is in fact the easiest part of the task, compared to what awaits us on the ground when we start implementing it," he told a news conference.

    Immigration Politics In Europe Versus Immigration Politics In The US - Barkley Rosser - Immigration politics in both places has gotten very ugly, but it strikes me that in Europe it may be worse than in the US.  We may be about to see the fall from power this weekend of Angela Merkel as Chancellor of Germany over the issue of immigration, with her having been for some time the leading political figure in Europe supporting more moderate policies towards immigrants, even as she has had to retreat more recently from her earlier opening to a million migrants from the war in Syria (and also some others in the region).  If so, this will follow the coming to power of anti-immigrant Sebastian Kurz in neighboring Austria, who is actively working with Merkel’s anti-immigrant critics to overthrow her, not to mention the strong reelection of Victor Orban in Hungary and the assertion of anti-immigrant policy in Italy with newly installed Interior Minister, Matteo Salvini. All this follows anti-immigrant forces coming to power in Poland and some smaller other nations, as well as the anti-immigrant Brexit vote in UK two years ago.  Only in Spain have we seen the recent installation of a friendlier-to-migrants Socialist government in Spain, which is however preoccupied with the Catalonian separatism issue. Of course in the US we have seen Trump elected on a strong anti-immigrant wave, and he has just had a SCOTUS decision supporting his power to enact travel bans.  OTOH, his recent awful policies towards asylum seekers on the Mexican border have led to a backlash that has forced him to back off somewhat, although what his actual policy there is currently somewhat unclear.  He remains strongly anti-immigrant, but he did not win the popular vote, and he remains highly unpopular in the polls.  His base clearly loves this stuff, but it does not seem to be selling with fervor or effect that it is in quite a few European nations recently.

     The migration crisis will shatter Europe - As politicians wrangle behind closed doors, the MV Lifeline is in limbo. The Lifeline is a rescue ship that picked up 234 migrants off the Libyan coast last week. Normally it would have docked in Italy. But Italy’s new hard-line government turned it away. No one wants the passengers, who are mostly young African men. Italy’s new Interior Minister, Matteo Salvini, has already threatened to deport hundreds of thousands of migrants unless Europe gets serious about sharing the burdens of intercepting and processing them. Last week, he posted a video on his Facebook page in which he called the passengers of the Lifeline ”human meat.” Attitudes have hardened on migration across Europe – not only in Hungary and Poland, which have had little tolerance for foreigners, but also in France and even tolerant Sweden. The top two issues in most countries are immigration and terrorism, pollsters find. Experts can lecture all they want about how immigration, terrorism and crime are really pseudo-problems, whipped up to serve the interests of the populists. But the truth is that Europe’s leaders have failed miserably to come up with any common solution to the migration problem. That’s why support for national populists is rising and why centre-right parties are shifting farther right. The absolute numbers of asylum seekers have fallen dramatically since 2015 – the year of the great surge to Germany. Even so, as the Financial Times says, “The impact of migration on European politics has become truly poisonous.” In Sweden, the once-shunned anti-immigrant right is heading for a breakthrough in September’s elections. In Germany, Angela Merkel’s job is in jeopardy if she can’t manage to placate her coalition partners in Bavaria, the Christian Social Union, who are being challenged by the far right. They’re threatening to close the borders if they don’t get new assurances on immigration – a move that would be a devastating blow to the European Union’s open-borders policy. Anti-immigration sentiment in Germany is also fuelled by violent crime. Recently, a young Iraqi man was apprehended for the violent rape and murder of a 14-year-old German girl – a graphic reminder to many people that the government can’t control who is living within its borders. “The government should beg for forgiveness from Susanna’s parents, ” said Bild, a popular daily newspaper.

      Trump’s controversial pick for top UN migration job voted down in Geneva - The UN migration agency on Friday voted down Ken Isaacs, the Trump administration's candidate to lead the International Organization for Migration, a US official told CNN, leaving it without an American at the helm for the first time since 1951. He was eliminated from contention after the second round of voting, a UN source told CNN."This was a very competitive election with three highly qualified candidates," a State Department official told CNN."We congratulate the winner and look forward to working with him/her. IOM is an important partner for the United States around the globe, and we are committed to working with IOM to address root causes of migration and to promote safe and legal migration," the official said. Isaacs, who works in relief efforts for the Christian nonprofit Samaritan's Purse, was nominated in February to serve as director general of the 169-member group whose mission is to promote "humane and orderly migration" through assistance to both governments and migrants.But the agency decided Friday that it will choose a non-American leader for the first time in decades -- a move that comes as the Trump administration continues to reduce the number of refugees it accepts into the US every year and push a controversial immigration agenda. Isaacs himself has also come under scrutiny after a report from CNN's KFile earlier this year andone from The Washington Post in February revealing he shared anti-Muslim and anti-refugee views on social media.

      Poland Backtracks On A Controversial Holocaust Speech Law - Poland is taking steps to soften a controversial law that means anyone who accuses the nation of complicity during the Holocaust could be handed a prison sentence of up to three years.President Andrzej Duda signed the bill into law in February, after it was proposed by the ruling right-wing Law and Justice party. He said the law protected Polish interests "so that we are not slandered as a state and as a nation."The measure prompted criticism in Israel, the United States and Europe for whitewashing history and undermining free speech. Just four months later, Prime Minister Mateusz Morawiecki – also a member of the Law and Justice party – made an unexpected concession. He asked Parliament to amend the law by removing the criminal penalty of imprisonment.  With the change, accusing Poland of complicity during Nazi occupation would be a civil offense and courts could still impose a fine.

      European readers still blocked from some US news sites - Major American news sites, including the Los Angeles Times and the New York Daily News, remain unavailable to readers in the EU, a month after new data protection rules were implemented. The websites went dark in Europe after the General Data Protection Regulation (GDPR) law came into force on 25 May. GDPR gives EU citizens more rights over how their information is used. A statement on the blocked websites says the publishers are "committed to looking at options" to allow EU access. News sites within the Tronc and Lee Enterprises media publishing groups are affected. Tronc's high-profile sites include the Chicago Tribune, the Orlando Sentinel and the Baltimore Sun. The company recently sold the Los Angeles Times and the San Diego Union-Tribune to billionaire Patrick Soon-Shiong. Its websites carry the same message they did one month ago. It reads: "Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market." Websites belonging to the Lee Enterprises publishing group are also blocked. The LA Times website carries the same message it did one month ago The company, which runs 46 daily newspapers across 21 states, originally said its sites were "temporarily unavailable" - but browsers in the EU are now greeted with a message informing them that access is "unavailable due to legal reasons". Under GDPR, companies working in the EU, or providing a service to people within the EU, must show they have a lawful basis for processing personal data, or face hefty fines.  In the aftermath of the law's introduction, the Washington Post and Time were among those requiring EU users to agree to new terms.

      Nine EU states, including UK, sign off on joint military intervention force -- Defense ministers from nine EU countries, including the U.K., on Monday pledged to form a joint European military intervention force that will allow British support to last post Brexit. The European Intervention Initiative, spearheaded by French President Emmanuel Macron as part of plans for an autonomous European defense force outlined in his Sorbonne speech in September, will be tasked with quickly deploying troops in crisis scenarios near Europe’s borders. The group includes Germany, Belgium, the U.K., Denmark, the Netherlands, Estonia, Spain and Portugal. “The goal: that our armed forces learn get to know each other and act together,” French Defense Minister Florence Parly said in a tweet. “Thanks to exchanges between staff and joint exercises, we will create a European strategic culture. We will be ready to anticipate crises and respond quickly and effectively.” The initiative will be distinct from the European defense pact known as PESCO — which includes all EU member countries except Britain, Malta and Denmark — enabling the U.K. to continue to participate after it leaves the bloc in 2019. The U.K. was “very keen” to sign the agreement in order to “maintain cooperation with Europe beyond bilateral ties,” Parly told Le Figaro in an interview published Sunday. The group will work “as close as possible with the European Defense Union because we know that our troops are engaged either in NATO or the EU, but also in U.N. missions or counter-terrorism coalitions,” German Defense Minister Ursula von der Leyen said ahead of a meeting of defense ministers in Luxembourg. As part of discussions on the rules of PESCO, EU defense ministers also agreed Monday to set out the general conditions for “third state participation” in PESCO projects in November — rules that would also apply to the U.K. once it leaves the bloc.

      Surge in Britons getting EU nationality --  There has been a surge in UK citizens acquiring the nationality of another EU country since the Brexit referendum, according to data obtained by the BBC. In 2017 a total of 12,994 UK citizens obtained the nationality of one of the 17 member states from which the BBC has received figures. This compares with 5,025 in 2016 and only 1,800 in 2015. The most frequent new nationality was German, which saw a huge jump from just 594 cases in 2015 up to 7,493 in 2017. The rise is presumed to be the result of Britons who can meet the criteria seeking to keep their legal rights attached to European Union membership. The 2017 figure is about seven times the 2015 level. The dramatic increase is consistent across many countries. France was the second most popular nationality, jumping from 320 instances in 2015 to 1,518 last year, and then Belgium, where the increase was from 127 to 1,381. The number for Ireland rose from 54 in 2015 to 529 in 2017. However, this does not include new Irish passport applications from the much larger number of people who already had entitlement to Irish citizenship, due for example to being born in Northern Ireland. 

      Huge anti-Brexit demonstration throngs central London -- At least 100,000 people took to the streets yesterday as part of the largest ever demonstration of support for a new referendum over Britain’s final Brexit deal.With more businesses poised to issue dire Brexit warnings this week and senior Tories already drawing up plans to soften Theresa May’s exit proposals, organisers of the march on Sunday said it showed Britain’s departure from the European Union was not a “done deal”. A former aide to Margaret Thatcher, several Labour MPs and pro-EU campaigners from across Britain took part in the demonstration, marking two years since the Brexit vote. Organisers said that people from every region and walk of life were among those who took part in the march down Whitehall. Conservative supporters marched alongside Labour voters and Liberal Democrats during the protest, which saw angry denunciations of the chaos that has ensued inside government since the Brexit vote. Labour’s leadership also came under pressure at the march for refusing to back a second public vote. There were chants of “Where’s Jeremy Corbyn” from the crowd. The Labour leader was on a visit to a Palestinian refugee camp. Anger on the streets at the prime minister’s handling of the Brexit negotiations is being accompanied by a renewed push from industry to ensure that trade with Europe is not disrupted as a result of leaving. More prominent manufacturing firms are set to issue warnings about Britain’s Brexit negotiations within days, after Airbus and BMW broke cover to say they could reconsider their UK investment plans unless a Brexit deal was reached keeping Britain closely aligned with Europe.

      Brexit: PM urged to speed up no-deal Brexit plans -- Theresa May must prepare to exit the EU with no deal to have "real leverage" in Brexit negotiations, a letter from 60 politicians and business figures says. The prime minister should also reserve the right to "take with it the £39bn it has offered to pay as part of a divorce settlement", it says. Signatories urge the government to accelerate plans to operate under World Trade Organisation (WTO) rules. Downing Street said it was confident the UK would get a good deal. Former cabinet ministers, economists and business figures including former chancellor Nigel Lawson, vocal Brexiteer John Redwood, and Wetherspoon chairman Tim Martin signed the letter. It was organised by Economists for Free Trade (EFT) and asks Mrs May to warn the EU that despite its "intransigent and punitive stance" Brexit cannot be stopped. "We believe you could also make clear that your preferred outcome is a free trade deal between Britain and the EU, an arrangement that is to the mutual benefit of both parties," the letter says. It goes on to say that even though a free deal trade is "eminently possible", it believed it was "time" to move to a World Trade Deal under WTO rules "in light of the reluctance of the EU swiftly to secure a free trade deal". 

      Brexit Could Cripple Britain’s Ports -- Dover is home to the busiest seaport in the United Kingdom. Situated on the southeast tip of England in the county of Kent, it is the nearest British port to France, with the city of Calais a scant 27 miles away. Every year, 2 million lorries pass through this small town on their way to and from the port.Through the past two bruising years of British politics, Dover has been emblematic of all the chaos that followed the referendum to leave the European Union, a.k.a. Brexit. Described as the “Gateway to England,” the town and its scenery are constantly invoked in rhetoric around borders and national identity. On the day that Article 50 was triggered, the right-wing tabloid The Sun projected a series of messages onto the cliff face, includingdover and out and see eu later. The following month, the betting company Paddy Power erected a gigantic effigy of Prime Minister Theresa May on top of the cliffs, wearing a Union Jack and making a V-sign (an offensive gesture in the United Kingdom) out to the continent. The Port of Dover lurks in the shadow of the chalk and flint. Today, it operates smoothly within systems that permit people and freight to seamlessly bounce between one country and another: the customs union and the single market. There are many questions about what will happen when—and if—the United Kingdom extricates itself from these systems; how goods will flow, how the port will operate. When quizzed, British politicians have frequently invokednotions of new and emergent digital technologies, which will somehow permit business as usual in Brexit’s brave new world. But most of these promises have been shot down by European politicians as “magical thinking.”

      Brexit: Two years on, the Irish dilemma remains as intractable as ever -- An hour after it was clear that Britain had voted to leave the EU, a terse statement was circulated among press officers before being released to the outside world.  The Irish Government, said the statement, "notes the outcome of the UK EU referendum this morning. The result clearly has very significant implications for Ireland…"What was not fully appreciated then was that Ireland would also have very significant implications for the result.  Two years to the day since the Brexit referendum, the Irish border - an issue ignored during the campaign - may end up constraining and dictating the Brexit destiny more than anyone could have imagined. Equally, it could be the rock on which an orderly withdrawal flounders. As things stand, significant amounts of the Withdrawal Agreement, the Treaty that will guide Britain out of the EU, have been agreed in principleThe Irish backstop remains unresolved. The indications are that both the EU and the UK are hardening their positions."We’re clearly worried," says a senior official from one member state who is closely involved in the negotiations, "and I think there will be a signal coming out of [next week’s EU] summit that we’re very worried." That signal will, indeed, register the EU’s frustration at the lack of progress on Ireland, and will warn London that the two-year transition beyond March 2019 is at risk, and that member states will now accelerate plans for a no deal scenario.

      Most Brexit voters feel a hard border with Northern Ireland would be worth it to leave the customs union – we shouldn’t be surprised -- Recent polling from Conservative peer Michael Ashcroft suggests that two-thirds of pro-Brexit voters would rather leave the customs union than avoid a hard border in Northern Ireland, and that six out of ten people surveyed “would not mind either way” if Northern Ireland voted to leave the UK.This shouldn’t actually come as a great surprise. While not frequently acknowledged by those on the Remain side of the argument, Brexiteers believe passionately in their project. It’s easy to deride such people for being duped by the simplistic slogans and promises of the Leave campaign but that underestimates both their argument and their determination to see it through.The hope that they will “come to their senses” once the full implications of the UK’s decision to leave the EU are recognised is most likely a forlorn one. These people are frustrated, anxious and increasingly bitter about what they see as an attempt to undermine the Brexit negotiations and thwart the process of the UK leaving the EU. The shrill invective that can be seen on social media, where Irish politicians have been accused of “weaponising” the debate on Brexit, is in part driven by a concern that their Brexit dreams may be dashed.But there is little evidence that their strength of feeling has lessened as a result of the political incompetence of the UK government and its negotiating team over the past 18 months. Nor is it affected by the fact that indicators from credible sources suggest the UK is heading for a disastrous economic outcome. Brexiteers are determined it seems, reminiscent of Alfred Lord Tennyson’s Charge of the Light Brigade, to keep “Charging an army while all the world wondered”. In this context – and for those who do not live there – the spectre of a hard border in Northern Ireland may be a price worth paying to keep the Brexit project on the rails.

      Brexit: Chaos Visible -- Yves Smith -  Rather late in the game, some high profile corporate players have cleared their throats to say that Something Must Be Done about Brexit. The Society of Motor Manufacturers and Traders warned that Brexit uncertaintywas putting 860,000 auto industry jobs at risk and was responsible for investment dropping by 50% in 2018 compared to the same period last year. This followed a bleat from Airbus that if they didn’t know pretty soon what UK was up to with Brexit, it was going to have to hunker down, which would be very bad for its 15,000 jobs at 25 plants in the UK. BMW then piped up, saying that if customs got to be a mess, it would have to close production sites in the UK, which could imperil 8,000 jobs. The Government roused itself, scheduling a meeting with Airbus and one next week between May and her ministers to try to sort out the UK’s position on trade as part of a white paper set to be published on July 9. Yet bad news keeps coming in. Yesterday, Politico wrote that the European Commission warned the EU27 to prepare airports for a crash-out Brexit. This is a scenario that most have deemed to be so cataclysmic that they’ve assumed it can’t happen. As with so many other possibilities, the unthinkable is now looking decidedly possible. From Politico:If the U.K. leaves the EU without an aviation agreement, flights would immediately cease between the islands and the EU27 since EU-issued operating aviation licenses would no longer be valid, and British airlines would no longer have the right to fly to EU countries. The U.K. would also cease being a member of the European Aviation Safety Agency (EASA), which issues the certification and licenses EU aircraft require.The Commission told officials and diplomats at the briefing about the problems that additional customs checks on cargo would impose on airports under a no-deal Brexit.Currently, a lot of air cargo from third countries first arrives at the U.K. and is then shipped on to other EU countries, where it doesn’t need to be processed by local customs. But in the event of no deal, those shipments would either fly directly into other EU airports or from the U.K., but in either case it would have to be cleared by customs, something that may entail a large increase in staff and infrastructure. Richard North gives a high level overview of the aviation agreements and concludes: Putting the fragmented areas together, it is very hard to see how, in the context of a “no deal” Brexit, aviation agreements with the EU can survive…

      Carmakers warn ‘there is no Brexit dividend’ --The U.K. government’s two main models for a post-Brexit trading relationship with the EU will do major harm to the car industry, the head of the Society of Motor Manufacturers and Traders (SMMT) lobby group warned Tuesday.“Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it,” said Mike Hawes, the SMMT’s CEO, at the industry’s annual summit.Companies like BMW, Honda, Nissan and Toyota have major factories in the U.K. and export much of their production to the EU27, meaning there is little benefit from Brexit for an industry that employs 856,000 nationwide and turned over a record £82 billion in 2017, the lobby group said. “There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment,” said Hawes. He said that both of the government’s options for post-Brexit cross-border arrangements — the so-called “maximum facilitation” or “customs partnership” models — were complex, expensive and not deliverable over a short period of time. An estimated 1,100 trucks bring components across the Channel to U.K.-based factories each day, based on a just-in-time logistics chain. “There is growing frustration in global boardrooms at the slow pace of negotiations,” said Hawes. “The current position, with conflicting messages and red lines goes directly against the interests of the U.K. automotive sector which has thrived on single market and customs union membership.” BMW and Honda have also issued their own warnings in recent days about the costs of Brexit.

      BMW will shut UK sites if customs delays clog supply post-Brexit Guardian - BMW has said it will be forced to close its production sites in the UK, putting 8,000 jobs at risk, if components for Mini and Rolls-Royce cars are caught up in customs delays after Brexit.In its starkest warning over Brexit yet, the customs manager of the German carmaker’s UK operations said its manufacturing set-up would not be able to cope with obstructions to its supply chain.“We always said we can do our best and prepare everything, but if, at the end of the day the supply chain will have a stop at the border, then we cannot produce our products in the UK,” Stephan Freismuth told the Financial Times. BMW employs 8,000 people in the UK, including 4,500 at its flagship plant in Cowley, Oxford, where it produces the Mini.The BMW warning comes ahead of of a key motor manufacturing industry conference on Tuesday where a series of automotive executives from companies with major UK manufacturing operations are expected to express serious concerns about the future of their businesses. The industry hopes a series of warnings from companies including Honda, Volvo and Ford will act as a wake-up call to Theresa May who made exiting the customs union and the single market one of her early red lines.

      May’s New Brexit Trade Scheme Dead Before Arrival – Yves Smith  - One of the few upsides of watching the slow sinking of HMS Brexit is that it’s produced some great barbs. For instance, the Irish Times pointed out:In fact, the view at EU level is that Britain has been trying to serve a reheated casserole of ideas that London has persistently dished up – and Brussels has consistently sent back…The topic of discussion then was the Irish borer, but the Government seems to be using that tired, failed approach in another area where it is refusing to acknowledge the EU’s stance, that of trade.EU leaders, almost with a single voice, starting the very morning after Brexit, made clear that for the UK to have the benefit of access to the single market, aka “frictionless trade,” it had to accept the four freedoms, one of which is free movement of EU citizens. That means no immigration restrictions on them.The Government’s insistence on imposing EU immigration restrictions is hypocritical, since before the Brexit vote, the UK had more non-EU immigrants than EU immigrants. Moreover it appears that some EU immigrants who are departing now, such as low-level workers in the horse racing industry, are being replaced by other immigrants, and not UK nationals. I’d welcome reader input as to the responses they are seeing to EU immigrant departures.The EU has rejected the idea of mutual recognition, which in the case of traded goods, would amount to the EU having to negotiate a whole new set of “a lot but not exactly like” EU regulations, and along with that, a whole new supervisory and dispute settlement regime too.The EU very clearly said that any post-Brexit relationship with the UK would have to fit within the parameters of arrangements it already has with other countries. What the UK is asking the EU to do is so out of line that it’s tantamount to walking into a Chinese restaurant and ordering a souffle. The UK has already suggested a limited form of mutual recognition as a possible solution for the Irish border and it was shot down, pronto. It appears that the great compromise that May is trying to get her cabinet to accept is rewarmed mutual recognition. The Spanish foreign minister, Josep Borrell, shot down the idea that May can serve up any scheme that achieves her fond desire to have the borders work the way they do now. He contends that the EU will hold to its position, and won’t let country be part of the single market without accepting the movement of people Towards the end of his interview with the Guardian, Borrell also made clear the issue of Gibraltar isn’t going away either.

      Brexit: bank contracts worth trillions at risk, says finance watchdog -- Britain’s chief financial watchdog has warned that contracts worth trillions of pounds between UK and European Union banks remain at risk of collapse following Brexit, after Brussels’ failure to implement protective legislation. In a warning to EU officials that time is running out before next March to devise rules for EU banks, the Bank of England’s financial policy committee (FPC) said £29tn worth of contracts could be declared void. Derivatives contracts, which provide banks and corporations with protection from interest rate rises, could come to an end without fresh legislation from the UK and EU, the committee said in its latest quarterly health check on Britain’s financial services industry. The warning will be seen as a direct response to the European Banking Authority, which argued earlier this week that the UK was dragging its feet preparing for Brexit. In an increasingly bitter war of words, EBA officials said there was little preparation by the UK authorities and individual banks for life outside the EU. The FPC hit back, saying the Treasury was well advanced in its efforts to bridge the gap between banks in London and those on the continent, but Brussels had made little obvious effort to support its own financial institutions. “The biggest remaining risks of disruption are where action is needed by both UK and EU authorities, such as ensuring the continuity of existing derivatives contracts. As yet the EU has not indicated a solution analogous to a temporary permissions regime,” it said. The committee said a technical working group co-chaired by the Bank of England governor, Mark Carney, and the European Central Bank president, Mario Draghi, was a welcome development. But it added that there was as yet no proposed remedy to reassure banks and their customers that contracts would be valid after next March. 

      May warns Cabinet to prepare to compromise over Brexit as EU’s stance hardens after Italian elections --THERESA MAY has warned Cabinet Ministers they must be ready to compromise over Brexit as Brussels has hardened against a good deal for the UK following the election of the new anti-EU government in Italy. The PM and her Brexit guru Olly Robbins are claiming that EU chiefs are closing ranks to put off other countries leaving during “grim” one on one briefings for her top team ahead of next week’s crunch Chequers summit. Theresa May has told her Cabinet to prepare to compromise over Brexit as the EU signalled they will harden their stance against a good deal for BritainPA:PRESS ASSOCIATION 3 Theresa May has told her Cabinet to prepare to compromise over Brexit as the EU signalled they will harden their stance against a good deal for Britain A government source said: “Italy has spooked them and made them more determined that no one is allowed to leave with a good deal”. The negative views of Downing Street in these ministerial “bi-lats” last night sparked Brexiteer fears Mrs May is poised to soften her exit red lines — a claim denied by her senior aides.However some Ministers including David Davis have used the private briefings to set out their own stances. The Brexit Secretary is understood to have told Mrs May that he would be unable to continue in his job if she ploughed ahead with her complex New Customs Partnership plan that would see the UK collecting taxes on goods on behalf of Brussels forever. 

      Bank, Corporate Brexodus Begins as “No-Deal” Brexit Looms - naked capitalism - Yves here. We’ve flagged some of the loud warnings by high profile players like Airbus and BMW about the havoc continued Brexit uncertainty, as well as a hard or crash out Brexit. What is interesting about Don Quijones’ post is the degree to which banks have been complacent about taking serious Brexit preparation steps. On the one hand, we’ve read many press reports about how banks were looking into and applying for licenses, as well as looking at various major EU cities for more office space. Our PlutoniumKun reported that a favorite gym had become a casualty to Brexit, since the (former warehouse?) building in which it was located was being razed to build an office tower.On the other, as Don Quijones indicates, a lot of firms have apparently taken initial steps but dawdled on the follow through.I’m also not sure what to make about the Bank of England squealing about derivative contracts. I find it hard to take the figures they are tossing about at face value, simply because a significant proportion will expire before Brexit date and would presumably be replaced by agreements that would not be exposed to Brexit. Further, I’d expect ISDA or bank lobbyists to have been making noise before the Bank of England started sounding alarms.Having said that, as we learned when Lehman failed, most derivative agreements have options in how they get settled (usually cashed out in some form) and you can be assured whoever has latitude in how the contract will be closed out will use that power to his advantage. I wish someone who was closer to the current state of play would identify what types of contracts might cause trouble if they could not be settled or novated neatly, and how big the economic (as opposed to notional) exposures might be there. I’m sure there is a real issue here, but I’d like to see the problem dimensioned much better than it has been so far.Finally, a story in openDemocracy exposes something that clear has to exist but we haven’t seen much of, which is groups that see profit opportunities in Brexit and have been lobbying for it. And I don’t mean fuzzy headed “Oh, the UK can be the new Singapore” enthusiasts. OpenDemocracy discusses the fracking industry as keen to escape EU environmental regulations:   The post continues to name quite a few names….by Don Quijones of Spain, UK, & Mexico

      Theresa May plays Brexit security card at EU summit - Theresa May made a personal appeal to EU national leaders on Thursday, urging them to think of their own citizens’ safety by offering the U.K. more flexibility in negotiations on security cooperation post Brexit.Speaking at the European Council summit dinner in Brussels, the U.K. prime minister warned her fellow leaders that the EU’s current approach to security cooperation in Brexit talks would hamper the U.K.’s ability to share information on wanted criminals and collaborate on tracking terror networks.May, who is facing a rebuke from EU leaders who say progress on Brexit negotiations has been too slow, made the appeal on security knowing it is one of the U.K.’s strongest points of leverage in the talks.Shortly before she spoke, the U.K. government also confirmed a major £20 billion ship-building contract between British firm BAE Systems and the Australian navy — reinforcing the U.K.’s other strongest card, defense. The U.K. wants the EU to go further than its existing legal frameworks for security cooperation with third countries, instead giving the U.K. unprecedented access to databases in return for the U.K. sharing their own information.May told leaders at the dinner that their ability to share information through the Schengen Information System and the European Criminal Records Information System would be “at risk” under the EU’s current approach.“That is not what I want and I do not believe it is what you want either,” she said, according to remarks pre-released to journalists. “So when you meet at [in the EU27 formation] tomorrow, I would urge you to consider what is in the best i nterest of your citizens and mine and give your negotiators a mandate which will allow us to achieve this crucial objective.”

      Brexit must not force people to choose if they are British or Irish- Brexit has taken up an extraordinary amount of media time and space since the United Kingdom made its decision to withdraw from theEuropean Union in 2016. Yet few would have anticipated the current focus on the 1998 Belfast or Good Friday Agreement, which has sustained the peace that we have enjoyed on this island for the past 20 years.Fewer still would have suspected that the biggest threat to that historic settlement would be a unilateral withdrawal of the United Kingdom from the European Union.Time is running out on solutions to avoid a hard exit from the human rights and equality architecture that has underpinned Ireland-UK relations for decades. This is not an academic complaint: that architecture is what supports the everyday choices of people living on both sides of the Border, who regularly travel back and forth to access healthcare, work, childcare and education.Nor is it academic for people living in Northern Ireland, who have no desire to go back to the days when two people born on the same street grow up with two different sets of rights.This is what is at stake when we argue that the North-South equivalence of rights must be safeguarded after Brexit, and enforceable in the final Withdrawal Agreement.Progress towards a lasting r esolution of the conflict in Northern Ireland has been grounded in the human rights and equality provisions of the Good Friday Agreement, which itself was rooted in the assumption that both the UK and Ireland would continue to be members of the EU.

       Use of Ritalin and other 'smart drugs' doubled in last decade in UK - The chief inspector of schools has accused parents of trying to 'medicate away' their children's hyperactive behaviour.Head of Ofsted Amanda Spielman made the comments after it was revealed that the use of Ritalin and other 'smart drugs' has doubled in the past decade. There were nearly 1.5 million prescriptions for the drugs last year by the NHS compared with less than 700,000 ten years prior. The pills are used to make people with ADHD - attention deficit hyperactivity disorder - more focused.   Spielman said more should be done to try address the symptoms without opting for quick-fix drugs.  'The fact that it seems to have become the norm for a whole swathe of the social structure to medicate as a response to behavioural problems feels like a very big warning signal,' she told The Times.'You don't just want to try and block out the symptoms, you want to say, is there something that can be solved?'

      No comments: